Pubblicato in: Banche Centrali, Stati Uniti

Inflazione. Un fenomeno complesso. 35 parametri importanti per valutarla. – Bloomberg.

Giuseppe Sandro Mela.

2021-07-29.

Andrà tutto bene 001

Bloomberg ammette che l’inflazione esiste e che sta crescendo, ma secondo il suo punto di vista non c’è proprio nulla da temere. Nulla di nulla.

L’articolo allegato è molto lungo e denso: ne estrarremo solo i punti più significativi, ma il commento verterà l’intero testo.

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«Inflation is here — These 35 metrics tell you how much to worry»

«A year ago, the Covid-19 pandemic crushed prices in many parts of the U.S. economy. As expected, that has created inflation 12 months on as the economy reopens and rebounds»

«No one disputes that inflation has arrived. The question is where it’s heading»

«The most basic fact is that June’s “headline” consumer price index, including everything the government puts in its representative basket of products and services that Americans buy, stands at 5.4%, the highest in 30 years barring one month in the summer of 2008 when oil reached nearly $150 per barrel»

«Those numbers would seem to validate the doomsayers»

«Yet bond markets and economists take the opposite view»

«The bond market’s best estimate of the average inflation rate for the next 10 years»

«The yield curve — the extra yield that investors demand for 10-year bonds rather than 2-year bonds, which generally rises when people expect higher inflation — is now below 1%»

«Inflation is a complex phenomenon that grows from many places. These 35 key measures offer up a more nuanced picture of how markets are positioned»

«Distance from 10-year average, with one standard deviation providing the upper- and lower-end range for a “normal” score»

«Flashing alarmingly bright are the official data, as well as surveys of businesses and consumers»

«Resolution should come in two categories that remain finely balanced: prices and wages»

«the raw industrials index, which includes basic commodities that aren’t in the futures markets, continues to rise and is nearing its historic top from more than a decade ago»

«the pay of low-skilled workers is picking up and employers are complaining that they cannot fill jobs, which could imply wage inflation ahead»

«The Fed’s preferred measure of inflation, the Core PCE deflator, is also at its highest level since 1992»

«But it will still be a relief if next month’s data can show a significant retreat in some of the sectors that were hit by extreme inflation.»

«The crucial measures for monetary policy are the official government measures of inflation, mostly published monthly»

«The Consumer Price Index (CPI) includes everything in the Bureau of Labor Statistics’ basket.»

«The Producer Price Index (PPI) measures prices paid by producers for making goods»

«Core CPI excludes fuel and food prices, which are more variable than most and, to an extent, beyond the reach of monetary policy»

«The Trimmed Mean CPI is another measure of “core” inflation in which the biggest outliers in both directions are excluded»

«Finally, the Personal Consumption Expenditure (PCE) Deflator, which is compiled as part of the calculations for GDP, is the measure most closely watched by the Fed»

«It takes into account an even broader range of prices and is based on surveys of businesses rather than consumers»

«Collecting inflation numbers is a massive statistical endeavor»

«Many claim that the basket of goods in the CPI is biased in some way but this is a tad unfair»

«→→ Housing prices are immensely important and can have knock-on effects on wage demands and other prices ←←»

«College tuition has long inflated far faster than the rest of the economy, so we look at it in isolation»

«Medicinal drugs are a hot-button issue where rising prices would hurt the neediest»

* * * * * * *

Si concorda pienamente con Bloomberg che il fenomeno inflattivo sia molto complesso e non esprimibile con un unico parametro, anche se il Producer Price Index (PPI) ed il Consumer Price Index (CPI) siano soddisfacenti per quanti desiderino seguire quanto accade, senza addentrarsi in analisi del sistema economico.

Un aspetto da tener sempre presente è che il CPI dipende strettamente dal paniere di riferimento, che, per esempio, nei pesi occidentali, non tiene conto dei costi legati alla casa, sia di acquisto, sia di affitto, sia di manutenzione ordinaria o straordinaria. Eppure questa voce incide severamente sui bilanci casalinghi. Nei paesi europei, poi, vi compaiono beni da tempo non più acquistati.

A nostro sommesso parere, la pandemia avrebbe influito ben poco sul processo inflattivo, checché ne dicano economisti e media.

Negli ultimi tempi i costi estrattivi sono aumentati vertiginosamente. Un esempio per tutti, il carbone.

Carbone. Dai 46.9$ per tonnellata a settembre agli attuali 148.6$.

I prezzi delle materie prime sono quasi raddoppiati nel volgere di un anno ed i paesi produttori tendono a vendere il loro estratto quasi solamente a paesi amici.

Su questa variabile le banche centrali sono impotenti, e saremmo propensi a considerarla concausa primaria della inflazione. Sempre a nostro sommesso parere, la pandemia ha influito ben poco.

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Inflation Is Here — These 35 Metrics Tell You How Much to Worry

A year ago, the Covid-19 pandemic crushed prices in many parts of the U.S. economy. As expected, that has created inflation 12 months on as the economy reopens and rebounds. Now the market seems to believe that a resurgence of the pandemic will rein in inflation before it grows out of control. No one disputes that inflation has arrived. The question is where it’s heading.

The most basic fact is that June’s “headline” consumer price index, including everything the government puts in its representative basket of products and services that Americans buy, stands at 5.4%, the highest in 30 years barring one month in the summer of 2008 when oil reached nearly $150 per barrel. Exclude food and fuel, always variable, and inflation still comes in at 4.5% — its highest in three decades by far. Even if the most extreme movers both up and down are stripped out, inflation stands at 2.9%, its worst since 1992 (barring a few months of very expensive oil). Those numbers would seem to validate the doomsayers.

Yet bond markets and economists take the opposite view. They see inflation not only coming under control but eventually falling to levels lower than before the pandemic hit. The bond market’s best estimate of the average inflation rate for the next 10 years stands at 2.3%, which is roughly where it’s been for four months even as other numbers have gotten worse. The yield curve — the extra yield that investors demand for 10-year bonds rather than 2-year bonds, which generally rises when people expect higher inflation — is now below 1%. That’s less than its average for the last decade, a period when inflation hasn’t been a problem. Indeed, it’s no higher than it was in February.

Either market players remain confident that the Federal Reserve can keep rising prices under control, or they’re worried the economy won’t keep growing fast enough to push inflation numbers higher. Those concerns are definitely increasing as the delta variant shows its ability to slow economic reopening.

Our dashboard of indicators aims to add clarity to this debate. Inflation is a complex phenomenon that grows from many places. These 35 key measures offer up a more nuanced picture of how markets are positioned, what the official data say and what consumers and businesses are discounting. Numbers are current as of Monday, July 19 and will be updated weekly.

                         Authers’ Indicators

*Distance from 10-year average, with one standard deviation providing the upper- and lower-end range for a “normal” score. A Z-score equal to 0 represents an average value.

Flashing alarmingly bright are the official data, as well as surveys of businesses and consumers. The latest survey by the National Federation of Independent Business, of prices paid by small companies, is at a level it last reached all the way back in the first quarter of 1981. Yet showing no concern at all are market indicators and Bloomberg’s surveys of expert economists’ predictions. Both are below their averages for the last decade.

Resolution should come in two categories that remain finely balanced: prices and wages. These factors drove inflation higher in the 1970s and could do so again. Prices of futures for oil, agriculture and metals have all given up ground after rising very sharply from last year’s lows. But the raw industrials index, which includes basic commodities that aren’t in the futures markets, continues to rise and is nearing its historic top from more than a decade ago.

Meanwhile, although wage growth remains well within its recent ranges, the pay of low-skilled workers is picking up and employers are complaining that they cannot fill jobs, which could imply wage inflation ahead. The decisive factor could be if a new pandemic-related downturn weakens demand, as well as the hand of labor, again. That would be bad news, but at least it would avert an extended bout of inflation.

                         Official Measures Are Still Rising

June’s inflation data delivered a third nasty shock in succession. The Fed’s preferred measure of inflation, the Core PCE deflator, is also at its highest level since 1992. Meanwhile, headline inflation (including fuel and food) is at 5% for the first time since the oil price spike of 2008. Producer price inflation is also high. These are sudden moves and the more muted rise in the “trimmed mean” measure, which excludes goods that have suffered the most extreme changes in price, suggests that it is indeed mainly a transitory effect from the pandemic. But it will still be a relief if next month’s data can show a significant retreat in some of the sectors that were hit by extreme inflation.

                         Why these indicators?

The crucial measures for monetary policy are the official government measures of inflation, mostly published monthly. The Consumer Price Index (CPI) includes everything in the Bureau of Labor Statistics’ basket. The Producer Price Index (PPI) measures prices paid by producers for making goods. Core CPI excludes fuel and food prices, which are more variable than most and, to an extent, beyond the reach of monetary policy. The Trimmed Mean CPI is another measure of “core” inflation in which the biggest outliers in both directions are excluded, with the average taken of the rest; this can compensate for the fact that prices in many products are “lumpy” and can in practice only be raised once or twice a year. Finally, the Personal Consumption Expenditure (PCE) Deflator, which is compiled as part of the calculations for GDP, is the measure most closely watched by the Fed. It takes into account an even broader range of prices and is based on surveys of businesses rather than consumers.

                         Sanity Returns to Some Sectors

There is deepening concern over shelter inflation, the single biggest component of the CPI index, which is now up to 2.3% and will likely rise further as higher house prices pull up rents in their wake. This will be particularly closely watched. But the most extreme transitory effects of the pandemic are otherwise beginning to ease. Car rental prices, for example, are now “only” 88% higher than they were 12 months ago, having previously topped 100%. Several sectors which suffered a deflationary blow from the pandemic are still not seeing prices recover. Recreation inflation is still negative. And — heaven be praised — college-tuition inflation remains close to its lowest since records began in 1979, although it did tick up slightly in June. It is still just about possible to sustain an optimistic narrative that the pandemic caused extraordinary inflation in some pockets of the economy but might have brought sanity to others where prices had grown prohibitive.

                         Why these indicators?

Collecting inflation numbers is a massive statistical endeavor. Many claim that the basket of goods in the CPI is biased in some way but this is a tad unfair, as the Bureau of Labor Statistics provides a breakdown of inflation for all the categories it follows. Housing prices are immensely important and can have knock-on effects on wage demands and other prices. College tuition has long inflated far faster than the rest of the economy, so we look at it in isolation. Two sectors (car rentals and recreation) were hard-hit by the pandemic and can be expected to enjoy sharp-but-transitory rebounds. Medicinal drugs are a hot-button issue where rising prices would hurt the neediest.

                         The Bond Market Is No Longer Worried

The bond market, where traders make their most precise predictions of inflation, has been in flux all year. Four months ago, 5-year breakevens topped 2.75%, virtually matching their high during the 2008 oil price spike. Since then they have dropped below 2.4%, although the latest data returned them to 2.6% — higher than they were at any point between 2010 and 2020. Meanwhile, expectations for the years from 2026 to 2031 have fallen to 2.16%, suggesting confidence that the Fed will be able to rein in inflation over the next five years. The heat map is based on the 20-day moving average of the breakevens, to avoid being too affected by day-to-day movements, which have been violent in the last few weeks. Nobody is positioned for the Fed to lose control of inflation anytime soon, nor for Germany or Japan to snap out of their disinflationary malaise.

Why these indicators?

Every day the market is revising its working estimates of inflation and the bond market gives us precise estimates, through the gap between yields on fixed and inflation-linked bonds. Central banks watch breakevens very closely, as they are driven by experts with real money at stake. In the U.S., we follow projections for average inflation over the next five years and (through the 5-year/5-year breakeven) the five years after that. The wider the gap between 2-year and 10-year bond yields (known as the yield curve), the higher inflation is expected to be. Finally, deflationary psychology has ravaged Germany for years and Japan for decades; we look at expectations for them over the next 10 years.

                         Businesses Still Sounding the Alarm

These numbers offer perhaps the greatest support for the case that inflation is a near and present danger. All are way above their ranges for the last decade. The small business survey shows inflation expectations at their highest in four decades, while the Institute for Supply Management numbers are at post-2008 highs and still rising in the latest number produced at the beginning of July — although the survey for the services sector did show a slight decline. Consumer expectations have also risen very sharply, to their highest since the commodity price spike before the financial crisis, with the latest Conference Board survey reaching a fresh high for this cycle. This could be transitory but, if so, the numbers need to come down soon.

                         Why these indicators?

If consumers expect higher prices in the surveys conducted by the University of Michigan and the Conference Board, this will be reflected in higher demand now and in higher wage demands, both of which will tend to press inflation upwards. The National Federation of Independent Business survey of the proportion of small-business executives bracing for higher prices and the Institute for Supply Management supply managers’ survey of the prices that larger businesses say they are paying have both proved to be great leading indicators in the past. In all cases, these numbers can prove to be self-fulfilling prophecies, which is why they are monitored so closely.

                         No Clear Picture From Commodity Prices

Rising commodity prices represent exactly the kind of inflation that can attack living standards. But, given the economic collapse a year ago and the rush by speculators to get a leveraged play on the rebound, they don’t give firm evidence of inflation that is more than transitory. Metals prices are about 6% below their May peak, while energy prices have also dropped by about 6% as the OPEC+ cartel tries to sort out its problems; it’s not at all clear the latter are locked into an inflationary expansion. One increasingly ominous warning sign comes from the Commodities Research Board raw industrials index, which covers basic commodities that aren’t in the futures market. In theory, these prices should be driven by supply-and-demand dynamics in the real world, not by ebbs and flows of emotion in the markets. The index has gained more than 50% in a year and is nearing an all-time high.

                         Why these indicators?

Inflation shows up first in the price of raw materials and futures markets capture those changes by the second. Bloomberg futures indexes for industrial metals, agricultural commodities and energy thus provide a good real-time indicator of inflationary pressures. Earlier this year, lumber futures were gripped by a huge price spike; this has now reversed as sawmills increased production, but needed to be monitored as lumber was central to early arguments that inflation was returning. The Commodities Research Board’s RIND index covers raw materials such as burlap, tallow and lard that are not tied to futures. If the futures indexes are being driven by speculation rather than genuine inflationary pressure, you would expect to see this index lagging them; the reverse is the case at present.

                         Low-Skilled Wages Are Picking Up

Wage inflation is a crucial driver of inflation and, from the official data, it appears to be under control despite a number of factors that would normally drive salaries and wages upwards. Most measures of wage inflation are running below their average for the last five years, with the Atlanta Fed putting overall wage growth at 3.2%. Yet, job vacancies are at an all-time record, while small businesses complain that they have never found it harder to recruit workers. This suggests a problem with skill mismatches coming out of the recession. At the same time, while average hourly earnings have been quite variable over the last few months, the latest number shows them increasing at the fastest rate since 2009. The ongoing wage tracker kept by the Atlanta Fed shows that wage inflation for low-skilled workers has reached 3.6%, close to its highest since the global financial crisis. The National Federation of Independent Business finds the highest proportion of its members raising pay since they started asking the question in 1984.

Why these indicators?

Higher wages raise costs for companies, which they want to pass on to customers. They also put more money in the pockets of consumers. Although often much to be desired, wage inflation is thus a direct driver of price inflation. Average hourly earnings can be affected by composition — they rose early during the pandemic, for instance, because layoffs disproportionately hit the low-paid — so we include both weekly and hourly figures. The Atlanta Fed produces a handy “nowcast” survey of wage trends for both high- and low-skilled workers, while the National Federation of Independent Business survey tracks how many small businesses are raising rather than cutting pay. This figure hit a record high just before the pandemic and has nearly returned to the same level.

                         Economists More Worried About Deflation

Broadly, the consensus is that the Fed, like other central banks, will get what it wants. The Fed is forecasting Core PCE (personal consumption expenditure) of 3% for this year but expects it to decline to 2% in 2023; in other words, it will be transitory. The experts are less anxious for now and think it will reach 2.5% this year and decline in the two following years — more or less perfect for the Fed, which is prepared to let inflation “run hot.” German inflation, after a bobble this year, is expected to fall back to 1.7% in 2023; there’s no sign of a new reflationary cycle there or in Japan, or even China. Whatever markets say, the experts are still more worried about deflation.

Why these indicators?

The forecasts by economic experts greatly impact government planning and policy, and also affect decisions by companies. Bloomberg’s survey offers as good an estimate as we’re going to get of “received expert wisdom” and also shows the spread of opinion into the future.

Pubblicato in: Banche Centrali, Devoluzione socialismo, Stati Uniti

USA. FED System. Documento dei Governatori sulla politica monetaria.

Giuseppe Sandro Mela.

2021-07-15.

FED 001

La Federal Reserve ha rilasciato il documento sottoscritto dal Board dei Governatori sulla politica monetaria.

È un documento molto esteso e particolareggiato, di cui riporteremo solo il sommario, pur raccomandandone la lettura del testo completo.

«monetary policy continues to deliver powerful support to the economy until the recovery is complete»

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«Carenze di materie prime e “difficoltà nelle assunzioni” stanno frenando la ripresa economica statunitense dalla pandemia da coronavirus e hanno causato un picco “transitorio” di inflazione.

Lo ha detto la Federal Reserve nel rapporto semestrale al Congresso Usa sullo stato dell’economia.

“Il progresso delle vaccinazioni ha portato alla riapertura dell’economia e a una forte crescita economica” si legge. “Tuttavia, le carenze di materie prime e le difficoltà nelle assunzioni hanno frenato l’attività in vari settori”.

Il rapporto sarà oggetto di audizioni al Congresso la prossima settimana, tra cui la testimonianza del presidente della Fed Jerome Powell sull’outlook per economia, inflazione e transizione della politica monetaria in un contesto di affievolirsi della pandemia.

Il rapporto pubblicato dalla Fed analizza in gran parte la situazione economica pregressa, ma documenta la visione della banca centrale di una ripresa che resta ben instradata mentre imprese e famiglie si orientano all’interno di una complessa riapertura economica.» [Reuters]

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Carenza ed alto costo delle materie prime sono problematiche che esulano le competenze della Fed, ma che dovrebbero stare ben più a cuore nel gestire la politica estera. Accattivarsi le amicizie dei paesi estrattori e produttori delle materie prime contrasta con la politica di imposizione della Weltanschauung liberal e delle relative sanzioni comminate.

Correttamente, a nostro modesto avviso, la Fed assume la piena occupazione come parametro cardine della ripresa economica, che le manovre finanziarie devono cercare di assecondare.

Certo, fa specie che vi siano tuttora 14,209,007 disoccupati sotto sussidio federale ed il sistema abbia “difficoltà nelle assunzioni”.

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Board of Governors of the Federal Reserve System. Monetary Policy Report. July 9, 2021

Summary.

Over the first half of 2021, progress on vaccinations has led to a reopening of the economy and strong economic growth, supported by accommodative monetary and fiscal policy. However, the effects of the COVID-19 pandemic have continued to weigh on the U.S. economy, and employment has remained well below pre-pandemic levels. Furthermore, shortages of material inputs and difficulties in hiring have held down activity in a number of industries. In part because of these bottlenecks and other largely transitory factors, PCE (personal consumption expenditures) prices rose 3.9 percent over the 12 months ending in May.

Over the first half of the year, the Federal Open Market Committee (FOMC) held its policy rate near zero and continued to purchase Treasury securities and agency mortgage-backed securities to support the economic recovery. These measures, along with the Committee’s guidance on interest rates and the Federal Reserve’s balance sheet, will help ensure that monetary policy continues to deliver powerful support to the economy until the recovery is complete.

Recent Economic and Financial Developments

The labor market. The labor market continued to recover over the first six months of 2021. Job gains averaged 540,000 per month, and the unemployment rate moved down from 6.7 percent in December to 5.9 percent in June. Although labor market improvement has been rapid, the unemployment rate remained elevated in June, and labor force participation has not moved up from the low rates that have prevailed for much of the past year. A surge in labor demand that has outpaced the recovery in labor supply has resulted in a jump in job vacancies and a step-up in wage gains in recent months.

Inflation. Consumer price inflation, as measured by the 12-month change in the PCE price index, moved up from 1.2 percent at the end of last year to 3.9 percent in May. The 12-month measure of inflation that excludes food and energy items (so-called core inflation) was 3.4 percent in May, up from 1.4 percent at the end of last year. Some of the strength in recent 12-month inflation readings reflects the comparison of current prices with prices that sank at the onset of the pandemic as households curtailed spending—a transitory result of “base effects.” More lasting but likely still temporary upward pressure on inflation has come from prices for goods experiencing supply chain bottlenecks, such as motor vehicles and appliances. In addition, prices for some services, such as airfares and lodging, have moved up sharply in recent months toward more normal levels as demand has recovered. Both survey-based and market-based measures of longer-term inflation expectations have risen since the end of last year, largely reversing the downward drift in those measures in recent years, and are in a range that is broadly consistent with the FOMC’s longer-run inflation objective.

Economic activity. In the first quarter, real gross domestic product (GDP) increased 6.4 percent, propelled by a surge in household consumption and a solid increase in business investment but restrained by a substantial drawdown in inventories as firms contended with production bottlenecks. Data for the second quarter suggest a further robust increase in demand. Against a backdrop of elevated household savings, accommodative financial conditions, ongoing fiscal support, and the reopening of the economy, the strength in household spending has persisted, reflecting continued strong spending on durable goods and solid progress toward more normal levels of spending on services.

Financial conditions. Since mid-February, equity prices and yields on nominal Treasury securities at longer maturities increased, as the rapid deployment of highly effective COVID-19 vaccines in the United States and the support provided by fiscal policy boosted optimism regarding the economic outlook. Despite having increased since February, mortgage rates for households remain near historical lows. Overall financing conditions for businesses and households eased further since February, as market-based lending conditions remained accommodative and bank-lending conditions eased markedly. Large firms, as well as those households that have solid credit ratings, continued to experience ample access to financing. However, financing conditions remained tight for small businesses and households with low credit scores.

Financial stability. While some financial vulnerabilities have increased since the previous Monetary Policy Report, the institutions at the core of the financial system remain resilient. Asset valuations have generally risen across risky asset classes with improving fundamentals as well as increased investor risk appetite, including in equity and corporate bond markets. Vulnerabilities from both business and household debt have continued to decline in the first quarter of 2021, reflecting a slower pace of business borrowing, an improvement in business earnings, and government programs that have supported business and household incomes. Even so, business-sector debt outstanding remains high relative to income, and some businesses and households are still under considerable strain. In the financial sector, leverage at banks and broker-dealers remains low, while available measures of leverage at hedge funds increased into early 2021 and are high. Issuance volumes of collateralized loan obligations and asset-backed securities recovered strongly through the first quarter of 2021, while issuance of non-agency commercial mortgage-backed securities was weak in that quarter. Funding risks at domestic banks continued to be low in the first quarter, but structural vulnerabilities persist at some types of money market funds and bank-loan and bond mutual funds. (See the box “Developments Related to Financial Stability” in Part 1.)

International developments. Foreign GDP growth moderated at the start of the year, as some countries tightened public health restrictions to contain renewed COVID-19 outbreaks. Compared with last spring, many foreign economies exhibited greater resilience to public-health-related restrictions, and their governments have continued to provide fiscal support. Recent indicators suggest a pickup in activity in advanced foreign economies this spring following an increase in vaccination rates and an easing of restrictions. However, conditions in emerging market economies are more mixed, in part dependent on their success in containing outbreaks and the availability of vaccines. Inflation has been rising in many economies, as the price declines seen last spring reversed and commodity prices ramped up. Monetary and fiscal policies continue to be supportive, but some foreign central banks are adopting or signaling less-accommodative policy stances.

Foreign financial conditions generally improved or held steady. Equity prices and longer-term sovereign yields increased across advanced foreign economies, boosted by their ongoing reopening. Equity markets in emerging market economies were mixed, and flows into dedicated emerging market funds slowed. After trending lower since the spring of 2020, the foreign exchange value of the dollar has changed little on net since the start of the year.

Monetary Policy

Interest rate policy. To continue to support the economic recovery, the FOMC has kept the target range for the federal funds rate near zero and has maintained the monthly pace of its asset purchases. The Committee expects it will be appropriate to maintain the current target range for the federal funds rate until labor market conditions have reached levels consistent with its assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed that rate for some time.

Balance sheet policy. With the federal funds rate near zero, the Federal Reserve has also continued to undertake asset purchases, increasing its holdings of Treasury securities by $80 billion per month and its holdings of agency mortgage-backed securities by $40 billion per month. These purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses. The Committee expects these purchases to continue at least at this pace until substantial further progress has been made toward its maximum-employment and price-stability goals. In coming meetings, the Committee will continue to assess the economy’s progress toward these goals since the Committee adopted its asset purchase guidance last December.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.

Special Topics

The uneven recovery in labor force participation. The labor force participation rate (LFPR) has improved very little since early in the recovery and remains well below pre-pandemic levels. Relative to its February 2020 level, the LFPR remains especially low for individuals without a college education, for individuals aged 55 and older, and for Hispanics and Latinos. Factors likely contributing both to the incomplete recovery of the LFPR and to differences across groups include a surge in retirements, increased caregiving responsibilities, and individuals’ fear of contracting COVID-19; expansions to the availability, duration, and level of unemployment insurance benefits may also have supported individuals who withdrew from the labor force. Many of these factors should have a diminishing effect on participation in the coming months as public health conditions continue to improve and as expanded unemployment insurance expires. (See the box “The Uneven Recovery in Labor Force Participation” in Part 1.)

Recent inflation developments. Consumer price inflation has increased notably this spring as a surge in demand has run up against production bottlenecks and hiring difficulties. As these extraordinary circumstances pass, supply and demand should move closer to balance, and inflation is widely expected to move down. (See the box “Recent Inflation Developments” in Part 1.)

Supply chain bottlenecks in U.S. manufacturing and trade. Supply chain bottlenecks have hampered U.S. manufacturers’ ability to procure the inputs needed to meet the surge in demand that followed widespread factory shutdowns during the first half of last year. Additionally, a massive influx of goods has exceeded the capacity of U.S. ports, extending manufacturers’ wait times for imported parts. The stress on supply chains is reflected in historically high order backlogs and historically low customer inventories; these stresses, together with strong demand, have led to increased price pressures. When these bottlenecks will resolve is uncertain, as they reflect the global supply chain as well as industry-specific factors, but for some goods, such as lumber, the previous sharp increases in prices have begun to reverse. (See the box “Supply Chain Bottlenecks in U.S. Manufacturing and Trade” in Part 1.)

Inflation expectations. To avoid sustained periods of unusually low or high inflation, a fundamental aspect of the FOMC’s monetary policy framework is for longer-term inflation expectations to be well anchored at the Committee’s 2 percent longer-run inflation objective. Even though the pace of price increases has jumped in the first half of this year, recent readings on various measures of inflation expectations indicate that inflation is expected to return to levels broadly consistent with the FOMC’s 2 percent longer-run inflation objective after a period of temporarily higher inflation. That said, upside risks to the inflation outlook in the near term have increased. (See the box “Assessing the Recent Rise in Inflation Expectations” in Part 1.)

Monetary policy rules. Simple monetary policy rules, which relate a policy interest rate to a small number of other economic variables, can provide useful guidance to policymakers. Many of the rules have prescribed strongly negative values of the federal funds rate since the start of the pandemic-driven recession. Because of the effective lower bound for the federal funds rate, the Federal Reserve’s other monetary policy tools—namely, forward guidance and asset purchases—have been critical for providing the necessary support to the economy through this challenging period. (See the box “Monetary Policy Rules, the Effective Lower Bound, and the Economic Recovery” in Part 2.)

The Federal Reserve’s balance sheet. Since January, the growth in reserves, the drawdown of the Treasury General Account, and the surge in usage of the overnight reverse repurchase agreement (ON RRP) facility have significantly affected the composition of the Federal Reserve’s liabilities. Against a backdrop of low short-term market interest rates and ample liquidity, the use of the ON RRP facility has increased substantially since April and has reached a recent high of nearly $1 trillion, compared with usage near zero in February. Factors contributing to this increase included the decline in Treasury bill supply, downward pressure on money market rates, and the recent technical adjustment to the Federal Reserve’s administered rates. (See the box “Developments in the Federal Reserve’s Balance Sheet and Money Markets” in Part 2.)

Pubblicato in: Devoluzione socialismo, Geopolitica Asiatica

Cambogia. 2021. Pil anno su anno stimato al 7.1%.

Giuseppe Sandro Mela.

2021-05-08.

Cambogia 004

La Cambogia è un paese misero, che però aveva raddoppiato il proprio pil nel volgere di dieci anni.

La crisi pandemica ha di fatto bloccato il turismo e gran parte delle attività industriali ed agricole.

Adesso si iniziano a vedere i primi segni di una ripresa.

2021-05-01__ Cambogia 001

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2021-05-01__ Cambogia 002

«Cambodia’s economy is forecast to grow 4 percent in 2021 and 5.5 percent in 2022»

«ADB [Asian Development Bank] said the Southeast Asian nation’s economy contracted by 3.1 percent in 2020 because of the COVID-19 pandemic»

«industrial production is expected to rise 7.1 percent in 2021 and 7 percent in 2022»

«Agriculture is expected to grow by 1.3 percent in 2021»

«Services will recover more slowly, expanding by 3.3 percent in 2021 and 6.2 percent in 2022»

2021-05-01__ Cambogia 004

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ADB says Cambodia’s economy to rebound by 4 pct in 2021, higher next year.

Phnom Penh, April 29 (Xinhua) — Cambodia’s economy is forecast to grow 4 percent in 2021 and 5.5 percent in 2022, as the economic recovery in its major trading partners boosts demand for the kingdom’s exports, an Asian Development Bank (ADB) report has said.

ADB country director for Cambodia Sunniya Durrani-Jamal said the Southeast Asian nation’s economy contracted by 3.1 percent in 2020 because of the COVID-19 pandemic.

“The government has responded quickly to the recent spike in cases, and we expect the economy to return to growth in 2021,” she said in a press statement on Wednesday.

“This will help increase household incomes, but not all sectors and regions will benefit equally, so it will be essential to closely monitor household welfare and the need for additional support,” she added.

According to the bank’s report, industrial production is expected to rise 7.1 percent in 2021 and 7 percent in 2022 on the back of a rebound in the garments, footwear, and travel goods sector, as well as growth in other light manufacturing such as electronics and bicycles.

Agriculture is expected to grow by 1.3 percent in 2021 and 1.2 percent in 2022, underpinned by higher crop production after last year’s flood damage, continued growth in aquaculture, and rising agriculture exports to China, it said.

Services will recover more slowly, expanding by 3.3 percent in 2021 and 6.2 percent in 2022, the report said, adding that efforts to contain a local outbreak of COVID-19 that began on Feb. 20 are dampening service sector activities.

Travel restrictions are expected to remain in place for most of 2021, which means tourism is not expected to boost services this year, it said. Real estate is expected to recover from last year’s contraction, in line with a similar trend for the construction industry.

“The uneven pace of the recovery across sectors will continue to put pressure on some households and firms this year, which will slow down the overall recovery,” Durrani-Jamal said.

“Key risks to the outlook include widening community outbreaks of COVID-19, slower than expected growth for Cambodia’s major trading partners such as the United States and EU, continued weakness in domestic demand, and stress on financial services and banking,” she added. Enditem

Pubblicato in: Cina, Russia

Norvegia. Russia e Cina la stanno comprando pezzo per pezzo.

Giuseppe Sandro Mela.

2021-03-19.

Norvegia 001

«The past year has seen the world economy blighted by the impacts of the COVID-19 pandemic. The pandemic has impacted every corner of the globe and every sector in the world economy. However, there are some countries that have emerged, post-lockdown, relatively unscathed»

«Generally, those with an authoritarian regime, that are less bound by electoral cycles, individual freedoms, and market-driven economies, have been able to shut their country down efficiently. The ease at which countries can mobilize the military, to both enforce lockdowns and aid in mass vaccination programs, has helped in the quicker reopening of their economies than other freer countries»

«These countries have thus been better placed to able be to take full advantage of a weaker global economy. The huge drop in international productivity, business, and trade has seen governments worldwide prop up sectors of their economy with enormous financial support. This has allowed an almost “firesale” of key strategic national companies and resources»

* * *

«The Chinese government-owned ChemChina acquisition of Elkem, from Orkla, in 2010 was seen as the start of this era. Having the Chinese government as the biggest shareholder in this strategic Norwegian chemical company, which produces precious metals and alloys, raised eyebrows»

«The impact of this pandemic on the travel industry saw the government bailout Norwegian Air Shuttle to the tune of nearly NOK 3 billion last year. With government support popping up a vulnerable airline, the Chinese state-owned BOAC Aviation Ltd company, according to Norwegian Broadcasting (NRK), swooped in to acquire 12.67% and thus become the second-largest shareholder»

«The recent controversial NOK 1.6 billion sale of the Bergen Engines factory, in Hordvikneset, to the Russian-controlled TMH International is another example»

«However, as the largest client of Bergen Engines is the Norwegian Navy, there was concern, both from Norway’s military and fellow NATO members, about key military technology falling into Russian hands»

«The economic encroachment of authoritarian countries, into key strategic sectors of the Norwegian economy, has sparked a broad political discussion about the repercussions of such acquisitions»

* * *

«The economic presence of countries like China and Russia, in Norway, has also caused alarm in the Norwegian Foreign Intelligence Service»

«Russia and China, …have political systems with close and intended ties between politics and economy, between state and private, and between civilian and military spheres»

«The complexity of the ongoing debate about the acquisition of key Norwegian resources, infrastructure, or companies can be best summed up by the Arctic region of Norway»

«Here is an area that is both underpopulated but resource-rich. Huge investment is needed for infrastructure and employment opportunities»

«The Halogaland Bridge, near Narvik, was built with Chinese collaboration as an important link crossing the Rombaken fjord to the nearby European road E6»

«The Russian company Novatek has started to build a world-leading oil and natural gas facility in Murmansk, some 250 kilometers from Kirkenes»

«Espousing such freedoms, of which many of these countries that are increasing their economic presence in Norway simply do not have, has led, to diplomatic conflict»

«The same year that ChemChina acquired its stake in Elkem, the Norwegian Nobel Committee awarded its annual Peace Prize to Chinese writer and noted dissident, Liu Xiaobo»

«As the old Norwegian proverb goes “Better an empty purse than wrongly got money.”»

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Il problema degli investimenti russi e cinesi non è però limitato alla sola Norvegia: coinvolge invece tutto il mondo. Nei fatti, solo i governi di questi stati, unitamente a quelli del sud est asiatico, hanno saputo gestire la crisi da Covid, così da contenerla e superarla in breve tempo.

Non solo.

Subito dopo hanno ripresa la crescita appena scalfita dalla pandemia, e lo hanno fatto anche perché favorite dalla latitanza finanziaria ed economica occidentale.

Solo per esempio, a febbraio la produzione industriale cinese annualizzata è stata +35.1%

L’enclave libera socialista occidentale è destinata ad essere fagocitata pezzo per pezzo.

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Norway For Sale: Are Russia And China Really Buying Up Norway’s National Resources?

The past year has seen the world economy blighted by the impacts of the COVID-19 pandemic. The pandemic has impacted every corner of the globe and every sector in the world economy. However, there are some countries that have emerged, post-lockdown, relatively unscathed.

Generally, those with an authoritarian regime, that are less bound by electoral cycles, individual freedoms, and market-driven economies, have been able to shut their country down efficiently. The ease at which countries can mobilize the military, to both enforce lockdowns and aid in mass vaccination programs, has helped in the quicker reopening of their economies than other freer countries.

These countries have thus been better placed to able be to take full advantage of a weaker global economy. The huge drop in international productivity, business, and trade has seen governments worldwide prop up sectors of their economy with enormous financial support. This has allowed an almost “firesale” of key strategic national companies and resources.

Recent acquisitions have sparked political debate

Norway has seen a surge of Chinese and Russian investment in recent years. The Chinese government-owned ChemChina acquisition of Elkem, from Orkla, in 2010 was seen as the start of this era. Having the Chinese government as the biggest shareholder in this strategic Norwegian chemical company, which produces precious metals and alloys, raised eyebrows.

The past year, especially, has seen China and Russia increase their presence and flex their economic muscle in Norway due to a weaker economy affected by COVID-19. The impact of this pandemic on the travel industry saw the government bailout Norwegian Air Shuttle to the tune of nearly NOK 3 billion last year. With government support popping up a vulnerable airline, the Chinese state-owned BOAC Aviation Ltd company, according to Norwegian Broadcasting (NRK), swooped in to acquire 12.67% and thus become the second-largest shareholder.

The recent controversial NOK 1.6 billion sale of the Bergen Engines factory, in Hordvikneset, to the Russian-controlled TMH International is another example. The sale had tentative government support, in collaboration with four government ministries (Trade, Foreign Affairs, Defense, and Justice – who all signed off on the deal). However, as the largest client of Bergen Engines is the Norwegian Navy, there was concern, both from Norway’s military and fellow NATO members, about key military technology falling into Russian hands. The sale has been temporarily suspended due to “safety concerns,” according to Justice Minister Monica Mæland.

The government line is that both are private commercial transactions of which there should be no interference. However, not all are happy. The economic encroachment of authoritarian countries, into key strategic sectors of the Norwegian economy, has sparked a broad political discussion about the repercussions of such acquisitions.

Security Act update and intelligence service warning

The past decade has seen an aggressive rise, not just in financial markets, of authoritarian countries. There is a feeling that having such countries acquire a position in the Norwegian economy is not only bad business but also undermines national security. An updated version of the Security Act (Sikkerhetsloven) came into force in 2018 specifically to counter these aggressive acquisitions.

Lately, politicians, like Emilie Enger Mehl (SP), have been questioning the point of having updated the Act when such acquisitions can go ahead with seemingly little government due diligence. The Act now gives the National Security Authority (the regulatory body for overseeing such acquisitions) scope to block such deals. Foreign acquisitions of both private and public Norwegian companies that perform, either directly or through supply chains, a “basic national function”, can be prohibited on national security grounds. This can be applied broadly to sectors of the economy, not just those associated with defense and the military.

The economic presence of countries like China and Russia, in Norway, has also caused alarm in the Norwegian Foreign Intelligence Service. Handing down its annual report last year, Lieutenant-General Morten Haga Lunde said countries, like Russia and China, “…have political systems with close and intended ties between politics and economy, between state and private, and between civilian and military spheres.” The acquisition of Norwegian resource companies, for example, now has political as well as economic considerations.

The application of the Security Act was hinted at by Justice Minister Monica Mæland in a press conference at the Norwegian parliament (Storing) on Tuesday. Discussing the temporary suspension of the sale of Bergen Engines, she admitted that “we are now at a point where there is great uncertainty about national security interests” (of the sale), according to NTB. The impression was that the government is very much thinking about using the act to permanently stop the sale.

While various Intelligence Agencies in Norway have signaled China and Russia as the biggest threat increasing with their recent economic presence, the Chief of Armed Forces Eirik Kristoffersen still wants an improved dialogue. At the forefront of NATO’s border with Russia, Norway must delicately balance economic, political, and military affairs.

Recent Chinese and Russian activity centered on Arctic Norway

The complexity of the ongoing debate about the acquisition of key Norwegian resources, infrastructure, or companies can be best summed up by the Arctic region of Norway. Here is an area that is both underpopulated but resource-rich. Huge investment is needed for infrastructure and employment opportunities. These opportunities have, recently, been exploited not by Oslo but by Moscow and Beijing.

The Arctic region has seen increased Chinese attention. Recent years have seen China not only release a white paper outlining its own “Arctic Policy” but also Chinese companies develop a significant presence. The Halogaland Bridge, near Narvik, was built with Chinese collaboration as an important link crossing the Rombaken fjord to the nearby European road E6. This is part of the Chinese government’s development of the Arctic as a Northern route for its route “Belt and Road Initiative,” establishing key infrastructure that will link trade routes from Europe to China.

Sharing a land border with Norway, Russia has a more established presence in the region. The Russian company Novatek has started to build a world-leading oil and natural gas facility in Murmansk, some 250 kilometers from Kirkenes. Employing over 15.000, there is a hope this will turn the far Northern Arctic into a new global trade hub. However, the fact remains that much of the natural resources lie in Norwegian territorial and economic waters.

With rising global temperatures, the once unnavigable Northern Sea route, linking Europe with Asia, has become a major focus. There is already a Sino-Russian joint natural gas joint venture in the region and increased cargo shipping activity. There is a hope to fully develop Kirkenes as a deep water port which would help trade opportunities for Norway, China, and Russia.

Juggling the geopolitics of money

With a recent history of authoritarian countries increasing their presence in the Norwegian economy, where does this leave the Norwegian government seen as a champion of human rights?

Historically, the Norwegian government’s foreign policy has been the promotion of those rights enshrined in the United Nations Declaration of Human Rights: namely freedom of opinion, religion, speech, equality, privacy, a fair trial, and the freedom from torture. Lately, the Norwegian government has also championed peace diplomacy, the greater inclusion of women into economic and political life, and climate change.

Espousing such freedoms, of which many of these countries that are increasing their economic presence in Norway simply do not have, has led, to diplomatic conflict. The further integration of such countries to the Norwegian economy, holding strategic resources, companies, or infrastructure, has led to a belief that these holdings could be used to influence Norwegian policy

Money often talks when politicians don’t

The same year that ChemChina acquired its stake in Elkem, the Norwegian Nobel Committee awarded its annual Peace Prize to Chinese writer and noted dissident, Liu Xiaobo. Though the Committee is an independent entity to the government, the Chinese saw this as a direct slight and froze off diplomatic relations for 6 years. This meant the stalling of free trade talks which have only just resumed. Since then, the Norwegian government has been more circumspect in its dealings with China.

The complex integration of the Norwegian and Russian economy has been highlighted by the Norwegian Wealth Fund. Regardless of EU and US sanctions, the Wealth Fund increased its ownership of Russian companies, mostly in the oil and gas sector. With more Norwegian cash flowing into companies associated with the Putin regime, like Gazprom, there is the probability that this money will be used to prop up a faltering economy… and regime.

Divided opinions on foreign investment

The stronger presence of Russia and China, in Norway, has led to an ongoing discussion very much at the center of Norwegian society. As the Norwegian government is undergoing free trade talks with its Chinese counterpart, the youth wings of all major political parties (apart from the Progress Party) have voiced their opposition. They want an immediate ceasing of relations due to China’s recent human right record of the treatment of its Muslim Uyghur population.

A recent study of attitudes towards foreign investment published saw widespread skepticism of Russia and China. What was interesting was an age disparity where younger people seemed to be less skeptical of Russian and Chinese investment. As the Cold War ended a generation ago, and China has since aggressively embraced a market economy, there is little collective memory of living next to the “iron curtain” and the perils of communism.

Though the presence of countries like China and Russia, in the region, is not a recent phenomenon their increased economic activity is. What is needed now, more than ever, is a sensible debate about the long-term repercussions of any form of money from countries not necessarily aligned with many aspects of Norwegian society. As the old Norwegian proverb goes “Better an empty purse than wrongly got money.”

Pubblicato in: Cina, Commercio, Geopolitica Mondiale

Cina – Europa. Gennaio. Da Manzhouli sono partiti 331 treni, +59.9% anno su anno.

Giuseppe Sandro Mela.

2021-02-21.

Cina Manzhouli 001

«Manzhouli, China’s largest land port, handled a growing number of China-Europe freight trains in January»

«A total of 331 cross-border freight trains went through the port in January, up 59.9 percent year on year, marking growth for 11 consecutive months»

«Of the total, the port handled 157 outbound trains, an increase of 27.6 percent year on year, while the number of inbound trains soared by 107.1 percent year on year to 174»

«The outbound China-Europe freight trains through Manzhouli can reach 13 European countries»

«The imported and exported goods mainly include daily necessities, electrical products, industrial machinery, metals and agricultural products»

«short freight time, low price and high efficiency, have played an important role in ensuring smooth logistics and stable material supply in China and European countries»

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Ferrovia Cina – Europa. 2020. 12,400 treni, +50% anno su anno.

Ferrovia Cina, Kyrgyzstan, Tajikistan, Iran, Afganistan, più Uzbekistan e Turkmenistan.

Nepal. Belt and Road. Progetto di collegamento ferroviario moderno con la Cina.

Rep Ceka e Cina. Attiva la ferrovia Praga – Yiwu.

Kenya. Nuova linea ferroviaria Nairobi – Mombasa finanziata dalla Cina.

Cina. Xi Jinping si meriterebbe il Premio Nobel per l’economia.

Ferrovia Yiwu-Xinjiang-Europe. 11,920 km in dieci giorni. 1,033 convogli al mese.

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La costruzione di interporti ferroviari, ed il loro collegamento alla rete ferroviaria, permette alla Cina di portare lavoro produttivo nelle sue zone periferiche, sottosviluppate. Non elargizione di sussidi, bensì allestimento di infrastrutture.

Questo discorso vale anche per l’interporto di Manzhouli, che ha generato quasi trentamila posti di lavoro degni di quel nome, per non parlare dell’indotto.

Ma la direttrice verso l’Europa non è certamente l’unica.

Cina. New Silk Road. Qualche difficoltà nel sud-est asiatico.

Cina. La diplomazia ferroviaria.

Al contrario degli Stati Uniti e dell’Occidente in genere, massimamente le Nazioni Unite, la Cina non vincola i propri investimenti alla soddisfazione di propri modi di vedere e sentire i problemi etici e morali. Accetta le altre realtà così come esse siano e richiede solo rapporti paritetici. La Cina investe in Africa ed Asia soprattutto in progetti infrastrutturali, quali ferrovie e strade.

Il conseguente indotto alimenta quindi il perfezionamento dei rapporti politici.

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Xinhua. China’s largest land port sees rising number of China-Europe freight trains

HOHHOT, Feb. 7 (Xinhua) — Manzhouli, China’s largest land port, handled a growing number of China-Europe freight trains in January, local authorities said.

A total of 331 cross-border freight trains went through the port in January, up 59.9 percent year on year, marking growth for 11 consecutive months, said the Manzhouli station under China Railway Harbin Group.

Of the total, the port handled 157 outbound trains, an increase of 27.6 percent year on year, while the number of inbound trains soared by 107.1 percent year on year to 174.

The outbound China-Europe freight trains through Manzhouli can reach 13 European countries. The imported and exported goods mainly include daily necessities, electrical products, industrial machinery, metals and agricultural products.

The global sea and air transport capacity has been severely affected by the COVID-19 pandemic, while the China-Europe freight trains, due to advantages such as short freight time, low price and high efficiency, have played an important role in ensuring smooth logistics and stable material supply in China and European countries.