Week in Business: Guns vs. Economic Sanctions
What’s up? (February 27-March 5)
More than a million people have fled Ukraine since the arrival of Russian troops. Much of the response from Western countries has been economic. The United States, the European Union, Britain and other nations agreed to remove Russia from the SWIFT financial messaging system, essentially barring the country from international transactions, and imposing sanctions on its central bank. The sanctions seem to have had an immediate effect on Russia’s financial situation: the ruble crashed, Russia’s stock market froze and Russians rushed to cash out. Businesses also targeted Russia’s economy. Oil companies said they would pull out of investments in Russia; H&M and Apple halt sales in the country; And Disney and Warner Bros. said they would halt the release of theatrical films.
state of the Union
President Biden began his first State of the Union address on Tuesday by condemning Russia’s invasion of Ukraine and garnering support for Ukraine. Then he turned to domestic issues, including the economy. In particular, he highlighted his plan to fight inflation, which he called a “top priority”. This includes strengthening competition among companies, expanding workforce opportunities, and fixing broken supply chains. (Some economists were skeptical that these efforts would be enough to quell price increases, which are primarily the job of the Federal Reserve.)
A Strong Jobs Report
US employers added 678,000 jobs in February, the Labor Department reported Friday. There are still about two million fewer jobs in the economy than before the pandemic, but job recovery has been steady despite new waves of the coronavirus. Employers have added at least 400,000 jobs every month since May. The report also showed gains in the number of adults participating in the labor force. Solid job gains, along with a declining number of coronavirus cases, have made some forecasters optimistic that the economy is returning to something closer to normal.
What will happen next? (March 6-12)
A New Pandemic Playbook
President Biden unveiled a new coronavirus response strategy on Wednesday. The plan aims to move the United States into a new phase of the pandemic in which the virus does not disrupt everyday life. It includes proposals that can help businesses manage the risks of the coronavirus, such as giving businesses tests, developing a checklist that businesses can use to manage air safety, and asking Congress for a tax credit. Can ask to revive, which is offered early for paid leave-related work absences during the pandemic. The question is whether Congress will approve funding for the plan. On Wednesday, Mr. Biden asked Congress to provide $22.5 billion.
Prices went up, but by how much?
On Thursday, the Labor Department will report how much prices have increased in February. In January, the Consumer Price Index, an important measure of inflation, showed prices were rising at their fastest pace in 40 years. Federal Reserve Chairman Jerome H. Powell has indicated that the central bank will begin raising interest rates at its March meeting. On Thursday, he told the Senate Banking Committee that the Fed was committed to using its tools to rein in inflation, and earlier in the week, he told the House Financial Services Committee that the economic crisis created by Russia’s invasion of Ukraine. Uncertainty has not changed the economy. Fed plans.
China’s Congress begins
China’s legislature opened its week-long annual session on Saturday. Chinese leaders are expected to use the event to pledge that China’s slowing economic growth will regain momentum. They could also indicate how China plans to ease its stringent pandemic restrictions. But addressing the war in Ukraine is unlikely. Beijing’s stand so far has been that the two sides should negotiate, and its top banking regulator said last week that it would not engage in sanctions on Russia.
The Russo-Ukraine War and the Global Economy
Major League Baseball canceled the games amid a labor dispute. Amazon said it would close 50 brick-and-mortar stores. Apple is expected to unveil a lower priced version of its iPhone. And participants of the CERAWeek energy conference, which begins this week in Houston, should have plenty to talk about as oil prices rise.
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