What’s new? (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 countries have agreed to remove Russia from the SWIFT financial messaging system, essentially banning the country from international transactions and imposing restrictions on its central bank. The sanctions seem to have had an immediate effect on Russia’s financial situation: the ruble crashed, the Russian stock market froze, and Russians rushed to withdraw cash. The companies have also targeted the Russian economy. The oil companies announced that they would abandon their investments in Russia; H&M and Apple have suspended sales in the country; and Disney and Warner Bros. said they would suspend theatrical film releases.
State of the Union
President Biden began his first State of the Union address on Tuesday by condemning Russia’s invasion of Ukraine and rallying support for Ukraine. He then 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 businesses, expanding labor opportunities, and fixing the broken supply chain. (Some economists doubted these efforts would be enough to dampen price growth, which is primarily the job of the Federal Reserve.)
A strong employment report
U.S. employers added 678,000 jobs in February, the Labor Department reported Friday. The economy still has about two million fewer jobs than before the pandemic, but the recovery in employment has been steady despite new waves of coronavirus. Employers have added at least 400,000 jobs each month since May. The report also showed gains in the number of adults participating in the labor force. Strong job gains, along with falling coronavirus case numbers, have made some forecasters optimistic that the economy is on its way back to something closer to normal.
And after? (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 daily life. It includes proposals that could help businesses manage the risks of the coronavirus, such as testing businesses, developing a checklist businesses can use to manage airline safety, and asking Congress to relaunch a tax credit, offered at the start of the pandemic, for paid leave during Covid-work-related absences. The question is whether Congress will approve funding for the plan. On Wednesday, Mr. Biden asked Congress to provide $22.5 billion.
Prices have gone up, but how much?
On Thursday, the Ministry of Labor will report on the price increase in February. In January, the consumer price index, an important gauge of inflation, showed prices rising at their fastest pace in 40 years. Jerome H. Powell, the Federal Reserve Chairman, signaled that the central bank would begin raising interest rates at its March meeting. On Thursday, he told the Senate Banking Committee that the Fed remains committed to using its tools to contain inflation, and earlier in the week he told the House Financial Services Committee that the economic uncertainty created by Russia’s invasion of Ukraine had not changed the Fed’s plans.
The Chinese Congress begins
China’s legislature opened its annual week-long session on Saturday. Chinese leaders are expected to use the event to pledge that China’s slowing economic growth will regain momentum. They may also hint at how China plans to ease its tough pandemic restrictions. But the war in Ukraine is unlikely to be discussed. Beijing’s position so far has been that the two sides should hold talks, and its top banking regulator said last week it would not join sanctions against Russia.
The Russian-Ukrainian War and the World Economy
Major League Baseball has canceled games amid a labor dispute. Amazon has announced that it will close 50 physical stores. Apple should reveal a cheaper version of his iPhone. And attendees of the CERAWeek energy conference, which kicks off this week in Houston, should have plenty to say as oil prices soar.