Economists Warn a Summer of Fun Could Lead to Autumn Pain

Uncomfortably high inflation is set to persist, forcing central bankers to inflict more pain on consumers and businesses by repeatedly raising borrowing costs.

But economists point to unusual trends heading into the summer. Despite soaring prices, consumers are still splurging on expensive but fun experiences, from nights out to concerts.

Central bankers on both sides of the Atlantic are sounding alarm bells. The Bank of England raised interest rates 0.5 percentage points more than expected after failing to capture inflation, the highest among the G7 countries. “If we don’t raise rates now, it could get worse later,” said Governor Andrew Bailey, whose credibility has fallen to the ground.

Hours later, Fed Chairman Jay Powell told a Senate committee: saw a similar threat. “We are fully committed to keeping inflation under control,” he said, warning that at least one more rate hike was under consideration.

Economists have noticed something odd about inflation data. Consumers are splurging on expensive meals, covered flights, and expensive concert tickets. Some Swedish economists have even accused fans of inflating hotel and restaurant prices when they flocked to Sweden to watch Beyoncé’s world tour kick off last month.In the United States, others have seen similar effect Hotel prices are skyrocketing in cities where Taylor Swift performs.

“If you’re looking for the word, it’s fanflation,” Holger Schmieding, chief economist at Berenberg, told Dealbook. And the data suggests that this inflationary trend is not receding. “We are thinking of a fun summer,” he said.

When inflation stays high, consumers usually save money. When they do spend money, it is usually spent on so-called durable goods such as new washing machines, cars, and homes. The idea is that it is wise to front-load such purchases if you anticipate spending more in the near future. Economists and central bankers have seen some of that trend, but also see an increase in spending on discretionary items such as travel and nights out.

With the COVID-19 lockdowns now in the distant past, some have called the eagerness to indulge in the experience “revenge spending.” (It helps that many still have savings to tap in the pandemic, or wages have skyrocketed over the past year.) He points out that tickets and computer games are big problems.Drivers who support this country stubborn high inflation.

A fun summer outing could lead to tougher policy responses this fall. “The only way to get inflation down to 2% is to slow down demand and slow the economy in a more substantial way,” said Torsten Srock, chief economist at Apollo Global Management. told the Financial Times.

Five people aboard the Titan submersible are presumed dead. A US Coast Guard official said the Titanic appeared to have suffered a “catastrophic implosion” near the wreck site. Deep-sea experts, including director James Cameron, said the company had long been warned that Titan’s design was flawed.

Microsoft has warned it may abandon its bid for Activision Blizzard. Lawyers for the tech giant said at a court hearing that the company would pull out of the $70 billion deal if a federal judge granted the FTC an injunction to delay the deal’s completion. Microsoft’s team also called its top video game rival Sony a “chief of dissatisfaction” About the contract.

TikTok shakes leadership. The company’s chief operating officer, V. Pappas, has left the video app maker to appoint the belligerent former Disney head of media relations, Xenia Mucha, as head of communications. The move comes as TikTok faces pressure from the US government over questions about the data and privacy practices of its Chinese parent company, ByteDance.

Warren Buffett has donated billions more to charity. Oracle of Omaha $4.6 billion worth of donations Five of his Berkshire Hathaway holdings have been sold to organizations including the Gates Foundation and organizations run by his children. That brings Buffett’s total philanthropic giving to more than $51 billion, surpassing Buffett’s total. Total net worth in 2006when he first started making huge annual donations.

Indian Prime Minister Narendra Modi received a wealth of agreement and admiration from President Biden during his state visit to Washington this week. The long-sought defense pact and promise economic cooperation.

Mr. Modi has benefited from Mr. Biden’s efforts to strengthen ties with India, aimed at making India a counterweight to China and undermining its alliance with Russia. But all the visiting arrangements and pomp, including a speech to Congress and a lavish state dinner, may not have achieved what the White House hoped.

Some of the deals India got include: The long overdue purchase of a $3 billion Predator drone. A joint venture with General Electric, which produces next-generation jet engines in India. Commitments by Chipmakers Including Micron and Applied Materials invest in a factory there; other efforts in communications, artificial intelligence, etc.;

Surprisingly, the United States and India Resolved 6 conflicts PM Modi has agreed to lift retaliatory tariffs on a wide range of US exports and submitted it to the World Trade Organization.

US leaders warmly welcome Modi This is because the US government is trying to push India further into the US sphere of influence. “This partnership is one of the most important in the world,” Biden said at a press conference on Thursday.

American companies were heavily involved in the visit as companies look to expand further into India, a key manufacturing hub and growth market. Think about who ate stuffed portobello mushrooms and saffron risotto with Prime Minister Modi at last night’s state dinner.

  • Industry leaders such as Boeing’s Dave Calhoun, GE’s Larry Culp, and Lockheed Martin’s James Tyklett.

  • Tech giants including OpenAI’s Sam Altman, Apple’s Tim Cook, Micron’s Sanjay Mehrotra, Alphabet’s Sundar Pichai and AMD’s Lisa Su.

  • Financial leaders such as Citigroup’s Ken Chenault and Jane Fraser, Nasdaq’s Adena Friedman, Insight Venture Partners’ Devon Parekh and General Catalyst’s Hemant Taneja.

“The US and India need each other in technology,” Taneja told DealBook via email. “The United States needs to recognize the strength and needs of the Indian economy and create a feedback cycle to avoid the digital cold war it is currently facing with China. This has become even more pressing with the growing need around the world to adopt basic guardrails to ensure that the future of the human race is not dictated by the bad guys.”

But difficult questions about India were not answered. Biden and Modi have largely dismissed criticism of the Indian government’s crackdown on human rights and religious freedom. And Modi has not promised to back US efforts to curb China or cut ties with Russia. (Speaking of which, the Times investigation into how India benefits from the purchase and refining of Russian oil is a must-read.)

That may be as the White House and business leaders focus on India’s population of 1.4 billion, its growing appetite for consumer goods and its explosive growth as a manufacturing hub. “I have long believed that the relationship between the United States and India will be one of the defining relationships of the 21st century,” Biden said Thursday.

  • More India and US news: Brooklyn federal prosecutor and SEC reportedly arrested Adani Group ScrutinyThe conglomerate, run by Modi ally Gautam Adani, has been criticized by American short sellers, according to Bloomberg.

Justin WelbyThe Archbishop of Canterbury, a former oil industry executive, speaks out on the Church of England’s decision to sell stakes in major oil companies including Shell, BP and Exxon, citing frustration at not doing enough to tackle climate change. rice field. .

On Thursday, basketball fans were glued to the San Antonio Spurs’ selection of Victor Wenbanyama with the No. 1 pick in this year’s NBA Draft. Analysts have long expected the French seven-footer, perhaps the most anticipated draft pick since LeBron James, to be a game-changer.

However, the low-profile development also has the potential to rebuild the league. Qatar sovereign wealth fund First reported by Sportico, the Washington Wizards are in talks to buy a portion of the Washington Wizards’ parent company at a valuation of $4.05 billion.

Qatar is seeking a 5% stake in Monumental Sports and Entertainment. The company owns the Wizards (and the NHL’s Washington Capitals) and is the country’s first investment in a major US sports league. The oil-and-gas-rich nation has no say in how Wizards operates, but the money could help fund further expansion by Monumental.

The talks represent the next step in the NBA’s efforts to broaden the universe of league ownership, starting with private equity firms and expanding to other institutional investors such as family offices and sovereign wealth funds. . (It was also reported on Thursday that Omars, a large public pension fund in Ontario, was in talks to acquire a 20 percent stake in the company. Parent company of the Toronto Raptors of the NBA)

This is the latest move into the sport by Middle East funds. Their coffers are bloated with petroleum money and they are keen to build their soft power by acquiring global brands.

Qatar owns football club Paris Saint-Germain through a separate entity, but a member of the Qatar royal family has made a bid to join England’s Manchester United. And this month, Saudi Arabia helped broker a potential deal between the emerging Saudi-sponsored competition LIV Golf and the PGA Tour.

Critics say the flow of Middle Eastern wealth into sport is an effort by the Persian Gulf states to cover up accusations of human rights abuses against them. Still, sports leagues have so far shown little inclination to refuse funding.

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