Following the ECB's decision to hold interest rates, President Christine Lagarde will hold a press conference. Despite leaving rates unchanged, the ECB has lowered its 2024 growth forecast to 0.6% (from 0.8%) and reduced its inflation projection to 2.3% (from 2.7%).
Layoffs have spiked, surpassing 2009 levels, driven by tech sector cuts. Finance and other industries have also witnessed substantial job losses. Despite the layoffs, unemployment rates remain low due to a favorable job market, with many workers finding new employment quickly. The trend is expected to persist as companies focus on cost reduction and technology adoption, altering staffing requirements.
Federal Reserve Chairman Jerome Powell testified to the Senate Banking Committee, reiterating his anticipation for potential interest rate cuts contingent on future incoming data. Emphasizing that inflation must show signs of decelerating towards the Fed's target, Powell noted that current evidence is insufficient. He also addressed monetary policy and the proposed Basel III bank capital regulations, facing questions in his last public appearance before the Fed's upcoming meeting in mid-March.
Two tax plans are emerging for the upcoming U.S. presidential election. Trump proposes extending the Tax Cuts and Jobs Act, including permanent cuts for individuals. Biden plans to extend these cuts for those earning less than $400,000, while increasing taxes for the wealthy and corporations. Both plans rely on the expiration of the Tax Cuts and Jobs Act provisions in 2025, which could result in higher taxes for most Americans if Congress does not act.
A New York bank's financial difficulties have caused customer withdrawals, but most deposits up to $250,000 are secure under FDIC coverage. Despite bank failures, the FDIC actively monitors banks and considers most regional banks stable. Small businesses should assess bank stability to protect their finances.
Investors aiming to avoid volatility by selling stocks during downturns may miss out on substantial gains. Historically, the stock market's returns concentrate in a few trading days over decades. Missing the top trading days, especially during volatile recessions, leads to reduced returns. It's difficult to predict market shifts, making timing the market a risky strategy. Long-term investment plans and consistency are recommended, with higher returns observed for investors who stay invested through volatile times.
The US job market expects continued growth in February, with 198,000 new jobs and a 3.7% unemployment rate. While slower than January, it reflects a healthy market. Employers remain cautious about rapid expansion to avoid inflation. Despite layoffs in tech, growth persists in other sectors. Skilled worker shortages continue in healthcare, engineering, and skilled trades. Wage growth is moderating slightly from January's pace.
China has significantly increased spending limits for foreign Alipay users, aiming to enhance payment convenience for tourists and promote mobile payment adoption. Without ID registration, tourists can now spend up to $2,000 annually, while those who register their ID have limits of up to $5,000 per transaction and $50,000 annually. The increase extends to foreign visitors using Alipay+ partner apps.
Federal Reserve Chair Jerome Powell has hinted at the possibility of lowering interest rates in the near future if inflation continues to ease. The Fed is nearing confidence that inflation is approaching their 2% target, and will consider rate cuts to prevent an economic downturn. Market expectations indicate the first cut may occur in June, with a total of 4 cuts anticipated by the end of 2024. However, Powell emphasized that the current policy stance remains appropriate until stronger indications of inflation decline are observed.
President Biden's proposal includes tax credits to enhance homeownership affordability for middle-class families. First-time buyers would receive $5,000 annually for two years, while families upgrading would be eligible for up to $10,000. However, experts express skepticism that these credits alone can address the underlying issues of high mortgage interest rates and insufficient affordable housing supply.
President Biden's State of the Union address emphasized the government's efforts to ease student debt burdens through Income-driven Repayment Plans and Public Service Loan Forgiveness. The Income-driven Repayment Plans have granted forgiveness to 930,000 borrowers, while Public Service Loan Forgiveness, now expanded, has benefited 790,000 public servants, resulting in a total of $138 billion in debt relief for nearly 4 million borrowers.
