Aurelia Butler

WASHINGTON (Reuters) – U.S. consumer sentiment slumped to its lowest level in nearly 11 years in early May as worries about inflation persisted, but household spending remains underpinned by a strong labor market and massive savings, which should keep the economy expanding.The University of Michigan’s survey on Friday showed the deterioration in sentiment, which some economists said pushed it into recessionary territory, was across all demographics, as well as geographical and political affiliation. Gasoline prices and the stock market have a heavy weighting in the survey. Gasoline prices resumed their upward trend this month, setting an average record high of $4.432 per gallon on Friday, according to AAA. Fears that the Federal Reserve will have to aggressively tighten monetary policy to bring down inflation have unleashed a massive equities sell-off on Wall Street.”But confidence has been a poor guide to consumption growth in recent years, so we would not read too much into that signal,” said Michael Pearce, a senior U.S. economist at Capital Economics in New York. “Just because consumers resent paying higher prices and are suffering limited availability doesn’t mean they aren’t still making those purchases.” The University of Michigan’s preliminary consumer sentiment index tumbled 9.4% to 59.1 early this month, the lowest reading since August 2011. Economists polled by Reuters had forecast the index dipping to 64. The sharp decline is in stark contrast with the Conference Board’s consumer confidence survey, whose index remains well above the COVID-19 pandemic lows.The Conference Board survey places more emphasis on the labor market, which is generating jobs at a brisk clip. Wages are also rising as employers scramble to fill a record 11.5 million job openings as of the end of March.The University of Michigan survey’s gauge of current economic conditions dropped 8.4% to 63.6. That was the lowest reading since 2013, and 36% of consumers attributed their negative assessment to inflation. Its measure of consumer expectations declined 9.9% to 56.3. Consumers viewed buying conditions for long-lasting manufactured goods as the worst since the survey started tracking the series in 1978. Economists were unfazed, noting that consumers were sitting on at least $2 trillion in excess savings accumulated during the pandemic. “But consumer spending keeps rising, and with savings high, household debt low and the jobs market strong, that spending should continue until the economy falters,” said Robert Frick, corporate economist with Navy Federal Credit Union in Vienna, Virginia.Even as consumers stressed about high prices, long-term inflation expectations appeared to be well anchored. The survey’s one-year inflation expectations were at 5.4% for the third straight month. Its five-year inflation expectations were unchanged at 3.0% for the fourth consecutive month.Stocks on Wall Street rebounded after a tumultuous week, while the dollar fell against a basket of currencies. U.S. Treasury yields rose. INFLATION LIKELY PEAKEDThere have been worries that high inflation and the Fed’s interest rate hikes, which started in March, could abruptly slow growth or even tip the economy into recession. The economy contracted in the first quarter under the weight of a record trade deficit, but domestic demand remained solid.Though inflation is likely to remain elevated, signs are growing that price pressures have peaked. A separate report from the Labor Department showed import prices were unexpectedly flat in April as a decline in the cost of petroleum offset gains in food and other products. Import prices had surged 2.9% in March.Economists had forecast import prices, which exclude tariffs, would climb 0.6%. In the 12 months through April, import prices rose 12.0% after accelerating 13.0% in the year through March. Government data this week showed monthly consumer prices increased at the slowest pace in eight months, while the gain in producer prices was the smallest since last September. With oil prices drifting higher in May, monthly import, consumer and producer prices are likely to pick up.Annual inflation rates are expected to continue edging lower, though likely to stay above the Fed’s 2% target. The deceleration is mostly the result of last year’s big increases dropping out of the calculation. The U.S. central bank last week raised its policy interest rate by half a percentage point, the biggest hike in 22 years, and said it would begin trimming its bond holdings next month. Imported fuel prices dropped 2.4% last month after soaring 17.3% in March. Petroleum prices declined 2.9%, while the cost of imported food increased 0.9%. Prices of imported capital goods rose 0.4%. The cost of imported consumer goods excluding motor vehicles was unchanged. Prices of imported motor vehicles and parts climbed 0.3%. Excluding fuel and food, import prices rose 0.4%. These so-called core import prices advanced 1.3% in March. They increased 6.9% on a year-on-year basis in April. Some of the slowdown in the monthly core import price gains reflect the dollar’s strength against the currencies of the United States’ main trade partners. The greenback has gained about 2.65% on a trade-weighted basis since the Fed started raising interest rates.”Past appreciation in the U.S. dollar will also put some downward pressure on import prices,” said Ryan Sweet, a senior economist at Moody’s (NYSE:MCO) Analytics in West Chester, Pennsylvania. More

BOGOTA (Reuters) – Colombia’s economy could have grown by 7.5% in the first quarter of 2022 versus the year-earlier period, mainly boosted by domestic consumption, though this will begin to moderate amid inflationary pressures, a Reuters poll revealed on Friday. Estimates from 13 analysts for economic growth fluctuated between 6% and 8.30% in the three months ended March 31. If growth is in line with the poll’s median forecast of 7.5%, Latin America’s fourth-largest economy will have expanded at a slower rate than in the prior quarter ending Dec. 31, when growth hit 10.8%. “The good dynamics of domestic demand, the high terms of trade and expansionary monetary policy could have contributed to growth during the first three months of 2022,” David Cubides, director of economic research at stock brokerage Alianza, said. “However, looking ahead to the following quarters, the rise in inflation, tighter financial conditions abroad and the increase in the monetary policy rate would lead growth to gradually moderate,” he added. The analysts also forecast that the Andean country’s gross domestic product will expand by 5.25% this year, before growth slows to 3% in 2023.Last year Colombia’s economy grew by a historic 10.6%, versus a weak comparative period in 2020. The forecast cooling is partly explained by Colombia’s central bank opting to hike its benchmark interest rate, which it has raised by a total of 425 basis points since September last year, to 6%, its highest level since May 2017. The interest rate rises come as a move to tackle runaway inflation, which hit 9.23% in the 12 months to April, which is far from the bank’s target of 3%.An average of analysts’ estimates forecasts the central bank will raise interest rates up to 8.5% by the end of this year. More

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen will meet with Polish Prime Minister Mateusz Morawiecki on Monday to discuss how Russia’s invasion of Ukraine affects Poland’s economy as part of a week-long trip that also will take her to Brussels and a G7 finance leaders meeting in Germany.While in Warsaw, Yellen will “express her gratitude for the generosity Poland has shown in welcoming refugees” and will discuss the rising threat of food insecurity and a global minimum tax deal that will raise critical revenues, the U.S. Treasury Department said in a statement.Yellen on Monday also will meet with Polish Finance Minister Magdalena Rzeczkowska and National Bank of Poland Governor Adam Glapinski, as well as U.S. Ambassador to Poland Mark Brzezinski. The Treasury said throughout her meetings, Yellen will discuss the Russian invasion’s impact on Poland’s economy, particularly on inflation, and on its fiscal policy and supply chains.Yellen also will visit facilities for Ukrainian refugees, including the World Central Kitchen, which is providing meals for refugees and highlight the Treasury Department’s ongoing efforts to address food security challenges arising from Russia’s invasion and blocked Ukrainian grain and exports.On Tuesday in Brussels, Yellen will meet with European Commission President Ursula von der Leyen and U.S. Ambassador to the European Union Mark Gitenstein, the Treasury said.”These meetings will focus on the impact of Russia’s war against Ukraine, including European energy security and Russian energy imports, Ukraine’s economic assistance needs, and on the implementation of the global tax agreement,” the Treasury said.Yellen also will deliver remarks to the Brussels Economic Forum 2022 on the war’s impact on the global economic outlook and the future of multilateral.At the G7 finance ministers and central bank governors meeting in Bonn, Germany, Treasury said Yellen will work to advance the global recovery and discuss steps to increase economic pressure on Russia to end its invasion.The G7 is made up of closely allied wealthy industrial democracies: Canada, Britain, France, Germany, Italy, Japan and the United States. More

Good evening,One important thing to remember about our supposedly “post-Covid world” is that it is, as yet, far from being post-Covid.Reports from China illustrate the point, with the government announcing that it will strictly limit its citizens going abroad. This is part of increasing official efforts to combat a coronavirus outbreak that has led to weeks of city lockdowns.At the same time, President Xi Jinping prioritising the elimination of the virus is coming under pressure as a result of the economic strain it is causing. For example, China’s main financial centre Shanghai recently imposed restrictions on non-government food deliveries in the city.Xi’s zero-Covid strategy threatens to crush economic growth and pile pressure on hard-pressed businesses, with the president this year seeking an unprecedented third term in office.North Korea, meanwhile, has confirmed its first coronavirus cases and death since the pandemic’s beginning and imposed nationwide lockdowns. The country’s chief ally China has, despite its own problems, promised North Korean leader Kim Jong Un its “full support and assistance”.North Korea is one of only two countries that have not yet initiated a Covid-19 vaccination programme. The other is Eritrea.In Europe, Russia’s war in Ukraine has led to questions of who is going to pay for the damage. At the same time, farmers in Ukraine — some of the world’s most important agricultural producers — are accusing the Russian army of plundering their land.What are the chances, however, of the war being brought to a negotiated end? Jonathan Powell, chief executive of charity Inter Mediate, which works to resolve armed conflicts around the world, says that those chances must be kept alive.He criticises, for example, UK government ministers for “outcompeting each other to expand Ukrainian war aims with aggressive rhetoric”. The risk of a wider catastrophe must be managed by offering Russian president Vladimir Putin what, in ancient times, the Chinese general and philosopher Sun Tzu called a “golden bridge” to retreat over, he adds.US president Joe Biden has a reputation for being a first class negotiator, stretching far back in his political career to the Salt talks of the 1970s. At this dangerous moment, however, he finds himself not in a position to take the advice of former US secretary of state Henry Kissinger that it is unwise to be facing more than one major enemy at a time.While it was Kissinger who attracted China into friendly relations with the US a half-century ago, Biden finds himself assailed by a diversity of enemies, among them the relatively realigned Russia and China.As the FT’s Ed Luce writes, reflecting the views of CIA chief William Burns, the US is facing a new global realignment. All this, plus — in common with much of the world — inflation, too.Taming fast rising prices, says US Federal Reserve chief Jay Powell, will “include some pain”. This may well mean global recession. Tough times indeed.Latest newsElon Musk puts $44bn Twitter deal ‘on hold’Ukraine claims 200th Russian jet shot downUK sanctions spread net to Putin’s family and associatesFor up-to-the-minute news updates, visit our live blogNeed to know: the economyEuropean gas prices have soared after Russia imposed sanctions on EU energy companies. Moscow’s move reinforces Putin’s willingness to use energy as a weapon against the EU.Norway’s oil fund has denounced “corporate greed” in executive pay. The world’s largest sovereign wealth fund has voted against remuneration packages at Intel, Apple, IBM and General Electric.Latest for the UK and EuropeAllianz, Europe’s largest insurance company by market value, says it is highly likely to leave Russia. The move could hit the German company’s profits by as much as €500mn.The controversy at Monte dei Paschi continues after executives at the world’s oldest bank were acquitted of helping hide more than €2bn in losses. The overturning of the convictions of 13 bankers in one of the biggest financial scandals in Italian history has drawn shocked reactions from local politicians and campaigners.UK attitudes today are positive about high levels of immigration. With a growing sense that borders are under control, the appetite for hostile policies is shrinking, writes the FT’s John Burn-Murdoch.Global latestBaltic states have hailed Finland and Sweden’s expected accession to Nato. The move will dramatically improve the security of Estonia, Latvia and Lithuania, say foreign ministers.Diplomats face “one last chance” to revive Iran’s nuclear deal, writes former Iranian nuclear negotiator Seyed Hossein Mousavian.The cost of living crisis in Australia has raised the prospect of opposition leader Anthony Albanese becoming prime minister. Local alarm has also been sparked after a decision by the Solomon Islands, which is about 2,000km to the north-east of Australia, to sign a security pact with China.Need to know: businessThe sexist comments levelled at Aviva chief Amanda Blanc at the company’s annual shareholder meeting should not be seen as a one-off, writes Helen Thomas. Rare is the woman who has risen through the ranks in business without a few stories about feeling belittled, patronised, overlooked or excluded on account of her gender, she says.As gloomy economic talk threatens to revive memories of the 1970s, rock group Pink Floyd are not complaining. They are selling their back catalogue for about $500mn, with Warner Music and KKR-backed BMG among those interested.Science round upAs if to keep things in perspective and remind us that we live on a small piece of rock in the limitless universe, astronomers have unveiled the first images of the closest black hole to Earth. They hope to glean new information from it about mysterious celestial bodies.There are clues but few answers to the childhood hepatitis mystery, writes Anjana Ahuja. Adenoviruses, Covid-19 and exposure to dogs have all been blamed for new cases around the world.Get the latest worldwide picture with our vaccine trackerAnd finally . . . 

An Andy Warhol silkscreen sold for $195mn, just the week before a football shirt worn by Maradona fetched over £7mn © AP

Here are some reflections about the recent sale at auction of the shirt worn by Diego Maradona, when his footballing genius defeated England in the 1986 World Cup. As one who witnessed the event, I didn’t see which England player exchanged shirts at the end of the game with the Argentine star. But it was Steve Hodge who showed the enterprise to approach Maradona and ask for the shirt. Hodge played just three times for England and jobbed his way around numerous football clubs with a final brief spell at pride of London’s East End, Leyton Orient. The shirt at auction made more than £7mn. A nice bit of pension. Well done, Steve. More