Economy

News that inflation has hit a 40-year high is another blunt reminder of just how much the president is asking voters to sacrifice in an election year.WASHINGTON — The price of gasoline has risen every day since Russia invaded Ukraine. Record-high inflation in the United States is causing sticker shock. And now, President Biden is blaming the pinch on Vladimir V. Putin, the Russian president.“There will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war,” Mr. Biden said in a statement on Thursday.The president is betting that Americans are willing to endure the financial pain that comes from waging an economic war with Russia. But Thursday’s news that inflation has hit a 40-year high is another blunt reminder of just how much he is asking voters to sacrifice in an election year.With the midterm elections eight months away, the urgent political question for Mr. Biden is whether the American people are prepared to go along with blaming the Russians, and not him, for rising costs. Experts have said that prices have risen over the past year primarily because strong demand, stoked in part by government relief spending, outstripped pandemic-disrupted supply. Russia’s invasion of Ukraine is just beginning to compound the problem.“It’s certainly a challenge, but it’s not one that we really have a choice about making,” Josh Schwerin, a Democratic strategist, said about imposing financial penalties on Russia. “There’s broad support for standing up to Putin and putting these sanctions in place, including those that will increase the cost of gas.”Mr. Biden’s approval ratings have been pulled down for months by frustration among many Americans about inflation and the pandemic. But recent surveys of voter attitudes suggest that many Democrats and Republicans support the administration’s sanctions on Russia, even if the penalties are bad for their pocketbooks.In an Economist/YouGov poll released this week, 66 percent of Americans said they approved of sanctions aimed at punishing Russia for its invasion. In a Wall Street Journal survey, 79 percent of voters supported a ban on Russian oil even if it meant that energy prices would rise as a result.Those findings are good news for Mr. Biden, who has been the subject of Republican attacks for failing to keep inflation in check. Republicans have blamed him for the rise in gas prices even as they supported his decision to impose a ban on Russian oil. Officials familiar with his decision said Mr. Biden had struggled for days over whether to cut off Russian oil amid fears of accelerating the already rapid rise in the price of gasoline.Ronna McDaniel, the chairwoman of the Republican National Committee, accused the Biden administration on Thursday of refusing to take responsibility for rising costs.“Prices continue to skyrocket under Biden and Democrats’ reckless policies,” Ms. McDaniel said in a statement. “Biden’s attempt to deflect blame is an insult to every American and small-business owner struggling to afford the cost of everyday goods.”Jen Psaki, the White House press secretary, told reporters on Thursday that there was “no question that inflation may be higher for the next few months than it would have been” without the Russian invasion of Ukraine, and that the administration’s focus would be to mitigate the long-term effects of rising costs.Democratic strategists pointed out that much of the criticism of Mr. Biden from Republicans is that he has not done even more to confront Russia. The president has repeatedly said he is unwilling to send American troops into Ukraine, and the United States declined this week to take fighter jets from Poland and station them at an American air base for eventual use in Ukraine.Each decision Mr. Biden is making, the strategists from his party argue, is rooted in strategic decision making, not political calculation.Russia-Ukraine War: Key Things to KnowCard 1 of 4On the ground. More

The war in Ukraine and the associated sanctions that countries around the world have imposed on Russia are likely to cause a downgrade of the International Monetary Fund’s global economic growth forecast, Kristalina Georgieva, the I.M.F.’s managing director, said on Thursday.The Ukraine crisis is another shock to a world economy that was just emerging from the coronavirus pandemic, and it has been compounding global supply chain disruptions and inflation headwinds that have been cause for concern. The full impact on the world economy remains uncertain, I.M.F. officials said, and will depend on the outcome of the war and how long sanctions remain.“We just got through a crisis like no other with the pandemic, and we are now in an even more shocking territory,” Ms. Georgieva told reporters. “The unthinkable happened — we have a war in Europe.”In January, the I.M.F. reduced its estimated global growth rate for 2022 to 4.4 percent, from the 4.9 percent it had projected last year, as a result of slowdowns in the United States and China.Ms. Georgieva said the most significant threat to the world economy was greater inflation coming from higher commodity prices as countries shifted consumption away from Russian oil and gas. This, in turn, could eat into consumer spending. Worsening financial conditions and business confidence also have the potential to weigh on growth.“The surging prices for energy and other commodities — corn, metals, inputs for fertilizers, semiconductors — they are coming, in many countries, on top of already high inflation and are causing grave concern in so many places around the world,” Ms. Georgieva said.The I.M.F. is working to develop a plan to provide more assistance for Ukraine’s eventual rebuilding effort, but said it was too soon to know the extent of the country’s needs. This week, the fund’s executive board approved $1.4 billion in emergency financing.Ukraine’s top economic adviser said earlier on Thursday that Russia had already destroyed $100 billion worth of the country’s assets.The fund is also assessing the impact of the sanctions on the economy of Russia. Much of its financial sector and its central bank has been blacklisted.“The Russian economy is contracting, and the recession in Russia is going to be deep,” Ms. Georgieva said. “That is already clear.”She said Russia was unlikely to have access to its emergency currency reserves because of sanctions.The I.M.F. has halted operations and programs in Russia. Ms. Georgieva said there had been no discussions about ending Russia’s membership in the fund. More

Essaid is a veteran of about three decades in the investment banking industry, has principally worked across the media and telecoms sectors, according the memo. Essaid, who was previously with the Credit Suisse (SIX:CSGN) group, will lead the M&A team with Gary Posternack.A Barclays spokesman confirmed the contents of the memo.Barclay’s global M&A business had a record year in 2021, exceeding its prior all-time-high revenues by more than 25%, the memo said. Global M&A volumes topped $5 trillion for the first time ever in 2021, comfortably eclipsing the previous record of $4.55 trillion set in 2007, according to Dealogic data. Investment bankers expect the dealmaking frenzy to continue well into next year.Last month, Barclays said its investment bank delivered its strongest ever profit of 5.8 billion pounds, thanks to a 34% increase in fees from advising on deals such as mergers and fundraising. More

(Reuters) – A surge in U.S. retail gasoline prices to record highs has prompted governors and lawmakers in several states to consider slashing their fuel taxes and to ramp up pressure on the federal government to do the same.The push reflects worries in state governments that the rapid spike in fuel costs could hurt motorists and chill local economies, and that federal efforts to keep prices down so far have been insufficient.”Today I am announcing that, at this time of global uncertainty, we are working on an emergency suspension of the gas tax to help with the pain at the pump,” Maryland Governor Larry Hogan, a Republican, said on Thursday in a Tweet. The state has a 36.9 cent per gallon gas tax.Georgia Governor Brian Kemp, a Republican, said earlier this week he was working with legislators to suspend the state’s roughly 29 cent per gallon tax, citing “a total failure of leadership in Washington” to curb fuel prices.Governors and lawmakers in California, Florida, Maine, Michigan, New York, Tennessee and elsewhere are making similar moves. Meanwhile, a coalition of six Democratic governors – from Colorado, Michigan, Minnesota, Pennsylvania, New Mexico, and Wisconsin – sent a letter this week to U.S. congressional leaders, asking them to support a bill to lift the nation’s 18.4 cent per gallon federal tax.“Money saved at the pump translates into dollars back in consumers’ pockets for groceries, childcare, rent, and more,” they wrote.U.S. consumer prices surged in February, culminating in the largest annual increase in 40 years, and inflation is poised to accelerate further in the months ahead.Pump prices struck $4.38 on average nationwide on Thursday, according to motorist group AAA, driven in part by rising global demand and the disruption of Russian oil supplies since Moscow’s invasion of Ukraine.The administration of U.S. President Joe Biden, which announced a ban on Russian oil imports this week, has attempted to curb rising consumer energy prices by orchestrating the release of crude oil stockpiles from emergency reserves in concert with other consumer nations.The White House has said it is studying additional moves to blunt the impact on U.S. fuel consumers, and administration officials have called on domestic and foreign energy producers to drill more oil quickly to stabilize the market.Taxes, however, make up a significant chunk of prices at the pumps. They include the 18.4 cent federal gas tax, along with state and local levies that can vary broadly from below 10 cents to nearly 60 cents per gallon.State and local governments collected a combined $52 billion in revenue from motor fuel taxes in 2019, according to the Urban Institute. Most of that money is diverted to transportation spending, including for road, bus and metro systems.Florida lawmakers agreed on Wednesday to suspend the state’s roughly 27-cent gasoline tax starting in October.Michigan’s legislature, meanwhile, announced its plans to vote on a six-month suspension of the state’s 27.2 cent a gallon fuel tax. Michigan’s Senate Majority leader Mike Shirkey, a Republican, estimated that the move would save drivers about $750 million. In New York, state lawmakers from both parties are calling for a suspension of the state’s 48 cent per gallon gas tax. Governor Kathy Hochul said Monday she is speaking with her budget office about the potential budget impact.California Governor Gavin Newsom, a Democrat, meanwhile, said Tuesday that his administration was developing a proposal to offer Californians a tax rebate to help cover the rising costs of fuel. More

WASHINGTON (Reuters) – The war in Ukraine and massive sanctions against Russia have triggered a contraction in global trade, sending food and energy prices sharply higher and forcing the International Monetary Fund to lower its global growth forecast next month, IMF Managing Director Kristalina Georgieva said on Thursday.The global lender had already lowered its economic forecasts for the United States, China and the global economy in January, citing risks linked to the COVID-19 pandemic, rising inflation, supply disruptions and U.S. monetary tightening.At the time, it projected global economic growth would reach 4.4% this year, a downgrade of 0.5 percentage point.Georgieva told reporters the unprecedented sanctions imposed on Russia over its invasion of Ukraine had caused an abrupt contraction of the Russian economy and it faced a “deep recession” this year. She said a default by Russia on its debt was no longer seen as “improbable.”The chief economist of the World Bank told Reuters this week that both Russia and Belarus were squarely in “default territory.”Georgieva gave no detailed forecast for Russia or the global economy. The IMF is due to release its updated World Economic Outlook in mid-April.In a separate interview with CNBC, Georgieva said the fund still expected “a positive trajectory” for the world economy, but said the duration of the war would play a crucial role in determining growth and the future of multilateral cooperation.The IMF’s executive board on Wednesday approved $1.4 billion in emergency financing for Ukraine to help meet urgent spending needs and mitigate the economic impact of the invasion.Georgieva told reporters on Thursday that the IMF was preparing to present a “funding mechanism” that would allow others to help Ukraine, but gave no details.She told CNBC that she expected mounting pressure on Russia to end the war in Ukraine given the spillover effects it is having on economies around the world, including China.She said she had spoken on Wednesday with a Chinese central bank official who expressed great concern about the loss of human life and suffering in Ukraine.”I wouldn’t be surprised if we actually see a bit more pressure on Russia to stop the war, because of the spillover it has on … all economies,” she said.Georgieva told reporters that China had more policy space to cushion the impact of the war, but it might find it hard to achieve its target growth rate of 5.5%.She said the IMF had no program or policy relations with Russia at this point and its Moscow office was not operating. Members have condemned the war, which Russia calls a special military operation, but there has been no discussion about ending Russia’s membership in the global lender.Georgieva added that it was “highly, highly, highly improbable” that Russia would be able to find a central bank to exchange its IMF Special Drawing Rights into currencies.She said the surge in inflation triggered by the war meant monetary tightening already underway in many countries would “go faster and go further” than expected.It would also have serious consequences for Latin America, the Caribbean, some Middle Eastern countries like Egypt and many countries in Africa. More

The IRS also will create a new 700-person “surge team” to process new returns at its campuses in Kansas City, Austin, Texas and Ogden, Utah, the Treasury said.As of Feb. 5 the National Taxpayer Advocate’s office said the IRS had a backlog of some 23.5 million tax returns that still needed some form of manual processing, including 13.5 million from individuals, 7.2 million from businesses and 2.8 million from unspecified filers.The backlog is due partly to delayed filing seasons over the past two years due to the COVID-19 pandemic, and the Treasury also blamed a decade of IRS budget cuts that has left the agency with a workforce the same size as in 1970 despite a 60% increase in the U.S. population and a more complex American economy. The IRS said it will hold job fairs at the Kansas City, Austin and Ogden locations to fill 5,000 open positions and 5,000 new positions.The Treasury said the agency also is requiring mandatory overtime work for more than 6,000 employees processing original returns, and overtime pay also is available for some 10,000 other employees processing amended returns and taxpayer correspondence. More

Argentina agreed on a 30-month extended fund facility (EFF) with the IMF late last week, replacing a failed 2018 program, which pushes repayments back until 2026-2034. It needs approval from the IMF board and Argentina’s Congress.”This is a matter for the Argentineans, but if they asked for my opinion, I would say that they accept the payment extension,” Lopez Obrador told a regular news conference.Defaulting on its debt would not “help Argentina or the rest of the world’s economies,” said Lopez Obrador, an ally of Argentine President Alberto Fernandez.”Honorable people know you received a bankrupt country because of your predecessor’s irresponsible decision for Argentina to take on unlimited debt in complicity with foreign governments and financial organizations,” Lopez Obrador said, reading from a letter addressed to Fernandez and dated March 5. More

The currency has lost as much as 50% of its value to the dollar this year, crippled by international sanctions after Russia’s invasion of Ukraine last month.The rouble closed at 118.5 per dollar in Moscow or up 1.3% from the close on Wednesday, still down 36.5% from mid February. It hit a record intraday low of 121.5275 on the Moscow Exchange used by major Russian banks.Against the euro the rouble closed at 125 in Moscow, up 1.6% for the session, after hitting a record intraday low of 132.4175. It is down 32.4% year to date.In international markets bids were indicated at 127.75 to the dollar and 140.4 to the euro, slightly stronger on the day.”We’ve had a bit of a reversal today, but that needs to be put in the context of everything going on and volumes are so much lighter that we don’t read too much into that,” said Christian Lawrence, senior market strategist at Rabobank.The local stock market remains shut, as does bond trading.Talks in Turkey on Thursday between top Ukrainian and Russian diplomats Dmytro Kuleba and Sergei Lavrov yielded little progress.Kuleba said there had been no promise of a ceasefire to allow aid to reach civilians while Lavrov accused the West of inflaming the situation by providing weapons to Ukraine.The impact of economic sanctions on Russia has weighed heavily on the value of Russian assets in global financial markets.”There is a pretty wide spread between (Moscow Exchange) pricing and what you would see in the West, so that gives you very little confidence about the level,” TD Securities’ Head of Emerging Markets Strategy Cristian Maggio said. There were also more global sanctions and restrictions on Thursday.Britain imposed sanctions on another list of wealthy Russians including Chelsea Football Club owner Roman Abramovich, while the Bank for International Settlements – the main global central bank umbrella group – suspended Russia’s central bank from all its meetings and services.Markets are also keeping a close eye on debt repayments due, with the looming spectre of Russia defaulting on $40 billion of external bonds. It would be its first major such default since the years following the 1917 Bolshevik revolution.Finance Minister Anton Siluanov said Russia will service its external obligations in roubles if foreign exchange accounts of the central bank and the government remain blocked by the western sanctions, according to Russia’s TASS news agency.But 5-year credit default swaps, the cost to insure exposure to Russia’s sovereign debt, touched a record high of 3,176 basis points.IFR reported that Russian state-owned oil company Rosneft paid back a bond in U.S. dollars on Wednesday while Norilsk Nickel, the world’s biggest nickel and palladium producer, also made a payment on a U.S. dollar bond, according to sources.Moscow must make $107 million in coupon payments on two hard-currency sovereign bonds on March 16. More