The Economist - USA (2022-01-15)

TheEconomistJanuary15th 2022 7
The world this week Business

America’sannualrateof
inflationjumped to 7% in
December, its highest level
since June 1982. Several factors
are sustaining rising prices,
including a tighter labour
market. The unemployment
rate dropped to 3.9% at the end
of 2021; average hourly wages
rose by almost 5%. Jerome
Powell, chairman of the Feder­
al Reserve, this week described
inflation as a “severe threat” to
the economy, and reiterated
his commitment that the Fed
is ready to increase interest
rates, and at a fast pace if need
be. “It’s a long road to normal
from where we are,” he said.

The imftold emerging econo-
miesto prepare for the Fed’s
policy tightening, warning
that faster rate increases could
unsettle global markets, and
may lead to capital outflows
and currency depreciation in
those countries. 

The euro zone’sannual
inflation rate crept up to 5%
last month, another record
high for the currency bloc.
Energy prices were again the
main factor. Wholesale
natural­gas prices surged in
December, and were up again
this week, in a market that is
acutely sensitive to fluctua­
tions in gas supplies from
Russia, which provides about
half of the eu’s gas imports. 

Argentina’scentral bank
raised its key interest rate from
38% to 40%. In December the
imfsuggested Argentina’s
“appropriate” monetary policy
would be to lift interest rates
above inflation, which is run­
ning at an annual rate of 51%. 

Take-Two Interactive, the
company behind console
games such as “Grand Theft

Auto”and“RedDeadRedemp­

tion”,agreedtobuyZynga, a

pioneerinmobilegamingthat

isbestknownfortitlessuchas

“FarmVille”and“MafiaWars”,

ina dealworth$12.7bn.

Afinancialincentive

Citigroupwasreportedly

preparingtofire,bytheendof

January,employeeswhohave

notbeenvaccinatedagainst

covid­19 (unless they are

exempt). Around 90% of the

bank’s staff in America have

been jabbed. That number is

expected to go up soon. 

Car salesrose in China last

year for the first time since

2017, driven by sales of electric

and plug­in hybrid vehicles,

which were up by 170%. New­

energy vehicles made up 15%

of overall passenger­car sales.

America’s National Labour

Relations Board said that a new

vote for workers at an Amazon

warehouse in Alabama on

whether to unionise will begin

on February 4th and last two

months. The retailer is ada­

mantly opposed to letting the

unions in. A vote at the Ala­

bama facility last year, which

was seen as a crucial test for

supporters of unionisation,

resulted in a resounding no,

but amid claims of worker

intimidationthenlrbdecided

thereshouldbea re­run.In

DecemberAmazonreachedan

agreementwiththenlrbto

makeit easierforitsemploy­

eestoorganise.

Despitetheeasingoftravel

restrictionsinthelatterhalfof

2021,Heathrowairportsaid

thatitspassengernumbers

werelowerlastyearthanin

2020,whenlockdownswere

first rolled out. Flights to Asia,

where some borders remain

shut, were down by 40%. The

emergence of Omicron in

December led to a wave of

cancellations. 

The government of India

stepped in to rescue Vodafone

Idea, the country’s third­

largest mobile provider. The

company has lost tens of mil­

lions of subscribers in a price

war that started when low­cost

Jio entered the market in 2016.

The rescue plan will leave the

state as Vodafone Idea’s biggest

shareholder with a stake of

36%, and dilute the holdings of

its other big investors, Voda­

fone Group, a British company,

and Aditya Birla, an Indian

conglomerate. 

Storms and floods caused

substantially higher losses for

insurers in 2021, the industry’s

fourth­costliest year ever for

naturaldisasters, according

toMunichRe.Assetsworth

$280bnweredestroyedaround

theworld,almosthalfofthat

suminAmerica.HurricaneIda

resultedin$65bn­worthof

overalllosses,thefloodingin

Germany $54bn,winterstorms

andfrostsintheUnitedStates

$30.1bn,floodsinChina’s

Henanprovince$16.5bnand

anearthquakeinJapan$7.7bn.

The sentencing of Elizabeth

Holmes, recently convicted for

fraud at Theranos, will take

place in September. The delay

is linked to “ongoing proceed­

ings in a related matter”,

according to a court filing.

Corporatepurposestatement

Unilever, which has pushed

the mantra of environmental­

ism and sustainability more

than most, came in for some

withering criticism from an

investor. Pointing to the poor

performance of the conglom­

erate’s stock, Fundsmith, an

investment firm based in

London, said Unilever was

“obsessed” with displaying its

credentials. Referring to one of

its best­known brands, Fund­

smith observed that a “compa­

ny which feels it has to define

the purpose of Hellmann’s

mayonnaise has in our view

clearly lost the plot.” 

United States

Consumer prices

% increase on a year earlier

Source: Refinitiv Datastream

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