How are you? (January 15-21)
The US is reaching its debt ceiling
The United States hit its $31.4 trillion borrowing ceiling on Thursday, setting the stage for a bitter fiscal battle in Congress over raising the cap. Treasury Secretary Janet L. Yellen said the government would take “extraordinary measures” at least until early June to continue paying its bills. Democrats and the White House, as well as forecasters and economists, have warned that the nation risks a financial crisis and other dire economic scenarios if lawmakers don’t raise the limit before the Treasury Department exhausts its ability to buy more time. But Republicans have said they will not raise the loan limit again unless President Biden agrees to major cuts in federal spending.
“Samcoins” and the last days of FTX
As the government continues to build a case against the founder of the cryptocurrency exchange FTX, Sam Bankman-Fried, more details about the operation of the exchange are emerging. Rivals said Mr Bankman-Fried often promoted digital currencies known as “Samcoins”. Mr. Bankman-Fried would use his influence to persuade people to buy large quantities of the coins and artificially inflate their value, in order to make his crypto trading company, Alameda Research, look healthier than it actually was. (Mr Bankman-Fried has denied allegations that he attempted to manipulate the cryptocurrency markets.) Also, documents obtained by The New York Times show that FTX executives expressed concern about the use of client funds in the weeks leading up to the collapse from the company .
More layoffs in Big Tech
Two of the tech industry’s biggest players announced last week that they would cut thousands of jobs. Microsoft said on Wednesday it would lay off about 10,000 employees, and Alphabet, Google’s parent company, said on Friday it would lay off 12,000 employees. Across the tech industry, employers are retreating after several years of frenetic hiring to cope with the pandemic-fueled surge in online services. According to Layoffs.fyi, which tracks job losses in the industry, nearly 200,000 tech workers have lost their jobs since the start of 2022. Even the big players in the industry have been affected: Apple is the only major company that has yet to announce significant cuts. Satya Nadella, CEO of Microsoft, said last week at the World Economic Forum meeting in Davos, Switzerland, that “Frankly, we in the technology industry, too, are going to have to become efficient.”
Understand the US debt ceiling
What is the debt ceiling? The debt ceiling, also known as the debt limit, is a limit on the total amount of money the federal government can borrow through U.S. Treasury bills, such as bills and savings bonds, to meet its financial obligations. Because the United States runs budget deficits, it has to borrow huge sums of money to pay its bills.
What’s next? (January 22-28)
First estimates of economic growth
The Bureau of Economic Analysis will release its first estimates of economic growth in the United States in the fourth quarter of 2022 on Thursday. The gross domestic product report is likely to show that economic output, adjusted for inflation, will grow at an annual rate of 1.5 percent. increased. percent in the quarter, according to forecasters’ predictions. That would mean a slowdown compared to the 3.2 percent in the third quarter. The Federal Reserve’s campaign to contain inflation by raising interest rates is taking its toll on the economy, especially the housing market. While consumer spending has slowed, the economy has shown surprising resilience after contracting in the first half of last year.
