I'm Chris Anstey, a senior editor for economic policy in Boston, and today we're looking at a boom in US entrepreneurial spirits. Send us feedback and tips to ecodaily@bloomberg.net or get in touch on X, the social media platform formerly known as Twitter, via @economics. And if you aren't yet signed up to receive this newsletter, you can do so here. - China's central bank said it would increase funding support for the private sector.
- No amount of power and prosperity can stop the irritation of getting judged for your borrowing habits, as the world's biggest economy just experienced.
- Washington was once abuzz with the idea of a digital dollar, but enthusiasm faded as people began to hash out the details.
The US job market has proven far more resilient than most thought possible in the face of the Federal Reserve's most powerful monetary-tightening campaign since the 1980s. So much so that for 14 straight months US nonfarm payroll increases beat the median estimate among the scores of economists Bloomberg surveys, until the streak came to an end in June. The chart below from Oxford Economics illustrates the consistent outperformance of pre-Covid trends: Friday's July release will show whether undershooting is now a trend. But barring any shock crash in employment, the jobless rate will almost certainly be lower than the 4.1% rate that economists, as of a year ago, had figured would be the prevailing rate by now. The highest among the 67 estimates in Bloomberg's survey for July is 3.7%. One of the underlying sources of strength may be a dramatic increase in entrepreneurial spirits seen since the pandemic struck, as Enda Curran reports here. Read More: Slowing US Wage Growth to Set Stage for End of Fed Tightening An explosion of online resources make it easier than ever for would-be entrepreneurs to get on their feet these days. And the upheaval of dealing with all the stresses and unprecedented conditions of the Covid crisis left many people more willing to take a plunge. "People want freedom," says Karen Jenkins, an independent management consultant in South Carolina. "They want to take ownership of their lives and are willing to take more risks."
The numbers tell the story: More than 5 million new business applications were filed in 2022, a 42% increase from pre-pandemic levels. The increased digitalization of the US economy has also helped. Setting up an e-commerce operation used to require hiring developers and coders, which would typically take months and thousands of dollars. A decade ago, small-business owners might have needed "an MBA to figure things out, but you can now pretty much get 99% of that content on YouTube for free," says Thomas Rhodes, a partner in Rhodes Cos., a South Carolina provider of school graduation mementos. These days, "you can have one in 15 minutes" as a multitude of websites offer such services. Of course, plenty of small enterprises — the backbone of the job market — fail, too. The constriction in credit and increased costs of inputs are a headwind. But the increased willingness to embrace risk has the potential to bolster US innovation and productivity. "The US economy was already the most competitive and dynamic economy in the world, and the level of entrepreneurship and innovation has increased further during the pandemic," said Torsten Slok, chief economist at Apollo Global Management.
- German factory orders jumped the most in three years, a sign that Europe's largest economy is stabilizing.
- Australia's central bank revised down its estimate for economic growth and sees inflation back inside its 2-3% target at the end of 2025.
- Egypt unexpectedly resumed its cycle of monetary tightening, seeking to tame inflation that's running at an all-time high.
- Bank of England Governor Andrew Bailey said it's too soon for the UK to declare victory in the battle against inflation.
- Shipping giant Maersk lowered its estimate for global container trade, seeing no major signs of a recovery this year.
Underlying inflation in the euro zone has probably peaked, even though its exact level remains difficult to determine, according to the European Central Bank. The recent easing is mainly driven by non-energy industrial goods, the ECB wrote in a prerelease of its economic bulletin published on Friday, adding that a decline for services appears to have started too. At the same time, it said that domestic price pressures are becoming more prominent, echoing the Governing Council's conclusions last week. (Read the full story here.) ECB Chief Economist Philip Lane acknowledged that core price pressures are difficult to gauge. "Conceptually we are very focused on underlying inflation, but it's more work than normal to work out where that is," he said. Read more reactions on X |
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