The week in business: Industrial action sweeps Britain

What’s new? (Dec 4-10)

Workers’ frustrations with wages

A wave of strikes and other industrial action began in September in Britain, largely sparked by worker frustration that wages were not keeping up with soaring inflation. This wave is intensifying now, with hundreds of people leaving their jobs in the past week. About 600 workers at a non-profit housing organization went on a two-week strike, 200 employees at a brewery went on strike and several dozen workers at a pickle factory walked off the job. (That could mean shortages of beer and pickles during the holidays, according to the union that represents these workers.) But that may be just the beginning: Workers in all sectors, including health care and transport, are about to go on strike and industrial action is planned. every day until Christmas. The central issue in most cases remains pay, particularly in the public sector as the British government under Prime Minister Rishi Sunak seeks to make drastic budget cuts. Mr Sunak said he was working on “strong new laws” against such strikes.

Relief at the gas pump

Traveling this winter – if you’re traveling by car – is likely to be much more affordable than it was over the summer, when U.S. gas prices hit a record national average of $5 a day. gallon. Last week, the national average gas price fell to $3.33 a gallon, according to AAA, almost exactly where prices were a year ago, when the national average was $3.34. Prices were sent lower by a drop in global energy demand and falling oil prices just in time for the holiday season. It’s a rare bright spot for consumers who are still experiencing uncomfortably high prices elsewhere in the economy, even as inflation begins to loosen its grip. But all that could change, as China eases its Covid restrictions and oil supplies tighten due to the new Russian oil embargo.

China relaxes “zero Covid”

China’s economy has suffered from strict ‘zero Covid’ policies that have shuttered businesses and triggered record youth unemployment rates. But as the country begins to roll back those measures in response to widespread protests, economic uncertainty remains. Analysts say consumer spending is unlikely to rebound quickly after being stifled for so long, and the country is facing a housing crash as well as weakening demand from trading partners that could be approaching recessions. China is also preparing for a surge in Covid cases as its restrictions are lifted. Still, optimistic investors hoping for an economic recovery lifted stock markets in Hong Kong and Shanghai.

And after? (11-17 December)

High hopes for a more moderate Fed

For many months in a row, Federal Reserve officials have disappointed — and scared off — investors eager to see the central bank slow the pace of its aggressive interest rate increases. But they may be pleased with the outcome of Wednesday’s Fed meeting, as Fed Chairman Jerome H. Powell signaled that policymakers would begin to moderate their approach. Analysts are expecting a half-percentage-point increase, compared with increases of three-quarters of a percentage point in the past four meetings. As the Fed tried to calm demand and slow the economy, it was aware that it could go too far and tip the country into a recession. “My colleagues and I don’t want to squeeze too much,” Mr Powell said last month.

New inflation data

Ahead of Wednesday’s Fed meeting, officials will get one final piece of data to complete the picture of the economy’s direction. Tuesday’s consumer price index is expected to show inflation continuing to moderate, with analysts predicting prices in November rose 7.3% from 7.7% in October. Last month’s report was an encouraging development for both U.S. consumers and Fed officials, who had begun to worry that inflation was taking root and feeding on itself in a wage spiral. -price, in which high prices lead to increases in wages which then lead to even higher increases. prices.

Congressional Hearings on FTX

Fallen crypto mogul Sam Bankman-Fried has agreed to appear before the House Financial Services Committee this week to answer questions from lawmakers about the staggering implosion of the crypto exchange he founded, FTX. . But even though he said he was ready to give evidence, promising to shed light on topics such as what led to the accident and how his own failures contributed, Mr Bankman-Fried dampened expectations warning that he “wouldn’t be as helpfulas he would like to be. He also dodged similar requests from the Senate Banking Committee to testify, and the chairman of that panel, Sen. Sherrod Brown, Democrat of Ohio, told Mr. Bankman-Fried he was prepared to compel him to testify by subpoena if he did not. answer. These hearings represent just a fraction of the range of investigations the fledgling crypto founder faces around the world as investigators try to learn more about the disappearance of billions of dollars of client money.

What else?

Morgan Stanley is laying off 2% of its global workforce. On Wednesday, Ramesh Balwani, Elizabeth Holmes’ No. 2 at bankrupt blood startup Theranos, was sentenced to nearly 13 years in prison for fraud. And Janet L. Yellen became the first female Treasury Secretary to have her signature on US banknotes, which were unveiled on Thursday.