US ECONOMY & POLITICS

Americans Reported Strong Personal Finances Late Last Year, Fed Finds – Wall Street Journal, 5/23/2022

• Americans reported the highest level of financial well-being last fall than at any point in almost a decade, according to a Federal Reserve survey, bolstering households ahead of growing economic uncertainty.
• The survey, conducted in October and November of last year and released Monday, is a sign that households entered 2022 in good shape, ahead of the disruptions caused by the Omicron wave of Covid-19 and the highest inflation in four decades.
• Overall, 78% of adults said they were either doing OK or living comfortably, up from 75% in 2020 and the highest share since the survey began in 2013.
• Stronger family finances have made it easier for people to afford an unexpected expense.
• About 68% of adults said they would be able to cover a hypothetical $400 expense using cash or putting the expense on a credit card, up from 50% in 2013.
• Parents with children in the home saw a significant increase in their financial well-being last year.
• Three out of four parents in the survey said they were doing at least OK financially, up from 67% in 2020.

Small Businesses Lose Confidence in U.S. Economy – Wall Street Journal, 5/23/2022

• Small businesses are flashing warning signs on the U.S. economy as inflation, supply-chain snarls, a shortage of workers and rising interest rates darken the outlook for entrepreneurs.
• Fifty-seven percent of small-business owners expect economic conditions in the U.S. to worsen in the next year, up from 42% in April and equal to the all-time low recorded in April 2020, according to a survey of more than 600 small businesses conducted in May for The Wall Street Journal by Vistage Worldwide Inc., a business-coaching and peer-advisory firm.
• Despite rising prices, the portion of small businesses that expects revenue to increase in the coming year fell to 61%, down from 79% in May 2020.
• Twelve percent of businesses surveyed said they expected economic conditions to improve and another 28% said they would stay about the same.

Biden Kicks Off Economic Group Linking U.S., Asia – Wall Street Journal, 5/23/2022

• President Biden and leaders from a dozen countries in the Indo-Pacific region on Monday endorsed a new economic platform meant to counter China’s influence through cooperation on global issues such as supply chains, clean energy and digital rules.
• The Indo-Pacific Economic Framework marks the Biden administration’s most ambitious attempt to build economic ties with Asian nations after the U.S. under then-President Donald Trump pulled out of the Trans-Pacific Partnership in 2017.
• But unlike the TPP, which went into effect in late 2018 without U.S. participation, the new group doesn’t include plans to negotiate lower tariffs or broad steps to clear away barriers to market access.
• The White House said the nations in the new framework collectively represent about 40% of global gross domestic product.
• U.S. allies Japan and South Korea joined the group as well as seven nations in the 10-nation Association of Southeast Asian Nations: Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. In addition, India, Australia and New Zealand joined.

Biden Says U.S. Would Intervene Militarily if China Invaded Taiwan – Wall Street Journal, 5/23/2022

• President Biden said the U.S. would respond militarily to defend Taiwan if China tries to take it by force, sparking uncertainty over whether the U.S. was moving away from its longstanding policy of strategic ambiguity and prompting a clarification from the White House.
• Mr. Biden’s comments were met with anger from Beijing and praise from Taipei. They were also part of a pattern: In August and October of last year, the president answered questions on Taiwan by suggesting a break in U.S. policy toward the democratically self-ruled island, only to have aides jump in to say nothing had changed.
• The president was asked if the U.S. would get involved militarily in response to a Chinese invasion of Taiwan after declining to send American troops to Ukraine to fight Russia’s invasion.
• “Yes. That’s the commitment we made,” he said.

As Biden Zeroes In on Student-Loan Forgiveness Decision, Voter Anxiety Grows – Wall Street Journal, 5/23/2022

• President Biden in the coming weeks is expected to decide whether to put forward a student-loan forgiveness plan aimed in part at motivating young voters to cast ballots in November’s elections.
• At the University of North Carolina, and in neighborhoods across the surrounding Research Triangle area, there are signs that whatever approach he takes could leave swaths of voters dissatisfied.
• Students and recent graduates with heavy debt loads worry that Mr. Biden’s plan will be too weak, after the president and his advisers signaled they are considering relief that could be far less than the $50,000-per-borrower sought by prominent Democrats.
• At the same time, voters who tightened their belts to pay off their loans or didn’t go to college say it would be unfair to make taxpayers subsidize school debt for Americans whose education can boost their earning power.
• Mr. Biden is likely to face political blowback from the kind of voters that Democrats need to turn out in November if they hope to limit midterm election losses that have been predicted by pollsters.
• A moratorium on student-loan payments that started at the onset of the Covid-19 pandemic is set to expire at the end of August just as the thick of the campaign season gets under way.

EUROPE & WORLD

Lagarde Signals End to ECB’s Negative Interest Rates Experiment – Wall Street Journal, 5/23/2022

• The European Central Bank is likely to increase its key interest rate, currently negative, to zero by September and could continue raising rates after that, President Christine Lagarde said, signaling the end of the ECB’s eight-year experiment with negative rates amid record-high inflation and concerns about the weakness of the euro currency.
• The policy shift, outlined in an ECB blog post on Monday, follows robust actions by the Federal Reserve and other major central banks to phase out easy-money policies as inflation heats up around the globe.
• It is part of a sharp pivot by the eurozone central bank, which had until recently signaled it would increase interest rates only gradually, diverging from the Fed.
• “With the inflation outlook having shifted notably upward compared with the prepandemic period, it is appropriate for nominal variables to adjust—and that includes interest rates,” Ms. Lagarde wrote.
• It is the first time that Ms. Lagarde has signaled such an aggressive interest-rate trajectory. She had previously indicated that the ECB might start increasing interest rates in July and that any further increases would be gradual.

Cost-of-Living Crisis is Holding Back UK Economy, BOE Chief Warns – Bloomberg, 5/23/2022

• Bank of England Governor Andrew Bailey said the cost-of-living crisis is holding back the UK economy and that policy makers will take that into account in gaging how much to raise interest rates.
• Appearing on a conference panel on Monday, Bailey also pushed back against recent political criticism of the BOE, saying that its response to the pandemic wasn’t responsible for the “painful” rise in inflation the UK is experiencing.
• The remarks highlight the conflicting forces the BOE is having to balance as it aims both to rein in inflation, which has leaped to a 40-year high, and keep the economy recovering from the pandemic.

Didi Says It Will Proceed With Delisting From NYSE – Wall Street Journal, 5/23/2022

• Chinese ride-hailing giant Didi Global said it would proceed with its plan to delist from the New York Stock Exchange, after securing approval from its shareholders at a Monday meeting.
• The move will allow the company to move forward after a long period of disruption during which Beijing tightened its grip on the country’s tech companies and their troves of data. Didi had told shareholders it needed to delist before it can resolve a continuing cybersecurity probe in China.
• Some 96% of shareholders who cast votes at the meeting favored the delisting proposal, the company said.
• A May 11 filing with the U.S. Securities and Exchange Commission said that Didi’s founders Will Cheng and Jean Liu had indicated they intended to vote in favor on a one-vote-per-share basis.

Factmonster – TODAY in HISTORY

• Christopher Columbus died in Spain. (1506)
• Charles Lindbergh began the first solo nonstop transatlantic flight, departing from Long Island aboard the Spirit of Saint Louis. (1927)
• Amelia Earhart took off from Newfoundland to become the first woman to fly solo across the Atlantic. (1932)
• A mob attacked a busload of “freedom riders” in Montgomery, Ala., setting the bus on fire. (1961)
• In a 6-3 vote, the Supreme Court rejected a Colorado measure banning laws that protect homosexuals from discrimination. (1996)
• East Timor became the what was then the world’s newest nation. (2002)