The United States has imposed 50% tariffs on Canadian products valued at approximately $20 billion. In retaliation, Canada has imposed tariffs of up to 50% on about 700 U.S. products valued at approximately $20 billion, marking the beginning of a new trade war.—reuters.com Questions What is a tariff? How important is the United States–Canada trading … Continue reading A New Trade War
Category: Eye On
The 25% Tariff on Cars
The 25% Tariff on Cars In a Proclamation, “Adjusting Imports of Automobiles and Automobile Parts into the United States” issued on March 26, 2025, President Donald Trump announced the imposition of a 25 percent tariff on imported cars and auto parts to be effective from April 2, 2025. During a call with the CEOs of … Continue reading The 25% Tariff on Cars
U.K. and Japan Fell into Recessions at the End of Last Year
U.K. real GDP shrank by 1.4% in the fourth quarter of 2023 following a 0.3% fall in the quarter before. Japan also had two consecutive quarters of shrinking real GDP—3.3% in the third quarter and 0.4% in the fourth. U.S. real GDP grew 3.3% in the fourth quarter.—Investopedia, February 16, 2024. What is a recession? … Continue reading U.K. and Japan Fell into Recessions at the End of Last Year
History’s Inflation Lessons
IMF economists Anil Ari, Carlos Mulas-Granados, Lev Ratnovski, and Wei Zhao and Victor Mylonas of Tilburg University, explored 111 inflation shocks between 1973 and 2014. Use the links to read this important study. Here is a summary of what they found. Sources: Anil Ari, Lev Ratnovski, History’s Inflation Lessons, International Monetary Fund, December 2023, and … Continue reading History’s Inflation Lessons
Job Growth Twice As Strong As Expected In January
The U.S. added 353,000 jobs in January, almost double the 185,000 economists expected, as the economy walks the tightrope of maintaining a strong labor market while simultaneously bringing down inflation to a palatable level. The unemployment rate stayed flat at 3.7 percent.—Forbes, February 2, 2024 Why did the unemployment rate stay flat when employment increased? … Continue reading Job Growth Twice As Strong As Expected In January
De Beers Makes Sharp Cuts to Diamond Prices After Sales Grind to Near Halt
During the pandemic, the demand for diamond jewellery boomed, but demand quickly faded as social restriction eased. Many diamond jewellery sellers were left with excess stock that they had bought at high prices. In January 2024, De Beers cut prices by about 10 per cent across the board and up to 25 percent for larger … Continue reading De Beers Makes Sharp Cuts to Diamond Prices After Sales Grind to Near Halt
Federal Judge Blocks JetBlue’s $3.8 Billion Acquisition of Spirit Airlines
In January 2024 , a federal judge blocked JetBlue Airways $3.8 billion deal to buy Spirit Airlines, rejecting a merger that he said would hamper competition and lead to higher fares. The ruling marks a victory for the U.S. Department of Justice, which stopped the JetBlue and Spirit deal from going ahead. The Data: Figure … Continue reading Federal Judge Blocks JetBlue’s $3.8 Billion Acquisition of Spirit Airlines
The Fed’s Interest Rate Toolkit
Federal Reserve (the Fed) Chair Jerome Powell describes the Fed’s interest rate tools as follows: “The Federal Reserve sets two overnight interest rates: the interest rate paid on banks' reserve balances and the rate on our reverse repurchase agreements. We use these two administered rates to keep a market-determined rate, the federal funds rate, within … Continue reading The Fed’s Interest Rate Toolkit
Cheerios Maker General Mills Cuts Sales As Price Hikes Hammer Demand
Price hikes, undertaken to offset steep input costs, primarily labor costs, have pushed consumers to buy smaller pack sizes for pantry staples and pet food, as well as opt for cheaper private-label alternatives.—Reuters, December 20, 2023 In this post, we look at the price hike that consumers face and use the model of demand and … Continue reading Cheerios Maker General Mills Cuts Sales As Price Hikes Hammer Demand
Silicon Valley Bank Shut Down
When the business day ended on March 9, 2023, Silicon Valley Bank had cash payment obligations that exceeded its cash reserves by close to $1 billion. The following morning, depositors attempted to withdraw $42 billion, a quarter of the bank’s total deposits. SVB couldn’t get the cash to pay its depositors and the Federal Deposit … Continue reading Silicon Valley Bank Shut Down