WELCOME BACK TO SIX MORE WEEKS OF WINTER
Welcome back to a new edition of The Weekender… where Punxsutawney Phil saw his shadow on Groundhog Day, marking six more weeks of winter this year. Also—the Fed’s inflation fight continues, and the latest on the COVID-19 public health emergency order may be finally and officially expiring. Plus—a certain TikTok trend going around is attracting car thieves. And—Big Tech companies are having big layoffs… but will they regret it? These stories and more in the latest edition of The Weekender.
P.S. Strategic Elements is proud to announce Kim Kelzer has been named Executive Graphic and Multimedia Designer. Kim has made a big impact during her time at Strategic Elements and Kdence, and we are thrilled to see what she accomplishes in her new role. Learn more about Kim.
The Fed’s Inflation Fight Continues
The U.S. Federal Reserve’s primary focus heading into 2023 remains fighting stubborn by hiking interest rates. Fed Chairman Jerome Powell recognizes that inflation has slowed, and it may be a signal that they are near the end of its rate increases. Financial markets anticipate that the Fed will stop raising interest rates soon, and analysts want Powell to push back against these high hopes. On Wednesday, the policymakers raised their benchmark rate from 4.5% to 4.75%, its highest level in about 15 years. This move is likely to further increase borrowing rates for consumers and companies. Inflation has weakened since the fall, but as a result, the risks that the Fed’s rate hikes could send the economy into a recession, with job losses, are rising. A report came out Tuesday that showed wage growth slowed in the final three months of 2022 for a third straight quarter. This report could reassure Fed officials to consider suspending their rate hikes now that rising paychecks are less likely to fuel inflation. Some economists believe the Fed doesn’t need to push rates much higher as it would heighten the chance of a deep recession. Powell will not likely signal a pause in rate increases anytime soon out of concern that it would touch off rallies in stocks and bonds. However, investors expect them to stop at a range of 4.75% to 5% and to cut rates before the year is out. Read more in AP News.
The End of (What Feels Like) an Era for the COVID-19 Public Health Emergency
The COVID-19 public health emergency is on its way out. President Biden says the emergency order will expire come May 11. The order, renewed 13 times since January 2020, provides continued federal funding for free vaccines, testing, and treatment, and maintains relaxed Medicaid and Medicare coverage requirements. When the COVID-19 public health emergency ends, it shifts the responsibilities of treatments to individuals and their health insurance companies. Pfizer’s COVID-19 vaccine retail price is expected to quadruple from $30 per shot to between $110 and $130. Paxlovid, which has been shown to be nearly 90% effective in reducing the risk of severe COVID-19 disease, will also no longer be free. Special waivers for Medicaid and Medicare requirements will also end when the public health emergency expires. Close to 18 million people could be dropped from Medicaid, though many will qualify for other government programs or employer-sponsored health insurance. State Medicaid plans will continue to cover COVID-19 vaccines and tests ordered by a physician, but treatments and at-home testing may come with an out-of-pocket expense. Additional government funding for COVID-19 programs has already declined, and the federal funds given to uninsured Americans dried up in the Spring of 2022. The end of the emergency also means the end of Title 42, a seldom-used public health order that allows the government to override immigration law and send back migrants who enter the country illegally. The White House decided to give notice in advance to give time to Americans to transition and get things in order before the emergency expires. Read more at CNET.
TikTok Trend Blamed for Increasing Car Thefts
A social media challenge has inspired car thieves to target Hyundai and Kia vehicles by exposing a manufacturing defect that allows them to be hot-wired with a USB phone charger cord. The trend, while not new, has caused a spike in vehicle thefts since the onset of the pandemic. In Prince George’s County, Maryland, thefts of Hyundai and Kia vehicles accounted for nearly one-sixth of all thefts in 2022 and nearly half of all thefts in 2023. Dozens of lawsuits have been filed against Hyundai and Kai, prompting company officials to announce plans to address the security defect and fix the problem for the vehicle owners. In one class-action lawsuit filed in California, the complaint against the companies asserted that “Kia and Hyundai’s vehicles are so easy to steal, teenagers and children as young as 11 years old are stealing and joyriding cars, and posting their exploits on social media, including one TikTok video that has over 33 million views.” The videos show how inserting a USB cable into the steering column of some Kia and Hyundai vehicles allows people to start the cars without a key, in part because the vehicles lack immobilizing technology. Police departments across the country have been raising alarms over car thefts and providing tips on reducing them. In response to these thefts, Hyundai made engine immobilizer standard for all vehicles manufactured and plans to make a software update available beginning in March, free of cost. Kia will have a similar security software update available soon, and all 2022 models will have immobilizer technology included. Both manufacturers are working with select law enforcement agencies to provide steering wheel locks to Kia and Hyundai owners affected by the issue. Read more in The Washington Post.
Big Tech Making Bold Moves
Will 2023 be a rough year to work in tech? On average, every day in 2023 we’ve seen at least 1,600 laid-off tech employees. After only 15 days into 2023, 91 tech companies worldwide have cut 24,151 positions. This is not necessarily surprising; 154,256 tech workers felt the theoretical axe throughout 2022. What is surprising some observers is that tech companies believed the expanded pandemic e-commerce marketplace would remain as robust as it was during COVID-19’s peak after the quarantines ended and people returned to life as usual. The massive wave of layoffs appears to be fueled by tech’s “buyer’s remorse” from the pandemic hiring spree. While layoffs often reflect economic downturns, those experienced in the tech industry over the past year are increasingly viewed as the result of the businesses returning to operation levels they had prior to the inflated increase in remote work. As Meta, Salesforce, Stripe, Snap, Netflix, Oracle, and many others are reducing employee counts left and right, one thing has become abundantly clear: tech is essential to navigating the modern world, but the world no longer revolves around it. Read more in Bloomberg.
A Divided Congress Puts Police Brutality to the Back Burner
On January 7, 2023, a traffic stop in Memphis, Tennessee, left 29-year-old Tyre Nichols with severe injuries after officials say police officers beat and screamed profanities at him. Three days later, officials say Mr. Nichols died in the hospital as a direct result of the physical trauma incurred by the officers. In a disturbing video taken during the assault, Mr. Nichols can be heard calling for his mother. Today, the nation calls for justice. The number of victims of police brutality continues to rise, with Black Americans 2.9 times more likely to be killed by police than white Americans. This begs the question: where is Congress? While discussing the anniversary of the killing of George Floyd during his inaugural State of the Union in 2021, President Biden pledged to “get it done” within the following month. Two years later, nothing changed. Police reform negotiations on Capitol Hill are entrapped in the most common pitfall in Washington, D.C.: partisan divide. Unfortunately, this pushes the issue of police brutality to the back burner of legislative priorities, writing yet another page in the book of Congress failing to pass legislation despite broad agreement on the issue at hand. As Nichols’ family, community, and the entire country mourn his horrific and far-too-soon death, Dems and the GOP are rightfully forced to negotiate policing in America. It is too early to determine if anything of value emerges from discussions as Congress is divided with Democrats maintaining control of the Senate and Republicans controlling the House. Read more in AP News.
UK Being Put on Hold as Workers Go on Strike
An estimated half-million critical, public-sector workers are standing united against the United Kingdom government to strike against stagnant wages amid the country’s 10.5% inflation – the United Kingdom (U.K.)’s highest in 40 years. The protests, led in large part by the Trades Union Congress (TUC), are made up of teachers, healthcare workers, bus operators, civil servants, train drivers, postal workers, university staff, and border passport readers, among others. Strikes are implemented via strategically scheduled walkouts by massive swaths of employees as a protest to secure better pay amid a cost-of-living crisis. Action is expected to boil to a head this week, with estimates of 85% of all schools being fully or partially closed. Prime Minister Rishi Sunak, who has held the position since October 2022, said that the teacher strikes were wrong since the U.K. government has already given educators their biggest pay raise in 30 years. He argued increasing the wages of all public workers currently striking would result in raised taxes, greater government borrowing, and spending cuts for other publicly funded programs. According to a report by the International Monetary Fund, Britain’s economy will experience a stark contraction, falling behind Russia, which has been saddled with international economic sanctions following their self-proclaimed “special military operation” in Ukraine. This week, the aptly named “Walkout Wednesday” that happened on February 1 is expected to lead to an economic impact greater than any protest day facilitated by union members on this campaign to date. Walkout Wednesday will certainly be felt by the government as it will close schools, grind public transportation to a halt, and forcibly place the military on standby, to name a few outcomes. While these strikes have only incurred a 0.1% drop of the country’s expected GDP, they will likely lead to a serious political impact on the Sunak Administration. Read more in AP News.
- 2.9%: The percentage of global economic growth the International Monetary Fund projected for 2023. This projection is down from 3.4% from last year.
- 64%: The percentage of U.S. consumers who were living paycheck to paycheck as of the end of last year, which was up from 61% from the year before.
- 7,500: The number of migrants from Cuba, Nicaragua, and Haiti who have been approved to come to the United States under a program set up by the Biden administration.
- $3.1 million: The amount a rare Anthony van Dyck painting sold at auction for after the owner had originally bought it for $600. The piece was discovered in a farm shed but had been well preserved.
- 25 million: The number of people in the United States who have been under winter weather alerts, stretching from Texas to Illinois. It brings the risk of heavy precipitation and significant icing to the region.
- 95: The number of people who were killed in northwestern Pakistan Monday after a bomb explosion ripped through a mosque at a police compound. At least 80 others are being treated for their injuries.
- 226 million: The number of domestic trips China saw during the Lunar New Year holiday, which was celebrated January 21-27, 2023. It was a 74% surge from last year, after the government lifted all travel restrictions under its zero-COVID policy.
- $375 billion: The amount the first U.S. exchange-traded fund (ETF, now called the SPDR S&P 500 ETF Trust) is worth in assets. Like stocks, ETFs track the performance of companies in the S&P 500. The ETF sector, in total, had amassed $6.5 trillion in assets by the end of 2022.
— ESPN (@espn) February 1, 2023