AT Business Confidence DA - Michigan 7 2023 BFHGR

Aff Answers
General Econ Stuff
2AC --- Uniq ---Interest rate
Mortgage rates prove interest is down.
Anna Bahney, 6-22-2023, a writer for CNN covering investments and real estate, focusing on investments in traditional, alternative, real estate and cryptocurrency markets. "Mortgage rates tick down for the third week in a row," CNN, https://www.cnn.com/2023/06/22/homes/mortgage-rates-june-22/index.html ---ML
Mortgage rates ticked lower for the third week in a row as investors absorbed strong signals from the housing industry and last week’s pause on rate hikes by the Federal Reserve after 10 consecutive hikes.
The 30-year fixed-rate mortgage averaged 6.67% in the week ending June 22, down from 6.69% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.81%.
Mortgage rates have remained over 5% for all but one week during the past year and even went as high as 7.08%, last reached in November, but have been coming down since the end of May.
Interest rates are high now—hikes will increase from tight labor markets and sharp inflation.
Smialek citing Powell 6-23 [Jeanna Smialek, reporter for the New York Times citing Jerome Powell, chair of the Federal Reserve, American attorney and investment banker, also serves as Chairman of the Federal Open Market Committee, the System's principal monetary policymaking body, served as an Assistant Secretary and as Under Secretary of the U.S. Department of the Treasury under President George H.W. Bush, with responsibility for policy on financial institutions, the Treasury debt market, and related areas; 6/21/23, “Fed Chair Sees ‘Long Way to Go’ on Inflation Fight”, The New York Times, https://www.nytimes.com/2023/06/21/business/economy/powell-inflation-federal-reserve.html DOA 6/23/23] nmui
Jerome H. Powell, the chair of the Federal Reserve, told House lawmakers that the United States remains a “long way” away from low and stable inflation even 15 months into the central bank’s campaign to cool the economy and wrestle down rapid price increases.
Mr. Powell is testifying before the House Financial Services Committee. He told lawmakers that the labor market remains very tight and that inflation — while it has come down notably from its peak last summer — is still too fast. In light of that, the Fed could raise interest rates even higher than their current level of just above 5 percent.
“Inflation has moderated somewhat since the middle of last year,” Mr. Powell said, speaking from prepared remarks. “Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go.”
Fed officials left interest rates unchanged last week following 10 straight increases. But central bankers have been adamant that the decision to hit pause did not amount to a declaration of victory over inflation. Instead, moving more gradually will give policymakers time to assess how well higher rates are working to slow the economy as they try to strike a delicate balance of doing enough to cool growth without doing too much.
“Given how far we’ve come, it may make sense to move rates higher, but to do so at a more moderate pace,” Mr. Powell said in response to a lawmaker’s question, explaining that it was like moving from a highway to more local roads. “As you get closer to your destination, as you try to find that destination, you slow down even further.”
Central bankers forecast in their fresh economic projections last week that they will probably raise interest rates to around 5.6 percent this year, which would amount to two more quarter-point rate increases. Mr. Powell said during his news conference following the decision last week that the Fed’s July 25-26 meeting will be “live,” meaning that a rate increase is possible at that gathering.
Investors only expect the Fed to make one more rate increase before holding them steady through the rest of the year, based on market pricing, though significant uncertainty remains around that forecast — markets place some odds on higher rates, and some odds on a rate cut before the end of 2023.
The Fed will need to assess how much the economy is slowing, and whether that is likely to be enough to return inflation to their 2 percent goal over time. Overall growth and the housing market have cooled since 2021, but consumption and even home prices have shown recent signs of renewed strength and hiring has remained rapid.
“We have been seeing the effects of our policy tightening on demand in the most interest rate–sensitive sectors of the economy,” Mr. Powell said. “It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation."
Interest rates are projected to increase to keep up with rising inflation
Brown 6-21-23 (Courtenay Brown, 6-21-2023, Courtenay Brown is an economics reporter at Axios. "Federal Reserve chair Powell: Interest rates will increase "somewhat further" in 2023," Axios, https://www.axios.com/2023/06/21/powell-interest-rates-congress// AP)
Federal Reserve Chair Jerome Powell told lawmakers on Wednesday there is still "a long way to go" to cool inflation and interest rates are expected to rise further this year.
Why it matters: Powell began two days of appearances before Congress, where he is facing questions about the rate hiking campaign that the Fed paused as inflation continues to runs hot, as well as the impact of higher rates on the economy and labor market.
What they're saying: "[I]nflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go," Powell said in his opening statement at a House Financial Services Committee hearing.
Reducing inflation will likely require slower economic growth and "some softening of labor market conditions," he added.
Catch up quick: For the first time in 15 months, the Fed did not raise interest rates at the conclusion of its policy meeting last week.
However, new projections released alongside that decision showed officials expect two more rate increases by the end of 2023 — moves that could come as soon as next month.
Between the lines: In his prepared remarks, Powell acknowledged that rates could rise "somewhat further." But he said that Fed officials "judged it prudent" to keep rates steady last week so the central bank could assess how its previous moves are working through the economy.
He added: "The economy is facing headwinds from tighter credit conditions for households and businesses, which are likely to weigh on economic activity, hiring, and inflation," though the extent to which remains uncertain.
The Fed will make decisions about further rate increases "meeting by meeting," Powell said.
Of note: The Senate on Wednesday will also start confirmation hearings for Fed vice chair nominee Philip Jefferson and governor nominee Adriana Kugler, as well as a 14-year full term for Fed Governor Lisa Cook.
2AC --- Uniq --- Jobs down
Unemployment up.
Reuters, 6-22-2022, "U.S. jobless claims hold steady at 20-month high, current account gap widens," https://www.reuters.com/markets/us/us-jobless-claims-hold-steady-20-month-high-current-account-gap-widens-2023-06-22/ ---ML
June 22 (Reuters) - The number of people filing for state unemployment benefits for the first time held steady at a 20-month high last week, remaining elevated for a third straight week in what may be an early indication of a softening labor market in the face of the Federal Reserve's aggressive credit tightening.
Data from the Bureau of Labor Statistics on Thursday showed 264,000 new claims were filed for jobless benefits on a seasonally adjusted basis in the week ended June 17, unchanged from the prior week's upwardly revised level, which is the highest level of initial claims activity since October 2021.
The median expectation among economists polled by Reuters was for 260,000 new claims.
Meanwhile, the ranks of all those continuing to receive benefits beyond the first week fell to 1.759 million in the week ended June 10 from a revised 1.772 million the week before. The latest reading compared with a median economists' estimate of 1.782 million so-called continued claims.
The government also reported that the U.S. current account deficit - the broadest measure of the flow of goods, services and investments into and out of the country - widened modestly in the first three months of 2023, snapping three quarters of narrowing.
The Commerce Department said the current account gap grew to $219.3 billion in the first quarter from a revised $216.2 billion in the fourth quarter of 2022. Economists in a Reuters poll had estimated it widening to $217.5 billion.
Unemployment is up.
Alicia Wallace, 6-2-2023, a senior writer for CNN Business covering the economy and topics such as cannabis. "The US economy added 339,000 jobs last month, soaring past expectations — again," CNN, https://www.cnn.com/2023/06/02/economy/may-jobs-report-final/index.html ---ML
However, the sizable jump in the unemployment rate was also a surprise, rising to 3.7% from 3.4%. Economists polled by Refinitiv had expected it to edge up by only a percentage point.
The surge in the jobless rate — the largest monthly leap since the early days of the pandemic and, before that, November 2011 — was driven by people who lost their jobs permanently and those who completed a temporary job, BLS data shows. The labor force participation rate held steady in May at 62.6%, while the prime age participation rate, for workers between the ages of 25 and 54, rose to 83.4%, which is the highest since January 2007.
[Graph omitted]
That data also shows that it may be taking longer for people to find work: The number of people unemployed for 15 to 26 weeks jumped by 179,000 to 858,000.
Health, manufacturing, food, retail, and education are down.
Stephanie Ferguson, 6-9-2023, Director, Global Employment Policy & Special Initiatives, U.S. Chamber of Commerce "Understanding America’s Labor Shortage: The Most Impacted Industries," US Chamber of Commerce, https://www.uschamber.com/workforce/understanding-americas-labor-shortage-the-most-impacted-industries ---ML
A closer look at labor force participation
To further understand shifts in the labor force, it is interesting to look at labor force participation across different industries. Some have a shortage of labor, while others have a surplus of workers.
For example, durable goods manufacturing, wholesale and retail trade, and education and health services have a labor shortage—these industries have more unfilled job openings than unemployed workers with experience in their respective industry. Even if every unemployed person with experience in the durable goods manufacturing industry were employed, the industry would fill 44% of the vacant jobs.
Conversely, in the construction industry, there is a labor surplus. There are more unemployed workers with experience in their respective industry than there are open jobs.
The manufacturing industry faced a major setback after losing roughly 1.4 million jobs at the onset of the pandemic. Since then, the industry has struggled to fill job vacancies. As of March 2023, there were 693,000 open manufacturing jobs.
2AC --- Uniq --- Growth Down
Growth is declining now—shortfalls in private inventory will cause recession.
Economist Intelligence Unit 5-23 [Economist Intelligence Unit, research and analysis division of the Economist Group, providing forecasting and advisory services through research and analysis, such as monthly country reports, five-year country economic forecasts, country risk service reports, and industry reports, 70 years’ experience in helping businesses, financial firms and governments; 5/23/23, “US GDP growth slows sharply in the first quarter”, EIU, https://www.eiu.com/n/us-gdp-growth-slows-sharply-in-the-first-quarter/ DOA 6/22/23] nmui
In the first quarter of 2023 US real GDP expanded at an annualised rate of 1.1%, according to the initial estimate from the Bureau of Economic Analysis—down significantly from 2.6% growth in the fourth quarter of 2022. However, the headline figure masks diverging trends; private consumption growth surged to 3.7% (annualised), up from just 1% in the final quarter of 2022, but this was largely offset by a steep decline in private inventory investment.
US economic data were mixed throughout the first quarter, suggesting that the US economy is at a turning point, coming out of a year of robust (but unsustainable) growth in 2022 and heading into a slowdown. These mixed signals complicate the task facing the Federal Reserve (Fed, the central bank) as it seeks to reduce still-high inflation without unnecessarily deepening the economic slowdown.
On the surface, robust private consumption in the first quarter suggests that the Fed has more work to do to dampen consumer demand, and therefore inflation. However, even this story was mixed: strong consumption growth was largely a January story, supported by a one-off surge in real personal incomes at the start of the year. This, in turn, pushed up real consumption expenditure by 1.4% month on month, reversing modest declines in November-December 2022. We do not expect this pace of growth to continue; real personal consumption fell month on month in February and remained flat in March.
The jump in consumption expenditure would have supported higher first-quarter GDP growth, but it was largely offset by a steep decline in private inventory investment. Inventory declines were the sharpest in wholesale trade (wholesalers have already been hit by softer demand in recent months, and may therefore be replenishing stocks at a slower rate) and in manufacturing. Activity in the manufacturing sector has already been slowing for several months; thus far, the impact on overall GDP has been masked by still-strong consumption, but we expect the two sectors to turn down in tandem from the second quarter. Fixed investment more broadly has declined since the second quarter of 2022, led by slowing activity in the housing sector.
We continue to expect a mild technical recession in the US, with two consecutive contractions in the second and third quarters. Falling personal consumption is expected to drive this downturn as the full weight of monetary tightening over the past year comes to bear. Manufacturing and fixed investment are only forecast to recover meaningfully around mid-2024, once interest rates start to fall. Softening consumption data make it more likely that the Fed will pause its tightening cycle after a 25-basis-point increase in May.
Growth decline will hit recession now—global trends prove.
The World Bank 1-23 [The World Bank, international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects, provides financing, policy advice, and technical assistance to governments of developing countries; 1/10/23, “Sharp, Long-lasting Slowdown to Hit Developing Countries Hard”, The World Bank, https://www.worldbank.org/en/news/press-release/2023/01/10/global-economic-prospects DOA 6/24/23] nmui
2023 global growth to slow to 1.7% from 3% expected six months ago
WASHINGTON, Jan. 10, 2023 — Global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine, according to the World Bank’s latest Global Economic Prospects report.
Given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession. This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.
The global economy is projected to grow by 1.7% in 2023 and 2.7% in 2024. The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95% of advanced economies and nearly 70% of emerging market and developing economies.
Over the next two years, per-capita income growth in emerging market and developing economies is projected to average 2.8%—a full percentage point lower than the 2010-2019 average. In Sub-Saharan Africa—which accounts for about 60% of the world’s extreme poor—growth in per capita income over 2023-24 is expected to average just 1.2%, a rate that could cause poverty rates to rise, not fall.
“The crisis facing development is intensifying as the global growth outlook deteriorates,” said World Bank Group President David Malpass. “Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates. Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty, and infrastructure and the increasing demands from climate change.”
Growth in advanced economies is projected to slow from 2.5% in 2022 to 0.5% in 2023. Over the past two decades, slowdowns of this scale have foreshadowed a global recession. In the United States, growth is forecast to fall to 0.5% in 2023—1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970. In 2023, euro-area growth is expected at zero percent—a downward revision of 1.9 percentage points. In China, growth is projected at 4.3% in 2023—0.9 percentage point below previous forecasts.
Excluding China, growth in emerging market and developing economies is expected to decelerate from 3.8% in 2022 to 2.7% in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financing conditions, and other domestic headwinds.
By the end of 2024, GDP levels in emerging and developing economies will be roughly 6% below levels expected before the pandemic. Although global inflation is expected to moderate, it will remain above pre-pandemic levels.
The report offers the first comprehensive assessment of the medium-term outlook for investment growth in emerging market and developing economies. Over the 2022-2024 period, gross investment in these economies is likely to grow by about 3.5% on average—less than half the rate that prevailed in the previous two decades. The report lays out a menu of options for policy makers to accelerate investment growth.
Projections show it’s declining---employment, labor force and wages.
CBO 2-23 [Congressional Budget Office, federal agency within the legislative branch of the United States government that provides budget and economic information to Congress, strictly nonpartisan; conducts objective, impartial analysis; and hires its employees solely on the basis of professional competence without regard to political affiliation; 2/10/23, “The Economic Outlook for 2023 to 2033 in 16 Charts”, Congressional Budget Office, https://www.cbo.gov/publication/58957#:~:text=The%20employment%20cost%20index%20for,and%203.3%20percent%20in%202027. DOA 6/24/23] nmui
Unemployment
Reflecting the expected slowdown in economic growth, the overall rate of unemployment is projected to rise from 3.6 percent in the fourth quarter of 2022 to 5.1 percent by the end of 2023, averaging 4.7 percent for 2023 as a whole. Thereafter, the unemployment rate is projected to decline gradually beginning in the second quarter of 2024, falling to 4.5 percent by the end of 2027.
Labor Force Participation
The rate of labor force participation is projected to remain roughly unchanged in 2023 at 62.2 percent. (That rate is the share of the civilian noninstitutionalized population age 16 or older that has jobs or that is available for work and is either seeking work or expecting to be recalled from a temporary layoff.) Thereafter, the labor

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