What’s Up? (Feb. 20-26)
Whipsawing Markets
Russia’s full-scale invasion of Ukraine whipsawed global markets amid uncertainty over the conflict’s potential impact on inflation, the operations of multinational corporations, energy prices and the flow of energy to Europe. In recent years, Europe has received nearly 40 percent of its gas and more than a quarter of its oil from Russia. In addition, Ukraine and Russia together produce nearly a quarter of the world’s wheat, and Russia is a key supplier of other major commodities. The fallout from the conflict is likely to continue to push up inflation. That creates an economic pickle for the Federal Reserve and its plans to begin raising interest rates in March. Pulling back support for the economy may help reduce inflation, but it also could weigh on economic growth if consumers reduce their spending. Several Fed officials have signaled that they are unlikely to change course.
Back to the Office, Take Four
After Omicron delayed the latest round of back-to-office plans last year, companies are making another attempt to set return dates — for real, this time (they hope). Office occupancy rates across the country are creeping up after a January dip: Across 10 major cities earlier this month, it was an average of 31 percent of pre-Covid levels, up from 23 percent in early January, according to the security firm Kastle Systems. As more workers return to the office, the coronavirus protocols they encounter there will vary depending on their employer. Google announced last week that it was easing some of its restrictions, including the requirement that employees be tested weekly to enter its U.S. offices and that staff wear masks in most of its offices. The Times surveyed 500 top companies about their vaccine policies, and of the more than 100 that responded or made their plans public, 75 said that they would require shots for some employees. Some also said they would require booster shots or would require vaccination for some workers but not others.
U.S. Soccer Agrees to Equal Pay for Women
A six-year fight between U.S. Soccer and members of its national women’s team came to an end on Tuesday with a $24 million payment and a commitment by the organization to equalize pay between the women and men’s teams in all competitions. The settlement comes two years after a federal judge dismissed the players’ equal pay arguments. Most of the multibillion dollar payment will go to a group of several dozen current and former players as back pay. The pledge to equalize pay going forward is contingent upon the ratification of a new contract with the players’ union — and to make the deal work, the men’s players would have to agree to share millions of dollars in potential World Cup payments.
What’s Next? (Feb. 27-March 5)
Financial Penalties for Russia
Governments have responded to Russia’s invasion of Ukraine with punishing sanctions. Russia’s main development bank and its military bank were cut off from much of the financial system, making it tougher for Russia to raise money in foreign markets. Both the United States and European Union also cut off technological exports to Russia, which could hurt its ability to upgrade airplanes, electronics and ships. Two measures were noticeably absent from global sanctions: blocking Russia from SWIFT, a Belgian service that connects more than 11,000 financial institutions as they transfer money around the world, and interfering with its energy exports. Locking Russia out of SWIFT could make it more difficult for countries in Europe to buy energy from the country. Choking Russia’s energy business could push global energy prices even higher and hurt Europe as much as Russia.
New Jobs Numbers
New data released by the Department of Labor on Friday will show whether the job market continued its strong rebound in February after better-than-expected growth in January. The January report was seen by economists as a good sign that the economic recovery was resilient to disruptions caused by Omicron. The February data was collected during different pandemic conditions: New coronavirus cases have declined more than 80 percent from their peak in mid-January.
Proposed Accountability for Supply Chains
Legislation proposed on Wednesday would require large companies operating in the European Union to establish regulations for detecting, preventing and mitigating breeches of human rights and environmental hazards in their supply chains. If the proposal passes — a process that could take a year or more — victims could sue companies that violate it in the domestic courts of E.U. nations, even if the harm occurred elsewhere. Richard Gardiner of Global Witness said the legislation had the potential to become “a watershed moment for human rights and the climate crisis,” while Pierre Gattaz, the president of the trade organization BusinessEurope, said, “It is unrealistic to expect that European companies can control their entire value chains across the world.”
Russia’s Attack on Ukraine and the Global Economy
A rising concern. Russia’s attack on Ukraine could cause dizzying spikes in prices for energy and food and could spook investors. The economic damage from supply disruptions and economic sanctions would be severe in some countries and industries and unnoticed in others.
The cost of energy. Oil prices already are the highest since 2014, and they have risen as the conflict has escalated. Russia is the third-largest producer of oil, providing roughly one of every 10 barrels the global economy consumes.
Gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.
Food prices. Russia is the world’s largest supplier of wheat and, together with Ukraine, accounts for nearly a quarter of total global exports. In countries like Egypt and Turkey, that flow of grain makes up more than 70 percent of wheat imports.
Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Financial turmoil. Global banks are bracing for the effects of sanctions designed to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.
What Else?
The Winter Olympics drew its smallest television viewership on record. Volkswagen is considering a plan to spin off Porsche in a public offering. And the Internal Revenue Service said on Monday that it would allow taxpayers to opt out of using facial recognition technology to gain access to their online accounts.
