1 US economic growth slows sharply (Andrew Walker on
BBC) US economic growth slowed sharply in the third quarter of the year. Gross
domestic product grew at an annualised pace of 1.5% between July and September,
according to the Department of Commerce, down from a rate of 3.9% in the second
quarter. The slowdown was partly due to companies running down stockpiles of
goods in their warehouses.
It is a sharp slowdown compared with the previous
three months. But the biggest reason for it was companies running down stocks -
meeting demand by selling stuff they already have in the warehouse. That is a
process that has a limit. Sooner or later, they will feel they have sold enough
and may want to start replenishing those stocks.
Consumer spending remained fairly robust. Yes, it
too did slow, but not by all that much. It grew by 0.8% in the three-month
period, or 3.2% in the annualised terms that the US official statisticians
prefer.
The big question for markets is, when will the
Federal Reserve raise interest rates? Will the central bank think the economy
is strong enough to take it? The markets seem to think the new figures have, if
anything slightly increased the chances that the Fed will move at its next
policy meeting in December.
Low oil prices have hit US energy firms so far this
year. But lower fuel prices have been good news for consumer spending, which
accounts for more than two-thirds of US economic activity. Analysts said that
the running down of warehouse stockpiles in the third quarter was likely to be
a temporary effect and they expected growth to accelerate again in the fourth
quarter.
2 After $6.6bn loss, Deutsche Bank to cut 15,000
jobs (Khaleej Times) Deutsche Bank says it is cutting 35,000 jobs through redundancies
and the sale of businesses as new CEO John Cryan seeks to make Germany's
biggest lender more manageable and profitable. The bank will slash 9,000
full-time jobs, 6,000 contractor positions and sell operations with 20,000 more
workers. It will also close local operations in 10 smaller countries.
The announcement came as the bank reported a net
loss of 6 billion euros ($6.6 billion). Net profit was hit by 5.8 billion euros
in noncash charges for the reduced value of its investment bank and retail bank
Postbank, which it plans to sell.
The bank has struggled to reduce costs and make its
administration more transparent and ethical as it deals with uneven profits and
investigations into rigging financial benchmarks. Former co-CEO Anshu Jain
resigned in June. The other co-CEO, Juergen Fitschen is leaving in May.
The bank has set aside billions to pay for fines and
legal settlements and costs in a several cases, including the rigging by a
number of banks of the key interest rate benchmark known as the London
Interbank Offered Rate, or Libor. The bank said it would close its onshore
operations in Argentina, Chile, Mexico, Peru, Uruguay, Denmark, Finland,
Norway, Malta and New Zealand. Some branches in Germany would close as well,
Cryan said.
3 After 35 years, China ends one-child policy (Tom
Phillips in The Guardian) China has scrapped its one-child policy, allowing all
couples to have two children for the first time since draconian family planning
rules were introduced more than three decades ago.
Some celebrated the move as a positive step towards
greater personal freedom in China. But human rights activists and critics said
the loosening – which means the Communist party continues to control the size
of Chinese families – did not go far enough. “The state has no business
regulating how many children people have,” said William Nee, a Hong Kong-based
activist for Amnesty International.
For months there has been speculation that Beijing
was preparing to abandon the divisive family planning rule, which was
introduced in 1980 because of fears of a population boom. Demographers in and
outside China have long warned that its low fertility rate – which experts say
lies somewhere between 1.2 and 1.5 children a woman – was driving the country
towards a demographic crisis.
The Communist party credits the policy with
preventing 400m births, thus contributing to China’s dramatic economic takeoff
since the 1980s. But the human toll has been immense, with forced
sterilisations, infanticide and sex-selective abortions that have caused a
dramatic gender imbalance that means millions of men will never find female
partners.
In one of the most shocking recent cases of human
rights abuses related to the once-child policy, a woman who was seven months
pregnant was abducted by family planning officials in Shaanxi province in 2012
and forced to have an abortion.
Opponents say the policy has created a demographic
“timebomb”, with China’s 1.3 billion-strong population ageing rapidly, and the
country’s labour pool shrinking. The UN estimates that by 2050 China will have
about 440 million people over 60. The working-age population – those between 15
and 59 – fell by 3.71 million last year, a trend that is expected to continue.
Experts said the relaxation of family planning rules
is unlikely to have a lasting demographic impact, particularly in urban areas
where couples were now reluctant to have two children because of the high cost.
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