FirstFT: Economists warn US set for recession

The US economy will tip into a recession next year, according to nearly 70 per cent of leading academic economists polled by the Financial Times.

The latest survey, conducted in partnership with the Initiative on Global Markets at the University of Chicago’s Booth School of Business, suggests mounting headwinds for the world’s largest economy after one of the most rapid rebounds in history.

The survey findings come as the Federal Reserve ramps up efforts to contain the highest inflation in about 40 years. The US central bank has already embarked on what will be one of the fastest tightening cycles in decades. Since March it has raised its benchmark policy rate by 0.75 percentage points from near-zero levels.

The Federal Open Market Committee gathers once again on Tuesday for a two-day policy meeting, at which officials are expected to implement the first back-to-back half-point rate rise since 1994 and signal the continuation of that pace until at least September.

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1. Yen plunges to 24-year low against the dollar The yen hit ¥135.19 against the dollar in Asian trading today as Japan’s authorities grow increasingly wary of the currency’s rapid weakening. On Friday, the Bank of Japan, Ministry of Finance and Financial Services Agency issued a rare joint statement expressing concern about the yen’s steep slide against the dollar. The yen has fallen by a fifth against the US currency in the past 12 months, creating a “cheap” Japan, the chief executive of Nomura told the FT.

  • Pound under pressure Sterling fell sharply in Europe this morning after new figures showed the UK economy shrank in April. The surprise data sent the pound down 0.7 per cent against the dollar.

2. Crypto lending platform Celsius Network halts withdrawals The $12bn digital asset lending platform said today it was “pausing all withdrawals, swap, and transfers between accounts”. The company, which was founded in 2017 and has offices in the US, UK and Lithuania, is one of the biggest players in the crypto industry. Bitcoin dropped to its lowest level since December 2020 today as part of a broader market sell-off.

3. Senators agree on modest US gun reforms in wake of shootings A bipartisan group of 20 US senators has reached a tentative deal on gun-control measures that would fund states to enact “red flag” laws and tighten background checks. The proposed framework stops short of many of the more stringent measures supported by Joe Biden’s administration, including raising from 18 to 21 the minimum age to buy certain firearms.

Thousands of gun-control advocates join the ‘March for Our Lives’ rally near the Washington Monument in Washington
Thousands of gun-control advocates join the ‘March for Our Lives’ rally near the Washington Monument in Washington on Saturday © Saul Loeb/AFP/Getty Images

4. UK regulator puts Credit Suisse on watchlist The UK’s Financial Conduct Authority has put Credit Suisse on its watchlist for tougher supervision after saying last month that it was concerned the Swiss lender had not done enough to improve its culture, governance and risk controls following a series of crises.

5. Google engineer put on leave after claiming chatbot is ‘sentient’ Blake Lemoine, a senior software engineer in Google’s Responsible AI unit, has been put on leave after he went public with his belief that the tech group’s chatbot has become “sentient”, triggering a social media firestorm.

The day ahead

Wall Street set for further falls Futures trading implied the US S&P 500 index would lose 1.9 per cent in early New York dealings after Friday’s close ended its worst week since January. Data showing annual consumer prices accelerated in May compared to April led to fears the Federal Reserve would have to increase interest rates more rapidly than expected, leading to a recession.

Line chart of Week-to-date performance (%) showing US stocks suffer biggest weekly losses since January

January 6 committee hearings The House committee investigating the January 6 2021 attack on the US Capitol will hold its second public hearing in Washington today. The first hearing focused on the events that led to the insurrection. Bennie Thompson, chair of the committee investigating the attack, said today’s hearing would focus on the connection between former president Donald Trump and the rioters.

Company earnings Software group Oracle is expected to report sales growth but a decline in quarterly earnings when it posts results after the market close. The company, which recently completed the $30bn acquisition of electronic medical records provider Cerner, is expected to say that earnings per share came in 17 cents below a year ago at $1.37.

UK to publish Northern Ireland bill The British government will publish legislation that rips up the part of the 2020 Brexit deal with the EU covering trade with Northern Ireland. The bill will bring Prime Minister Boris Johnson into conflict with many of his own MPs, the House of Lords, the EU, lawmakers in Washington and even some business groups in Northern Ireland.

WTO conference The 12th ministerial meeting of the World Trade Organization’s most senior decision-making body continues in Geneva. Director-general Ngozi Okonjo-Iweala has urged governments to end food export restrictions to help alleviate a hunger crisis caused by Russia’s invasion of Ukraine.

What else we’re reading

Russians get their first taste of rebranded McDonald’s Russian consumers received their first taste of the former McDonald’s under new local ownership yesterday. Rebranded Vkusno & Tochka, or “Tasty — Full Stop” the fast-food chain opened in Moscow with a further 200 set to open around the country by the end of the month, according to its new owner.

Former McDonald’s restaurants reopened their doors in Moscow under Russian ownership and a new name
Former McDonald’s restaurants reopened their doors in Moscow under Russian ownership and a new name © Evgenia Novozhenina/Reuters

Elon Musk’s bankers face dilemma: should they help him kill the Twitter deal? Wall Street lenders bankrolling the Tesla chief’s $44bn acquisition of the social media company may soon find the industry’s biggest payday on the line, as Musk claims that concerns about fake accounts give him grounds to walk away from a deal.

Can the aviation industry get airborne by summer? As passenger numbers pick up, staffing problems at airlines have caused chaos across the US and Europe, leaving little slack in a system struggling to deal with other operational issues, from weather to air traffic control delays.

How Xi Jinping is reshaping China’s capital markets Beijing’s IPO pipeline is in flux as President Xi Jinping aligns the stock market with Communist party objectives, with more listings in industries vital to China’s competition with the west (think: biotechnology, renewable energy and artificial intelligence). Analysts warn that the state’s growing influence could come at a hefty cost if western governments cut off investment flows.

A new wave of tech work is too baffling for too many If you don’t know your XaaS from your UX and UI, you’re not alone. There is something unsettling about the speed at which the online revolution has bred a generation doing jobs that utterly baffle outsiders, writes Pilita Clark.

Visual Art

Artist Rashid Johnson evokes longing and homesickness in his exhibition in Menorca and talks about the potential of new media for artists of colour.

“A lot of artists of colour at that time were interested in these new media, partly because it didn’t have all this canonical history that was so framed by western constructs — it was like, maybe we can affect the discourse here.”

Rashid Johnson with his seascape “Angola’ (2022)
Rashid Johnson with his seascape ‘Angola’ (2022) © Courtesy the artist/Hauser & Wirth. Photo: Daniel Schäfer