Banananomics: Jubilant Economic Forecast More Fiction Than Fact

Jubilant Economic Forecast More Fiction Than Fact

This year's Milken Institute conference, an annual gathering of financiers, CEOs, and economic influencers, is touting the strength of the U.S. economy over China.

Inputs that matter: Federal Reserve Bank of Minneapolis President Neel Kashkari said the central bank will likely keep interest rates where they are "for an extended period" until officials are sure inflation is on track to their target.

• A combination of high home prices, mortgage rates, and low housing inventory has put significant pressure on potential home buyers.

• According to Redfin data, the median sale price of a home rose 4.8% from a year earlier to $420,321 in March.

• Meanwhile, the number of homes sold plunged almost 10%, with the average rate on a 30-year-fixed mortgage down to 7.28% from around 7.4%.

The opportunity: Kristalina Georgieva, managing director of the International Monetary Fund (IMF), told a ballroom full of people at Milken, "The U.S. has a robust labor market. It has an ample supply of labor. It has the tremendous advantage of being an energy exporter. It has the privilege of the dollar."

• CNBC's Jim Cramer said the market sell-off may have ended, noting that the averages rallied on Monday and "maybe the worst is behind us."

Zoom in: "The United States recovered very rapidly relative to most other countries," Ron O'Hanley, CEO of State Street Bank, said at the Milken Institute. 

• "Part of what you're seeing is an ongoing bet on the endurance of the U.S. economy."

• Citi CEO Jane Fraser told the Milken audience, "The United States has a unique depth and breadth of the capital market."

• For several years, booming China was the darling of global investors and the hottest topic at Milken.

Between the lines: Employment is shifting globally, favoring self-employed gig workers.

• Due to living cost increases, the gig economy contributed heavily to the 5.2% increase in multiple job holders.

• With over 30% of U.S. workers now freelancers, the gig economy is on track to encompass more than half of the workforce by 2027.

Follow the money: Nearly 75,000 tech workers have lost their jobs at 257 companies, including Tesla, Microsoft, Google, Dell, Cisco, and SAP, year to date.

• IBM is planning to replace more than 8,000 jobs with A.I.

• Tesla's Giga Shanghai plant operates with 95% automation, which allows the plant to complete a vehicle in just 39.62 seconds with very little need for human labor.

Risky High Tech Bickering Between US and China

A new report says one of Tesla's top executives has been reassigned to China, another sign that Elon Musk is tightening his grip on the electric car maker.x

Inputs that matter: Electrek reports that Tom Zhu, who was previously in charge of Tesla's U.S. plants and sales, has been named the company's vice president of China.

• Musk has now resumed control of Tesla's North American sales operations, Electrek reports.

• In recent weeks, Tesla has undergone multiple layoffs and seen the departure of roughly half a dozen top executives, including Drew Baglino, the SVP of powertrain and electrical engineering, and Rohan Patel, the V.P. of public policy and business development.

• China has 23.8% E.V. adoption, and the U.S. has 8.1%, which is Tesla's core market.

The opportunity: The United States has taken further action to limit China's technological advancement, revoking licenses that allowed Intel and Qualcomm to buy and sell chips to Huawei Technologies.

• Huawei has been on U.S. trade restrictions lists since 2019 but has recently made progress that worries the U.S. government, such as last month's AI-enabled laptop.

• National security experts have accused Huawei of helping China to conduct cyber espionage.

Zoom in: Meanwhile, TikTok is suing the federal government over a new law that will ban the app next year unless its parent company, China-based ByteDance, finds a non-Chinese buyer. 

• The lawsuit alleges the ban is unconstitutional and amounts to an unprecedented suppression of free speech.

Between the lines: Renewable energy accounted for more than 30% of the world's electricity for the first time last year following a rapid rise in wind and solar power.

• According to a climate think tank Ember report, clean electricity has helped slow the growth of fossil fuels by almost two-thirds in the past ten years. Renewables, which made up 19% of electricity in 2000, made up more than 30% of global electricity last year.

• "The renewables future has arrived," said Dave Jones, Ember's global insights director. "Solar, in particular, is accelerating faster than anyone thought possible."

Follow the money: The Verge explains, "Tesla is closing in on a new manufacturing process that could significantly reduce costs and increase production of its electric vehicles."

• Tesla's new technology and Chinese rivals such as Xiaomi are driving down the cost of E.V.s.

• According to the Wall Street Journal, Tesla has been awarded more sites than any other company to help build the nationwide fast charging network.

• Ford, BMW, Genesis, General Motors, Honda, Hyundai, Jaguar, Kia, Lucid, Mini, Mercedes-Benz, Nissan, Polestar, Rivian, Toyota, and Volvo can also use the Tesla charging system.

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