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The United States has poured trillions of dollars into its economy during the pandemic, and if President Joe Biden has his way, it will continue doing so for the next several years.
While most of the attention to the stimulus and recovery payments in the U.S. has focused on the domestic economic impact, economists have their eye on another side effect: the “spillover” benefits to the rest of the world.
“The government is sending out checks to everybody,” said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics. “Households and state and local governments are buying all kinds of supplies for education and health care — we haven’t had a government budget deficit this big since World War II.”
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Even though it is currently impossible to say what percentage of the stimulus money coming from the federal government will be spent rather than saved, the “massive” amount of money involved guarantees large economic impacts, Gagnon said.
A ‘phenomenal experiment’
Gagnon explained that in an economic boom, the percentage of spending directed overseas — in normal times between 15% and 20% — increases sharply. “So that means that maybe as much as 30% of all this extra spending could spill over onto other countries.”
The level of spending by the U.S. right now amounts to a “phenomenal experiment,” Gagnon said.
“Overall, it’s good for the world,” he said. “In fact, it’s so good that it might end up being a political issue in the U.S. because our trade deficit is going to get much larger, and people will say, ‘Why is the federal government borrowing all this money to support jobs in China and in Germany?’ ”
The US as ‘locomotive’
Falk Bräuning, a senior economist and policy adviser in the Federal Reserve Bank of Boston Research Department, said that there is a “strong consensus” among economists that the spillover effects from increased U.S. spending are very significant for other countries.
“The U.S. is really on track for a very strong recovery after last year,” he said, adding that the U.S., as the world’s largest economy, can serve as a “locomotive” that pulls other economies along behind it.
“The booming U.S. economy will help other countries to recover faster and more strongly,” Bräuning said. “So we expect strong, positive spillover effects on direct trade partners to the United States. In fact, we see part of that already materializing.”
Germany, he pointed out, is already reporting strong export growth to the U.S. based on increased demand.
Some benefit more than others
The bulk of the benefit from increased U.S. spending abroad will likely accrue to other large economies in Europe and Asia, experts said. And countries such as Mexico and the nations of Central America, which all have economies closely tied to the United States, will likely see substantial increases in their exports.
Countries that rely on tourism for most of their income, however, probably won’t see much benefit from increased U.S. spending until the travel industry recovers more fully.
And the economic boom in the U.S., while good news for much of the world, could also have some downsides.
Inflation and rising interest rates
Desmond Lachman, a resident fellow at the American Enterprise Institute in Washington, said that he expects the large volume of extra spending in the U.S. to overheat the economy within the next year, and that will have follow-on effects that may hurt other countries.
“The negative side is that if the United States economy overheats … then what that does is it produces high-interest rates in the United States,” he said.
When that happens, investors who had taken their money overseas in search of higher returns will start seeing new opportunities in the U.S. and will bring that money back. Lachman pointed out that precisely the same thing happened in 2013 when the Federal Reserve began raising interest rates after the Great Recession.
“This is serious because a lot of these countries are just totally dependent on money coming from the United States to keep them afloat,” Lachman said. “They’re running big budget deficits, and they’re really in very bad shape.”
Lachman said that he is looking particularly at countries such as Brazil, South Africa, and Turkey, which would be hit particularly hard if U.S. capital begins to flow away from them.
The problems will be compounded for countries that have borrowed money that they are required to pay back in U.S. dollars. As U.S. interest rates rise and the dollar strengthens, making those debt payments will become more of a financial drain on debtor nations.
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A cautious approach
Bräuning, the Federal Reserve Bank of Boston economist, said the Federal Reserve is well aware of the potentially damaging effects of disrupted international capital flows, and it will be cautious about how it approaches changes to monetary policy.
“I think the key to avoiding these disruptive effects is that interest rates increase gradually and not abruptly,” he said. Economic research, he said, “has found that as long as there’s a gradual and kind of predictable path of the interest rate, then these disruptive effects — especially for emerging markets — resulting from capital outflows are much less severe.” (VOA/KB)
Diwali is known for gifting and jewellery tops the list, with the focus on buying gold and diamonds. ORRA jewellery, a trusted diamond jewellery brand is gearing up for the festive and bridal season. As they open their 50th store in the country, IANSlife caught up with Dipu Mehta, Managing Director, ORRA, to find out how the company plans to ramp up its now 50 company-owned and operated stores, expanding its retail presence in Tier-1 and 2 cities and target the millennial segment.
Q: The brand is expanding in tier-2 and tier-3 cities, is brick and mortar the way forward to create a presence in this segment?
A: ORRA currently is expanding in metros plus tier-2 cities. But we aren't opening stores in any new markets. We are only opening in markets where we are already present. We are increasing the number of stores within cities as the demand for jewellery buying has also increased. Currently, we are present in 25 cities with 50 stores, and by the end of the month, we would be launching another seven stores.
Also with a category like jewellery, it is important to have brick and mortar stores as the customers like to see and hold higher value jewellery before purchasing. Jewellery buying is an important decision to the customers and having a store gives them that assurance.
ORRA currently is expanding in metros plus tier-2 cities. | Wikimedia Commons
Q: Jewellery is recession-proof do you agree and why?
A: Jewellery buying in India has always been an emotional and occasion-led purchase. It is also considered a great investment. The pandemic has affected all industries and the purchase pattern of consumers has slowed down. We wouldn't call it recession-proof but due to the festive season coming up, we predict a good season for all retailers.
Jewellery buying in India has always been an emotional and occasion led purchase. | Photo by Joeyy Lee on Unsplash
Q: The small Indian wedding doesn't mean that jewellery gets minimal, it just means people are investing more in jewellery. Please elaborate on how the brand's consumer behaviour has shifted in this regard.
A: Weddings in the family has always been a strong motivator for bridal jewellery purchase. It doesn't matter if the wedding is on a large scale or small scale, the kind of jewellery worn has been large. The only difference we see now is due to the pandemic and the limited number of guests at weddings the families are spending more money than before on buying diamond jewellery. We have seen the customers upgrade to higher-value diamond necklaces than ever before.
Weddings in the family has always been a strong motivator for bridal jewellery purchase. | Photo by Aayush(gop) Rawat on Unsplash
Q: The brand is the only one to offer 0 per cent interest EMI on diamond jewellery. Please share the idea behind this and what is the impact it has had on sales?
A: The idea came from the insight that during a wedding in the family, the father of the bride is always the most worried about all the wedding expenses. At ORRA, we understand this and decided to offer 0 per cent interest EMI.
We are the only brand offering 0 per cent interest EMI on diamond jewellery and we have seen a great response from customers. Offering this has led a lot of customers to upgrade the jewellery and purchase larger pieces. We are seeing a growing trend of customers who prefer buying jewellery on EMI and to pay it in equal monthly installments instead of paying the whole amount in one go.
OORA is the only brand offering 0 per cent interest EMI on diamond jewellery and they have seen a great response from customers. | Needpix
Q: The millennial and Gen Z as a segment, how important are they to you and are you doing any digital marketing for this audience?
A: The millennial and Gen z customers are extremely important to us and we launched our 'Desired Collection' specially to target this age group and style. This generation has a distinct style and makes their own decisions, they are tech savvy and are comfortable making jewellery purchases on our e-commerce website. They love a good deal along with great designs and quality products. Our customers are extremely engaged with us on our social media handles and we ensure that we respond to all their product-related queries within a day. We also have live chat and video calling facility which helps them make a decision.
OORA's customers are extremely engaged with them on our social media handles and they ensure that they respond to all their product-related queries within a day. | Photo by Campaign Creators on Unsplash
Q: Lastly what are the trends you predict for 2021 and 2022?
A: We see an upward trend this season and in the coming few months. We see an increase in demand in diamond jewellery purchases and with the help of 0 percent interest EMI we can see more and more customers buying larger pieces of diamond jewellery. (IANS/ MBI)
Keywords: diamond jewellery purchase, Diwali is known for gifting and jewelry, festive and bridal season,
The Centre on Wednesday directed all Union Ministries and Departments to clear Air India's dues immediately. An office memorandum from the Finance Ministry's Department of Expenditure said: "Recently, the Government of India has decided to disinvest Air India, and the process of disinvestment of Air India and Air India Express is ongoing.""Air India has stopped extending credit facilities on account of purchase of air tickets. Therefore, all Ministries or Departments are directed to clear Air India's dues immediately." "Air tickets from Air India may be purchased in cash till further instructions."
In 2009, the Centre had mandated that Central government officers travel via Air India for all official purposes including availing of LTC. On Monday, conglomerate Tata Group entered into a share purchase agreement with the Central government for buying out the latter's stake in national carrier Air India, Air India Express, and AISATS.
Earlier, a Letter of Intent was issued to the Tata Group. After the SPA, Tata Group would need to fulfill the conditions precedent in the agreement before taking over the airline. The rest of the transaction is expected to be completed by December.
Tata Sons' subsidiary Talace emerged as the highest bidder for the national carrier under the divestment process. Talace had quoted an enterprise value of Rs 18,000 crore for 100 per cent equity shareholding of the Centre in Air India along with that of Air India Express and AISATS. (IANS/ MBI)
Keywords: India, air India, ministers, government, purchase, dues, Tata group, centre
Sports betting has been around for centuries for the audience to not only watch the sport but to get more deeply involved in the match. It is a fun and often profitable activity for the viewer to win some extra fortune or simply get some extra sweat while watching the game. At first glance, sports betting may look like it's pure luck, but when you indulge deeper into the activity you realize it is more of a calculative and research activity than just pure luck. We must note that yes, luck does play a certain role to some extend but a win is not completely dependent on luck, if you're putting your bets on a certain team you have to make sure to do some research about the players on the team, history of wins and losses of the team and compare the probability of winning and then place bets.
Even though sports betting has existed since the ancient era, it was not until recently that it became increasingly popular among the youth. This happened due to the legalization of the activity and the rise of online sports betting. The technological revolution has expanded the sports betting industry, offering the bettors new markets and ways to bet. The only major difference between online bookmarkers and traditional brick-and-mortar venues of sports betting is that now you can place bets online from your mobile devices, laptops, computers etc.
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Online sports betting allows the sports enthusiastic bettors to place their sports bet online from wherever they are on real-life happening sports events. For instance, if there is a match between Chelsea F.C. and Machester United in the English Premier League, you can place wagers on either of the team to win from your comfort space, on your device and if you correctly predict the outcome, you'll win money.
How to Bet on Sports?
Sport betting gives more thrill and involvement in the sport to the bettor.Istockphoto
Now that you understand the basic mechanism of sports betting, how and where should you place your bets? For new bettors, sports betting can be a little intimidating because you're putting real money as stakes and no one wants to lose it. Here are the steps to place your sports bets online:
Choose a betting site: The first step to placing your sports bets is to find a reliable sports betting site. BetRivers sportsbook is one of the most popular sports betting sites in the US which also has a mobile app. It has a solid design with intuitive navigation, user friendly and polished layout.
Sign up: After choosing the website, you must sign up and provide simple details like your name, email address, age etc. to verify your proof of identity and if you're legally allowed to start betting in the state or not.
Deposit money in your online sportsbook: Once you've registered an account, you can immediately deposit some money and place your bets on the sport of your choice. Most online sports betting platforms accept numerous deposit methods. BetRivers accepts various methods like online banking, Paypal, Visa, Mastercard, pay+, etc; and withdrawing money is as simple as depositing the amount.
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Locate the market: Before placing your first bet, pinpoint the sports you want to place bets on, then select specific competitions or leagues that interests you the most. Then you need to find a team you want to bet on. Do some research on the odds and market. Once you've made up your mind you can bet your money on your prediction.
Place your first bet: Once you're certain about your bet, you're required to enter the amount you want to bet. Most sites give you a preview of how much a bettor stands to win in the bet slip. If you're satisfied with the odds, you can happily hit the button to confirm your bet and wait for the results.
Enjoy the game: The bet has been placed, the game has started, now all you need to do is sit back, relax and watch the game and let your bet come in.
Disclaimer: (This article is sponsored and includes some commercial links)