2022 Tax Year, Economy Week Ahead, & China Protests
Tax Policy:
November 23: IRS says your tax refund may be smaller this year
Your refund for the 2022 tax year may be smaller than in years past, the Internal Revenue Service said Wednesday. That's because of several recently passed changes to the tax code.
For those claiming the Earned Income Tax Credit or the Additional Child Tax Credit, the IRS said it can not issue those returns until mid-February because the law requires it to hold the entire refund in an attempt to give itself more time to detect fraud.
Some large refunds for tax years 2020 and 2021 were allotted because taxpayers who hadn't received their Economic Impact stimulus payments claimed them when they filed their taxes.
There are a few new or expanded tax credits that may be available to taxpayers, including the Premium Tax Credit and the Clean Vehicle Credit.
The IRS acknowledged that there were still 3.7 million unprocessed individual returns it received in 2022 as of Nov. 11, as well as 900,000 unprocessed Forms 1040-X for amended tax returns. "The IRS is processing these amended returns in the order received and the current timeframe can be more than 20 weeks," the IRS said in the release.
Economic News/Policy:
November 29: S&P 500 and Nasdaq close lower for the third day as investors look to Fed Chair Powell’s speech
The S&P 500 and Nasdaq Composite closed lower for a third straight session Tuesday as traders struggled to recover from sharp losses suffered in the previous session and looked ahead to more economic tea leaves coming later in the week.
The Nasdaq Composite shed 0.59% to close at 10,983.78. The S&P 500 lost 0.16%, ending the day at 3,957.63. The Dow Jones Industrial Average notched a marginal gain, closing 3.07 points, or 0.01%, higher at 33,852.53.
The markets largely failed to reverse course from the steep and broad losses Monday after protests in mainland China against the country’s zero-Covid policy started over the weekend. The protests elevated concerns over the potential for Chinese Covid protocols that could once again hamper global supply chains.
Overnight, however, global markets seemed to catch a reprieve as a Chinese official told reporters that 65.8% of people “over age 80” had received booster shots. On top of that, the government reported the first decline in Covid infections within mainland China in more than a week. That contributed to a rally in the Hong Kong and Shanghai markets.
November 28: Fed president sees inflation fight stretching into 2024
The Federal Reserve head in St. Louis expects the central bank's fight to curb high inflation in the U.S. economy to stretch into 2024. St. Louis Federal Reserve President James Bullard told MarketWatch's economics editor Greg Robb the Fed could slowly raise interest rates to a range of 5 percent to 7 percent. The Fed has raised interest rates six times this year as the U.S. struggles with a roughly 40-year high inflation rate.
Bullard told MarketWatch that it was beneficial for the Fed to fight inflation while unemployment is low.
The annual inflation rate fell from 8.2 percent in September to 7.7 percent in October, but that's still much higher than the 2 percent goal for the Fed.
New York Federal Reserve President John Williams said during an appearance at the Economic Club of New York on Monday that "Inflation is far too high." "Persistently high inflation undermines the ability of our economy to perform at its full potential," Williams said, according to comments shared on Twitter.
November 27: Economy Week Ahead: U.S. Job Market and Consumer Spending in Focus
Tuesday: S&P Global releases its S&P CoreLogic Case-Shiller National Home Price Index, which will show September home-price trends. Home prices fell 1.1% in August from July, the biggest month-on-month decrease since December 2011.
The Conference Board publishes its November consumer-confidence index, which measures U.S. attitudes toward jobs and the economy. Consumer confidence fell in October—the index’s first decline in three months—over concerns about high inflation and less upbeat views on the labor market.
Wednesday: The Labor Department releases October data on job openings, quits, hires, and layoffs. Employers had 10.7 million openings in September, an increase of 437,000 from the prior month, showing that demand for workers remains robust. September openings were well above the 5.8 million unemployed people seeking work that month.
Federal Reserve Chairman Jerome Powell gives remarks on the U.S. economy and the labor market at the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy.
The European Union’s statistics agency releases November inflation figures for the 19-nation eurozone. The bloc’s consumer prices were 10.7% higher in October from the same month a year earlier. That was the fastest pace since records began in 1997.
The National Association of Realtors reports the number of home sales based on contract signings in October. Pending home sales fell in September for a fourth consecutive month as rising interest rates and worsening home affordability weighed on demand.
The Fed releases its periodic compilation of economic anecdotes collected from businesses around the country, known as the Beige Book. The report will include details from businesses on inflation, employment, and output growth.
Thursday: The Commerce Department releases figures on U.S. household spending and income in October. Consumer spending rose 0.6% in September from the prior month as Americans spent more on housing, transportation, food, and utilities. The department also releases its personal-consumption expenditures price index, a gauge of inflation closely watched by the Fed. The so-called core PCE-price index, which excludes volatile food and energy prices, strengthened in September to a 5.1% year-over-year increase—the strongest pace since March.
The U.S. Labor Department reports the number of worker filings for unemployment benefits in the week ended Nov. 26.
S&P Global and the Institute for Supply Management released November surveys of purchasing managers measuring economic activity in the U.S. manufacturing sector. S&P Global also releases November manufacturing indexes for other countries.
Friday: The Labor Department releases the November employment report detailing job gains, the unemployment rate, and worker earnings. Payroll growth remained robust in October while the jobless rate rose to 3.7% from the half-century low of 3.5% registered the prior month.
Global Trade:
November 29: Chinese Protests Over ‘Zero Covid’ Follow Months of Economic Pain
More than 80 cities in China are battling infections, up from 50 in the spring, when a smaller surge of infections prompted an eight-week lockdown in Shanghai and set the economy on its slowest pace of annual growth in decades. These cities account for half of China's economic activity and ship 90 percent of its exports, according to Capital Economics.
This month, China announced plans to ease some pandemic policies, fueling speculation that it was the beginning of a transition to phase out its "Zero-Covid" policy, much to the delight of investors who sent shares of Chinese companies soaring.
As the number of infections rose, the government reverted to a familiar playbook and held firm to what it has said all along: China is trying to eradicate Covid, not learning to live with it.
In a series of editorials in state media starting on Sunday, Beijing said China still needed to "Maintain strategic focus" in combating Covid, but it urged officials around the country to avoid extreme measures such as blocking fire exits or barricading communal doors during quarantine. It stressed the need for local officials to adhere to policy tweaks meant to "Optimize" existing Covid policies and limit disruptions to people and businesses. Even so, the authorities on Monday night deployed additional security to discourage another night of protests.
The impact has also spread to larger companies. A decline in overall profits at China’s industrial firms accelerated in October, according to the National Bureau of Statistics. Profit in China’s 41 industrial sectors fell 3 percent in the January-to-October period, a steeper decline than the 2.3 percent slide in January to September, numbers released on Sunday indicate.
China’s initial success in containing Covid started to crumble this year with the spread of the more infectious Omicron variant. The government projected modest 5.5 percent growth for 2022 in March, several weeks before a sharp rise in infections pushed Shanghai into lockdown and brought the economy to a grinding halt. A series of smaller subsequent outbreaks have continued to test the limits of China’s zero-tolerance strategy, putting the government’s economic growth target out of reach.
November 28: COVID-19 lockdown protests in China rattle US, world markets
Protests in multiple cities in China over the country's so-called zero-COVID policy rattled world markets Monday, adding to fears about stagnating growth and supply chain crunches as the holiday shopping season picks up.
Protests erupted across China after 10 people died in a fire last week in Urumqi, a city in the western part of the country that has seen extended lockdowns, with some residents confined to their homes for more than three months.
Rates of COVID-19 infection in China have been climbing in recent weeks, and the resulting crackdowns in social policy are adding to an environment that's becoming less friendly to international business.
Confidence in China among U.S. businesses had already been shaken over the course of the pandemic due to the government's stringent public health policies.
One survey from May carried out by the American Chamber of Commerce in China found that more than half of respondents had decreased or delayed Chinese investments as a result of the pandemic.
"The foreign business community's confidence in doing business in China continues to decrease, with 100 percent of respondents reporting an impact from China's policies concerning the recent outbreak," the survey from May found.
“This situation is not touch-and-go, it’s really a continuing process in which the U.S. has been somewhat of an aggressor,” Former Commerce Secretary Mickey Kantor said. "In cutting off high-technology exports to China and being very reluctant to allow U.S. businesses with export controls to do business in China - this is a huge factor for the Chinese economy and the U.S. economy, as well."
For Fun:
November 28: Jellyfish design could inspire swimming robots
Engines inspired by a relative of the jellyfish could power the next generation of underwater vehicles, a new study has found.
The gelatinous Nanomia bijuga swims by jetting water from its dozen independently controlled pumps, according to the study published in the Proceedings of the National Academy of Sciences on Monday.
That independent, distributed control allows the Nanomia to toggle between swimming styles to prioritize energy efficiency or speed — a feature the authors say could find its way into future generations of submersibles.
“Most animals can either move quickly or in a way that’s energetically efficient, but not both. Having many, distributed propulsion units allows Nanomia to be both fast and efficient,” said marine biologist Kelly Sutherland of the University of Oregon.
Future underwater vehicles might borrow from the animal to alternate the timing of their engines to either move fast or save energy depending on need, the scientists said.