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Business

German economy unexpectedly shrinks in Q4, reviving spectre of recession

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  • Q4 GDP at -0.2% Q/Q vs forecast of 0.0%
  • Decline due mainly to falling private consumption
  • Economists reckon mild recession is likely

BERLIN, Jan 30 (Reuters) – The German economy unexpectedly shrank in the fourth quarter, data showed on Monday, a sign that Europe’s largest economy may be entering a much-predicted recession, though likely a shallower one than originally feared.

Gross domestic product decreased 0.2% quarter on quarter in adjusted terms, the federal statistics office said. A Reuters poll of analysts had forecast the economy would stagnate.

In the previous quarter, the German economy grew by an upwardly revised 0.5% versus the previous three months.

A recession – commonly defined as two successive quarters of contraction – has become more likely, as many experts predict the economy will shrink in the first quarter of 2023 as well.

“The winter months are turning out to be difficult – although not quite as difficult as originally expected,” said VP Bank chief economist Thomas Gitzel.

“The severe crash of the German economy remains absent, but a slight recession is still on the cards.”

German Economy Minister Robert Habeck said last week in the government’s annual economic report that the economic crisis triggered by the Russian invasion of Ukraine was now manageable, though high energy prices and interest rate rises mean the government remains cautious.

The government has said the economic situation should improve from spring onwards, and last week revised up its GDP forecast for 2023 — predicting growth of 0.2%, up from an autumn forecast of a 0.4% decline.

As far as the European Central Bank goes, interest rate expectations are unlikely to be affected by Monday’s GDP figures as inflationary pressures remain high, said Helaba bank economist Ralf Umlauf.

The ECB has all but committed to raising its key rate by half a percentage point this week to 2.5% to curb inflation.

Monday’s figures showed falling private consumption was the primary reason for the decrease in fourth-quarter GDP.

“Consumers are not immune to an erosion of their purchasing power due to record high inflation,” said Commerzbank chief economist Joerg Kraemer.

Inflation, driven mainly by high energy prices, eased for a second month in a row in December, with EU-harmonized consumer prices rising 9.6% on the year.

However, analysts polled by Reuters predict annual EU-harmonized inflation will enter the double digits again in January with a slight rise, to 10.0%. The office will publish the preliminary inflation rate for January on Tuesday.

Reporting by Miranda Murray and Rene Wagner, editing by Rachel More and Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

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World

Taiwan’s military has a problem: As China fears grow, recruitment pool shrinks

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Taipei, Taiwan
CNN
 — 

Taiwan has noticed a hole in its defense plans that is steadily getting bigger. And it’s not one easily plugged by boosting the budget or buying more weapons.

The island democracy of 23.5 million is facing an increasing challenge in recruiting enough young men to meet its military targets and its Interior Ministry has suggested the problem is – at least in part – due to its stubbornly low birth rate.

Taiwan’s population fell for the first time in 2020, according to the ministry, which warned earlier this year that the 2022 military intake would be the lowest in a decade and that a continued drop in the youth population would pose a “huge challenge” for the future.

That’s bad news at a time when Taiwan is trying to bolster its forces to deter any potential invasion by China, whose ruling Communist Party has been making increasingly belligerent noises about its determination to “reunify” with the self-governed island – which it has never controlled – by force if necessary.

And the outlook has darkened further with the release of a new report by Taiwan’s National Development Council projecting that by 2035 the island can expect roughly 20,000 fewer births per year than the 153,820 it recorded in 2021. By 2035, Taiwan will also overtake South Korea as the jurisdiction with the world’s lowest birth rate, the report added.

Such projections are feeding into a debate over whether the government should increase the period of mandatory military service that eligible young men must serve. Currently, the island has a professional military force made up of 162,000 (as of June this year) – 7,000 fewer than the target, according to a report by the Legislative Yuan. In addition to that number, all eligible men must serve four months of training as reservists.

Changing the mandatory service requirement would be a major U-turn for Taiwan, which had previously been trying to cut down on conscription and shortened the mandatory service from 12 months as recently as 2018. But on Wednesday, Taiwan’s Minister of National Defence Chiu Kuo-cheng said such plans would be made public before the end of the year.

That news has met with opposition among some young students in Taiwan, who have voiced their frustrations on PTT, Taiwan’s version of Reddit, even if there is support for the move among the wider public.

A poll by the Taiwanese Public Opinion Foundation in March this year found that most Taiwanese agreed with a proposal to lengthen the service period. It found that 75.9% of respondents thought it reasonable to extend it to a year; only 17.8% were opposed.

Many experts argue there is simply no other option.

Su Tzu-yun, a director of Taiwan’s Institute for National Defense and Security Research, said that before 2016, the pool of men eligible to join the military – either as career soldiers or as reservists – was about 110,000. Since then, he said, the number had declined every year and the pool would likely be as low as 74,000 by 2025.

And within the next decade, Su said, the number of young adults available for recruitment by the Taiwanese military could drop by as much as a third.

“This is a national security issue for us,” he said. “The population pool is decreasing, so we are actively considering whether to resume conscription to meet our military needs.

“We are now facing an increasing threat (from China), and we need to have more firepower and manpower.”

Taiwan’s low birth rate – 0.98 – is far below the 2.1 needed to maintain a stable population, but it is no outlier in East Asia.

In November, South Korea broke its own world record when its birth rate dropped to 0.79, while Japan’s fell to 1.3 and mainland China hit 1.15.

Even so, experts say the trend poses a unique problem for Taiwan’s military, given the relative size of the island and the threats it faces.

China has been making increasingly aggressive noises toward the island since August, when then-US House Speaker Nancy Pelosi controversially visited Taipei. Not long after she landed in Taiwan, Beijing also launched a series of unprecedented military exercises around the island.

Since then, the temperature has remained high – particularly as Chinese leader Xi Jinping told a key Communist Party meeting in October that “reunification” was inevitable and that he reserves the option of taking “all measures necessary.”

Chang Yan-ting, a former deputy commander of Taiwan’s air force, said that while low birth rates were common across East Asia, “the situation in Taiwan is very different” as the island was facing “more and more pressure (from China) and the situation will become more acute.”

“The United States has military bases in Japan and South Korea, while Singapore does not face an acute military threat from its neighbors. Taiwan faces the greatest threat and declining birth rate will make the situation even more serious,” he added.

Roy Lee, a deputy executive director at Taiwan’s Chung-hua Institution for Economic Research, agreed that the security threats facing Taiwan were greater than those in the rest of the region.

“The situation is more challenging for Taiwan, because our population base is smaller than other countries facing similar problems,” he added.

Taiwan’s population is 23.5 million, compared to South Korea’s 52 million, Japan’s 126 million and China’s 1.4 billion.

Besides the shrinking recruitment pool, the decline in the youth population could also threaten the long-term performance of Taiwan’s economy – which is itself a pillar of the island’s defense.

Taiwan is the world’s 21st largest economy, according to the London-based Centre for Economics and Business Research, and had a GDP of $668.51 billion last year.

Much of its economic heft comes from its leading role in the supply of semiconductor chips, which play an indispensable role in everything from smartphones to computers.

Taiwan’s homegrown semiconductor giant TSMC is perceived as being so valuable to the global economy – as well as to China – that it is sometimes referred to as forming part of a “silicon shield” against a potential military invasion by Beijing, as its presence would give a strong incentive to the West to intervene.

Lee noted that population levels are closely intertwined with gross domestic product, a broad measure of economic activity. A population decline of 200,000 people could result in a 0.4% decline in GDP, all else being equal, he said.

“It is very difficult to increase GDP by 0.4%, and would require a lot of effort. So the fact that a declining population can take away that much growth is big,” he said.

Taiwan’s government has brought in a series of measures aimed at encouraging people to have babies, but with limited success.

It pays parents a monthly stipend of 5,000 Taiwan dollars (US$161) for their first baby, and a higher amount for each additional one.

Since last year, pregnant women have been eligible for seven days of leave for obstetrics checks prior to giving birth.

Outside the military, in the wider economy, the island has been encouraging migrant workers to fill job vacancies.

Statistics from the National Development Council showed that about 670,000 migrant workers were in Taiwan at the end of last year – comprising about 3% of the population.

Most of the migrant workers are employed in the manufacturing sector, the council said, the vast majority of them from Vietnam, Indonesia, Thailand and the Philippines.

Lee said in the long term the Taiwanese government would likely have to reform its immigration policies to bring in more migrant workers.

Still, there are those who say Taiwan’s low birth rate is no reason to panic, just yet.

Alice Cheng, an associate professor in sociology at Taiwan’s Academia Sinica, cautioned against reading too much into population trends as they were affected by so many factors.

She pointed out that just a few decades ago, many demographers were warning of food shortages caused by a population explosion.

And even if the low birth rate endured, that might be no bad thing if it were a reflection of an improvement in women’s rights, she said.

“The educational expansion that took place in the 70s and 80s in East Asia dramatically changed women’s status. It really pushed women out of their homes because they had knowledge, education and career prospects,” she said.

“The next thing you see globally is that once women’s education level improved, fertility rates started declining.”

“All these East Asian countries are really scratching their head and trying to think about policies and interventions to boost fertility rates,” she added.

“But if that’s something that really, (women) don’t want, can you push them to do that?”

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World

Taiwan’s military has a problem: As China fears grow, recruitment pool shrinks

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Taipei, Taiwan
CNN
 — 

Taiwan has noticed a hole in its defense plans that is steadily getting bigger. And it’s not one easily plugged by boosting the budget or buying more weapons.

The island democracy of 23.5 million is facing an increasing challenge in recruiting enough young men to meet its military targets and its Interior Ministry has suggested the problem is – at least in part – due to its stubbornly low birth rate.

Taiwan’s population fell for the first time in 2020, according to the ministry, which warned earlier this year that the 2022 military intake would be the lowest in a decade and that a continued drop in the youth population would pose a “huge challenge” for the future.

That’s bad news at a time when Taiwan is trying to bolster its forces to deter any potential invasion by China, whose ruling Communist Party has been making increasingly belligerent noises about its determination to “reunify” with the self-governed island – which it has never controlled – by force if necessary.

And the outlook has darkened further with the release of a new report by Taiwan’s National Development Council projecting that by 2035 the island can expect roughly 20,000 fewer births per year than the 153,820 it recorded in 2021. By 2035, Taiwan will also overtake South Korea as the jurisdiction with the world’s lowest birth rate, the report added.

Such projections are feeding into a debate over whether the government should increase the period of mandatory military service that eligible young men must serve. Currently, the island has a professional military force made up of 162,000 (as of June this year) – 7,000 fewer than the target, according to a report by the Legislative Yuan. In addition to that number, all eligible men must serve four months of training as reservists.

Changing the mandatory service requirement would be a major U-turn for Taiwan, which had previously been trying to cut down on conscription and shortened the mandatory service from 12 months as recently as 2018. But on Wednesday, Taiwan’s Minister of National Defence Chiu Kuo-cheng said such plans would be made public before the end of the year.

That news has met with opposition among some young students in Taiwan, who have voiced their frustrations on PTT, Taiwan’s version of Reddit, even if there is support for the move among the wider public.

A poll by the Taiwanese Public Opinion Foundation in March this year found that most Taiwanese agreed with a proposal to lengthen the service period. It found that 75.9% of respondents thought it reasonable to extend it to a year; only 17.8% were opposed.

Many experts argue there is simply no other option.

Su Tzu-yun, a director of Taiwan’s Institute for National Defense and Security Research, said that before 2016, the pool of men eligible to join the military – either as career soldiers or as reservists – was about 110,000. Since then, he said, the number had declined every year and the pool would likely be as low as 74,000 by 2025.

And within the next decade, Su said, the number of young adults available for recruitment by the Taiwanese military could drop by as much as a third.

“This is a national security issue for us,” he said. “The population pool is decreasing, so we are actively considering whether to resume conscription to meet our military needs.

“We are now facing an increasing threat (from China), and we need to have more firepower and manpower.”

Taiwan’s low birth rate – 0.98 – is far below the 2.1 needed to maintain a stable population, but it is no outlier in East Asia.

In November, South Korea broke its own world record when its birth rate dropped to 0.79, while Japan’s fell to 1.3 and mainland China hit 1.15.

Even so, experts say the trend poses a unique problem for Taiwan’s military, given the relative size of the island and the threats it faces.

China has been making increasingly aggressive noises toward the island since August, when then-US House Speaker Nancy Pelosi controversially visited Taipei. Not long after she landed in Taiwan, Beijing also launched a series of unprecedented military exercises around the island.

Since then, the temperature has remained high – particularly as Chinese leader Xi Jinping told a key Communist Party meeting in October that “reunification” was inevitable and that he reserves the option of taking “all measures necessary.”

Chang Yan-ting, a former deputy commander of Taiwan’s air force, said that while low birth rates were common across East Asia, “the situation in Taiwan is very different” as the island was facing “more and more pressure (from China) and the situation will become more acute.”

“The United States has military bases in Japan and South Korea, while Singapore does not face an acute military threat from its neighbors. Taiwan faces the greatest threat and declining birth rate will make the situation even more serious,” he added.

Roy Lee, a deputy executive director at Taiwan’s Chung-hua Institution for Economic Research, agreed that the security threats facing Taiwan were greater than those in the rest of the region.

“The situation is more challenging for Taiwan, because our population base is smaller than other countries facing similar problems,” he added.

Taiwan’s population is 23.5 million, compared to South Korea’s 52 million, Japan’s 126 million and China’s 1.4 billion.

Besides the shrinking recruitment pool, the decline in the youth population could also threaten the long-term performance of Taiwan’s economy – which is itself a pillar of the island’s defense.

Taiwan is the world’s 21st largest economy, according to the London-based Centre for Economics and Business Research, and had a GDP of $668.51 billion last year.

Much of its economic heft comes from its leading role in the supply of semiconductor chips, which play an indispensable role in everything from smartphones to computers.

Taiwan’s homegrown semiconductor giant TSMC is perceived as being so valuable to the global economy – as well as to China – that it is sometimes referred to as forming part of a “silicon shield” against a potential military invasion by Beijing, as its presence would give a strong incentive to the West to intervene.

Lee noted that population levels are closely intertwined with gross domestic product, a broad measure of economic activity. A population decline of 200,000 people could result in a 0.4% decline in GDP, all else being equal, he said.

“It is very difficult to increase GDP by 0.4%, and would require a lot of effort. So the fact that a declining population can take away that much growth is big,” he said.

Taiwan’s government has brought in a series of measures aimed at encouraging people to have babies, but with limited success.

It pays parents a monthly stipend of 5,000 Taiwan dollars (US$161) for their first baby, and a higher amount for each additional one.

Since last year, pregnant women have been eligible for seven days of leave for obstetrics checks prior to giving birth.

Outside the military, in the wider economy, the island has been encouraging migrant workers to fill job vacancies.

Statistics from the National Development Council showed that about 670,000 migrant workers were in Taiwan at the end of last year – comprising about 3% of the population.

Most of the migrant workers are employed in the manufacturing sector, the council said, the vast majority of them from Vietnam, Indonesia, Thailand and the Philippines.

Lee said in the long term the Taiwanese government would likely have to reform its immigration policies to bring in more migrant workers.

Still, there are those who say Taiwan’s low birth rate is no reason to panic, just yet.

Alice Cheng, an associate professor in sociology at Taiwan’s Academia Sinica, cautioned against reading too much into population trends as they were affected by so many factors.

She pointed out that just a few decades ago, many demographers were warning of food shortages caused by a population explosion.

And even if the low birth rate endured, that might be no bad thing if it were a reflection of an improvement in women’s rights, she said.

“The educational expansion that took place in the 70s and 80s in East Asia dramatically changed women’s status. It really pushed women out of their homes because they had knowledge, education and career prospects,” she said.

“The next thing you see globally is that once women’s education level improved, fertility rates started declining.”

“All these East Asian countries are really scratching their head and trying to think about policies and interventions to boost fertility rates,” she added.

“But if that’s something that really, (women) don’t want, can you push them to do that?”

Read original article here

Business

Japan’s economy shrinks for first time in a year

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Japan’s economy unexpectedly shrank for the first time in a year in the third quarter, stoking further uncertainty about the outlook as global recession risks, a weak yen and higher import costs took a toll on household consumption and businesses.

The world’s third biggest economy has struggled to motor on despite the recent lifting of Covid curbs, and has faced intensifying pressure from red-hot global inflation, sweeping interest rate increases worldwide and the Ukraine war.

Gross domestic product fell an annualized 1.2% in July-September, official data showed, compared with economists’ median estimate for a 1.1% expansion and a revised 4.6% rise in the second quarter.

It translated into a quarterly decline of 0.3%, versus a forecast 0.3% growth.

On top of being squeezed by a global slowdown and soaring inflation, Japan has been dealing with the challenge of the yen’s slide to 32-year lows against the dollar, which has magnified cost-of-living strains by further lifting the price of everything from fuel to food items.

“The contraction was unexpected,” said Atsushi Takeda, chief economist at Itochu Economic Research Institute, adding that the biggest aberration were the larger-than-expected imports.

“But the three key pillars of demand – consumption, capital expenditure and exports – remained in positive territory, if not robust, so demand is not as weak as the headline figure shows.”

However, the risks to Japan’s outlook have risen as the global economy teeters on the brink of recession.

Economy Minister Shigeyuki Goto said a global recession could hit households and businesses.

At home, policymakers and citizens are bracing for a potential eighth wave of the Covid pandemic, adding to the gloom for private consumption which makes up more than half of the Japanese economy.

In the third quarter, private consumption grew 0.3%, a touch above consensus estimate for 0.2% growth but slowing sharply from the second quarter’s 1.2% gain.

“Growth should turn positive in Q4, amid a rebound in inbound tourism and a smaller trade deficit, but the eighth virus wave and rising inflation will limit the recovery,” said Darren Tay, Japan Economist at Capital Economics.

Tay noted that non-residential investment increased by 1.5% quarter-on-quarter, below consensus of a 2.1% rise and Capital Economics’ own estimate for a strong 3% growth rate.

Exports grew by 1.9% but were overwhelmed by hefty gains in imports, meaning external demand subtracted 0.7 percentage points from GDP.

Prime Minister Fumio Kishida’s government is stepping up support for households to try to ease the effects of inflation, with 29 trillion yen ($206.45 billion) in extra spending in the budget. The Bank of Japan has also maintained its ultra-loose monetary stimulus program to help revive the economy.

Capital Economics’ Tay sees a tough 2023 for Japan.

“As for 2023, Japan will be dragged into a mild recession in H1 by a global downturn that will weigh on exports and business investment.”

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Business

UK economy shrinks at start of feared long recession

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  • GDP in Q3 -0.2% q/q vs Reuters poll -0.5%
  • Sept economic output -0.6% m/m vs poll -0.4%
  • GDP in July and August revised up
  • Economists still see UK going into recession
  • Finance minister predicts “tough road ahead”

LONDON, Nov 11 (Reuters) – Britain’s economy shrank in the three months to September at the start of what is likely to be a lengthy recession, underscoring the challenge for finance minister Jeremy Hunt as he prepares to raise taxes and cut spending next week.

Economic output shrank by 0.2% in the third quarter, less than the 0.5% contraction analysts had forecast in a Reuters poll, Friday’s official data showed.

But it was the first fall in gross domestic product since the start of 2021, when Britain was still under tight coronavirus restrictions, as households and businesses struggle with a severe cost-of-living crisis.

Britain’s economy is now further below its pre-pandemic size – it is the only Group of Seven economy yet to recover fully from the COVID slump – and is smaller than it was three years ago on a calendar-quarter basis.

The Resolution Foundation think tank said that although the fall was smaller than investors had feared, it left Britain on course for its fastest return to recession since the mid-1970s.

Its research director James Smith said the figures provided a sobering backdrop for Hunt’s Nov. 17 budget announcement, when he will try to convince investors that Britain can fix its public finances – and its credibility on economic policy – after Liz Truss’s brief spell as prime minister.

“The Chancellor will need to strike a balance between putting the public finances on a sustainable footing, without making the cost-of-living crisis even worse, or hitting already stretched public services,” Smith said.

Responding to the data, Hunt repeated his warnings that tough decisions on tax and spending would be needed.

“I am under no illusion that there is a tough road ahead – one which will require extremely difficult decisions to restore confidence and economic stability,” Hunt said in a statement.

People walk across Millennium Bridge with the City of London financial district seen behind, amid the coronavirus disease (COVID-19) pandemic, in London, Britain, January 20, 2021. REUTERS/Hannah McKay

“But to achieve long-term, sustainable growth, we need to grip inflation, balance the books and get debt falling,” he added. “There is no other way.”

RECESSION REALITY

The Bank of England said last week that Britain’s economy was set to go into a recession that would last two years if interest rates were to rise as much as investors had been pricing.

Even without further rate hikes, the economy would shrink in five of the six quarters until the end of 2023, it said.

“Fears of a recession are turning into reality,” Suren Thiru, economics director for the Institute of Chartered Accountants in England and Wales, said.

“This fall in output is the start of a punishing period as higher inflation, energy bills and interest rates clobber incomes, pushing us into a technical recession from the end of this year.”

In September alone, when the funeral of Queen Elizabeth was marked with a one-off public holiday that shut many businesses, Britain’s economy shrank by 0.6%, the Office for National Statistics said. That was a bigger monthly fall than a median forecast for a 0.4% contraction in the Reuters poll and the largest since January 2021, when there was a COVID-19 lockdown.

But gross domestic product data for August was revised to show a marginal 0.1% contraction compared with an original reading of a 0.3% shrinkage, and GDP in July was now seen as having grown by 0.3%, up from a previous estimate of 0.1%.

The upward revisions to July and August’s GDP data mostly reflected new, quarterly figures on health and education output, alongside some stronger readings from the professional and scientific and wholesale and retail sectors, the ONS said.

Reporting by William Schomberg and David Milliken; Editing by Kate Holton and Catherine Evans

Our Standards: The Thomson Reuters Trust Principles.

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US

Steep water cuts loom as Colorado River shrinks and Lake Mead level plummets

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Two major announcements could come Tuesday. The first is a forecast from the US Bureau of Reclamation that could trigger the first-ever Tier 2 water shortage for the Lower Colorado River Basin. The second is the bureau’s next step in its a demand that the seven states in the river basin come up with a way to voluntarily cut up to 25% of their water usage, or the federal government will do it for them.

It was just a year ago that the Department of Interior declared the first shortage on the Colorado River — a Tier 1. But the past 12 months did not bring enough rain and snow. A report from July shows Lake Mead, which the agency uses to determine shortage conditions, is hovering around 1,040 feet above sea level, after having dropped 10 feet in just two, dry months.

Tuesday’s report is all but certain to show Lake Mead will be below 1,050 feet come January — the threshold required to declare a Tier 2 shortage beginning in 2023. The question is how far below that threshold it will be. If the forecast is below 1,045 feet, which recent forecasts would suggest it will be, then mandatory water cuts will expand beyond Arizona, Nevada and Mexico and into California for the first time.

But the growing concern is that the mandatory cuts — a system that was updated as recently as 2019 — aren’t enough to save the river in the face of a historic, climate change-driven drought. States, water managers and tribes are now back at the negotiating table to figure out how to solve the West’s water crisis.

“We thought we were good, but the last few years have been so dry that we realized those tier reductions weren’t enough and aren’t enough,” Bill Hasencamp, the Colorado River resources manager with the Metropolitan Water District of Southern California, told CNN. “So the two things we’re focused on is how do we get through the next three years without the system crashing, and then how do we develop a long term plan to sustain the Colorado River.”

‘There’s only so much water’

The Colorado River’s water was divvied up among seven states in the West a century ago. The pact gave half of the river’s water to the Upper Basin states (Colorado, Utah, Wyoming and New Mexico) and half to the Lower Basin (California, Arizona and Nevada). Mexico — through which the river flows before it reaches the Gulf of California — was also guaranteed an allotment.

There was one major problem: Having been written in the 1920s, at a time when precipitation was higher than normal, the pact overestimated how much water the Colorado River carries. It also did not account for the West’s booming population growth and its hotter and drier future in the face of the climate crisis.

At a June Senate hearing, Bureau of Reclamation chief Camille Touton laid out a stark warning. In order to stabilize the Colorado River Basin, states and water districts must come up with a plan by August 15 to cut 2 to 4 million acre-feet of water usage by next year. (An acre-foot is the amount of water that would fill one acre a foot deep — roughly 326,000 gallons.)

Touton’s proposed cut is a massive amount — the high end of the target is about 25% less water than states currently receive. And the low end of the target represents the vast majority of Arizona’s yearly allotment of Colorado River water.

Touton also made clear in June that if the states cannot come up with a plan, the federal government will act.

“It is in our authorities to act unilaterally to protect the system, and we will protect the system,” she said at the time. “We need to see the work. We need to see the action. Let’s get to the table and let’s figure this out by August.”

But inter-state negotiations are not going well.

John Entsminger, the general manager for the Southern Nevada Water Authority, told CNN that so far not enough of the stakeholders have put forth proposals that would get the basin to Touton’s target. He said he hopes the federal government proposes “some pretty strong measures” that could be acted on immediately.

“Frankly, I’m frustrated because the overwhelming sense I’ve gotten from the negotiations is there aren’t enough people taking this seriously enough and understanding this is about adapting to less water in this river,” Entsminger said.

Nevada has already moved to cut its metropolitan water usage, banning non-functional turf and paying people for years to remove water-intensive lawns, Entsminger said. But agriculture, which takes up a lot of the water from the river, must be part of the equation as well.

“You have to have a contribution from the sector that uses 80% of the water,” he said. “That’s not law, politics, it’s just math.”

Entsminger said other stakeholders that are hesitant to give up their water allotments need to accept a new reality: The river is running dry, and sacrifices must be made.

“It doesn’t matter what can be agreed to because there’s only so much water, and mother nature will figure this out at some point,” he said. “At some point, there’s just not water in the river channel.”

The federal government has not often stepped in and taken control of water management plans from the states, but it has the authority to do so in the Lower Colorado River Basin — which includes Arizona, southern Nevada and southern California. And experts told CNN the threat of federal action is something states will respond to.

“We kind of need the federal government to make some threats to spur action,” John Fleck, a Western water expert and professor at the University of New Mexico, told CNN earlier this year. “Progress seems to happen when the federal government comes in and says to states, you need to do this or we’re going to do something you don’t like.”

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World

Italy’s Lake Garda shrinks to near-historic low amid drought

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SIRMIONE Italy (AP) — Italy’s worst drought in decades has reduced Lake Garda, the country’s largest lake, to near its lowest level ever recorded, exposing swaths of previously underwater rocks and warming the water to temperatures that approach the average in the Caribbean Sea.

Tourists flocking to the popular northern lake Friday for the start of Italy’s key summer long weekend found a vastly different landscape than in past years. An expansive stretch of bleached rock extended far from the normal shoreline, ringing the southern Sirmione Peninsula with a yellow halo between the green hues of the water and the trees on the shore.

“We came last year, we liked it, and we came back this year,” tourist Beatrice Masi said as she sat on the rocks. “We found the landscape had changed a lot. We were a bit shocked when we arrived because we had our usual walk around, and the water wasn’t there.”

Northern Italy hasn’t seen significant rainfall for months, and snowfall this year was down 70%, drying up important rivers like the Po, which flows across Italy’s agricultural and industrial heartland. Many European countries, including Spain, Germany, Portugal, France, the Netherlands and Britain, are enduring droughts this summer that have hurt farmers and shippers and promoted authorities to restrict water use.

The parched condition of the Po, Italy’s longest river, has already caused billions of euros in losses to farmers who normally rely on it to irrigate fields and rice paddies.

To compensate, authorities allowed more water from Lake Garda to flow out to local rivers — 70 cubic meters (2,472 cubic feet) of water per second. But in late July, they reduced the amount to protect the lake and the financially important tourism tied to it.

With 45 cubic meters (1,589 cubic feet) of water per second being diverted to rivers, the lake on Friday was 32 centimeters (12.6 inches) above the water table, near the record lows in 2003 and 2007.

Garda Mayor Davide Bedinelli said he had to protect both farmers and the tourist industry. He insisted that the summer tourist season was going better than expected, despite cancellations, mostly from German tourists, during Italy’s latest heat wave in late July.

“Drought is a fact that we have to deal with this year, but the tourist season is in no danger,” Bendinelli wrote in a July 20 Facebook post.

He confirmed the lake was losing two centimeters (.78 inches) of water a day.

The lake’s temperature, meanwhile, has been above average for August, according to seatemperature.org. On Friday, the Garda’s water was nearly 26 degrees Celsius (78 degrees Fahrenheit), several degrees warmer than the average August temperature of 22 C (71.6 F) and nearing the Caribbean Sea’s average of around 27 C (80 F).

For Mario Treccani, who owns a lakefront concession of beach chairs and umbrellas, the lake’s expanded shoreline means fewer people are renting his chairs since there are now plenty of rocks on which to sunbathe.

“The lake is usually a meter or more than a meter higher,” he said from the rocks.

Pointing to a small wall that usually blocks the water from the beach chairs, he recalled that on windy days, sometimes waves from the lake would splash up onto the tourists.

Not anymore.

“It is a bit sad. Before, you could hear the noise of the waves breaking up here. Now, you don’t hear anything,” he said.

___

Nicole Winfield contributed from Rome.

___

Follow all AP stories on climate change and drought at https://apnews.com/climate-and-environment.

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Business

US economy shrinks for second consecutive quarter

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The US economy shrank for a second consecutive quarter, meeting one of the common criteria for a technical recession and complicating the Federal Reserve’s push to stamp out soaring inflation with a string of aggressive rate rises.

Data published by the commerce department on Thursday showed gross domestic product fell 0.9 per cent on an annualised basis in the second quarter, or a 0.2 per cent fall from the previous quarter. This follows first-quarter GDP data showing the US economy shrank 1.6 per cent in the first three months of 2022.

Back-to-back quarterly contractions meet one definition of a recession, although the US relies on a determination by a group of researchers at the National Bureau of Economic Research who look at a broader range of factors.

The White House has maintained that the US economy is not at present in a recession, with Treasury secretary Janet Yellen saying earlier this week she that would “be amazed” if the NBER declared it was.

She underscored that message at a press conference on Thursday, emphasising that the economy “remains resilient”.

“Most economists and most Americans have a similar definition of recession: substantial job losses and mass lay-offs, businesses shutting down, private-sector activity slowing considerably, family budgets under immense strain. In sum, a broad-based weakening of our economy,” she said. “That is not what we’re seeing right now.”

But two consecutive quarters of negative growth will nonetheless heap further pressure on president Joe Biden, who is contending with low approval ratings and has repeatedly touted a strong economy as one of the big achievements of his administration.

Shortly after the data were published, Biden said: “It’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation.

“But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure. Our job market remains historically strong.”

In a press conference on Wednesday after the Fed raised interest rates by 0.75 percentage points for the second consecutive month, chair Jay Powell said he did not believe the US was in a recession. He pointed to strength in the economy, including in the labour market, but noted that growth would need to slow and the labour market must cool down in order to tame inflation.

The labour market has not yet shown significant signs of weakness, with the US adding jobs at a healthy pace, averaging about 380,000 a month over the past three months. The unemployment rate also remains historically low at 3.6 per cent, just shy of its pre-coronavirus pandemic level.

“Nobody would look at two quarters in the United States of 3.6 per cent unemployment and call that a recession,” said Claudia Sahm, founder of Sahm Consulting and a former Fed economist. “We’re not in a recession in the true sense of the word, which is a broad-based sustained contraction in economic activity.”

The fallout from the GDP data rippled through debt markets. The two-year Treasury yield, which moves with interest rate expectations, plunged, suggesting investors were betting the Fed might have to slow its pace of interest rate increases. The 10-year yield, which moves with growth and inflation expectations, fell to its lowest level since April.

Despite the drop in headline GDP, personal consumption, which offers insight into the health of the US consumer, grew 1 per cent in the second quarter, compared with growth of 1.8 per cent in the first three months of the year.

The biggest drag on second-quarter GDP was a drop in business inventories, which wiped 2 percentage points off the headline figure.

Some economists believe this was a lingering effect of last year’s pandemic economy when business inventories surged as shelves were restocked after Covid-19-related supply chain bottlenecks started to ease. But the slowdown also reflected the damping impact the Fed’s interest rate rises have had on business investment, economists said.

“The inventory data have been very volatile for the past two years. Inventory management has been very difficult, partly because of the supply chain problem and partly because demand for goods was red hot,” said Brian Smedley, an economist at Guggenheim Partners.

The hefty rate increases implemented by the central bank in recent months have begun to put the brakes on the economy, and market participants are watching closely to see if this rapid tightening will tip the US into an official recession.

That has been evident in the housing market. The GDP data show residential investment fell 14 per cent in the second quarter, just as higher interest rates began pulling up mortgage rates. Further increases will pose additional challenges for the housing sector.

Economists said the data were unlikely to change the Fed’s calculus about the path forward for policy.

“I don’t think the GDP print would or should influence the Fed,” said AllianceBernstein economist Eric Winograd.

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Business

US economy shrinks in second quarter, signaling unofficial start of recession | US economy

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The US economy shrank again in the last three months, unofficially signaling the start of a recession.

The commerce department announced Thursday that gross domestic product (GDP) – a broad measure of the price of goods and services – decreased at an annual rate of 0.9% in the second quarter after falling at an annual rate of 1.6% in the first three months.

The bad news will be a major blow for the Biden administration as it prepares for a tough midterm election season. White House officials have tried to tamp down talk of a recession, arguing that many parts of the economy remain strong.

The growth rate stands in marked contrast to the robust 6.9% annual increase in GDP recorded in the final quarter of 2021 when the economy roared back from Covid shutdowns.

The fast pace of growth contributed to soaring inflation – now running at 40-year highs – and the Federal Reserve’s decision to sharply increase interest rates in order to bring down prices.

The changing economic environment was reflected in the GDP report. Consumer spending – the largest driver of the economy – slowed over the quarter but remained positive, rising 1% on an annual basis. Residential fixed investment, or home construction, dropped 14% on an annual basis and slowing business inventories, goods produced but not yet sold by businesses, dragged down the GDP number.

Two quarters of negative GDP growth are widely regarded as a signal that the economy has gone into recession. But the National Bureau of Economic Research (NBER) is the official arbiter of when recessions begin and end. While the GDP figures will play into the NBER’s final verdict, it also looks at a wider range of economic factors, including the jobs market, and is unlikely to give its decision soon.

“The 0.9% annualized fall in GDP in the second quarter is disappointing but doesn’t mean the economy is in recession,” said Andrew Hunter, senior US economist at Capital Economics. “That said, the details show that higher rates and surging inflation are weighing on underlying demand, and we expect only a muted rebound in economic growth over the second half of the year.”

In the meantime, pressure remains on the Biden administration. Surveys of consumer confidence are falling as recession fears grow and Joe Biden’s overall and economic approval poll numbers are at the lowest levels of his presidency.

In a statement, Biden said it was “no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation. But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure.”

Republicans countered that the report shows “Democrats’ reckless economic policies are destroying our economy”.

The latest GDP figures came a day after the Fed announced another three-quarter of a percentage point increase in its benchmark interest rates as it fights to tame inflation.

Prices rose at an annual rate of 9.1% in the year to June, driven up by soaring costs for fuel, food and shelter.

While parts of the US economy remain strong – most notably the jobs market – the Covid pandemic continues to play havoc with global supplies and the war in Ukraine has pushed up energy prices.

The confusing economic outlook has triggered sell-offs in stock markets around the world and led some economists to predict a recession is coming. Nearly 70% of leading academic economists polled by the Financial Times last month predicted the US economy will tip into a recession next year.

Fed chair Jerome Powell said on Wednesday that he did not believe the US was now in a recession. But he said the Fed was prepared to keep raising rates in order to bring prices back down and that it was inevitable that such a move would slow the economy and affect the job market. “Price stability is what makes the whole economy work,” said Powell.

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Health

New Medication Shrinks Cancer in 80% of Patients

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According to a recent study from the University of Michigan, the oral drug zanubrutinib was found to help most patients who had a slow-growing type of cancer known as marginal zone lymphoma.

After using zanubrutinib, 80% of patients with a specific type of lymphoma had their tumors shrink in a clinical trial

Lymphoma cancer is one of the most common cancers in the US, accounting for around 4% of all cancer cases. Lymphoma cancer may occur at any age. It is, in fact, one of the most frequent cancers in children, teenagers, and young adults. Nonetheless, the chance of acquiring Lymphoma cancer increases with age, and more than half of patients are 65 or older when they are diagnosed.

Lymphoma is a kind of cancer that involves the lymphatic system, which is a component of the body’s germ-fighting mechanism. There are many different types of lymphoma, but the two most common are Hodgkin’s lymphoma and Non-Hodgkin’s lymphoma. 

The oral medication zanubrutinib was shown to help most patients with a slow-growing kind of cancer called marginal zone lymphoma in early research conducted by the University of Michigan Health Rogel Cancer Center.

Cancers shrank in 80% of the 20 patients with marginal zone lymphoma who took part in the clinical study, with one-fifth of them going into complete remission.

The medicine had a substantially lower response rate in the 33 people who had follicular lymphoma, a similar type of cancer. Nevertheless, 18% of individuals who underwent imaging showed no signs of cancer.

The most frequent side effects were diarrhea, bruises, and rashes, as well as colds, fevers, and lower levels of white blood cells, which are important for combating infections and are part of the immune system.

Human lymphoma tumor cells that are stained and magnified. Credit: National Cancer Institute/National Institutes of Health

Based on the results of this research as well as a secondary study named MAGNOLIA, the Food and Drug Administration approved zanubrutinib on a contingent basis for adults with marginal zone lymphoma that has returned or proven resistant to other treatments.

“Treatment options with improved tolerability and better disease control were much needed for marginal zone lymphoma and follicular lymphoma,” said Tycel Phillips, M.D., a hematologist at the Rogel Cancer Center, a clinical associate professor at the University of Michigan Medical School and the lead author of the study. “While the small size of this study limits broad conclusions, the safety and efficacy results highlight the potential for zanubrutinib as an addition to available therapies for these cancers.”

Lymphoma is a type of cancer that begins in the lymphatic system, the tissues, and organs that produce and store white blood cells. The marginal zone and follicular lymphomas develop when white blood cells called B cells become damaged and start to grow uncontrollably.

Thus far, physicians have not been able to cure patients of their marginal zone or follicular lymphomas with chemotherapy, so researchers have been eager to find other, more tolerable, and successful treatments for the diseases.

Zanubrutinib is a novel type of drug called a Bruton Tyrosine Kinase inhibitor, which blocks an enzyme known as BTK that plays a crucial role in a signaling pathway that lymphomas are often dependent on in order to survive and grow. The medication is only the third BTK inhibitor to be approved for cancers that begin in B cells.

Reference: “Zanubrutinib monotherapy in relapsed/refractory indolent non-Hodgkin lymphoma” by Tycel Phillips, Henry Chan, Constantine S. Tam, Alessandra Tedeschi, Patrick Johnston, Sung Yong Oh, Stephen Opat, Hyeon-Seok Eom, Heather Allewelt, Jennifer C. Stern, Ziwen Tan, William Novotny, Jane Huang and Judith Trotman, 9 June 2022, Blood Advances. 
DOI: 10.1182/bloodadvances.2021006083



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