The daily business briefing: January 18, 2022
Airline CEOs warn 5G rollout will disrupt flights, China reports its economic growth slowed in late 2021, and more
Airline CEOs warn 5G rollout could disrupt flights, commerce
Top airline executives on Monday warned that a "catastrophic" aviation crisis could cause "the nation's commerce" to "grind to a halt" Wednesday when AT&T and Verizon launch new 5G service. The chief executives of American, Delta, United, Southwest, and other airlines wrote in a letter to federal transportation and commerce officials that potential interference with sensitive aircraft instruments such as altimeters could render some widebody aircraft unusable, potentially stranding "tens of thousands of Americans overseas" and triggering "chaos" on domestic routes. "Unless our major hubs are cleared to fly, the vast majority of the traveling and shipping public will essentially be grounded," the CEOs wrote in the letter. The Federal Aviation Administration has told the wireless carriers to reduce power to 5G transmitters near airports.
China reports economy slowed down in late 2021
Chinese officials announced Monday that the country's economy expanded by just 4 percent in the fourth quarter of 2021, the slowest pace since the start of the COVID-19 recovery in the second quarter of 2020. Beijing is trying to contain any further economic damage by dialing back some of its efforts to tighten monetary policy. China's central bank said Monday it would cut two key interest rates, potentially setting the stage for further cuts. "More stimulus measures [are] likely to be unveiled if domestic and external circumstances remain unfavorable," said Eswar Prasad, a professor of trade policy and economics at Cornell University and a former head of the International Monetary Fund's China division.
Europe EV sales surpass diesels for 1st time
Europeans had more sales of electric cars than diesels in December, a first. EVs accounted for more than 20 percent of new cars sold in Europe and Britain during the month, according to data compiled by Matthias Schmidt, a Berlin analyst who tracks electric-vehicle sales. Diesel-car sales fell below 19 percent, down from more than 50 percent as recently as 2015. The figures underscored how quickly electric vehicles are pushing into the mainstream as diesels, once popular in the European Union, are falling out of favor. Incentives offered by governments struggling to fight climate change by reducing carbon emissions have helped, as has the increasing variety of electric vehicles that motorists have to choose from.
Stock futures plunge as Treasury yields rise
U.S. stock futures fell sharply early Tuesday as government bond yields hit pandemic-era highs ahead of more corporate earnings reports. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down by 0.8 percent and 1.2 percent at 6:30 a.m. ET. Futures for the tech-heavy Nasdaq were down by 1.8 percent. U.S. markets were closed Monday for the Martin Luther King holiday. The turmoil came after the closely watched two-year Treasury yield rose above 1 percent for the first time since February 2020, just before the coronavirus pandemic hit and dragged the U.S. economy into a recession. The 10-year Treasury rose to 1.83 percent, the highest since January 2020. The movement came as expectations mounted that the Federal Reserve will speed up rate hikes to fight high inflation.
China's birthrate falls to record low
China announced Monday that its birthrate fell for the fifth straight year in 2021, hitting a record low. The decline is pushing China, the world's most populous country, toward the potentially disastrous point where its population will start to shrink. Life expectancy is increasing, leaving the country with fewer people of working age relative to those too old to work. The changes could create labor shortages and slower economic growth that would make it harder to support an aging population. China's ruling Communist Party has tried to raise the birthrate by relaxing its infamous "one child" policy, letting couples have two children starting in 2016 and up to three starting last year. "China is facing a demographic crisis," said Yi Fuxian, a professor at the University of Wisconsin-Madison.