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Volatile Food Prices to Persist; College Degrees Less Important in Tight U.S. Labor Market
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Good day. After a year in which food-price inflation surged in the U.S., analysts expect swings in food prices to be more frequent because almost a quarter of global food exports now have a foreign component, according to data from the World Trade Organization. For instance, Scotch whisky is sometimes made with barley from Ukraine. Energy shortages, supply problems for key agricultural commodities and high fertilizer prices are feeding into higher food prices, and they will rise 3% to 4% next year in the U.S., above historical rates, the Agriculture Department projects. Meanwhile, more employers in the U.S. are eliminating one of the biggest requirements for many higher-paying jobs as a tight labor market also fuels inflation: a college degree. For example, Alphabet Inc.’s Google, Delta Air Lines Inc. and International Business Machines Corp. have reduced
educational requirements for certain positions and shifted hiring to focus more on skills and experience.
Now on to today’s news and analysis.
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Globalized Supply Chain Brings More-Turbulent Food Prices
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The volume and variety of food crossing borders has jumped as the world has globalized.
PHOTO: CARLOS OSORIO/REUTERS
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For decades, globalization has increased the variety and reduced the cost of food. Now the pandemic, war in Ukraine and other global disruptions have shown how that complex supply chain can also result in more turbulent prices.
Food-price inflation hit multidecade highs this year in the U.S. and elsewhere, outpacing overall consumer prices. While food inflation has cooled in recent weeks, food prices globally are still 25% higher than before Covid-19 struck in early 2020, according to the United Nations Food Price Index.
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Employers Rethink Need for College Degrees in Tight Labor Market
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U.S. job postings requiring at least a bachelor’s degree were down to 41% in November, off from 46% at the start of 2019 ahead of the Covid-19 pandemic, according to an analysis by the Burning Glass Institute think tank.
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Junk-Rated Firms Face Greater Downgrade Risks as Economy Slows
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Default rates for low-rated U.S. companies are likely to reach 3.75% for the 12 months ending in September 2023, up from 1.6% in September 2022, but lower than the long-term average of 4.1%, ratings firm S&P Global Ratings said.
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Backers of Farmworker Visa Overhaul Push for Immigrant Labor Deal
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Lawmakers, agriculture groups and farmworker organizations are pushing to pass an overhaul of the farmworker visa program through both chambers of Congress before the GOP takes control of the House next year.
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Surviving Inflation and Economic Turbulence
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C-suite executives and other business leaders are planning for a period where inflation is sticky, interest rates are rising, the geopolitical landscape is fraught with tumult and economies across the globe are slowing.
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Here’s a guide from WSJ’s C-suite newsletters on how executives are tackling these challenges:
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Key Developments Around the World
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China Faces Challenges Despite Latest Moves to Stimulate Growth
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Steps to adjust Covid-19 controls and revive a beaten-down property market stirred hopes Xi Jinping is focused on supporting the economy. But many doubt China will return to the heady expansion of prepandemic days soon, if ever.
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Oil Prices Face Fresh Volatility With New Russia Sanctions
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OPEC and its allies are due to make a big call on oil output a day before expanded sanctions are set to strike Russia’s energy industry, helping to raise uncertainty for the oil market as coronavirus outbreaks hit demand in China.
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The Bahamas Is Picking Up the Pieces After FTX
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The Bahamas has been encouraging crypto firms to make themselves at home, promising a copacetic regulatory touch—exactly what FTX’s founder was looking for when he decided to move its headquarters from Hong Kong.
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Climate Change Summit Leaves Hope for Limiting Global Warming
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Governments left the U.N. climate summit this month with doubts that global temperature increases can be limited to 1.5C from preindustrial levels—but with hope that a more realistic goal, 1.7C degrees, is within reach.
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Financial Regulation Roundup
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FTX’s Collapse Upends Sam Bankman-Fried’s Washington Play
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Sam Bankman-Fried’s Washington charm offensive revolved around a small financial regulator and senators with whom the purported crypto billionaire found common cause in a bid for light-touch regulation of digital assets.
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Audit Standards Overseer Also Backs Startups
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An accounting trade body has invested in audit-related tech startups, while setting auditing standards and overseeing millions of audits—prompting concerns within the industry of potential conflicts of interest.
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Banks in Talks to Reimburse Scammed Zelle Customers
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Some of America’s biggest banks, including JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp., are devising a plan to compensate customers who fall victim to scams on their Zelle payment network.
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9 a.m.: ECB’s Lagarde speaks at hearing of Committee on Economic and Monetary Affairs of European Parliament
12 p.m.: New York Fed’s Williams speaks at Economic Club of New York; MarketWatch interview with St. Louis Fed’s Bullard
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3:10 a.m.: ECB’s de Guindos speaks at XIII Encuentro Financiero organized by Expansión
8:30 a.m.: ECB’s Schnabel speaks at Frankfurter Konjunkturgespräch organized by IG Metall in Frankfurt; Canada gross domestic product
9 a.m.: S&P CoreLogic Case-Shiller Home Price Index for September
10 a.m.: The Conference Board Consumer Confidence Survey for November; Bank of England’s Bailey speaks at House of Lords Economic Affairs Committee hearing
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Mega-Companies Messed Up U.S. Job Market. They’re Doing it Again.
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What could actually be coming is a reshuffling in the U.S. labor market, with many of the workers who got swept up by public companies after the pandemic hit ending up elsewhere, Justin Lahart writes.
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Sales of newly built U.S. homes rose in October from the prior month, led by sales of higher-priced homes, offering some relief for a housing market that has been clobbered by the doubling of mortgage rates. New-home sales rose 7.5% in October from September to a seasonally adjusted annual rate of 632,000, the Commerce Department said. That marked a reversal from the previous month when new-home sales fell about 11% in September from August. (Dow Jones Newswires)
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Mexico’s economy posted a fourth consecutive quarter of growth in the third quarter, with gains in services, industrial production and agriculture supported by solid external and domestic demand. Gross domestic product expanded 0.9% from the previous quarter in seasonally adjusted terms, the National Statistics Institute said. (DJN)
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Brazil recorded a current-account deficit of $4.6 billion in October, from a deficit of $5.7 billion in September, the country's central bank said Friday. The 12-month current-account deficit reached $60.3 billion in October, from a revised $61.7 billion the month before, the bank said. (DJN)
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Confidence in Brazil's construction in November fell to the lowest level since March, hit by political uncertainty, according to the monthly survey carried out by the Getulio Vargas Foundation, or FGV. The confidence index fell 5.3 points to 95.6, the biggest decline since April, the FGV said. (DJJN)
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Malaysia's consumer prices continued to rise in October, but at a slower pace than in September. The Southeast Asian nation's consumer-price index increased 4.0% in October from a year earlier, data from the Department of Statistics showed on Friday. The result was slightly higher than the median 3.9% increase forecast by six economists in a Wall Street Journal poll. (DJN)
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The German economy grew in the third quarter, beating expectations despite high inflation and uncertainty regarding energy supplies due to Russia’s invasion of Ukraine. According to a second estimate for the period released Friday by German statistics office Destatis, gross domestic product grew by an adjusted 0.4% from the previous period. A first estimate showed 0.3% growth. (DJN)
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Consumer confidence in Germany is set to continue to stabilize in December, although remaining at a low level, as research group GfK’s forward-looking consumer-sentiment index forecasts confidence rising to minus 40.2 next month from minus 41.9 this month. Economists polled by the Journal forecast a reading of minus 40.0. (DJN)
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This newsletter is compiled by James Christie in San Francisco.
Send us your tips, suggestions and feedback. Write to:
James Christie, Jon Hilsenrath, Michael S. Derby, Nell Henderson, Nick Timiraos, Paul Hannon, Kim Mackrael, Tom Fairless, Megumi Fujikawa, Perry Cleveland-Peck, Michael Maloney, Paul Kiernan, James Glynn
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