Recession Fears, China Lockdowns, Canada Housing: Eco Day

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Welcome to Monday, Americas. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:

• The fastest inflation in decades and the resulting rush by central banks to raise interest rates are stoking recession fears
  • History suggests that the Federal Reserve will face a difficult task in tightening monetary policy enough to cool inflation without causing a U.S. recession, with the odds of a contraction at about 35% over the next two years, according to Goldman
  • China reported its biggest decline in consumer spending and worst unemployment rate since the early months of the pandemic as Covid lockdowns put a strain on the world’s second-largest economy, adding another threat to global growth
  • The threat of defaults across emerging markets is rising. Both Russia and Sri Lanka have struggled to repay sovereign debt in recent days, though under very different circumstances. Bloomberg Economics finds five other countries particularly exposed to this risk: Tunisia, El Salvador, Pakistan, Ethiopia and Ghana
• President Joe Biden will nominate Michael Barr, a Treasury Department veteran and one of the architects of the Dodd-Frank Act of 2010, as the Fed’s chief banking supervisor
• U.S. Treasury officials blamed the Internal Revenue Service’s outsized number of audits on low-income households on severe underfunding of the agency by Congress
• President Andres Manuel Lopez Obrador failed in his effort to restore state control of Mexico’s electricity sector, falling short of the two-thirds majority needed in the lower house of congress to change the constitution
• Canada’s housing minister has a daunting target in front of him as his government tries to rein in skyrocketing housing prices: doubling the pace of housing construction in the country within 10 years
• Finally, here’s what to look out for in the world economy this week

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