MoneyWeek

“The only function of economic forecasting is to make astrology look respectable,” said JK Galbraith. Predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, especially if you are a picky Virgo like me. That is why we haven’t been too fazed by the Bank of England’s forecast of a 15-month recession. Its record is no better than any other forecaster’s, to put it charitably. A year ago it thought inflation would peak at 4%. Now it thinks inflation is heading for 13%. It was too gloomy about the impact on GDP of the Brexit vote and failed to predict the 2008 financial crisis. All official forecasters did. The US Federal Reserve said in January 2008, when the credit crunch was spreading fast, that the US would expand by up to…

A long battle over the $156m estate left by Prince (pictured) has ended, six years after the musician died without a will, says Rolling Stone. Prince, who died in April 2016, had no spouse or children, leading to a complex process of dividing his assets between six siblings and half-siblings. Three of the heirs agreed to sell their interests to music publishing firm and talent company Primary Wave and two died before the matter was concluded. Further delays resulted from a dispute between the US Internal Revenue Service (IRS) and estate executor Comerica Bank over the value of intangible assets, such as music, name and likeness rights. Comerica valued the estate at $82.3m and the IRS at $163.2m, with the argument resolved largely in the IRS’s favour in January. The…

The Bank of England has set off “the most piercing of warning sirens”, says Faisal Islam on the BBC. Last week the Bank’s Monetary Policy Committee (MPC) raised interest rates by half a percentage point to 1.75%, “the largest interest-rate rise in a quarter of a century”, while forecasting that inflation will peak at 13% later this year. Even more shocking, it is now predicting that the UK is heading for “a recession as long as the great financial crisis and as deep as that seen in the early 1990s”. The Bank reckons that inflation will still be near double digits this time next year, while GDP will contract in the last quarter of this year and throughout the whole of 2023, say Delphine Strauss and George Parker in the Financial…

Global food prices recorded their steepest monthly fall since 2008 in July. The UN Food and Agriculture Organisation’s FAO food price index, which tracks a basket of soft commodities including sugar, meat, and cereals such as wheat and maize, fell 8.6% , says Euronews. But food prices are still up 13.1% since July 2021. The index hit a record high in March after Russia invaded Ukraine. “Together, Russia and Ukraine accounted for around 30% and 20% of global wheat and maize exports, respectively, over the past three years.” The price declines suggest that a global economic slowdown is weighing on household and industrial commodity demand, and consequently prices, says Myra Saefong in Barron’s. Good harvests have also helped lower food prices. The pullback may be a sign that “inflation will soon…

“Greece is having a good summer”, says Helena Smith in The Guardian. With a million visitors a week descending on Athens, this year’s tourist season looks likely to top 2019, the previous record. That year brought in 33.1 million visitors and netted the country €18.2bn in revenue. “Tourism accounts for 25% of Greece’s economic output and one in five jobs.” The irony is that after years of crisis, low wages mean that “an estimated 43 % of the labour force can’t afford to take a holiday” of their own. However, the tourism boom should still see GDP growth hit 4% this year, according to forecasts from the European Commission. That would see Greece comfortably outperform the wider eurozone, which is forecast to grow about 2.6% in 2022. The ASE index of local…

“So much for the soft landing... It’s now a painful thud,” says Elizabeth Knight in The Sydney Morning Herald. Australian house prices fell by 1.3% in July, says CoreLogic. In Sydney they tumbled 2.2% for the month and are down 5.2% from their January apex: the local market is “plummeting” at its “fastest pace in 40 years”. The cause is rising interest rates. Having started tightening monetary policy “too late”, the Reserve Bank of Australia (RBA), the central bank, is playing “catchup” at “warp speed”. Tighter monetary policy has weighed on the stockmarket, with the benchmark S&P/ ASX 200 index down 7.5% since the start of the year. Still, that is better than many other developed markets, reflecting a heavy weighting towards commodities, which account for more than a fifth of…