September 30, 2023


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Debating reform after GameStop, regulators eye POS lending, and the ‘divergent economic fortunes’ caused by vaccine delays: This Week in Finance

Welcome to This Week in Finance, your weekly roundup of the conversations trending among financial professionals on LinkedIn. Click Subscribe to be notified of each edition. This week:

Is reform needed after GameStop?

As investors and the public catch their breath and start to analyze the GameStop stock-market saga, the conversation is turning to what comes next. Ideas for reform, especially in the regulatory and policy arenas, are now emerging and becoming the subject of debate. What should be the next steps for regulators or the industry? If reform is needed, where should it begin? 💲 See what regulatory and compliance professionals are saying.

  • Robinhood lifts trading limits: GameStop shares climbed Friday but are down 87% from the peak they hit a week ago. Robinhood had set temporary limits on purchases of the stock and others as it sought to shore up its capital, prompting outcry from retail investors.
  • Lights, camera, GameStop: Streaming giants and film producers are already racing to turn the GameStop market frenzy into a Hollywood movie.

Rosier outlook for U.S. economy

The U.S. economy will grow back to its pre-pandemic levels faster than originally predicted, according to projections released by the Congressional Budget Office. The country should see its gross domestic product return to its pre-pandemic level by the middle of 2021, earlier than first predicted over the summer. A combination of vaccines and relief spending — including financial help for households and businesses — will help the economy recover “rapidly” and the labor market return to “full strength quicker than expected.” 💲 Here’s what people are saying.

  • January jobs rise by just 49K: The U.S. economy added 49,000 jobs last month, partly reversing a drop in December but revealing continued weakness in a labor market that has regained about half of jobs lost to the pandemic. While the unemployment rate also fell — to 6.3% from 6.7% — participation in the workforce slipped, the Labor Department report showed.

UK regulator eyes point-of-sale lenders

“Buy now pay later” firms such as Klarna and Clearpay are to be regulated by the Financial Conduct Authority after a report warned of the risk of people running into “unseen debt.” The services, which allow people to defer payment for goods or pay in installments, have a younger client base on average. A report for the financial regulator found that use of BNPL services quadrupled in 2020 and that one in 10 customers had existing debt arrears. The report calls for lenders to perform affordability checks on shoppers and ensure customers are treated fairly, particularly those struggling with repayments. 💲 Here’s what people are saying.

Worst year for oil in decades

The pandemic has taken a massive toll on Big Oil as demand has all but dried up, with global travel still largely restricted and swaths of ex-commuters working from home. Energy was the worst-performing sector in the S&P 500 last year, noted The Wall Street Journal. Exxon Mobil and BP reported annual losses of $22 billion and $18.1 billion, respectively, and for Exxon Mobil it was the fourth consecutive loss for the first time in modern history.

Fed struggles with diversity

While the Federal Reserve shapes policy to keep Black Americans from being hit harder by economic downturns, its own ranks remain almost entirely White, according to The New York Times. This employment conundrum, in which fewer than 1% of the central bank’s economists are Black, is driven by hiring practices that favor elite institutions — and a culture that can be less than welcoming. Black Americans, making up 13% of the U.S. population, account for 3% to 4% of economists. 💲 Here’s what people are saying.

Debating a $15 minimum wage

Debate is intensifying over President Joe Biden’s plan to increase the minimum wage over four years to $15 an hour. His advisers say large national employers, including Amazon, Walmart, and Home Depot, have done incredibly well during the pandemic, but compensation hasn’t necessarily followed suit. Critics of Biden’s plan say the risk of job losses is high, particularly in states with lower costs of living. 💲 Here’s what people are saying.

  • LinkedIn reached out to economists, frontline workers, small-business owners, and policymakers about what an increase in the federal minimum wage to $15 would mean. Here’s what they said.

Is the U.S. slipping in innovation?

The U.S. is no longer among the world’s 10 most innovative countries, according to the latest Bloomberg Innovation Index. Slipping to 11th place, the nation scored poorly in higher education as visa policies and the pandemic kept foreign students away. South Korea ranked first thanks to its increase in patent activity and strong R&D and manufacturing performance. The gap between the U.S. and China (16th) continues to steadily narrow in the rankings, which this year “reflect a world where the fight against COVID-19 has brought innovation to the fore,” per Bloomberg. 💲 Here’s what people are saying.

Vaccine delays hurt global rebound

Vaccination timetables are being revised across much of the world, since wealthier countries are getting the lion’s share of inoculations. Disputes over vaccine shortages have also escalated as some countries run into trouble sourcing enough doses. All of this threatens to cause “divergent economic fortunes” in the near term, reported The Wall Street Journal, with much of the world “battling the pandemic and its economic effects well into 2022 or beyond.” The International Monetary Fund forecasts the U.S. economy will grow 5.1% this year, while the outlook is murkier for eurozone and developing economies. 💲 Here’s what people are saying.

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With Riva Gold, Jessica Hartogs, Cate Chapman, Siobhan Morrin, Jake PerezAlexander Besant, and Capucine Yeomans.

What’s your take on the week’s news and other developments impacting you or your business? Join the conversation in the comments below.

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