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<ul class="summary-list"><li>Russia's economy is growing but headed for big trouble, researchers wrote in a recent article. </li><li>They pointed to Russia's outsized military spending, which has come at the cost of its private sector.</li></ul>Russia's wartime economic boom is masking much deeper problems, according to a group of researchers.The authors of a recent article, who hail from institutions including the Yale School of Management, the Wharton School, the Carnegie Endowment, and the Kyiv School of Economics, cast a stark warning for Russia's economic situation despite the nation posting strong growth numbers since its invasion of Ukraine in 2022.Russia's economy is expected to <a target="_blank" href="https://www.imf.org/en/Countries/RUS">expand another 2.4% this year</a>, according to figures from the International Monetary Fund. However, much of that growth stems from the Kremlin's wild spending spree, and Russia's economy is hindered by a number of problems that could set it up for trouble in the long run, the researchers said."The reality of Russia's economic situation is far more complex and concerning than some would have you believe. The productive core of the Russian economy has been severely compromised," the group wrote in <a target="_blank" class="" href="https://fortune.com/europe/2024/08/19/an-economic-catastrophe-is-lurking-beneath-russias-gdp-growth-as-putin-throws-everything-into-the-fireplace/">an op-ed for Fortune</a> this week.Russia has been spending heavily on its military and defense sectors, setting a <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-putin-ukraine-war-military-spending-budget-kremlin-inflation-2023-10">record military budget for 2024</a>. But that spending has come at a cost to Russia's private sector, some economists say, with other areas of its economy being slammed by a <a target="_blank" class="" href="https://www.businessinsider.com/russia-lacks-workers-ukraine-war-labor-crisis-worker-shortage-2023-12">severe shortage of workers</a> as resources get funneled into Russia's invasion of Ukraine.Private firms are showing signs they're unable to keep up with <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-war-spending-casualties-manpower-mobilization-labor-shortage-inflation-2024-8">consumer demand</a>. That imbalance has caused <a target="_blank" class="" href="https://www.businessinsider.com/russia-war-economy-boosts-wages-salaries-beat-inflation-labor-crunch-2024-2">wages</a> and <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-inflation-outlook-ukraine-war-gas-prices-oil-sales-2024-7">inflation</a> to spiral in the nation, prompting central bankers in Russia to <a target="_blank" class="" href="https://www.reuters.com/markets/rates-bonds/russian-central-bank-hikes-rates-by-200-bps-18-highest-more-than-two-years-2024-07-26/#:~:text=MOSCOW%2C%20July%2026%20(Reuters),an%20overheated%20economy%20come%20down.">hike interest rates to 18% in July.</a>"Simply put, Putin's administration has prioritized military production over all else in the economy, at substantial cost," the researchers wrote. Higher borrowing costs could spell trouble for Russian consumers, who are increasingly burdened by debt. <a target="_blank" class="" href="https://www.ceicdata.com/en/indicator/russia/household-debt--of-nominal-gdp">Household debt</a> accounted for 20% of Russia's total GDP at the end of the first quarter, according to CEIC data. Higher interest rates, in that backdrop, could set the nation up for a "looming crisis," the researchers added.Meanwhile, Russia's finances aren't squaring, partly because the nation is taking in less money from its <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/russian-energy-revenue-crude-oil-prices-gas-exports-sanctions-ukraine-2024-1">oil and gas trade. </a>The nation is running a 2% budget deficit — which is "significant" by Russia's standards, the researchers added. "In conclusion, the apparent resilience of the Russian economy is largely illusory, built on a precarious foundation of unsustainable government spending and short-term market factors," the researchers wrote. "A looming economic catastrophe driven by the fundamental flaws in Russia's current strategy will likely set the stage for severe long-term consequences that will play out in the years ahead," they added.Experts have warned of a dire future for Russia as it drags its economy through a third year of war. On the extreme end, forecasters are calling for the nation to <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-collapse-recession-moscow-ukraine-war-us-dollar-energy-2024-7">enter a severe recession</a>, with most experts agreeing that the nation has <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-real-situation-economist-ukraine-war-sanctions-growth-inflation-2023-11">poor prospects for long-term growth</a>.

Russia's economic growth is masking a looming 'economic catastrophe,' researchers say

<ul class="summary-list"><li>Texas' economy is growing faster than California's as it woos big companies and new residents.</li><li>While California still has the highest GDP in the US, Texas is close behind.</li></ul>California may boast the <a target="_blank" class="" href="https://www.businessinsider.com/california-economy-ranks-5th-in-the-world-beating-the-uk-2018-5">top economy</a> in the country, but Texas is close on its heels.Since 2020, big-name companies and hundreds of thousands of residents have ditched California for Texas, and the Lone Star State's economic growth has surpassed that of its coastal counterpart.California's economy, while still on the up and up, has grown "relatively slowly" in recent years, according to an October 2024 <a target="_blank" class="" href="https://www.ppic.org/publication/californias-economy/?utm_source=ppic&amp;utm_medium=email&amp;utm_campaign=epub">fact sheet</a> from the Public Policy Institute of California, averaging an uptick of 2.3% annually from 2020 to 2023. That figure is down from a 3.9% average increase in California's gross domestic product in the prior four years, according to the nonprofit research institute.Meanwhile, Texas has seen its GDP grow at a rate of 3.9% since 2020, according to the Public Policy Institute. That figure is even stronger for the fourth quarter of 2023, which saw Texas' GDP grow at an annual rate of 5% — a jump that Texas Gov. Greg Abbott <a target="_blank" class="" href="https://gov.texas.gov/news/post/texas-economy-again-expands-faster-than-nation#:~:text=%E2%80%9CTexas%20is%20again%20outpacing%20the,America%2C%E2%80%9D%20said%20Governor%20Abbott.">attributed</a> to the state being "the best business climate" in the country.The margins between the behemoths are close and growing closer. California's economy ranks 5th internationally, per the report. Its $3.9 trillion GDP accounts for 14% of the national GDP, according to the report. But Texas isn't far behind, comprising 9% of the country's total economy and coming in eighth internationally, according to <a target="_blank" class="" href="https://www.bea.gov/news/2024/gross-domestic-product-state-and-personal-income-state-4th-quarter-2023-and-preliminary">data</a> released by the Bureau of Economic Analysis earlier this year.California and Texas, which rank first and second in US population, respectively, have both seen their economies grow faster than the nation's overall economy in the last quarter-century. Since 1998, the US economy has increased 75%, while California's has jumped 111%, according to the Public Policy Institute of California.But Texas has them both beat with growth of 128% over that same time period, per the fact sheet.<h2 id="9e346c45-d5ad-41de-84b8-ba0fb92f4093">Texas has wooed major money-makers</h2>Texas' speedy financial growth comes as the state has increasingly <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-moving-spacex-x-texas-headquarters-california-law-2024-7">marketed itself as a corporate haven</a> for businesses and an economic refuge for people seeking a more affordable cost of living.Many of the businesses and people who have flocked to Texas come directly from California.A wave of large companies, including <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-wants-move-spacex-x-headquarters-texas-tesla-california-2024-7">Tesla</a>, Charles Schwab, and Oracle, have ditched The Golden State for Texas in recent years. <a target="_blank" class="" href="https://www.businessinsider.com/texas-company-headquarters-hq-tesla-chevron-charles-schwab-california-economy-2024-8">Chevron</a>, which had been in California since 1879, is the latest business to leave for Texas after California sued the company last year over fossil fuel risks.Gov. Abbott welcomed Chevron to the state last month with a clear message: "Drill baby drill," he tweeted.Corporate fans of Texas, chief among them billionaire Elon Musk, say the <a target="_blank" class="" href="https://www.businessinsider.com/moving-to-texas-because-california-regulations-too-tough-on-business-2024-2">state offers lower taxes and less regulation</a>. The Tesla CEO moved the company's HQ from Palo Alto, California, to Austin in 2021.Since then, several major corporations have followed suit. As of 2024, Texas is <a target="_blank" class="" href="https://www.visualcapitalist.com/map-the-number-of-fortune-500-companies-in-each-u-s-state/">home</a> to 52 Fortune 500 companies, according to <a target="_blank" class="" href="https://fortune.com/ranking/fortune500/search/?statename=California">Fortune</a>.While California still has Texas beat with 55 Fortune 500 companies based in the state, including tech giants like Apple, Alphabet, Meta, and Nvidia, the state's lead is growing ever thinner. According to CBRE, a global real estate company that itself moved from California to Texas in 2020, <a target="_blank" class="" href="https://www.cbre.com/insights/local-response/the-shifting-landscape-of-headquarters-change-among-the-fortune-500">found</a> that eight Fortune 500 companies left California from 2018 to 2023, seven of which moved to Texas.<h2 id="baf0885e-765f-4f23-b1e6-69005786fc91">Some Texas residents are less happy</h2>As Texas' economy soars, some residents are feeling <a target="_blank" class="" href="https://www.businessinsider.com/texas-housing-market-home-prices-falling-austin-dallas-moving-trends-2024-10">increasingly fed up and priced out.</a>Hundreds of thousands of Americans <a target="_blank" class="" href="https://www.businessinsider.com/moved-california-to-texas-will-never-go-back-expensive-2023-5">flocked to Texas</a> in the years since the COVID-19 pandemic began, many seeking cheaper living and <a target="_blank" class="" href="https://www.businessinsider.com/conservative-moved-california-to-texas-back-orange-county-dallas-2024-7">pandemic and political freedoms</a>. Between 2021 and 2022, the state gained 668,000 new residents, according to the US Census Bureau <a target="_blank" class="" href="https://www.census.gov/data/tables/time-series/demo/geographic-mobility/state-to-state-migration.html">data</a>.During that same period, however, <a target="_blank" class="" href="https://www.businessinsider.com/leaving-texas-political-freedom-property-taxes-housing-costs-2023-11">Texas also lost nearly half a million people</a>, per census data.Some people <a target="_blank" class="" href="https://www.businessinsider.com/california-moved-texas-homeless-want-to-go-back-2024-9">who left California for Texas</a> in recent years ended up returning to the Golden State, telling BI that the <a target="_blank" class="" href="https://www.businessinsider.com/couple-moved-california-texas-back-santa-cruz-rosenberg-2023-11">intense weather</a> and <a target="_blank" class="" href="https://www.businessinsider.com/leaving-texas-political-freedom-property-taxes-housing-costs-2023-11">politics</a> in Texas were too much for them. Others told Business Insider they were dismayed to discover that the <a target="_blank" class="" href="https://www.businessinsider.com/moved-california-to-texas-not-cheap-politics-2024-8">cost of living in Texas </a>didn't meet their expectations.In the Dallas, Fort Worth, and Arlington areas, consumer prices have jumped 25% over the last five years, <a target="_blank" class="" href="https://fred.stlouisfed.org/series/CUURA316SA0">according</a> to the Bureau of Labor Statistics.The state's big cities have primarily been the site of these small-scale exoduses, Business Insider's Jennifer Sor previously reported. Dallas has seen a slight population decline over recent years, losing about 5,000 people from mid-2020 to mid-2023, according to <a target="_blank" class="" href="https://www.census.gov/data/tables/time-series/demo/popest/2020s-total-cities-and-towns.html">census data. </a>Meanwhile, <a target="_blank" class="" href="https://www.businessinsider.com/austin-home-prices-falling-texas-mortgage-rates-housing-crisis-success-2024-9">Austin</a> ranks as the fifth most moved-out-of city in the US year to date, according to a May <a target="_blank" class="" href="https://www.pods.com/blog/moving-trends">analysis</a> from moving firm PODS.Texas realtors also told BI that the <a target="_blank" class="" href="https://www.businessinsider.com/home-prices-falling-florida-texas-us-housing-market-pandemic-boomtowns-2024-10">housing market has cooled</a> amid less demand. Median home prices, meanwhile, have fallen about 7% from the mid-2022 highs, according to <a target="_blank" class="" href="https://www.redfin.com/state/Texas/housing-market">data</a> from Redfin previously <a target="_blank" class="" href="https://www.businessinsider.com/texas-housing-market-home-prices-falling-austin-dallas-moving-trends-2024-10">cited</a> by BI.

California's economic growth is slipping behind Texas as the Lone Star state draws corporate HQs and people 

<ul class="summary-list"><li>Dollar dominance faces key challenges in the future, Brookings researchers said.</li><li>The think tank pointed to four forces that could be make the greenback less attractive. </li></ul>There are a handful of challenges to the dollar's top status in financial markets, according to researchers from the Brookings Institution.In a recent <a target="_blank" class="" href="https://www.brookings.edu/articles/the-changing-role-of-the-us-dollar/">note</a>, the think tank pointed to the US dollar's shifting status in global financial markets, with the use of the <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-imf-stealth-erosion-global-us-dollar-forex-reserves-sanctions-2024-6">greenback declining steadily </a>over the past several decades. While the <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/dedollarization-dollar-dominance-currency-war-trade-usd-reserves-explained-2024-5">dollar still dominates</a> central bank reserves and world trade, the currency accounted for 59% of all global reserves at the start of 2024, down from 71% of reserve in 1999, according to estimates from the International Monetary Fund.<div type="image" title="Dollar's share of global reserves graph" height="1138" width="1145" msid="112816893" hostid="261" sizebytes="59508"></div>Meanwhile, the share of nontraditional currency reserves has edged higher. Currencies like the Australian dollar, the Swiss franc, and Chinese yuan accounted for 11% of all central bank reserves at the start of this year, up from 2% recorded in 1999, per IMF data.<div type="image" title="Share of nontraditional currency reserves" height="1162" width="1151" msid="112816894" hostid="261" sizebytes="62210"></div>That decline has sparked some fear among investors that the dollar could soon be ousted from its top-dog position in financial markets. While most experts say that <a target="_blank" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-usd-yuan-china-russia-brics-currency-2024-7">likely isn't happening anytime soon</a>, the think tank said the dollar's dominant status faces key challenges, pointing to four factors in particular.<h2 id="eb86da1f-7f18-4189-b9a3-3748f015a7bb">1. US sanctions</h2>The US began implementing sanctions on Russia and its allies after Moscow began its invasion of Ukraine in 2022. That's sparked a de-dollarization drive in Russia and other BRICS nations, which have suggested they're looking to shift away from the dollar as a reaction to Western trade restrictions.Russia, in particular, has taken steps to heavily de-dollarize its economy, with the nation adopting a <a target="_blank" href="https://www.businessinsider.com/dedollarization-russia-china-yuan-ruble-exchange-rate-benchmark-new-sanctions-2024-6">yuan-to-ruble exchange rate</a>, proposing a <a target="_blank" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-dominance-currencies-brics-china-russia-india-putin-2023-7">rival currency to the greenback</a>, and reportedly spearheading an <a target="_blank" href="https://www.businessinsider.com/dedollarization-russia-actively-working-brics-local-currencies-platform-us-dollar-2024-6">alternative payment platform</a> that wouldn't be reliant on the dollar.China, which saw its companies hit with <a target="_blank" href="https://home.treasury.gov/news/press-releases/jy2546">secondary sanctions</a> from the US Treasury last week, has also signaled a shift away from the dollar, <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-china-yuan-cny-trade-usd-sanctions-protection-reserve-currency-2024-5">promoting its yuan as an alternative</a>."If the United States is capricious with sanctions, acts unilaterally, and fails to develop a doctrine of economic statecraft, the dollar could be dethroned," Brookings researchers said, citing <a target="_blank" class="" href="https://www.businessinsider.com/economic-sanctions-russia-us-dollar-dominance-yellen-alternative-yuan-dedollarization-2023-4">comments</a> from US Treasury Secretary Janet Yellen.<h2 id="eff7251a-f1be-40d0-8494-5988c77ddab7">2. US debt</h2>The US's rising debt load could make currency holders more wary of the dollar, especially if there are concerns that the US may not be able to pay back its dues.While the US debt balance hasn't yet breached unsustainable levels, the government's rapid pace of spending has done little to ease markets. Fitch, for instance, <a target="_blank" href="https://www.businessinsider.com/fitch-downgrades-us-credit-rating-deficit-debt-ceiling-2023-8#:~:text=Fitch%20downgraded%20the%20US's%20credit,the%20debt%20limit%20until%202025.">downgraded the US</a><a target="_blank" class="" href="https://www.businessinsider.com/fitch-downgrades-us-credit-rating-deficit-debt-ceiling-2023-8#:~:text=Fitch%20downgraded%20the%20US's%20credit,the%20debt%20limit%20until%202025."> credit rating</a> last year, citing a "steady deterioration in standards of governance.""Bickering over appropriations, Congress has shut the government down several times. Further political instability could erode investor confidence in the dollar," the researchers said.<h2 id="c18d8d68-8ac9-451c-b2c2-8ff5942f963f">3. Improved payment technology</h2>More advanced payment systems have made it easier to exchange nontraditional currencies. That could weigh on demand for the US dollar, which has traditionally been seen as the most attractive medium of exchange."Typically, converting such currencies to dollars, and vice versa, has been easier and cheaper than exchanging them for one another. But China and India, for example, will soon no longer need to exchange their respective currencies for dollars to conduct trade cheaply. Rather, exchanging renminbi for rupees directly will become cheaper. Consequently, the reliance on 'vehicle currencies,' particularly the dollar, will decline," Eswar Prasad, a senior fellow at the Brookings Institution, said in a previous note.<h2 id="0b9967af-c144-471b-8ee3-4faf7baad925">4. Central bank digital currencies</h2>Digital currencies issued by central banks could also make it easier and cheaper to nontraditional currencies. China is developing one such <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/dollar-dominance-outlook-china-india-digital-currency-race-fed-innovation-2024-1">CBDC</a>, and CIPS, China's Cross-border Interbank payment system, has been "growing rapidly" over the past few years, the think-tank noted.The Fed has created its own instant payment network, but hasn't moved to create a CBDC, with Powell suggesting last year that a <a target="_blank" class="" href="https://www.federalreserve.gov/faqs/is-fednow-replacing-cash-is-it-a-central-bank-digital-currency.htm">digital currency would require approval from lawmakers</a>. That means the US risks falling behind other countries, where digital payment tech is rapidly developing, Brookings researchers said.Still, despite warnings, most currency experts <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-currency-usd-dominance-china-yuan-economy-2024-5">do not believe de-dollarization</a> is a near-term threat to the US or its currency. At the moment, there are no close competitors to the greenback in financial markets — and countries that try to de-dollarize anyway <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-usd-yuan-china-russia-brics-currency-2024-7">risk a host of economic consequences</a>, like slower growth and lost investment value, one commodities vet told Business Insider.

The 4 forces that will challenge the dominance of the dollar, according to economic researchers

<ul class="summary-list"><li>North Korea fighting alongside Russia would be a serious escalation to the Ukraine war.</li><li>NATO and Western allies are facing pressure to respond — but have historically been hesitant.</li></ul>Western allies have options to react to the threat of North Korean troops in Russia, but are hamstrung by fears of escalation, military experts told Business Insider. On Monday, the Pentagon<a target="_blank" href="https://www.defense.gov/News/Transcripts/Transcript/article/3948100/pentagon-deputy-press-secretary-sabrina-singh-holds-an-off-camera-on-the-record/"> said</a> that 10,000 North Korean troops had been shipped to Russia for training and were likely to join Russian forces"over the next several weeks." NATO chief Mark Rutte said that some troops are already in Kursk, <a target="_blank" href="https://www.nato.int/cps/en/natohq/opinions_230105.htm">calling</a> the move "a significant escalation." He added that it is "yet another" contravention of UN Security Council resolutions. He said the bloc is "actively consulting" on what to do next. Despite these statements — and a similar chorus of condemnation from Western governments — few commitments have been made. On Wednesday, Ukrainian President Volodymyr Zelenskyy expressed frustration, saying that his allies' response was "not so loud as it has to be" in reaction to the North Korean threat,<a target="_blank" href="https://www.politico.eu/article/volodymyr-zelenskyy-war-in-ukraine-russia-north-korean-troops-western-allies-response/"> Politico reported</a>. "Till now, we heard some reactions, but it is not strong enough," he added. <h2>A watershed moment?</h2>In itself, 10,000 more troops in Russia's war in Ukraine is not a game changer, Patrick Bury, a military analyst at the UK's University of Bath, told BI. The troops, many with no experience in real war situations, could also be of limited help. There is reason, however, to imagine the numbers could rise. North Korea has steadily ramped up its cooperation with Russia, reportedly supplying<a target="_blank" href="https://www.thetimes.com/world/russia-ukraine-war/article/north-korea-supplies-half-of-the-shells-used-by-russia-in-ukraine-d3fkhppjs"> half of all artillery shells</a> used in Ukraine in the last year. North Korean leader Kim Jong Un has the fourth-largest standing army in the world, so there is no shortage of troops. Crucially, experts consider his regime to be receiving<a target="_blank" href="https://www.businessinsider.com/north-korea-military-officials-helping-russia-ukraine-win-for-kim-2024-10"> an economic and technological lifeline</a> in exchange. Edward Hunter Christie, a former NATO official and a research fellow at the Finnish Institute of International Affairs, described the dangers of the partnership as "a much more serious test of resolve for the West than most people currently realize." He added: "There's a reluctance to act." This at least means there will be no rash decisions, he said. Christie, along with other experts BI spoke to, described a hesitancy and fear of escalation among Ukraine's biggest Western partners that amounts to alack of overall strategy. <h2>The West has some options — and a history of slapping them down</h2>When it comes to options for the US and Europe, "the tools are the same tools that have been there all along," Richard Fontaine, CEO of the Center for a New American Security,<a target="_blank" href="https://www.bloomberg.com./news/articles/2024-10-28/ukraine-allies-face-limited-options-as-north-korea-troops-arrive?embedded-checkout=true"> told Bloomberg.</a> That includes the ad-hoc trickling through of aid packages like one<a target="_blank" href="https://kyivindependent.com/norways-pm-announces-new-500-million-euro-aid-package-for-ukraine/"> recently announced by Norway</a>. It also includes things that have long been ruled out, like allowing Ukraine to make long-range strikes in Russia with Western-supplied missiles. A bipartisan group in Congress has called on Biden to allow Poland to intercept Russian missiles in Ukrainian airspace, <a target="_blank" class="" href="https://thehill.com/homenews/house/4960374-biden-poland-air-defense-ukraine/">The Hill reported</a>. It's a move that NATO's former chief Jens Stoltenberg had earlier ruled out, saying it would risk the alliance "becoming part of the conflict," the outlet reported. South Korea, too, has said it is considering sending military aid directly to Ukraine. It's an unprecedented move that could prove highly beneficial, but which the state is hesitant to make,<a target="_blank" href="https://www.businessinsider.com/south-korea-ukraine-weapons-big-difference-russia-north-korea-2024-10"> experts told BI</a>. Lithuania's foreign minister, Gabrielius Landsbergis, has also revived a suggestion made in February by France's President Emmanuel Macron of not ruling out the deployment of <a target="_blank" class="" href="https://www.businessinsider.com/french-president-wont-rule-out-sending-troops-ukraine-2024-2">NATO troops in Ukraine</a>, in support roles. "We are still on the back foot, reacting to escalation instead of reversing it,"<a target="_blank" href="https://x.com/GLandsbergis/status/1848006509013225679"> Landsbergis wrote on X</a>. "Macron's ideas should now be revisited." That idea was earlier<a target="_blank" href="https://www.businessinsider.com/everyone-angry-germany-series-screw-ups-leaks-scholz-macron-ukraine-2024-3"> publicly slapped down</a> by Germany's Chancellor, Olaf Scholz. Such a move "would free up a lot of resources for Ukraine," said Ann Marie Dailey, a geopolitical strategist at RAND. It would also send an important signal to Russia, she said: "That they don't have dominance on the escalation ladder." <h2>The escalation trap</h2>President Joe Biden's administration — along with much of Western Europe — has largely avoided actions that could be seen as escalating the conflict. The fact that now a serious escalation looks possible thanks to North Korea is an indication of the failure of that policy, Christie told BI. The US presidential election and the impending change of administration also puts a chilling effect on any dramatic changes in policy for the coming months, he said. "We live in an age of US-led hesitancy within the Western world, which just keeps on failing us, which just keeps on increasing the level of danger to the security of the collective West," he said. The bind for the Biden administration is not only in dealing with two nuclear states, but also that North Korea's belligerence could cause the conflict to spill over toward its southern neighbor and<a target="_blank" href="https://www.businessinsider.com/china-muted-response-russia-north-korea-alliance-costly-ukraine-economy-2024-10">damage relations with China.</a> Western states are likely to have been quietly hoping that China might step in diplomatically and dissuade North Korea, Christie said. At some point, the West has to react decisively, he argued. Dailey told BI: "The problem with having a strategy of de-escalation is that if that is your stated strategy, you've already ceded every step on the escalation ladder to the enemy." In Bury's view, the West's problem is that it cannot even agree on its broader strategy, let alone decide how to implement it. "The broader point here is: the West, we're not doing the strategy," he said. "We're muddling through."

What can the West do about North Korea giving troops to Russia? Not much it hasn't already flinched from.

<keyword id="1334" type="General" weightage="100" keywordseo="china" source="Orion">China</keyword>'s once booming real estate sector and a pillar of economic growth is rapidly losing its sheen with prices of new homes in several major cities nosediving. This could dent China's economic recovery at a time when it is just coming out of the stringent Covid 19 lockdown shock. Real estate sector accounts for about 30 per cent of China's GDP. In June the average prices of new homes declined by 0.5 per cent year-on-year, following a 0.1 per cent drop a month earlier, data website <keyword id="13040067" type="General" weightage="50" keywordseo="trading-economics" source="Orion">Trading Economics</keyword> revealed. The problem is deep rooted. The non payment would impact the country's banking industry as the non-performing assets will pile up further. The shadow banking sector, which includes trust companies and is an important funding source for Chinese developers, will be hurt as well, <keyword id="608422" type="General" weightage="50" keywordseo="peterson-institute-for-international-economics" source="Orion">Peterson Institute for International Economics</keyword> (PIIE) said in a blog. Though Beijing has started firefighting to stabilise the situation by asking banks to ease lending for property developers, confidence among home buyers is at its lowest. The authorities are even looking at carving out a scheme facilitating a freeze of mortgage payment by homebuyers who have not been handed over the apartments. "There is a real crisis-like situation in China and the authorities are aware of this. They are taking all measures required to address this. But we will have to wait and watch to understand how things take shape in the coming months," a person engaged with the education sector in China told <keyword id="14220074" type="General" weightage="50" keywordseo="india-narrative" source="Orion">India Narrative</keyword>. The crumbling of real estate behemoths <keyword id="3283111" type="General" weightage="50" keywordseo="evergrande-group" source="Orion">Evergrande Group</keyword> last year and subsequently the fall of several other property giants have shaken up the market. Prices of new homes have been steadily falling for the last one year. While the demand for new homes, considered one of the safest investment options for the Chinese, have been surging until last year, developers continued to increase their debt levels. The total debt level stood at about $5.2 trillion as of June 2021, according to financial services company <keyword id="6354527" type="General" weightage="50" keywordseo="nomura" source="Orion">Nomura</keyword>. Protests by home buyers have become rampant. Earlier this month thousands of home buyers announced on social media they would not pay their mortgage loans. The protests have intensified spreading across 100 cities in the country. <keyword id="14549689" type="General" weightage="50" keywordseo="china-briefing" source="Orion">China Briefing</keyword> said that the homes in question were acquired through a pre-pay model, in which buyers acquire apartments that are unfinished - or in some cases have not yet broken ground - when the initial deposits are paid and developers are required to hand over the homes within a stipulated time frame. But amid overly ambitious development plans, sky-high debt, and a tightening regulatory environment aimed at deleveraging the industry, many have failed to do so. "This has left some households making mortgage payments for several years before being able to move in," it said. Will this be China's <keyword id="50209" type="General" weightage="50" keywordseo="lehman-brothers" source="Orion">Lehman Brothers</keyword> moment? (The content is being carried under an arrangement with indianarrative.com) SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/apps/news/list-of-top-new-upcoming-whatsapp-features-in-second-half-2022/articleshow/93103440.cms">From avatars to hiding online status—list of top new upcoming WhatsApp features</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/india-has-the-highest-rate-of-women-taking-action-against-harassment-calls-and-messages/articleshow/93107553.cms">India has the highest rate of women taking action against harassment calls and messages</a>

China's home prices crash as buyers refuse to pay mortgage

<ul class="summary-list"><li>BRICS' Kazan Declaration on Wednesday contained 134 points — and only one discussed the Ukraine war.</li><li>That point was a call for all parties to abide by UN standards, despite Russia hosting this year.</li></ul>Over two dozen world leaders at this year's BRICS summit ended Wednesday's talks with the Kazan Declaration, a 134-point summary of their agreements.The war in Ukraine was only mentioned once in the 43-page document, and though Russian leader Vladimir Putin hosted the event, its wording is a far cry from the Kremlin's preferred rhetoric.That single paragraph contained none of Russia's usual talking points, instead urging all parties to act in accordance with United Nations standards — a more neutral statement often used by nations like China."We emphasize that all states should act consistently with the Purposes and Principles of the UN Charter in their entirety and interrelation," the document reads. "We note with appreciation relevant proposals of mediation and good offices, aimed at a peaceful resolution of the conflict through dialogue and diplomacy."<a target="_blank" class="" href="https://www.understandingwar.org/backgrounder/russian-offensive-campaign-assessment-october-23-2024">The Institute for the Study of War</a> wrote on Wednesday that the language in the document shows that Russia, despite its leading position at the summit, still isn't able to shape the stances of friendly world leaders on its war."The Kazan Declaration notably only mentioned Russia's war in Ukraine once," the Washington-based think tank wrote.Russia has denied the sovereignty of Ukraine and said its invasion is justified as a <a target="_blank" class="" href="https://www.businessinsider.com/putin-said-invaded-ukraine-stop-nato-expanding-has-achieved-opposite-2022-5">counter to NATO's expansion</a> and due to <a target="_blank" class="" href="https://www.businessinsider.com/putin-tries-justifying-ukraine-war-denazification-zelensky-jewish-president-2022-2">debunked allegations that Ukraine is a Nazi-run state.</a>The declaration "demonstrated that Russia has not yet secured the international support nor created the alternative security structure that the Kremlin desires," ISW added.That's significant because Moscow has been trying to get its allies on board with its invasion while the West isolates the Russian economy in response. The US and Ukraine have repeatedly accused China, a founding BRICS member, of supplying Russia with weapons parts and economic support.Yet several founding members of the BRICS group, such as Brazil and India, still maintain strong economic ties with the US amid its support for Kyiv.The Kazan Declaration, meanwhile, condemned Israeli actions in the Middle East in five points, including criticism of a strike on the <a target="_blank" class="" href="https://www.businessinsider.com/deadly-israeli-strike-syria-could-put-us-forces-crosshairs-iran-2024-4">Iranian consulate in Syria</a>, <a target="_blank" class="" href="https://www.businessinsider.com/israel-attack-lebanon-hezbollah-past-invasion-2024-10">Tel Aviv's invasion of southern Lebanon</a>, and the <a target="_blank" class="" href="https://www.businessinsider.com/israel-gaza-hamas-civilian-casualties-children-deaths-airstrikes-palestinian-2023-10">war in Gaza.</a>World leaders also spent two paragraphs discussing the South Sudanese Civil War.The summit also exposed the difficulties that Western sanctions have inflicted on life in Russia. Leaders met in Kazan, which is in the southwestern Republic of Tatarstan region.Business Insider's Huileng Tan wrote that organizers said <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-russia-brics-summit-foreign-attendees-cash-usd-euros-putin-2024-10">card transactions there</a> would be unavailable due to restrictions on Mastercard and Visa cards issued outside Russia.Attendees were instead asked to bring cash in US dollars or euros — the same currencies that Putin has been trying to get his allied countries to drop — to exchange for rubles at Russian banks.

BRICS' new declaration shows Russia's war still can't get the international backing that Moscow wants

<ul class="summary-list"><li>Nouriel Roubini says stagflation risk will rise if Donald Trump wins the election.</li><li>The famed "Dr. Doom" economist made the remarks at the Greenwich Economic Forum on Wednesday.</li></ul>The US economy might confront a fate more challenging than a recession if Donald Trump retakes the White House, famed economist Nouriel Roubini said."The combination of trade, currency, monetary, fiscal, immigration and foreign policy of Trump poses much higher risks of stagflationary outcomes than if Kamala Harris is elected," he said at the Greenwich Economic Forum on Wednesday, first reported by <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-10-09/-dr-doom-nouriel-roubini-warns-of-trump-win-spurring-stagflation-shock">Bloomberg</a>.The famously bearish forecaster is referring to the one scenario central banks hope to avoid at whatever cost. Stagflation occurs when inflation keeps rising but growth slows.There are no painless solutions for an economy that tumbles into this situation.Typically, central banks lower interest rates to revive weaker activity, but this option goes away if prices keep rising. Rates must stay high to reduce inflation, leaving authorities between a rock and a hard place.When stagflation last hit the US in the 1970s, a <a target="_blank" href="https://www.businessinsider.com/stagflation-recession-us-economy-outlook-gdp-dimon-inflation-rate-cuts-2024-4">deep recession was required to finally break out</a> of the crisis.According to Roubini, Trump's proposals would fuel these two key ingredients: lower growth and higher inflation.For instance, <a target="_blank" href="https://www.businessinsider.com/trump-tariff-plan-inflation-policy-impact-trade-war-china-rates-2024-5">scores of economists</a> have criticized the former president's pledge to introduce a 10% universal tariff on all US imports. Not only are duties past down to consumers, but these taxes cause producers to pull out their products. When this happens, supply falls and prices rise.Trump's idea to replace the US income tax with tariffs was similarly called out by former Treasury Secretary Larry Summers, who called it the "<a target="_blank" href="https://www.businessinsider.com/trump-tariff-income-tax-proposal-stagflation-yellen-summers-trade-war-2024-6">mother of all stagflations</a>."When it comes to currency policy, Barclays highlighted that Trump's plans to devalue the US dollar <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/trump-tariff-trade-barrier-proposals-us-dollar-devaluation-currency-dominance-2024-7">would likewise spark higher inflation</a>.Roubini also expressed concern about Trump's stringent immigration policies. If elected, the Republican candidate has vowed to enforce mass deportations, which threatens one of the economy's major engines of growth, Roubini said.Others have made the same point. In July, JPMorgan's chief global strategist David Kelly called Trump's tariff and immigration policy mix an <a target="_blank" href="https://www.businessinsider.com/stagflation-recession-trump-policy-tariff-immigration-deportation-economy-outlook-jpmorgan-2024-7">"elixir for stagflation."</a> Separately, the Peterson Institute think tank warned that removing migrant workers would <a target="_blank" href="https://www.businessinsider.com/trump-deportation-immigration-plan-impact-recession-risk-inflation-stagflation-labor-2024-6">trigger a labor supply crunch</a> and a manufacturing-based recession.Roubini said tensions in the Middle East make the threat of stagflation under Trump worse. As conflict escalates between Israel and Iran, rising oil prices increase price pressure. By one estimate, a worst-case scenario in the region could push international crude up to<a target="_blank" href="https://markets.businessinsider.com/news/commodities/oil-price-outlook-israel-iran-geopolitics-middle-east-war-crude-2024-10?_gl=1*1dmubht*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcyODQ5NTIxOC43MDguMS4xNzI4NDk5OTY5LjYwLjAuMA.."> $200 a barrel</a>.He recommended that investors buy gold, short-term duration bonds, and Treasury inflation-protected securities to hedge against any upcoming risk.To be sure, not all of Roubini's forecasts have panned out. After correctly predicting the 2008 housing crash, his pessimistic outlooks have earned him the moniker of "Dr. Doom."According to Bloomberg, he similarly warned of a stagflationary debt crisis in 2022, citing that it would be worse than the 1970s era.

A Trump victory raises the risk of a US economic situation worse than recession, 'Dr. Doom' Nouriel Roubini says

<ul class="summary-list"><li>Mark Cuban has spent the past few days defending Kamala Harris' economic plans on social media.</li><li>He defended the VP's proposal to ban price gouging and assist first-time homebuyers.</li></ul>Billionaire <a target="_blank" class="" href="https://www.businessinsider.com/mark-cuban-wishes-wave-magic-wand-get-rid-both-parties-2024-8">Mark Cuban</a> has spent the past few days on social media defending Kamala Harris' economic proposals — while scratching his head over Donald Trump's plans.Harris unveiled some of her policy proposals on Friday at a North Carolina rally. They include a <a target="_blank" class="" href="https://www.businessinsider.com/grocery-costs-inflation-kamala-harris-ban-price-gouging-election-trump-2024-8">federal ban on price gouging</a> for groceries, a <a target="_blank" class="" href="https://www.businessinsider.com/kamala-harris-economy-proposal-25k-first-time-homebuyers-down-payent-2024-8">$25,000 subsidy for first-time homebuyers</a> looking to make a down payment, and a <a target="_blank" class="" href="https://www.businessinsider.com/child-tax-credit-new-parents-cut-taxes-harris-economic-policy-2024-8">$6,000 child tax credit</a>.So far, Cuban, who joined <a target="_blank" class="" href="https://www.businessinsider.com/silicon-valley-billionaires-investors-kamala-harris-mark-cuban-reid-hoffman-2024-8">over 800 venture capitalists</a> announcing their support for Harris in July, is gravitating toward her ideas.In one <a target="_blank" class="" href="https://x.com/mcuban/status/1824613344839360979">post</a>, Cuban argued the $25,000 down-payment subsidy could help homebuyers save money. In another, the billionaire supported the vice president's plan to ban price gouging on groceries, responding to a post from Bloomberg columnist Matthew Yglesias, who said that Harris "kind of vaguely said that antitrust enforcement is good (it is good).""This is a fact," Cuban said.Meanwhile, Cuban raised several questions about former president Trump's economic plans, which include ending <a target="_blank" class="" href="https://www.businessinsider.com/donald-trump-tax-free-tips-proposal-2024-6">federal taxes on tips</a> — a plan <a target="_blank" class="" href="https://www.businessinsider.com/harris-agrees-trump-tips-service-workers-not-taxed-2024-8">Harris also has supported</a> — and <a target="_blank" class="" href="https://www.businessinsider.com/trump-tariff-trade-tax-proposal-inflation-interest-rates-outlooks-predictions-2024-7">tariffs on imports</a>."Any importers want to explain how they deal with tariffs on say food and agricultural products," Cuban wrote on X in response to a clip of Trump blasting critics who view tariffs as taxing US citizens. Researchers at the Peterson Institute think tank said that Trump's proposed tariffs could cost Americans <a target="_blank" class="" href="https://www.businessinsider.com/trump-trade-war-china-tariffs-taxes-us-economy-deficit-impact-2024-5">$500 billion annually</a>.Cuban also criticized Trump's plan to cool inflation.In a speech on Wednesday, Trump said that he would "sign an executive order directing every cabinet secretary and agency head to use every tool and authority at their disposal to defeat inflation and bring consumer prices rapidly down.""You just watch. They'll come down, and they'll come down fast," Trump said, promising results within the first 100 days he's in office.In response, Cuban wrote: "What voters hear: He will instruct a bunch of un-named bureaucrats, and their agencies, talk to all the other un-named bureaucrats, and the thousands of bureaucrats that work for them, to defeat inflation in 100 days."Overall, Cuban appears to be set on who he believes is the best "pro business candidate.""I think she showed that she intends to be supportive of business. Particularly small business and entrepreneurs." Cuban wrote in an email to Business Insider. "She said she wanted regulatory clarity, which is important to the crypto market. And she is talking about transparency in healthcare.""Of course, the devils in the details. But so far I like what I've heard," he wrote.

Mark Cuban has praise for Harris' economic proposals and plenty of questions about Trump's

The overall size of the budget has remained almost unchanged from the interim one presented in February, indicating the government's strong commitment to move along the <keyword id="20099794" type="General" weightage="20" keywordseo="fiscal-prudence" source="keywords">fiscal prudence</keyword> path, said experts on Tuesday. According to the <keyword id="19908389" type="General" weightage="100" keywordseo="Union-Budget" source="keywords">Union Budget</keyword> 2024-25 presented by Finance Minister Nirmala Sitharaman, the total expenditure in Budget Estimates (BE) 2024-25 is estimated at Rs 48,20,512 crore of which total <keyword id="20018917" type="General" weightage="20" keywordseo="capital-expenditure" source="keywords">capital expenditure</keyword> is Rs 11,11,111 crore. The total expenditure in the Interim Budget presented in February was estimated at Rs 47,65,768 crore of which total capital expenditure was Rs 11.11 lakh crore. Debadatta Chand, Managing Director &amp; CEO, <keyword id="19920717" type="General" weightage="20" keywordseo="Bank-of-Baroda" source="keywords" meta.keywordsubtype="org" meta.entityname="Bank of Baroda" meta.hostid="261" meta.entityid="Bank of Baroda">Bank of Baroda</keyword>, said the Union Budget complements the main takeaways from the Economic Survey and focusses clearly on medium term development of the economy. "The overall size of the budget has remained almost unchanged from the interim one. The budget has shown strong intent on moving along the fiscal prudence path and targeted the <keyword id="19942084" type="General" weightage="20" keywordseo="fiscal-deficit" source="keywords">fiscal deficit</keyword> at 4.9 per cent for the year," he said. The said action will keep the growth steady as well as robust not only for economy but also banking. Aditi Nayar, Chief Economist, ICRA Limited, said the budget has kept the capital expenditure unchanged and pared the fiscal deficit to 4.9 per cent of GDP. "The anticipated reiteration of the reduction in the fiscal deficit to below 4.5 per cent of GDP in FY2026 is welcome. Interestingly, the new medium term fiscal consolidation path has been linked to a reduction in the debt/GDP ratio instead of continued compression of the fiscal deficit/GDP ratio," she said. Buoyed by improvement in revenue collection, the government has lowered fiscal deficit target to 4.9 per cent for the current <keyword id="19910979" type="General" weightage="20" keywordseo="financial-year" source="keywords">financial year</keyword> as against 5.1 per cent estimated in February's interim budget. Ranen Banerjee, Partner and Leader Economic Advisory, PwC India, said that fiscal prudence is the highlight of the full Union Budget 2024-25. The government has gone with realistic projections on its revenue and expenditure estimates and refrained from announcing overly populist measures. "The majority of the allocations, including the capex allocation, are as outlined in the interim budget, thus providing continuity. The capex being kept at INR 11.11 trillion was expected, given that the ability to consume this allocation is limited due to disruption from the elections in the first quarter and the second quarter being typically slowed down by the monsoons," Banerjee said. Institute of Chartered Accountants of India (ICAI) President Ranjeet Kumar Agarwal said the government has announced five schemes to facilitate employment and skilling for 4.1 crore youth over the next five years with a central outlay of Rs 2 lakh crore. "This is a welcome step that will create a skilled workforce to address the existing deficit and generate <keyword id="19972727" type="General" weightage="20" keywordseo="employment-opportunities" source="keywords">employment opportunities</keyword>. Additionally, financial support for loans up to Rs 10 lakh for higher education will help students pursue higher education and acquire skills," he added. Indian Institute of Insolvency Professionals of ICAI (IIIPI) Chairman Ashok Haldia said the budget proposals for an integrated technology platform and sprucing up NCLT infrastructure will provide a fillip to the Insolvency and Bankruptcy Code (IBC) regime. IIIPI is promoted by ICAI. Meanwhile, Kumarmangalam Vijay, Partner, JSA Advocates and Solicitors, opined that in its new avatar, it seems that the Modi government is keen to deliver on its promise of 'ease of doing business'. "Its focus on making it simpler is evident from the abolition of the angel tax, the increase in new income tax regime thresholds, new Vivad se Vishwas Scheme 2024 for the resolution of pending cases and the increase in the threshold for appeal by tax departments at various levels, decriminalising the non-reporting of shares received from non-resident employers and reducing the period for re-opening of the cases," Vijay said. The Institute of Company Secretaries of India (ICSI) said there has been a focus on the manufacturing sector in the budget. Measures have been taken for simplifying the FDI/ODI rules and regulations, and the <keyword id="21847964" type="General" weightage="20" keywordseo="tax-regimes" source="keywords">tax regimes</keyword>. The enhanced Mudra loan limit and the abolition of angel tax are all set to incentivize the startup and MSME ecosystem of the country. "The nine priorities identified in this progressive and inclusive budget 2024 are aimed at generating ample opportunities for all. Besides agricultural reforms, the budget focuses on skilling, educating and employing the youth, a priority that the ICSI has been concentrating on," said ICSI President B Narasimhan. Rajesh Magow, Co-Founder and Group CEO, MakeMyTrip, said the government's continued emphasis on infrastructure development is commendable. Enhanced road infrastructure will bolster the travel and tourism sector. "We also welcome the initiatives to develop iconic spiritual and cultural sites into world-class tourist hotspots," Magow said. Furthermore, he said the provision of credit for TCS against income tax under 'Income from Salaries' is logical and will provide much-desired relief to taxpayers who travel internationally.

Budget size almost unchanged from interim, shows govt's commitment to fiscal prudence: Experts

India is poised to remain the fastest-growing major economy in 2024-25, Chief Economic Adviser V Anantha Nageswaran said in a press conference after the tabling of the <keyword id="20613906" type="General" weightage="20" keywordseo="economic-survey" source="keywords">Economic Survey</keyword> in the Parliament on Monday. The Economic Survey tabled today projected India to grow at 6.5-7.0 per cent in 2024-25. Global institutions, including <keyword id="19896779" type="General" weightage="20" keywordseo="IMF" source="keywords" meta.keywordsubtype="org" meta.entityname="IMF" meta.hostid="261" meta.entityid="IMF">IMF</keyword>, OECD, World Bank, S&amp;P, ADB, and Fitch, have projected India to grow in a range of 6.6-7.2 per cent. The International Monetary Fund (IMF), in its latest outlook, has raised India's growth projections for 2024 from 6.8 per cent earlier to 7 per cent, with the country maintaining the fastest-growing status in emerging markets and developing economies. According to official data of the Indian government, the country's GDP grew at an impressive 8.2 per cent during the financial year 2023-24. India's economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22 respectively. Further, the CEA in his press conference projected that India's <keyword id="20089672" type="General" weightage="20" keywordseo="per-capita-income" source="keywords">per capita income</keyword> is expected to increase from around Rs 2 lakh in 2022-23 to Rs 14.9 lakh in 2046-47. Further, CEA said <keyword id="20751315" type="General" weightage="20" keywordseo="household-savings" source="keywords">household savings</keyword> of Indians in physical assets have been increasing over the past three financial years through 2023-24. The CEA, addressing the press conference, said household savings in physical assets rose from 8 per cent in 2020-21 to 12.9 per cent in 2022-23. "Households are not in distress, they are investing in <keyword id="20792385" type="General" weightage="20" keywordseo="financial-assets" source="keywords">financial assets</keyword> that have done very well. Financial assets of households are not marked to market so households are doing quite well in the aggregate," he said. India needs both banks and capital markets to provide the required finances sourced from a sustained high level of household savings, according to the Survey. <keyword id="20385790" type="General" weightage="20" keywordseo="Union-Finance-Minister" source="keywords">Union Finance Minister</keyword> Nirmala Sitharaman on Monday tabled the economic survey in Parliament, a day ahead of the full Budget presentation for 2024-25. The Economic Survey document, prepared by the Economic Division of the Department of Economic Affairs in the Ministry of Finance and formulated under the supervision of the chief economic adviser, gives insights into the state of the economy and various indicators of 2023-24 (April-March) and some outlook for the current year. The Economy Survey document also gave some idea about the tone and texture of the actual Budget for 2024-25, to be presented on Tuesday. (ANI)

India to remain fastest growing major economy in 2024-25, says CEA Nageswaran

<ul class="summary-list"><li>Americans are flocking to the South for jobs, lower taxes, and more affordable housing.</li><li>But by some economic measures, the South has some of the poorest states in the nation.</li></ul>The future of the US economy <a target="_blank" href="https://www.businessinsider.com/best-economy-us-south-texas-florida-houston-dallas-nashville-miami-2023-12">might be in the South</a> — but some states in the region are at risk of being left behind.What constitutes the Southern region of the US is <a target="_blank" href="https://www.businessinsider.com/south-states-usa-2018-5">up for debate</a>, but the Census Bureau <a target="_blank" href="https://www2.census.gov/geo/pdfs/maps-data/maps/reference/us_regdiv.pdf">defines</a> it as 16 US states — including Delaware, Maryland, Virginia, and West Virginia — plus the District of Columbia.In June, the financial services company WalletHub <a target="_blank" href="https://www.businessinsider.com/us-state-economies-ranking-best-worst-wallethub-washington-utah-massachusetts-2024-6">ranked the 50 states and DC</a> across three categories: economic activity, economic health, and innovation potential. Twenty-eight metrics, including the share of fast-growing firms, the unemployment rate, and entrepreneurial activity, were used in the analysis.Five of the 10 states with the lowest rankings were located in the South: <a target="_blank" href="https://www.businessinsider.com/mississippi-defends-abortion-ban-one-in-three-kids-in-poverty-2021-11">Mississippi</a>, West Virginia, Arkansas, Louisiana, and Kentucky.Additionally, the six states with the lowest <a target="_blank" href="https://www.businessinsider.com/us-economy-by-metro-area-ranked-san-francisco-seattle-austin-2018-4#40-cleveland-elyria-oh-1">GDP per capita</a> — the size of a state's economy, divided by the number of people living in the state — are all in the South: Mississippi, West Virginia, Arkansas, Alabama, South Carolina, and Kentucky. GDP per capita is one indicator that's used to gauge economic prosperity and living standards across the US — it's calculated using the latest state-level GDP data from the Bureau of Economic Analysis and population estimates from the Census Bureau.In some ways, the Southern economy is booming. Cities like Houston, Dallas, Miami, and Nashville could be poised to <a target="_blank" href="https://www.businessinsider.com/best-economy-us-houston-dallas-nashville-miami-cities-moving-businesses-2023-11">become economic powerhouses</a> as more companies invest there and create jobs. Additionally, warmer weather, <a target="_blank" href="https://www.businessinsider.com/save-income-tax-moving-california-florida-new-york-2022-9">lower taxes</a>, <a target="_blank" href="https://www.businessinsider.com/california-texas-moving-arizona-florida-expensive-housing-costs-washington-nevada-2023-10">cheaper housing</a>, and <a target="_blank" href="https://www.businessinsider.com/cities-hiring-the-most-florida-texas-california-job-growth-tech-2024-4">job growth</a> have persuaded many Americans to <a target="_blank" href="https://www.businessinsider.com/population-boom-south-texas-georgia-dallas-houston-atlanta-movers-homebuyers-2024-3">move South</a> in recent years — boosting the region's labor force and consumer <a target="_blank" class="" href="https://www.bea.gov/news/2023/personal-consumption-expenditures-state-2022">spending</a>.However, some economic measures show the South is lagging behind other regions of the US. And even if some of the region's cities and states prosper in the years to come, other areas could miss out on the economic boom.<h2 id="858fbdc9-29ae-4b33-8a5d-210eb5d9b9dd">Workers in Southern states tend to have lower wages</h2>An <a target="_blank" href="https://www.epi.org/publication/rooted-racism-part3/">analysis</a> of 2021 current population survey data published in July by the Economic Policy Institute, a left-leaning think tank, found that workers in the South earned less than those in other regions.The median Southern worker earned $20.30 an hour, compared to $21.05 in the Midwest, $22.08 in the West, and $23.81 in the Northeast. Additionally, the analysis found that 22% of Southern workers earned less than $15 an hour, compared to 17% in the Midwest, 12% in the Northeast, and 10% in the West.The Economic Policy Institute pointed to low <a target="_blank" href="https://www.businessinsider.com/map-the-last-time-each-state-raised-its-minimum-wage-2021-2">minimum wages</a> and <a target="_blank" href="https://www.businessinsider.com/labor-union-membership-fell-lowest-rate-record-2022-2023-1">unionization rates</a> in Southern states as two factors keeping pay down.Of course, workers in some Southern states earn less than others. In July, the Economic Innovation Group, a centrist think-tank, published an <a target="_blank" href="https://eig.org/wp-content/uploads/2024/07/TAWP-Kirkegaard.pdf">analysis</a> by Jacob Funk Kirkegaard, a nonresident fellow with the Peterson Institute for International Economics. Using US Bureau of Economic Analysis and Bureau of Labor Statistics data, the analysis highlighted the average annual wages across US states as of 2022.Mississippi had the second lowest average annual wage in the US at roughly $60,000 — only Hawaii ranked lower. Texas was the only Southern state in the top 10, ranking 8th with an average annual wage of about $80,000.<h2 id="1ecaa78f-0299-48c6-9804-8102c4eabe31">The South's low unemployment rate is misleading</h2>In recent years, the South has had a <a target="_blank" href="https://institute.bankofamerica.com/content/dam/economic-insights/regional-morsel-southern-economy-trends.pdf">low</a> unemployment rate compared to other US regions. But an <a target="_blank" href="https://www.epi.org/publication/rooted-racism-part2/#epi-toc-6">analysis</a> published in June by the Economic Policy Institute called the low jobless rate "misleading."That's because only people who are <a target="_blank" href="https://www.businessinsider.com/september-jobs-report-263k-payrolls-unemployment-rate-hiring-labor-market-2022-10">actively looking for work</a> are counted in official US unemployment statistics. And there's evidence to suggest many Southerners have given up looking or faced obstacles to employment, Chandra Childers, senior policy and economic analyst at the Economic Policy Institute, wrote in the analysis.As of 2022, the share of people aged 25 to 54 with jobs was lower in the South than the rest of the US, according to the Economic Policy Institute's analysis of Current Population Survey data. That so-called <a target="_blank" href="https://www.businessinsider.com/us-men-working-less-recessions-employment-productivity-2024-4">prime-age employment rate</a> — an oft-cited indicator of labor force strength — was 78.9% in the South, 79.2% in the West, 80.6% in the Northeast, and 81.9% in the Midwest.It's possible these figures could change as more updated data becomes available. But if people in the South are less likely to have jobs than people in other regions, then the region's low unemployment rate doesn't tell the full story.<h2 id="f8b9eb0e-36e7-48fb-9e8e-2275ade9e55e">There are reasons to be optimistic about the South's economy</h2>To be sure, it's not all doom and gloom for the South.A thriving economy needs people to work jobs and spend money, and the South is <a target="_blank" class="" href="https://www.businessinsider.com/city-metro-population-growth-from-2022-to-2023-florida-2024-3">boosting its population</a> in all sorts of ways.While the US has experienced a <a target="_blank" href="https://www.businessinsider.com/us-population-stalled-during-pandemic-slower-than-during-great-depression-2022-1">population slowdown</a> in recent years, the South has the <a target="_blank" href="https://www.businessinsider.com/best-economy-us-south-texas-florida-houston-dallas-nashville-miami-2023-12">highest birthrate</a> of any region. And when people are born there, they often don't leave. Eighty-two percent of native-born Texans still resided in the state as of 2021, the highest rate in the US, according to a Dallas Fed <a target="_blank" href="https://www.dallasfed.org/research/economics/2023/0829">analysis</a> published in August 2023. North Carolina and Georgia rounded out the top three.Many Americans not born in the South have moved there as well. Between July 2022 and 2023, the states with the <a target="_blank" href="https://www.businessinsider.com/state-population-growth-declines-map-moving-migration-census-2023-12">largest population growth</a> were all located in the South: Texas, Florida, North Carolina, Georgia, South Carolina, and Tennessee. Only two Southern states — Louisiana and West Virginia — were <a target="_blank" href="https://www.census.gov/newsroom/press-releases/2023/population-trends-return-to-pre-pandemic-norms.html">among</a> the eight US states that saw their populations decline between 2022 and 2023.Overall, there's plenty of reason to be optimistic about the future of the South's economy. However, it's still a work in progress, and some states are thriving considerably more than others.Have you moved into or out of the South over the past few years and are willing to share why you relocated? Or, are you a Southerner who is willing to talk about the influx of new residents? If so, reach out to this reporter at <a target="_blank" href="mailto:jzinkula@businessinsider.com">jzinkula@businessinsider.com</a>.

The South's economic boom is masking a harsher reality. It still has several of the poorest states in the nation. 

<ul class="summary-list"><li>Trump has promised to implement tariffs on virtually all US trade, and use them to replace the income tax.</li><li>But the US already has a history of implementing broad-sweeping tariffs, PIIE's Steven R. Weisman said.</li></ul>Donald Trump's preference for tariff policies has been on full show during the election cycle, with the Republican candidate pledging to tax virtually all US trade.But to Steven R. Weisman — a vice president with the Peterson Institute for International Economics — a look through American history shows why this could prove reckless. If a Trump White House imposes "over-the-top tariffs," it could return the country to a much less stable era, he wrote in an <a target="_blank" href="https://www.nytimes.com/2024/07/26/opinion/trump-tariffs-biden-ev.html">op-ed for the New York Times</a>."Overreliance on tariffs helped foment an era of economic shocks," he, outlining an entire policy timeline.His comments contradict Trump's perspective, with the former president frequently touting tariffs to solve US economic problems.If elected again in November, he has pledged to implement a <a target="_blank" href="https://www.businessinsider.com/trump-tariff-plan-inflation-policy-impact-trade-war-china-rates-2024-5">10% universal trade tax on virtually all US imports</a>, although Chinese goods would face rates as high as 60%. Separately, Trump has also offered <a target="_blank" href="https://www.businessinsider.com/trump-tariff-trade-policy-barrier-income-tax-rate-hikes-krugman-2024-7#:~:text=Trump%27s%20wide%2Dreaching%20tariff%20plan,%25%2C%20Nobel%2Dwinning%20economist%20says&amp;text=Trump%27s%20proposed%20tariffs%20would%20benefit,%2Dtax%20income%2C%20he%20said">tariffs as an alternative to the US income tax</a>.This isn't an untested approach, Weisman said. In fact, tariffs were the main source of federal revenue until 1913, when the 16th Amendment granted Congress the ability to collect an income tax.It's with good reason the US switched, he added."An across-the-board tariff policy would take us not to a prosperous future but to a reactionary past that stopped working in the 19th century, where it nearly bankrupted the government, aggravated class conflict, provoked instability and favored the wealthy over everyone else," Weisman wrote.For instance, one of the leading pushbacks to Trump's income-replacement idea is that tariffs simply <a target="_blank" href="https://www.businessinsider.com/trump-tariff-income-tax-proposal-stagflation-yellen-summers-trade-war-2024-6">cannot produce as much revenue</a> — a point proven by the Civil War, he noted. During the conflict, tariff-revenue insufficiencies threatened a fiscal crisis, pushing Congress to pass America's first, albeit temporary, income tax.Although World War I again highlighted the shortcomings of relying on tariffs, Weisman cited that America still re-embraced them by 1930. According to him, wide-sweeping trade barriers were seen as an effective shield for domestic industries and agriculture."Instead, they fueled a catastrophic global trade war, strangled commerce, unleashed competitive currency devaluations and intensified a worldwide depression that contributed to the rise of Nazism and wordwide war," he summarized.Trump, too, argues that protectionism is best for American workers and farmers, but Weisman sees the benefits as marginal at best.He offered an example: Where tariffs could diminish foreign competition in the steel industry, domestic manufacturers also depend on steel imports. And when trade barriers rise, access to these materials can decline.Weisman also noted that Trump's perception of tariffs as a cure-all for trade imbalances is misguided, a point proven by Trump's recent history.When his previous administration used tariffs to try to reduce the trade deficit with China, it had to pay $23 billion to bail out farmers when Beijing retaliated, he said.

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