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US economy crashes once more, Fuelling Recession Fears

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President Joe Biden

Gross domestic product, a wide-ranging measure of economic activity, fell by 0.9% on an annualized basis from April through June. That decline marks a key symbolic threshold for the most commonly used — albeit unofficial — definition of a recession as two consecutive quarters of negative economic growth.

The hotly anticipated data release has taken on outsized significance as investors, policymakers and ordinary Americans seek some measure of clarity in the current muddled economic environment.

Although Thursday’s initial estimate marked a sharp drop from the 6.7% expansion the economy underwent in the second quarter of 2021, the White House has been adamant that the world’s largest economy, despite being buffeted by decades-high inflation and a cascade of supply shocks, remains fundamentally sound.

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The administration even took the unusual step of publishing an explainer of sorts, maintaining that two consecutive quarters of economic contraction does not, in and of itself, constitute a recession. The White House posted a blog entry last week saying that in addition to GDP, data pertaining to the labor market, corporate and personal spending, production, and incomes all go into the official determination of a recession.

The nonprofit National Bureau of Economic Research is the official arbiter of recessions, and it is unlikely to render a verdict any time soon. The group’s Business Cycle Dating Committee typically weighs a plethora of statistics over a period of months before making a determination.

Economists say the biggest reason it would be premature to call a recession based on Thursday’s numbers is that the data can and probably will change. Subsequent revisions to first-quarter GDP figures, for instance, changed from an initial drop of 1.4% to 1.6%, and Thursday’s numbers are just the first of three estimates.

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Adjustments are the norm rather than the exception, since the Commerce Department repeatedly refines its calculations as new information becomes available. About a third of initial GDP releases rely on statistical extrapolations and assumptions in the absence of hard data, according to the Federal Reserve Bank of San Francisco.

“These are typically single points in time, snapshots. It’s almost like looking at a balance sheet versus an income statement over a quarter,” said Eric Freedman, chief investment officer at US Bank Wealth Management.

“New information can emerge,” he said, and when it does, those variables change the outcome.

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Sometimes, the differences between estimates are significant. Revisions to GDP in the fourth quarter of 2008, for example, revealed that economic activity actually plunged by an annualized -8.4%, indicating a much deeper recession than the initial estimate of -3.8% suggested.

Right now, the biggest smudge on the lens preventing economists from getting a clear picture is a buildup of inventories and a corresponding imbalance in the country’s usual trade flows.

“What you’re starting to see and hear a lot about right now is what’s happening with inventories… Inventories are an issue, both in terms of the mix of inventory retailers are holding as well as the amount,” Freedman said.

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A rush to load up on goods during the previous two quarters was a miscalculation for companies like big-box stores. Walmart and Target have both told investors they expect to cut prices to move products. But from a macroeconomic perspective, some experts think those missteps imply that the economy in the first quarter was not as anemic as the drop in GDP might otherwise imply.

Anna Rathbun, chief investment officer at CBIZ Investment Advisory Services, suggested that the 1.6% contraction in first-quarter GDP was artificially low because businesses started stockpiling inventory in the final quarter of last year. This pulled forward economic activity that otherwise would have taken place in the early months of this year, she said.

“The fourth quarter, to me, was bloated a little bit,” Rathbun said. “Everyone was just hoarding things.”

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In addition, when companies import more and export less, that dynamic weighs on GDP, said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics.

“It’s the value of production within the physical borders of the United States, so therefore if you have, hypothetically, exports that are flat and higher imports, then your trade deficit is rising. In that sense, a rising trade deficit subtracts from GDP,” he said, particularly when combined with wild swings in prices.

“When you have highly fluctuating commodity prices, and especially in periods of high inflation in general, then it can be misleading and, in my opinion, paint an overly negative view of where the economy is,” Kirkegaard said. “We have to be careful with saying the GDP number is the absolutely valid metric for economic well-being in the country.”

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Federal Reserve Chairman Jerome Powell on Wednesday reiterated the importance of considering various key economic measures as the central bank determines future rate moves. However, Powell said the first read of a GDP report should be taken “with a grain of salt

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Noble Ladies Champion Women’s Financial Independence at Grand Inauguration in Abuja

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Women from diverse backgrounds across Nigeria and beyond gathered at the Art and Culture Auditorium, Abuja, for the inauguration and convention of the Noble Ladies Association. The event, led by the association’s Founder and “visionary and polished Queen Mother,” Mrs. Margaret Chigozie Mkpuma, was a colourful display of feminine elegance, empowerment, and ambition.

The highly anticipated gathering, attended by over 700 members and counting, reflected the association’s mission to help women realise their potential while shifting mindsets away from dependency and over-glamorization of the ‘white collar job.’ According to the group, progress can be better achieved through innovation and creativity. “When a woman is able to earn and blossom on her own she has no reason to look at herself as a second fiddle,” the association stated.

One of the association’s standout initiatives is its women-only investment platform, which currently offers a minimum entry of ₦100,000 with a return of ₦130,000 over 30 days—an interest rate of 30 percent. Some members invest as much as ₦1 million, enjoying the same return rate. Mrs. Mkpuma explained that the scheme focuses on women because “women bear the greater brunt of poverty” and the platform seeks “to offer equity in the absence of economic equality.”

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Education is also central to the Noble Ladies’ mission, regardless of age. Their mantra, “start again from where you stopped,” encourages women to return to school or upgrade their skills at any stage in life. The association believes that financial stability is vital in protecting women from cultural practices that dispossess widows of their late husbands’ assets, while also enabling them to raise morally and socially grounded families.

Founded on the vision of enhancing women’s skills and achieving financial stability, the association rests on a value system that discourages pity and promotes purpose. “You have a purpose and you build on that purpose to achieve great potentials and emancipation,” Mrs. Mkpuma said.

A criminologist by training and entrepreneur by practice, she cautions against idleness while waiting for formal employment. “There are billions in the informal and non-formal sectors waiting to be made,” she said, rejecting the “new normal of begging” and urging people to “be more introspective to find their purpose in life and hold on to it.”

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Mrs. Mkpuma’s management style keeps members actively engaged, focusing on vocational skills and training to prepare them for competitive markets. She is exploring “innovative integration of uncommon technologies” and is already in talks with international franchises to invest in Nigeria, with Noble Ladies as first beneficiaries.

The association’s core values include mutual respect, innovation, forward-thinking, equal opportunity, and financial emancipation. With plans underway to establish a secretariat in the heart of Abuja, the group aims to expand its impact.

The event drew high-profile guests, including former Inspector General of Police, Mike Okiro, and a host of VIPs, marking a significant milestone in the association’s drive for women’s empowerment.

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NEPZA, FCT agree to create world-class FTZ environment

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NEPZA, FCT agree to create world-class FTZ environment

The Nigeria Export Processing Zones Authority (NEPZA) has stepped in to resolve the dispute between the Federal Capital Territory Administration and the Abuja Technology Village (ATV), a licensed Free Trade Zone, over the potential revocation of the zone’s land title.
Dr. Olufemi Ogunyemi, the Managing Director of NEPZA, urged ATV operators and investors to withdraw the lawsuit filed against the FCT administration immediately to facilitate a roundtable negotiation.
Dr. Ogunyemi delivered the charge during a courtesy visit to the Minister of the Federal Capital Territory, Barrister Nyesom Wike, on Thursday in Abuja.
You will recall that the ATV operators responded to the revocation notice issued by the FCT administration with a lawsuit.
Dr. Ogunyemi stated that the continued support for the growth of the Free Trade Zones Scheme would benefit the nation’s economy and the FCT’s development, emphasizing that the FCT administration recognized the scheme’s potential to accelerate industrialisation.
Dr. Ogunyemi, also the Chief Executive Officer of NEPZA, expressed his delight at the steps taken by the FCT minister to expand the economic frontier of the FCT through the proposed Abuja City Walk (ACW) project.
Dr. Ogunyemi further explained that the Authority was preparing to assess all the 63 licensed Free Trade Zones across the country with the view to vetting their functionality and contributions to the nation’s Foreign Direct Investment and export drives.
“I have come to discuss with His Excellency, the Minister of the Federal Capital Territory on the importance of supporting the ATV to succeed while also promoting the development of the Abuja City Walk project. We must work together to achieve this for the good of our nation,” he said.
On his part, the FCT Minister reiterated his unflinching determination to work towards President Bola Ahmed Tinubu’s Renewed Hope Agenda by bringing FDI to the FCT.
“We must fulfil Mr. President’s promises regarding industrialization, trade, and investment. In this context, the FCT will collaborate with NEPZA to review the future of ATV, a zone that was sponsored and supported by the FCT administration,” Wike said.
Barrister Wike also said that efforts were underway to fast-track the industrialisation process of the territory with the construction of the Abuja City Walk.
The minister further said the Abuja City Walk project was planned to cover over 200 hectares in the Abuja Technology Village corridor along Airport Road.
According to him, the business ecosystem aimed to create a lively, mixed-use urban center with residential, commercial, retail, hospitality, medical, and institutional facilities.
He added that the ACW would turn out to be a high-definition and world-class project that would give this administration’s Renewed Hope Agenda true meaning in the North-Central Region of the country.
Barrister Wike also indicated his continued pursuit of land and property owners who failed to fulfil their obligations to the FCT in his determination to develop the territory.

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Benue IDPs block highway, demand return to ancestral homes

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Vehicular movement along the Yelwata axis of the Benue–Nasarawa highway was brought to a standstill on Wednesday as Internally Displaced Persons, IDPs, staged a protest, demanding immediate return to their ancestral homes.

The protesters, believed to be victims of persistent attacks by suspected herdsmen, blocked both lanes of the busy highway for several hours, chanting “We want to go back home”.

The protest caused disruption, leaving hundreds of motorists and passengers stranded.

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Eyewitnesses said the displaced persons, many of whom have spent years in overcrowded IDP camps, are expressing deep frustration over the government’s delay in restoring security to their communities.

“We have suffered enough. We want to return to our homes and farms,” one of the protesters told reporters at the scene.

Security personnel were reportedly deployed to monitor the situation and prevent any escalation, though tensions remained high as of press time.

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Efforts to reach the Benue State Emergency Management Agency, SEMA, and other relevant authorities for comment were unsuccessful.

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