8 The world this week
Business Real median household income in the United States grew last year for the first time since 2007, to $56,500. That is up by 5.2% compared with 2014, the biggest percentagepoint increase since the measure was introduced in 1967 (though, adjusted for inflation, household income was still 2.4% below its peak in the 1990s). The proportion of people below the poverty line fell by the most since 1999, to 13.5% of the population. The good news came eight weeks before America’s election.
Increasing interest Uncertainty about whether the Federal Reserve will raise interest rates on September 21st caused jitters on global stockmarkets, some of which recorded their biggest daily falls since Britain’s vote in June to leave the EU. Janet Yellen, the central bank’s chairman, has suggested that the economic evidence for lifting rates is strong, but Lael Brainard, a senior Fed official, warned that tightening monetary policy now would be risky. Britain’s Council of Mortgage Lenders reported that the number of home loans fell sharply in July compared with the same month last year, but it could not determine if this was a reaction to Brexit or an indication of a market that was already cooling. Buy-to-let mortgages were down by 26%. Wells Fargo said it would ditch employee sales targets after it emerged that customers had been issued credit cards and bank accounts without their knowledge in order to meet branch goals. It is an embarrassing episode for Wells Fargo, which mostly avoided the allegations of impropriety that have tarnished the industry. Federal prosecutors are reportedly looking into the case. Postal Savings Bank of China launched an IPO in Hong Kong to raise up to $8.1 billion, making it the world’s biggest flo-
The Economist September 17th 2016 tation since Alibaba in 2014. Most of the shares are being sold to other Chinese stateowned enterprises, which cannot sell them for six months, a recurring feature of IPOs in Hong Kong that lessens the risk of a flop but also reduces market liquidity.
Hailing a taxi Uber wheeled out a pilot programme in Pittsburgh in which some of its vehicles are self-driving. Although a driver still sits behind the wheel and takes control in some circumstances, such as in unusual traffic situations, Uber proclaimed it the most extensive public use yet of autonomous cars. Elsewhere, the mayor of London, Sadiq Khan, unveiled plans to protect the city’s traditional black-cab industry, a bitter foe of Uber, including grants for drivers to buy greener vehicles and promoting taxis as public transport. A long-awaited report from the UN recommended that developing countries should be allowed to override patents on life-saving drugs and license generic versions. The pharmaceutical industry had fought hard to keep the recommendation out of the study, which they wanted to focus on issues such as inadequate storage
facilities for medicine. The only industry representative on the report’s panel warned that compulsory licensing of generic drugs would cause uncertainty among investors.
a former president of the commission but now advises the investment bank. He says the commission’s decision is “discriminatory”.
Polymore In the biggest foreign takeover to date by a German company, Bayer agreed to buy Monsanto for $66 billion, after four months of courting its American rival. The deal will create the world’s biggest supplier of agricultural seed and crop spray, but it faces antitrust obstacles. The rapid pace of consolidation in the agribusiness industry means just three big players could soon dominate the sector. Jim Yong Kim will serve a second term as president of the World Bank, as the nomination process for candidates ended with no challengers. Mr Kim has been sharply criticised for his ham-fisted reforms of the institution, prompting an unprecedented rebuke from its staff association. In an outdated convention, America has the final say on who leads the bank. José Manuel Barroso hit back at the European Commission’s decision to treat him as a lobbyist for Goldman Sachs in future meetings. Mr Barroso is
Banknotes in Britain Number in circulation, bn £50
3 2
£20
1 £10 £5 2004
10
0 16
Source: Bank of England
Cash machines in England and Wales dispensed the Bank of England’s new polymer £5 note, Britain’s first plastic currency. Low interest rates are one reason why holding cash is still popular in an age of digital transactions. Polymer notes are much more durable than paper ones. One TV presenter spent a lot of time trying, without success, to damage or destroy the new fiver, dunking it in his coffee, chewing it and attempting to rip it. Mark Carney, the Bank of England’s governor, dipped a note in a pan of curry to publicise its sturdiness. Other economic data and news can be found on pages 84-85