ECONOMY

What to Expect When You’re Expecting Rate Hikes

Just like your friend’s Covid-delayed wedding, the Fed’s interest rate hikes finally have a date: 2023. 

By then, central bankers project, the economy will be in a strong enough position for the Fed to raise interest rates that influence everything from mortgages to business investments. 2023 is one year earlier than the Fed’s previous estimates.

Why move the timeline up? 

All those sweet, sweet antibodies coursing through your immune system. Says the Fed: “Progress on vaccinations has reduced the spread of Covid-19 in the United States" and therefore “indicators of economic activity and employment have strengthened.” 

• Nearly 45% of the US population is fully vaccinated, and hard-hit states like California and New York removed most Covid-related restrictions this week.

How we got here: In March 2020, the Fed dropped interest rates to near-zero and launched a barrage of stimulus measures to steer the economy through its darkest days. It worked pretty well, and the question the Fed’s faced recently is: When has the economy recovered enough that these stimulus efforts, including a bond-buying program and super-low interest rates, aren’t needed? 

We’re not there yet. The Fed said it wouldn’t further update its strategy until “substantial further progress” is made. 

But what about inflation? 

The Fed has been pressured to pump the brakes on the economy after a run-up in prices this spring led to the highest inflation readings in years. Powell has consistently argued that higher inflation is temporary, but now he may be taking it a little more seriously: “Inflation could turn out to be higher and more persistent than we expect,” he said, while the Fed revised its inflation expectations higher. 

Looking ahead...the interest rate hikes in 2023 are just central bankers’ expectations, and could change based on the shape of the recovery. 

CYBERSECURITY

Biden and Putin Get Up Close and Political

President Biden and Russian President Vladimir Putin met face-to-face in Geneva yesterday to discuss light dinner-table topics including human rights, nuclear treaties, and—the one we’re focusing on—cybersecurity. But first, to set the scene... 

• Biden called Putin a “worthy adversary” leading up to the summit and gifted him a crystal bison sculpture and custom aviators.
• Putin threw down some Russian philosophy in a press conference after the meeting: “There is no happiness in life, there is only the mirage of it on the horizon, so we’ll cherish that."

So what did they say about cybersecurity?

Remember, both the hack of Colonial Pipeline, which led to a gas shortage on the Eastern seaboard, and the forced shut down of meat supplier JBS’s facilities in the US have been attributed to cybercrime groups operating in Russia.

• What Biden wants: Russia to take responsibility for cybercriminals acting within its borders.
• What Biden got: Putin agreed to “begin consultations” regarding cybersecurity with the US. 

Zoom out: Just last week, Russia, along with 20+ other countries including the US, agreed not to shelter cybercriminals or be involved in the hacking of other nations’ infrastructure (like the Colonial Pipeline) during peacetime. However, Russia has a poor track record of upholding such agreements.

HOUSING

Bring in Bob, He's Got Work to Do

Get ready for the most intense season of House Hunters you’ve ever seen, because construction of homes in the US in the last 20 years is 5.5 million units short of historical levels, according to a report released yesterday by the National Association of Realtors (NAR).

The pandemic only made the bad, worse, when supply chain bottlenecks and labor shortages throttled new development. Now, the US is experiencing a housing affordability crisis: The median price of an existing home hit an all-time high of $341,600 in April, up 19% from 2020. 

Big picture: There aren’t enough houses being built to account for population growth, aging and destroyed units, or even to replace all the haunted farmhouses.

Looking ahead...in response to the report, top WH economic advisor Brian Deese said, “We need a once-in-a-generation investment in increasing housing supply.” NAR released a slew of policy recommendations to accompany the report, hoping they can be folded into President Biden’s infrastructure plan.

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that Color on You

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Just look at the OCA Canvas—CARIUMA’s best selling shoe (heck, it recently had a 26k-person waitlist). It’s the perfect transitional sneaker with a broken-in fit, an array of hues, and a low profile you can dress up or down all year round.

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No time for laces? We hear you there, fellow minimalists. Cop a pair of IBI Slip-ons in Raw Red and sail away in shoes that have a 3x smaller carbon footprint than the average sneaker. 

Brew readers can get 15% off a new pair of CARIUMAs right here. (Hop to it—this offer won’t be around for long.)

GRAB BAG

Key Performance Indicators

Stat: The average number of video streaming services utilized per US user declined for the first time on record, from 7.23 in November to 7.06 in April, according to research firm Omdia. There are only so many friends’ passwords a person can remember. 

Quote: “It’s very close to a nuclear disaster, what has happened here.”

Muditha Katuwawala, a coordinator at Sri Lankan volunteer organization the Pearl Protectors, discussed the recent sinking of a cargo ship off Sri Lanka’s coastline with the Washington Post.

Now at the bottom of the ocean floor, the ship’s cargo of plastic pellets, chemicals, and other waste harmful to marine life is filling the surrounding water: “In the coming weeks, this is going to be a regional problem,” Katuwawala said.

Read: What I learned at a Dodge City meatpacking plant. (The Atlantic)

RETAIL

Google Gets Physical

As bars, restaurants, and baseball stadiums welcome more foot traffic, Google said, “Hey, gimme some of that.” This morning, the tech giant will open its first official permanent physical retail space in NYC’s Chelsea neighborhood, which, considering all the real estate Google’s bought there, should seriously consider renaming itself Alphabet City. 

Why it matters: The launch of brick-and-mortar retail may seem odd for a company that makes $147 billion in revenue from digital ads. But the store is intended less as a sales generator and more as a brand-building exercise. Some highlights include...

• A room full of flatscreen TVs for customers to try Google’s Stadia gaming service.
• Something called an “imagination space,” a 17-foot round glass structure where you can experience Google’s latest and greatest services.
• A showroom for Google’s hardware products, such as Pixel phones.

Big picture: Google is not going all-in on physical retail like Apple, but it’s at least trying to put in a better effort than Microsoft. The company that graced us with Excel closed all of its Microsoft Store locations except four last year.

WHAT ELSE IS BREWING

• GM is boosting spending on electric and autonomous vehicles to $35 billion through 2025, accelerating the arms race among global automakers.
• Spotify launched its Clubhouse rival, Spotify Greenroom.
• Facebook said it will begin testing ads in its Oculus virtual reality headsets. 
• How Airbnb’s Smart Pricing algorithm widened racial disparities among hosts.
• Slack will now allow you to schedule sends.

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Brew Mini: We completed this one in under a minute—can you get below :45? Play it here.

The state of automation: What jobs are easily automatable? Which ones are more difficult for robots to conquer? We’ll answer those questions and more at Emerging Tech Brew’s virtual event June 24. Register here.

For the product managers: Or anyone who wants to think like one. Here’s a list of 250+ curated Twitter threads helping you get better at product management. 

GAMES

Three Headline and a Lie

We’re not going to sugarcoat it: This week’s Three Headlines and a Lie is a little (and a lot) gross. See if you can spot which headlines are real and which one is fake. Whatever happens, you're welcome for the imagery.

1. NBC’s Ultimate Slip N’ Slide competition show halted due to “explosive diarrhea”
2. An Olympic hopeful says her burrito is to blame for her positive drug test
3. Petition urging Jeff Bezos to buy and eat the Mona Lisa gains steam
4. Scientists are trying to engineer a tastier cicada

ANSWER

Cicadas aren't getting tastier any time soon