The Week That Was- 8th February 2016
In an extremely close race, former US Secretary of State Hillary Clinton edged out Vermont Senator Bernie Sanders in the Iowa caucuses. While Clinton won the first Democratic contest by a mere 0.3%, Sanders has a comfortable lead in New Hampshire, the next primary state. On the Republican side, Texas Senator Ted Cruz came first in Iowa, slightly ahead of Donald Trump and Florida Senator Marco Rubio. Insufficient support in the Iowa caucuses caused Republican candidates Rick Santorum, Mike Huckabee, and Rand Paul to drop out of the race, while former Florida Governor Jeb Bush continues his presidential bid despite receiving only 2.8% of votes in Iowa.
For the first time since 2008, the US unemployment rate fell below 5%. Wages grew at their fastest pace in a year, which suggests that lower unemployment forces employers to raise wages to find and retain employees. Furthermore, higher wages might be drawing people to the labour force, as the labour participation rate increased for the second month in a row. Although job growth in 2015 was down compared to 2014, annual job growth remains strong at 2.7 million.
In a unanimous decision, the Bank of England’s Monetary Policy Committee voted to keep UK interest rates at 0.5%. The rate-setting committee gave downgrades of GDP and wage forecasts as reasons for the verdict.
The European Commission cut its growth forecast, as it warned that the influx of refugees and slowdowns in emerging markets could further impede the eurozone’s sluggish recovery. Reintroducing European border controls due to mass migration could threaten the prolific cross-border trade allowed for by the Schengen agreement. Furthermore, the Commission expects slowing growth in China to reduce eurozone exports.