At his garage in the south of Moscow, 35-year-old mechanic Ivan is starting to worry.
With billions of dollars in financial reserves and money still coming in from oil and gas exports, Russia has yet to feel the full impact of the barrage of Western sanctions imposed over its offensive in Ukraine.
But Ivan sees storm clouds on the horizon.
The foreign parts he needs to fix his clients’ cars are getting harder to find, and prices have jumped by at least 30 percent after many brands halted exports to Russia.
“We’re running out of stock. At some point, there won’t be anything left,” said Ivan, who declined to give his last name when speaking to international media.
“People who have foreign cars are worried, they are wondering what to do in the future,” he said.
Faced with a shortage of imported parts in factories, authorities eased safety and emission standards for locally produced cars in May — including dropping the requirement for airbags.
President Vladimir Putin has been defiant in the face of Western sanctions, insisting that the Russian economy will emerge stronger, and pointing to “chaotic measures” in Europe that have boosted global energy prices.
Officials say the damage from sanctions will be temporary, with the economy expected to shrink by eight percent this year and then bounce back to growth in 2024.
– VAT points to spending drop –
But Russia is heavily reliant on imports of everything from manufacturing equipment to consumer goods, and economists believe the worst effects of the sanctions are still to come.
Now almost 100 days into the conflict, officials and ordinary Russians are reporting a litany of problems, including shortages of everything from paper to medicine.
Authorities have stopped releasing key data, making it difficult to assess the impact of sanctions.
But the few available economic indicators point to significant problems.
Strict capital controls, high energy prices and a collapse in imports have led to a surge in the ruble, prompting Russia’s central bank to slash its key rate last week in a bid to rein in the currency.
Inflation meanwhile hit 17.8 percent year-on-year in April, the highest for 20 years.
And revenues from domestic value-added or sales tax collapsed by more than a half in April, VAT fees on imported goods dropping by a third compared to the same month in 2021.
“In April, the revenues of the overwhelming majority of companies in Russia took a hit,” Andrei Grachev, head of tax practice at Birch Legal, told The Bell, an independent Russian business website.
“This didn’t merely affect those who ceased operations in Russia, but also those who continued to work but lost clients and profits.”
That hit is evident on the streets of Moscow, which are now lined with shuttered shops: from McDonald’s and Starbucks to clothing retailers H&M and Zara.
Central bank chief Elvira Nabiullina warned in April that problems were emerging “in all sectors, both in large and small companies.”
– Button, paper shortages –
Textile manufacturers are having trouble buying buttons, while paper producers are struggling with a shortage of bleaching agents, Nabiullina said.
Prices for white paper have skyrocketed and some businesses in Moscow have started printing out receipts on unbleached beige paper.
The aviation and tourism sectors have been hit especially hard. Direct air links with Europe have been severed and Russians are unable to use their bank cards abroad.
Authorities are trying to convince Russians to holiday at home, but the country’s balmy Black Sea coast has become hard to reach due to the closure of airspace in the south over the fighting in Ukraine.
Russian Railways has launched additional train services to compensate for the absence of flights.
For now, the surge in oil and gas prices prompted by the Ukraine conflict is helping to keep the Russian economy afloat, despite the tens of thousands out of work or put on leave and paid a reduced salary while factories halt production for lack of foreign components.
Chris Weafer, the founder of consultancy Macro-Advisory and a long-time observer of the Russian economy, said sanctions mainly hit the financial system in March and April.
“What will start in the next few months are pay cuts,” Weafer told AFP.
“There will be a drop in income, and that combined with inflation will cut very deeply into people’s disposable income.”
Weafer said Russia was in a strong financial position and the authorities could still keep the economy going.
The EU’s decision this week to ban more than two-thirds of Russian oil imports will not have as much impact as many hoped, he said.
“By the time oil sanctions kick in, Russia should be able to replicate the EU market elsewhere,” in particular in Asia, Weafer said.
But further Western moves against Russia’s energy sector could cause serious harm, he said, “if sanctions were to move into more damaging territory: gas.”
How has US wealth evolved since the 1980s?
America’s economy has exploded since 1989.
Gross domestic product, which measures all of the goods and services produced in a year, grew from $9.9 trillion to $22.5 trillion from 1989 to 2023 (after accounting for inflation), according to the Bureau of Economic Analysis. This figure represents a massive increase in economic output.
This increased productivity has fed into a similarly significant increase in wealth. The Wealth Enhancement Group used data from the Federal Reserve to look at how the assets held by U.S. households has evolved over time.
Data shows that American households owned a combined $161 trillion in assets in the third quarter of 2023, up from $24 trillion in 1989. That makes for a roughly 570% increase, or 170% after adjusting for inflation.
After accounting for debt, such as mortgages, America’s total household net worth grew to $142 trillion, up from $20 trillion. Although the number is down by about 1% from its peak in the second quarter of 2022, it still reflects a dramatic increase over time.
The most valuable asset class the typical American family holds is real estate. Besides a significant drop during the 2000s subprime mortgage crisis and a brief dip following interest rate hikes in 2022, housing has been a reliable generator of wealth for the middle class.
Wealth Enhancement Group
Household assets have skyrocketed since 1989
For Americans in the bottom half of the wealth distribution, housing made up 51% of their assets. Wealthier households, in contrast, tend to have higher shares of their savings in equities.
Households in the top 0.1% held 60% of their assets in shares of public and private companies in 2023. Meanwhile, households in the bottom half of wealth in the United States held only around 6% of assets in equities.
Yet, despite how much housing has grown in value, its ascent pales compared to the fastest-growing asset class: public equities.
Between 1989 and 2023, the value of public stocks held by American households grew by nearly 1,700%, rising from $2 trillion in value to $37 trillion. This trend, coupled with the fact that shares in companies are held disproportionately by the rich, has caused the share of American household assets held by the top 0.1% to increase from 8% to 12%.
Wealth Enhancement Group
The wealthy tend to own shares in companies
Some economists argue that, in theory, the ratio of a country’s wealth to its economy, as measured by GDP, should be constant over time.
Yet, data from the Bureau of Economic Analysis and the Federal Reserve data shows that the ratio of the net worth of American households and nonprofit organizations to GDP rose from around 3.6 in the 1980s to 5.5 in the third quarter of 2023.
In 2022, YiLi Chien and Ashley Stewart, two researchers at the St. Louis Federal Reserve, offered a few theories to explain how this ratio has increased over time. They suggest that American companies might now have greater market power, allowing them to charge more. The authors also note that since the internet era, many of America’s biggest companies, such as Meta and Google, offer their services to consumers for free—while investors may value their economic contributions, they do not count for much in the GDP numbers.
However, assets are not net worth. The rich are more likely to own their homes outright. In the third quarter of 2023, households from the top 0.1% owned $1.83 trillion worth of real estate while owing just $70 billion in mortgages. In contrast, households in the bottom 50% of wealth owned $4.87 billion of real estate against $3 billion of housing debt.
Story editing by Ashleigh Graf. Copy editing by Kristen Wegrzyn.
This story originally appeared on Wealth Enhancement Group and was produced and
distributed in partnership with Stacker Studio.
Deepfakes cause 30% of organizations to doubt biometrics, Gartner finds
A look at AI deepfakes, it’s impact on security, and ways to mitigate the risks
A fake moustache and trenchcoat isn’t a convincing disguise, right? But a digitally altered video that makes your face identical to someone else’s?
That’s a different story.
Deepfakes are artificial images or videos that imitate a person’s likeness so convincingly that it can be nearly impossible to recognize they’re fake. Hackers use them to impersonate people’s faces and voices. This can have monumental impacts — even $25 million worth, which is what one undisclosed company lost in a deepfake scam.
Even with all the money a company spends on voice authentication and facial biometrics, it can all be in vain if a deepfake hacker manages to fool them.
Gartner explores the impact of deepfakes on organizational policy, and we’ll share some risk management considerations to address the trend.
30% of organizations can’t rely on facial recognition software and biometrics
Biometrics rely on presentation attack detection (PAD) to assess a person’s identity and liveness. The problem now is that today’s PAD standards don’t protect against injection attacks from AI deepfakes. Once a bulletproof security strategy, biometrics are now inefficient for 30% of companies surveyed by Gartner.
“These artificially generated images of real people’s faces, known as deepfakes, can be used by malicious actors to undermine biometric authentication or render it inefficient,”— Akif Khan, VP Analyst at Gartner
The solution is a demand for more innovative cybersecurity tech. Gartner advises organizations to update their minimum requirements from cybersecurity members to include all of the following
- Injected attacks detection (IAD)
- Image inspection
On top of that, you can beef up security with:
- Device identification: Numerical values or codes to identify a user’s device
- Behavioural analytics: Machine learning algorithms to detect any shifts in day-to-day online behaviour
So, how can you account for deepfakes risks and mitigation in practice? Here are a few more tips to consider:
- Educate employees: Hold monthly or quarterly meetings with experts in the field to help your employee identify common signs of deepfakes, including blurred or pixelated images in a person’s video, or distorted audio. Greater awareness of what to look out for can allow employees to flag suspicions.
- Don’t rely on one authentication process: Multi-factor authentication demands 2+ pieces of evidence to verify a user before admitting them into a network. Include email, phone, or voice verification in addition to biometrics.
- Invest in deepfake detection software: Consider a subscription Sensity AI, Deepware Scan, Truepic, or Microsoft Video Authenticator.
Gartner plans to share more findings and research on deepfakes at their security and risk management summits taking place in various countries around the world.
Read more about those summits and see the news release here.
Veronica Ott is a freelance writer and digital marketer with a specialization in finance and business. As a CPA with experience in the industry, she’s able to provide unique insight into various monetary, financial and economic topics. When Veronica isn’t writing, you can find her watching the latest films!
Where companies have adopted AI—and where they are planning to do so in the near future
On Nov. 30, 2022, OpenAI launched ChatGPT, a chatbot driven by artificial intelligence. The app spread like wildfire. Not only did it provide an entertaining companion to chat with, but it also showed promise as a piece of productivity software.
ChatGPT allows users to ask questions about myriad topics and get useful responses in a way that search engines like Google cannot provide. Similar technologies have emerged in all kinds of domains, including image generation, language translation, transcription, computer programming, and more.
Firms across the U.S. are embracing artificial intelligence. To find out which regions are the most enthusiastic about AI, Verbit analyzed data from surveys taken by the Census Bureau in December 2023. Overall, 4.9% of businesses said they were using AI to produce goods or services in the past two weeks, while 6.7% say they plan to within the next six months.
Unsurprisingly, information technology companies are the most eager to use artificial intelligence—22% of respondents from American tech companies said they had used AI for their products or services within the past two weeks. That number actually understates AI’s impact in the field. A survey of computer programmers conducted by JetBrains, a software company, found that 77% of respondents used ChatGPT, while 46% used GitHub Copilot, an AI coding assistant.
Professional, scientific, and technical services were the second-most likely type of firm to respond that they used AI tools, according to the Census Bureau. Law firms are using tools to scan through thousands of past cases. And, according to Tess Bennett, a technology reporter for Financial Review, consultants and accountants are using AI to create PowerPoint presentations and conduct exploratory data analysis.
Some businesses have been quicker to adopt AI than others. Companies in Rhode Island lead the way on this front—8.7% of businesses in the state are currently using AI, nearly twice the rate of companies in the United States as a whole.
Companies on the West Coast and the Southwest tended to be more AI-friendly, while companies in the Rust Belt were likelier to have the lowest interest in using AI tools.
This story matches the Census survey numbers with data on what kinds of companies each state has within its borders and the education level of its workforce to understand why these disparities across states exist.
In general, states with a higher share of businesses in the technology sector also were likely to have more businesses use AI to produce goods and services. However, the weak correlation suggests that despite all of the hype surrounding AI, companies have still been slow to change their practices to adopt the technology.
Getting on the bandwagon
Businesses in Washington D.C., were the most likely to say they planned to adopt AI in the next six months, at 13.7%. Meanwhile, about 9% of businesses in Maryland, Alaska, New Mexico, Rhode Island, and Florida said they planned on implementing AI. Alabama and Delaware were the least enthusiastic about AI adoption—only 3.3% of businesses in the two states reported plans to implement AI.
This analysis of Census data found a much stronger correlation between how many of a state’s firms are in the tech sector and their willingness to implement AI in their business practices in the near future.
Similar trends were found when it came to states with highly educated workforces—in general, the higher the share of a state’s residents with college degrees, the more likely its businesses were to say they were planning on implementing AI. Artificial intelligence might be the future. But Census data reveals it is still early days.
Story editing by Ashleigh Graf. Copy editing by Kristen Wegrzyn.
This story originally appeared on Verbit and was produced and
distributed in partnership with Stacker Studio.
People5 months ago
Women are great cybersecurity hires. So why are they so underrepresented in a short-staffed field?
Technology5 months ago
How to live forever: the longevity industry ramps up
Business4 months ago
Why is there such a massive cybersecurity talent gap in Canada?
People5 months ago
Multiple generations help a workplace, but age isn’t everything
Events4 months ago
Top 5 tech and digital transformation events to wrap up 2023