TIME Economy

How Statehood Changed Hawaii’s Economy

Gamma-Keystone / Getty Images Aug. 21, 1959: The President of the United States Dwight Eisenhower signing the act which declares the islands of Hawaii as the 50th state of the United States of America.

Aug. 21, 1959: Hawaii becomes the 50th state, by Eisenhower’s executive order

Mainland Americans have been making their mark on Hawaii — in ways both welcome and unwelcome — since the early 1800s, when Protestant missionaries first landed there and, per TIME, “devised a Hawaiian alphabet, soon printed a speller… promoted monogamy, [and] introduced the spare, hardy architecture of New England whaling ports.”

While the U.S. annexed Hawaii as a territory in 1898 under somewhat shady circumstances — and over the objections of many Hawaiians — by the 1950s most Hawaiians were in favor of being admitted as a state. When the state reached that milestone, on this day, Aug. 21, in 1959, just seven months after Alaska had joined the Union, Hawaii underwent immediate and radical change, largely in the form of unprecedented economic growth.

The cluster of islands that comprise America’s 50th state are some of the world’s most isolated: 2,390 mi. from the West Coast and 4,000 from Japan. But with statehood came a proliferation of commercial flights that connected Hawaii to the mainland and brought a massive influx of tourists.

Three days after Hawaii was admitted to the Union, Pan American became the first airline to provide jet service to the newest state, according to the Los Angeles Times. This convenience changed the face of Hawaiian tourism entirely. “The islands, which had been the playground of well-heeled visitors, most of whom traveled by ship, began welcoming middle-class travelers,” the LA Times notes.

As TIME reported in 1966, the years after statehood became a “jet rush,” in which the number of passengers arriving annually at Honolulu’s airport more than doubled — many of them vacationers who snapped up $100 tickets for the five-hour flight from Los Angeles or San Francisco. TIME observed:

No fewer than 18 airlines are begging the [Civil Aeronautics Board] to let them put new flights on the Honolulu route. Already, tourists spend $300 million a year, making tourism Hawaii’s largest civilian source of income, larger than the pineapple and sugar businesses combined. To accommodate them, some $350 million worth of hotel construction has gone up in the past five years. The boom has also created new jobs to absorb the unemployment created by automation on the plantations.

This jet-fueled increase in tourism was not Hawaii’s only area of growth. The state also saw a rapid expansion in light industry — companies producing “everything from muumuus to mirrors,” per TIME — and diversification in agriculture. The flurry of commercial activity led to a corresponding boom in development: In 1964, construction spending was up nearly 20 percent from the previous year, and included a $27 million high-rise on Waikiki Beach that was then the world’s largest single-unit apartment building, according to TIME.

Additional projects included a $14 million business complex in downtown Honolulu as well as freeway expansions and new planned communities. Other signs that 1964 was a banner year for the Hawaiian economy, by TIME’s account: “Four new mattress factories have been opened, and Schlitz is about to build a 100,000-barrels-a-year brewery near Pearl Harbor.”

Read more from 1959, here in TIME’s archives: Hawaii: The Big Change

TIME China

These 5 Facts Explain Why China Is Still on the Rise

Chinese President Xi Jinping waits to welcome French Prime Minister Manuel Valls at the Great Hall of the People on Jan. 30, 2015 in Beijing
red Dufour—Getty Images Chinese President Xi Jinping waits to welcome French Prime Minister Manuel Valls at the Great Hall of the People on Jan. 30, 2015 in Beijing

China has had a terrible past few weeks, but that won't stop it's growing dominance

Stock market plunges, currency devaluations and warehouse fireballs out of China have dominated headlines this summer. But make no mistake—this is the opening of the “China Decade,” the moment when the emerging giant’s international influence crosses a crucial threshold. These five facts explain why China’s rise is inevitable, even in the face of bad news—and why it won’t last forever.

1. Rough Summer

Economic indicators have been pointing to a Chinese slowdown for some time—exports had already dropped 8 percent last month compared to the same time last year—but matters have come to a head these last couple of months. Between June 12 and July 8, the Shanghai stock market plummeted 32 percent. On July 27, the stock market fell 8.5 percent, its greatest single-day drop. To put that in perspective, “Black Tuesday,” which kicked off the Great Depression in 1929, saw the Dow plunge 12 percent. Markets under the thumb of autocratic regimes were thought to be immune to such wild swings; turns out they’re not.

On August 11th, the Chinese government devalued the renminbi to kick-start their slowing economy. By the end of the week, the currency’s value had fallen by 4.4 percent, its biggest drop in 20 years.

(The New York Times (a), CNN Money, The New York Times (b), TIME)

2. China’s Rise

Yes, growth is slowing, but to levels enviable in any developed country. In the mean time, China’s march to no. 1 continues. In 2014, China’s total GDP overtook the US’s when measured by purchasing power parity. Using this metric, China accounted for 16.32 percent of world GDP in 2014, eclipsing the US’s 16.14 percent.

More impressive than the size of China’s economy is the speed with which it’s grown. Back in 2000, Chinese imports and exports accounted for 3 percent of all global goods traded. By 2014, that figure had jumped to more than 10 percent. In 2006, the U.S. was a larger trade partner than China for 127 countries. China was the larger partner for just 70. Today, those numbers have reversed: 124 countries trade more with China than with the United States.

(International Monetary Fund, Financial Times, Russia Today)

3. China’s Resilience

And despite recent turmoil, China’s economy has staying power. That’s in part because China’s leadership has spent decades building its foreign exchange reserves, which today are valued at $3.7 trillion. That’s by far the world’s biggest rainy day fund.

More important than its money buffer is China’s consolidated political leadership under Xi Jinping. China’s president has presided over an extensive anti-corruption campaign that has already seen 414,000 officials disciplined and another 200,000 indicted. In the process, Xi has probably rebuilt some of the party’s lost credibility with China’s people. He has definitely sidelined current and potential opponents of his reform program—and of his rule. And the lack of backlash illustrates just how strong his political control really is.

(Wall Street Journal, The Atlantic)

4. Spreading Wealth (and Influence)

Consolidated leadership also enables Beijing to pursue its comprehensive global strategy. China has spent the last two decades tactically investing around the world. Chinese investments in Africa jumped from $7 billion in 2008 to $26 billion in 2013, helping the continent build desperately-needed roads, rails and ports. In Latin America, China has already pledged to invest $250 billion over the coming decade, giving Beijing a solid foothold in the West. This extends China’s influence well beyond East Asia, helps China secure long-term supplies of the commodities it needs to continue to power its economy, creates jobs for Chinese workers, and helps China open new markets for its excess supplies of industrial products.

China also wants to use its money to reshape the world’s financial architecture. To that end, Beijing just launched the Asian Infrastructure Investment Bank to rival the Washington-based IMF and World Bank. Given that 57 countries have signed up as founding members, some of them US allies who chose to ignore US objections, it’s well on its way. With initiatives like the AIIB, China will continue funding infrastructure projects—and building goodwill—for years to come.

(Bloomberg, BBC, Wall Street Journal)

5. Problems Ahead

All that said, China’s longer-term challenges are becoming impossible to ignore. By 2050, it’s estimated that China’s work force will have shrunk by 17 percent. Blame demographics—back in 1980, the median age in China was 22.1 years; in 2013, 35.4, and by 2050 it will rise to 46.3. An aging labor force is like an aging sports star: both want more money, and both are nowhere near as productive as they once were.

Pollution continues to take its toll—less than 1 percent of China’s 500 cities meet WHO air quality standards. China’s environment ministry concedes that nearly 2/3 of underground water and 1/3 of surface water is “unfit for human contact.” A new study estimated that 4,000 Chinese die prematurely each day thanks to air pollution. As China’s masses join a growing middle class, the leadership will have to deal with stronger public demand for clean air and water. Beijing better deliver if it wants to keep the peace, and its regime, intact. And the public will have the means to make its demands known: There are already 650 million Chinese people online, and censorship, however sophisticated, can never fully control the flow of ideas and information in a social media market of that scale—witness the information leaking out on the Tianjin blast. China’s leaders know they must care about public opinion.

(Bloomberg, UN Economic and Social Affairs, Council on Foreign Relations, Russia Today, CNN)

China’s growing strength threatens the established world order, but its domestic vulnerabilities will have global repercussions, as well. It’s still too early to tell which of the two will be more destabilizing. Either way, the world will be shaped by Beijing’s successes and its failures. Welcome to the China Decade.

TIME Greece

European Bailout Fund Approves Release of Funds for Greece

Germany Greece Bailout angela merkel
Markus Schreiber—AP German Chancellor Angela Merkel, center, stands between lawmakers after she cast her vote on a bailout package for Greece, in the German parliament Bundestag in Berlin on Aug. 19, 2015.

The move followed Germany's parliament approving the Greek bailout package

(BERLIN) — European bailout fund supervisors on Wednesday approved the release of billions of euros to help rebuild Greece’s devastated economy just as a new debt payment looms.

The move — a virtual formality — came after Germany’s parliament approved the bailout package, along with the assemblies of other creditor nations, removing a big hurdle to release the new loans.

The European Stability Mechanism board said that it “will provide up to 86 billion euros ($95 billion) in financial assistance to Greece over three years.” A first tranche of 26 billion euros ($29 billion) can now be made available to meet Greece’s debts and help recapitalize its banks.

Greece is due to make a new debt payment to the European Central Bank on Thursday.

The total amount of funds will depend in part on Greece’s success in implementing new reforms aimed at streamlining the economy, which are certain to mean more hardship for long-suffering Greek citizens. Money from privatization efforts could also reduce the amount of loans needed. Despite International Monetary Fund calls for debt relief for Greece, many nations remain opposed and no such move will be examined by euro nations before October.

The chairman of the euro currency group, Jeroen Dijsselbloem, warned that Greece has a long and difficult road ahead.

“We will monitor the process closely,” said Dijsselbloem, after chairing the ESM board meeting, held by conference call. “It’s not going to be easy. We are certain to encounter problems in the coming years but I trust we will be able to tackle them.”

Beyond lifting a last obstacle, the result of the vote in Germany also dispelled speculation that Chancellor Angela Merkel would have difficulty getting her conservative bloc to sign on. Lawmakers voted 453-113 in favor, with 18 abstentions.

The Dutch parliament also approved the package earlier Wednesday.

Germany’s endorsement was never in doubt but in a similar vote last month, 60 members of Merkel’s conservative bloc voted against. Some local media had speculated that as many as double that could rebel this time as Germans are increasingly skeptical about giving Greece more money, but in the end only 63 from her bloc of 311 voted against.

German Finance Minister Wolfgang Schaeuble, a senior member of Merkel’s Christian Democratic Party who has been one of the harshest critics of Greece, may have helped the cause as he lobbied hard ahead of the vote for the passage of Greek’s third bailout in five years.

Schaeuble told lawmakers that while voting in favor of the bailout wasn’t an easy decision for him, approval of the three-year loan package is “in the interest of Greece and the interest of Europe.” He noted that the Greek government has taken big steps over the past few weeks to restore trust with its creditors.

Germany is the largest single contributor to the bailouts and many in Schaeuble’s party remain skeptical. Merkel’s coalition partner, the Social Democrats, and the opposition Greens also backed the deal.

In the Netherlands, a majority of lawmakers also backed the new Greek rescue after a heated debate in which Prime Minister Mark Rutte was attacked for reneging on an election pledge to not approve another bailout for Greece.

Geert Wilders, the anti-Islam lawmaker who is also a staunch opponent of the European Union and financial support for Greece, called Rutte “the Pinocchio of the Low Countries” for breaking his pledge not to approve another bailout.

Rutte’s coalition government easily survived a no-confidence vote at the end of Wednesday’s debate.

The Dutch parliament did not have to formally give its approval, but Rutte said it would have been politically difficult for him to sign off on the European loans to Athens if a majority of lawmakers had rejected the plan.

Under the terms of the deal, Greece has to make further spending cuts, hike taxes and implement major reforms. It must also pass a review in October to win access to the rest of the funds.

Schaeuble laid out his hope that the bailout will help turn the Greek economy around in the longer term. Greece has suffered through an economic depression in the past six years and seen unemployment jump to over 25 percent.

“If Greece stands by its obligations and the program is completely and resolutely implemented, then the Greek economy can grow again,” Schaeuble said. “The opportunity is there. Whether it will be used, only the Greeks can decide.”

Tsipras is mulling whether to call a vote of confidence in his government after a big rebellion among his radical left Syriza party over the bailout. There’s also growing talk in Greece that Tsipras may opt for early elections as soon as next month now that the bailout deal is in place.

Tsipras’ Syriza topped January’s election on a promise to bring an end to hated budget austerity measures but after months of tortuous discussions with creditors, he was forced into a U-turn so the country could get the rescue money that keeps Greece in the 19-country eurozone.

As Greece expected to get the new loans, Tsipras wrote Wednesday to European Parliament President Martin Schulz to request that the parliament joins the team of international institutions that monitor the country’s reforms.

The European Commission, European Central Bank, European bailout fund and the International Monetary Fund currently do that.

“I deem it politically imperative that the sole European institution with direct popular mandate acts as the ultimate guarantor of democratic accountability and compatibility of economic policy in Europe with European political and social (standards),” the letter said.


Lorne Cook in Brussels and Mike Corder in The Hague, Netherlands, contributed to this report.

TIME Economy

This Surprising Area Is Seeing Significant Job Growth

Job Seekers Attend Job Fair In San Francisco
Justin Sullivan—Getty Images SAN FRANCISCO, CA - MARCH 27: A "we are hiring" sign is displayed on a table during the San Francisco Hirevent job fair at the Hotel Whitcomb on March 27, 2012 in San Francisco, California. As the national unemployment rate stands at 8.3 percent, job seekers turned out to meet with recruiters at the San Francisco Hirevent job fair where hundreds of jobs were available. (Photo by Justin Sullivan/Getty Images)

Good news for college graduates.

A study conducted by the Georgetown University Center on Education and the Workforce shows that, of the 6.6 million jobs that the economy has created since 2010, 2.9 million of them were “good jobs.”

The study defines good jobs as those that pay over $53,000 annually. Most of these tend to be full time with both health insurance and retirement plans. Of these 2.9 million jobs, 2.8 million have gone to college graduates.

There has also been growth in the middle-wage ($32,000 – $53,000) and low-wage (less than $32,000) job sectors with an additional 1.9 million and 1.8 million jobs created, respectively.

Most of the growth in high-wage jobs has come from managerial, STEM, and healthcare professional occupations; middle-wage jobs saw recovery in “occupations that make up the blue-collar cluster; and low-wage jobs were in food and personal services, sales, and office support.

Despite the numbers, only high-wage and low-wage jobs have seen full recovery. The middle-wage tier still needs to see an additional 900,000 jobs before it reaches pre-recession levels.

TIME Economy

The Tooth Fairy Is Paying Out Less For the Second Year in a Row

Tooth Fairy
Getty Images

American moms and dads are only paying out $3.19 per tooth this year

For kids losing teeth, some tough news to chew on: Tooth Fairy payouts have continued to decline in 2015, with American children receiving $3.19 per tooth.

That’s a 24-cent decline from last year and the second year of decline overall, Forbes reports, but it’s still higher than some years past. From 2010-2012, the average per-tooth payment hovered around $3 before approaching $4 in 2013 and subsequently dropping.

The data comes from Visa’s sixth annual Tooth Fairy survey, which included 4,027 people via phone interviews. The data varies by income, gender and location. Dads are more generous than moms, giving $3.63 per tooth on average, while moms give only $2.87 on average.

Parents in the Northeast U.S. give the most, with an average of $3.56, while Southern parents offer the least with $3.07 per tooth.


TIME europe

Greece Gets Green Light for Fresh Bailout to Help Rebuild Economy

From left, European Commissioner Valdis Dombrovskis, Dutch Finance Minister and Chairman of the Eurogroup Jeroen Dijsselbloem, and Managing Director of the European Stability Mechanism Klaus Regling attend a media conference after a meeting of Eurozone finance ministers at the EU Council building in Brussels, Friday, Aug. 14, 2015. (AP Photo/Francois Walschaerts)
Francois Walschaerts—AP From left: European Commissioner Valdis Dombrovskis, Dutch Finance Minister and Chairman of the Eurogroup Jeroen Dijsselbloem, and Managing Director of the European Stability Mechanism Klaus Regling at a media conference at the EU Council building in Brussels on Aug. 14, 2015.

Europe's finance ministers voted to approve $29 billion in loans

(BRUSSELS) — Finance ministers of the 19-nation euro single currency group on Friday approved the first 26 billion euros ($29 billion) of a vast new bailout package to help rebuild Greece’s shattered economy.

“Of course there were differences but we have managed to solve the last issues,” Eurogroup chairman Jeroen Djisselbloem told reporters in Brussels. “All the intense work of the past week has paid off.”

Ten billion euros will be available to recapitalize Greece banks, while a second slice of 16 billion euros will be paid in installments, starting with 13 billion euros by Aug. 20 when Greece must make a new debt payment to the European Central Bank.

“On this basis, Greece is and will irreversibly remain a member of the Euro area,” said European Commission President Jean-Claude Juncker after the deal was sealed.

The final rescue package would eventually give Greece up to 86 billion euros ($93 billion) in loans over three years in exchange for harsh spending cuts and tax hikes.

The deal must still be approved by some national parliaments, including Germany, but that is largely considered to be a formality. Some nations, such as Finland, have already given their approval.

The move saves Greece from a disorderly default on its debts which could have come as soon as next week and helps end months of uncertainty that has shaken world markets, but it means more hardship for ordinary Greeks.

A key sticking point has been whether to forgive some of Greece’s debts.

The International Monetary Fund has insisted that Greece must be given some form of debt relief before it will participate in any new bailout, but a number of the country’s euro partners oppose such a move.

“It is equally critical for medium and long-term debt sustainability that Greece’s European partners make concrete commitments … to provide significant debt relief, well beyond what has been considered so far,” IMF chief Christine Lagarde said in a statement.

Keen to have the IMF on board, the finance ministers said the eurogroup “stands ready to consider, if necessary, possible additional measures” such as longer grace and repayment periods.

But this would only take place in October, once a review has been made of whether Greece is fully respecting the bailout terms.

The approval came after Greece’s parliament passed a slew of painful reforms and spending cuts after a marathon overnight session that divided the governing party, raising the specter of early elections.

The bailout bill passed through the parliament thanks to support from opposition parties, with 222 votes in favor, 64 against, 11 abstentions and three absent in the 300-member parliament.

Although approved by a comfortable majority, the result was a blow to Prime Minister Alexis Tsipras, who saw more than 40 of his 149 radical left Syriza party lawmakers vote against him. He has come under intense criticism from party hardliners for capitulating to the creditors’ demands for budget cuts – austerity measures he had promised to oppose when he won elections in January.

The bill includes reforms increasing personal, company and shipping taxes, reducing some pensions, abolishing tax breaks for some groups considered vulnerable and implementing deep spending cuts, including to the armed forces.

State television said Tsipras was expected to call a vote of confidence in his government, but that was not confirmed. Government spokeswoman Olga Gerovasili said any action would come after Aug. 20.

Tsipras has maintained his public popularity in Greece despite his U-turn on austerity policies, and consistently leads opposition parties in opinion polls. An election would allow him to remove the hard line elements from his party, but it is not a risk-free option.

“An election in the next few months would create more political uncertainty, delay economic recovery and impede reform implementation and the possibility of opening talks on debt relief as desired by the (International Monetary Fund) as a condition of its involvement in funding the program,” said Joan Hoey, analyst for Europe at the Economist Intelligence Unit.

“However, it appears to be unavoidable if Greece is to have a government capable of implementing the agreement.”

Syriza dissenters angrily challenged the government during the all-night parliamentary session.

“I feel ashamed for you. We no longer have a democracy … but a eurozone dictatorship,” prominent party member and former energy minister Panagiotis Lafazanis said before the vote. Lafazanis signed a declaration with another 12 left-wing politicians Thursday saying they would start a new anti-austerity movement. He stopped short of quitting Syriza.

The terms of the new bailout were agreed earlier this week with creditor negotiators from the European Central Bank, European Commission and IMF.

“We took a painful decision of responsibility, and took a step back,” Tsipras said in his defense of the bailout.

France, a key Greece ally, welcomed the move, with Finance Minister Michel Sapin saying he hopes the agreement will help Greece “again have confidence in itself.”

“Too much time was wasted for too long,” he said.


Elena Becatoros and Derek Gatopoulos in Athens, and Geir Moulson and Frank Jordans in Berlin contributed to this report.

TIME russia

These 5 Facts Explain Russia’s Economic Decline

Russian President Vladimir Putin Delivers State Of The Nation Address To Parliament
Sasha Mordovets—Getty Images Russian President Vladimir Putin delivers his annual state of the nation address to the National Assembly in Grand Kremlin Palace on in Moscow on Dec. 4, 2014.

Corruption, cheap oil and unproductive workers all hold Russia back—though Russians don't seem to care

For the first time since 2009—low point of the global economic slowdown—Russia is in recession. Its economy will contract 3 percent this year, though Moscow’s $360 billion in cash reserves will cushion the immediate blow. Still, as President Vladimir Putin continues to try to assert Russian power on the international stage, it has become clear that he is now ruling a “submerging market.” Unless something changes, Russia is in for a slow and steady economic decline. These five sets of stats explain why.

(TIME, International Monetary Fund)

1. Lack of Diversification

It’s not simply the size of your economy, but its diversity and resilience that counts. For years, the Kremlin has supported and protected large state-owned companies at the expense of small and medium-sized enterprises (SMEs). But those smaller firms are the foundation of any strong and well-diversified economy. SMEs spur innovation and respond effectively to changing times, technologies, and consumer tastes. In the EU, SMEs contribute an average of 40 percent to their respective countries’ GDP; in Russia, SMEs contribute just 15 percent. Those are daunting figures for anyone looking to start a business in Russia.

Things aren’t getting better—between 2008 and 2012, Russia’s private sector lost 300,000 jobs while the state added 1.1 million workers to its payroll. Rather than diversifying, Moscow is doubling down on its state-centered approach to economic development.

(JYSkebank, The Economist)

2. At the Mercy of Oil Markets

The price of oil has now fallen below $45 a barrel—welcome to the new normal. OPEC continues to pump oil at historic rates as it tries to price out competitors, and Iran expects to bring over a million new barrels a day to world markets after the lifting of international sanctions. These are deeply troubling developments for Moscow, which relies on oil and gas sales for nearly 50 percent of its government revenues. In 1999, oil and gas accounted for less than half of Russia’s export proceeds; today they account for 68 percent. Moscow has grown so reliant on energy sales that for each dollar the price of oil drops, Russia loses about $2 billion in potential sales. For Russia to balance its budget, oil will need to surge back to $100 a barrel. That’s going to take a while.

(CNBC, CNN, Wall Street Journal , World Affairs, EIA, BBC, Financial Times)

3. At the Mercy of Sanctions

Moscow’s over-reliance on crude oil—which makes up 40 percent of Russia’s state budget—has also left the country particularly vulnerable to international sanctions. Given the age of many existing fields, Russia will increasingly depend on cutting-edge technology from Western firms to pump oil from difficult-to-reach shale and deep-water reserves. These sources could account for more than 15% of the world’s undiscovered oil reserves and 30% of the gas. Some argue that Russia can turn for help to China—but while China wants more Russian oil and gas, it doesn’t have the technology Russia needs to draw those resources from the ground. The IMF believes sanctions could eventually cost Russia 9 percent of its GDP.

(EIA, Forbes, Reuters)

4. Russia’s Other Problems

Russians aren’t nearly as productive as they could be. For each hour worked, the average Russian worker contributes $25.90 to Russia’s GDP. The average Greek worker adds $36.20 per hour of work. And Greece is not a country you want to trail in productivity. The average for U.S. workers? $67.40.

In addition, endemic corruption costs the Russian economy between $300 and $500 billion each year, or roughly the cost of three Greek bailout packages combined. This year, Freedom House gave the country a 6.75 on its corruption scale; 7 is “most corrupt.”

It’s no surprise then that well-educated Russians are leaving their country in droves. Between 2012 and 2013, more than 300,000 people left Russia in search of greener economic pastures, and experts believe that number has only risen since Moscow’s annexation of Crimea last year.

(Bloomberg, OECD, PBS, Telegraph, Wall Street Journal, Freedom House, Washington Post)

5. No Incentive to Change

Russia’s biggest problem may be denial. Typically, a stumbling economy brings about change in political leadership. Some countries, like Greece, take this to an extreme—Athens has seen five different governments in five years. But Russians have gone the other way—as their economy has slowed, Putin has grown more popular; he now holds an approval rating of 86 percent. More surprising is that while 73 percent of Russians are unhappy with their economy, 7 in 10 approve of the way Putin is handling it.

How is that possible? About 90 percent of all Russians get their news from Russian television channels directly controlled by the Kremlin. By framing sanctions and the invasion of Ukraine as “Russia vs. the West”, Putin has succeeded in stoking the country’s nationalism. Today, 63 percent of Russians have a very favorable view of their country, up from 29 percent in 2013 and 51 percent in 2014. It’s easier under those circumstances to blame bad economic circumstances on outsiders. Credit where credit’s due—Putin knows what his people want to hear. It’s just not clear if he knows how to fix his flailing economy.

(TIME, Pew Research Center, Washington Post, Pew Research Center)

MONEY Economy

The Fed Will Probably Raise Interest Rates Twice in 2015

<> on July 16, 2015 in Washington, DC.
Alex Wong—2015 Getty Images Federal Reserve Chair Janet Yellen on July 16, 2015 in Washington, DC.

According to a Reuters survey of economists released on August 13th.

The U.S. Federal Reserve will probably raise interest rates twice this year, with the first increase in almost a decade coming as early as next month, according to a Reuters poll of economists published on Thursday.

The survey gave a median 55% chance that the U.S. central bank would raise its short-term lending rate twice this year. Economists put a 60% probability on a September rate hike and an 85% chance that it would move by year-end.

“If the FOMC (Federal Open Market Committee) acts in September, there is a good possibility that it will in December as well,” said economist Terry Sheehan of Stone & McCarthy in Princeton, New Jersey.

The case for a September monetary policy move was bolstered by solid job gains and a rebound in wages in July. In addition, economic growth accelerated in the second quarter after bad weather constrained it at the start of the year.

After China’s surprise devaluation of the yuan, U.S. financial markets have slightly pushed rate hike expectations to December. The Fed, currently targeting a range of zero to 0.25%, has not raised interest rates since 2006.

The midpoint of the range of federal funds rate expectations in the survey came to 0.375% by the end of September and 0.625% at the turn of the year, unchanged from a July poll.

Even if the Fed raises interest rates twice this year, the tightening process would still be gradual, economists said, citing a strong dollar.

Read next: How Soon Will Your Credit Card’s APR Go Up Once the Fed Raises Interest Rates?

“Their credibility requires a rate increase this year,” said Georgia State University professor emeritus Donald Ratajczak. “The strong dollar suggests that a very slow pace is needed until currency values stabilize.”

Average hourly earnings are expected to rise slightly beginning in 2016, according to the poll.

The economists forecast wage growth averaging 0.5% in the first quarter of 2016 and 0.6% in the second. They had previously expected 0.3% for both periods.

The more than 80 participating economists saw little impact on the economy from the anticipated slight tightening in monetary policy.

The growth estimate for 2015 was unchanged at an average of 2.3%. The survey showed growth accelerating to 2.7% next year, little changed from the July poll.

“Monetary policy will still be very accommodative even after the first couple of Fed rate hikes,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida. “Raising rates will be a sign that the Fed believes the recovery has made substantial progress and will continue to improve.”

Inflation forecasts were little changed from the July survey.

— Additional reporting by Lucia Mutikani; Polling by Aara Ramesh and Kailash Bathija

Read next: 3 Myths About Higher Interest Rates

TIME Economy

Here’s What China’s Currency Devaluation Really Means

Everything you need to know in 1 graphic

In a surprise move, China announced this week devalued its currency, the yuan, relative to the dollar.

The move, done by adding supply of yuan to the global marketplace, is a step towards giving market forces more influence over China’s tightly-controlled currency. It will help Chinese businesses who do business in foreign countries like the United States by making their goods less expensive here. And a more free-floating yuan is also more likely to gain the elite status of global reserve currency, a goal Beijing badly wants to achieve.

Read more: Here’s why China devalued its currency

But it’s unclear exactly how much control China is willing to cede over its currency. That uncertainty is taking a toll on global stock markets this week, with the Dow Jones Industrial Average dropping more than 200 points Tuesday before partially recovering Wednesday.

For more on China’s currency devaluation and what it means, see TIME’s infographic below:

TIME Economy

Here’s Why China Devalued Its Currency

Yuan Hits Highest Level Since Revaluation
China Photos—;Getty Images Dollars and yuan notes are seen at a bank on May 15, 2006 in Beijing.

The move is sending shockwaves through the global markets

Donald Trump may very well have a field day with today’s currency news, as analysts predict. But he shouldn’t.

China’s central bank devalued the country’s currency, the renminbi, by about 2% against the U.S. dollar on Tuesday. It was the biggest one-day move since the renminbi, or yuan, officially de-pegged from the U.S. dollar in 2005. The yuan maintains a close relationship with the dollar and trades 2% in each direction from a midpoint selected by China. Today, that midpoint went from 6.11 yuan per U.S. dollar to 6.22.

Trump and others may say China is purposely devaluing its currency to help exports. After all, its economy is struggling to hit the government 7% growth target.

But is that what’s really going on?

For the most part, China has recently actually wanted its currency to steadily rise, for political reasons and to keep capital from flowing out of China. China’s domestic and international goals align with a stronger yuan. That helps explain why presidential candidates like Trump haven’t been spouting off about China’s currency management as much of late.

The answer to why China’s government devalued its currency Tuesday probably has more to do with the dynamics of global currency markets than a sudden urge to help Chinese exporters make their goods cheaper on the world market.

First, the yuan is strongly related to the dollar because China still manages the exchange rate within a range against the dollar. When the U.S. dollar rises rapidly against world currencies, like it has in the past year to pull almost even with the euro, the yuan also rises against China’s trading partners’ currencies.

China has wanted the yuan to steadily rise against trade-weighted partners for a while. To keep that appreciation gradual, as the dollar rockets upwards, it may have to devalue a little, says Jonathan Anderson, at Emerging Advisors Group, one of the clearest observers of China’s markets. “But this is not the same as a “competitive devaluation” of the renminbi —and there’s nothing like that on the cards,” he wrote today.

“All China is doing today is managing the pace of trade-weighted renminbi appreciation,” Anderson continued. “Any attempt to gain truly meaningful competitiveness vis-à-vis trading partners would require, say, a 20% to 40% devaluation against the dollar.”

If China had devalued the yuan by, say, 20%, it would clearly be an effort to boost exports for its advantage. A 2% devaluation is different: it simply keeps the yuan a little more in line with trading partners’ currencies, which have lost value relative to the U.S. dollar. (For more on the U.S. dollar’s rise, read this recent Fortune piece.)

As mentioned, China actually wants a stronger currency. As recently as April, it was actively trying to strengthen the yuan, the Wall Street Journal reported. The country’s central bank purchased the yuan in the currency markets and sold U.S. dollar holdings, a move aimed at stemming capital outflows from China as the yuan was falling.

As Chen Long of Gavekal Dragonomics in Hong Kong recently explained, China has twin (and sometimes competing) goals for exchange rates. On the domestic front, it wants to help exporters with a cheaper currency, but it also wants to maintain a strong currency to prevent capital outflows that may weaken the country’s economy further. On the international side, China wants to avoid a trade war with the U.S., which it would have if it severely weakened the currency. It also wants to boost international use of the yuan for political purposes, as China asserts itself more strongly around the world. The country’s recent campaign to have the yuan join the mostly meaningless IMF reserve currency is one example of China desiring a strong currency. In the end, these multiple goals again promote a slightly stronger currency.

China’s central bank said Tuesday’s yuan depreciation was a way to make the country’s financial system more market-oriented. The bank said market spot prices would now determine the daily position, implying that the central bank would step in less to influence it. Over the past few months the yuan-dollar spot price had been lower than the exchange rate, and it became clear the central bank was supporting a stronger yuan.

There are reasons the government doesn’t deserve the benefit of the doubt when it says it’s in the business of market-based approaches. President Xi Jinping’s administration said the same thing before pledging around $800 billion in government money last month to prop up the falling stock market. China’s words and actions don’t always match.

But there are also reasons that today’s devaluation shouldn’t only be viewed through the prism of trade. First, other exporters in Asia, including South Korea and Taiwan, are hurting because of weak demand abroad. Sluggish economies in Europe and the U.S. influence China’s exports. That’s is not all solved by currency devaluations. Second, China can use other mechanisms to boost its economy. Internet rates and bank reserve requirements can still be cut considerably, and analysts expect that to happen. More government spending is already in the works: China’s banks will issue 1 trillion yuan worth of bonds for infrastructure spending, according to recent reports.

For now, it’s too early to say China is starting a currency war, even if that may be the West’s first inclination.

Read next: These 5 Facts Explain the Obstacles to the Trans-Pacific Partnership

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