The Federal Reserve on Jan. 26, 2022, signaled plans to begin raising interest rates “soon” – possibly in March – in a bid to tamp down inflation before it poses a serious risk to the U.S. economy. A separate report released the next day showed the economy grew 6.9% in the fourth quarter of 2021. An interest rate hike would be the first time the central bank has increased its benchmark lending rate in over three years.

Lifting the borrowing costs consumers and businesses pay for loans has the effect of slowing economic activity, which in turn could curb inflation. But there are also concerns that it could put on the brakes too quickly. We asked Alexander Kurov, a finance professor at West Virginia University, and Marketa Wolfe, an economist at Skidmore College, to explain what the Fed is doing and what it means for you.

1. Why is the Fed raising interest rates?

Short-term interest rates in the U.S. are now essentially zero.

The Fed quickly cut rates to zero at the beginning of the COVID-19 crisis in March 2020 in an attempt to soften the blow of the sharp recession that began that month as the U.S. went into lockdown. As a reminder of how bad things were back then, over 40 million workers – a quarter of the American workforce – filed for unemployment in the first few months of the pandemic, a staggering number with no precedent in the job market.

Although the recession was short-lived – lasting only two months – and the economy has mostly recovered, the Fed has kept rates at rock bottom because many workers and businesses still need support as the pandemic continues to rage.

The big problem for the Fed now is that U.S. consumer prices have surged. For 10 months in a row, inflation has been above the Fed’s 2% target and reached an annual pace of about 7% in December. This is the highest rate of inflation recorded in the U.S. in the last 40 years. High inflation means the prices people pay for goods and services are continually going up – especially for basic items like meat and gasoline, as well as for manufactured goods like cars.

The Fed can ill afford to allow this to continue because if higher inflation becomes entrenched, it would damage the economy. And the longer it lasts, the harder – and more painful for consumers and businesses – it is going to be to bring it back to a more sustainable 2%.

So the Fed has to act quickly before it’s too late.

2. How does the Fed raise rates?

The Fed sets a target range for what is called the “federal funds rate.” This rate acts like a benchmark for all interest rates in the economy.

While the Fed’s statement didn’t specify a time when it plans to raise rates, Chair Jerome Powell said “the committee is of a mind to raise the federal funds rate at the March meeting, assuming that the conditions are appropriate for doing so. Analysts expect it to be a 0.25 percentage point increase. This would affect banks’ cost of borrowing, which in turn slowly filters throughout the economy as lenders charge more for loans on homes, cars, businesses, college tuition and anything else you might want to buy with debt. Banks would also gradually increase the interest they offer on deposits and savings accounts.

The Fed does not directly control all these other rates, and the exact path they will take is not completely predictable, but the overall trend will be up if the Fed keeps raising its target rate.

Markets expect the Fed to raise interest rates at least two more times in 2022.

3. What does that mean for consumers and businesses?

Put simply, higher interest rates mean borrowers would need to pay more for the loans they get.

If the Fed lifts interest rates this year by 0.75 percentage point, as expected, this would translate into about US$45,000 in additional interest payments on a 30-year, $300,000 mortgage.

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So if you want to borrow to start a business, pay for college, buy a car or do anything else, you should expect your borrowing costs to be higher later this year.

On the other hand, higher rates is good news for savers and investors, as their returns from activities like making deposits and buying bonds will go up.

4. And how will it affect the broader economy?

Higher interest rates would likely slow down business activity. While this can help reduce inflation, it also means lower economic growth.

The Fed always makes decisions based on what is happening in the economy and on how economic conditions are expected to change. And changes in the economy are often hard to predict.

The biggest unknown at this point is what will happen to inflation later this year. This is uncertain because inflation is driven by multiple factors, such as supply chain shortages and strong demand.

In addition, the labor force participation rate has still not recovered to pre-pandemic levels, and the economy is experiencing labor shortages, which could push wages and prices higher. If these COVID-19-related pressures don’t ease up soon, inflation could continue to stay high or continue to accelerate, which may force the Fed to increase interest rates faster than currently expected.

On the other hand, if economic or employment growth stalls, this will make it much harder for the Fed to raise rates without making things worse. The Fed will need to find the right balance between taming inflation and avoiding slowing down the economy too much.

Article updated to add GDP report and Powell comment.

Alexander Kurov, Professor of Finance and Fred T. Tattersall Research Chair in Finance, West Virginia University and Marketa Wolfe, Associate Professor of Economics, Skidmore College

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Space travel is all about momentum.

Rockets turn their fuel into momentum that carries people, satellites and science itself forward into space. 2021 was a year full of records for space programs around the world, and that momentum is carrying forward into 2022.

Last year, the commercial space race truly took off. Richard Branson and Amazon founder Jeff Bezos both rode on suborbital launches – and brought friends, including actor William Shatner. SpaceX sent eight astronauts and 1 ton of supplies to the International Space Station for NASA. The six tourist spaceflights in 2021 were a record. There were also a record 19 people weightless in space for a short time in December, eight of them private citizens. Finally, Mars was also busier than ever thanks to missions from the U.S., China and United Arab Emirates sending rovers, probes or orbiters to the red planet.

In total, in 2021 there were 134 launches that put humans or satellites into orbit – the highest number in the entire history of spaceflight. Nearly 200 orbital launches are scheduled for 2022. If things go well, this will smash last year’s record.

I’m an astronomer who studies supermassive black holes and distant galaxies. I have also written a book about humanity’s future in space. There’s a lot to look forward to in 2022. The Moon will get more attention than it has had in decades, as will Jupiter. The largest rocket ever built will make its first flight. And of course, the James Webb Space Telescope will start sending back its first images.

I, for one, can’t wait.

Everyone’s going to the Moon

Getting a rocket into orbit around Earth is a technical achievement, but it’s only equivalent to a half a day’s drive straight up. Fifty years after the last person stood on Earth’s closest neighbor, 2022 will see a crowded slate of lunar missions.

NASA will finally debut its much delayed Space Launch System. This rocket is taller than the Statue of Liberty and produces more thrust than the mighty Saturn V. The Artemis I mission will head off this spring for a flyby of the Moon. It’s a proof of concept for a rocket system that will one day let people live and work off Earth. The immediate goal is to put astronauts back on the Moon by 2025.

NASA is also working to develop the infrastructure for a lunar base, and it’s partnering with private companies on science missions to the Moon. A company called Astrobotic will carry 11 payloads to a large crater on the near side of the Moon, including two mini-rovers and a package of personal mementos gathered from the general public by a company based in Germany. The Astrobotic lander will also be carrying the cremated remains of science fiction legend Arthur C. Clarke – as with Shatner’s flight into space, it’s an example of science fiction turned into fact. Another company, Intuitive Machines, plans two trips to the Moon in 2022, carrying 10 payloads that include a lunar hopper and an ice mining experiment.

Russia is getting in on the lunar act, too. The Soviet Union accomplished many lunar firsts – first spacecraft to hit the surface in 1959, first spacecraft to soft-land in 1966 and the first lunar rover in 1970 – but Russia hasn’t been back for over 45 years. In 2022, it plans to send the Luna 25 lander to the Moon’s south pole to drill for ice. Frozen water is an essential requirement for any Moon base.

All aboard the Starship

While NASA’s Space Launch System will be a big step up for the agency, Elon Musk’s new rocket promises to be the king of the skies in 2022.

The SpaceX Starship – the most powerful rocket ever launched – will get its first orbital launch in 2022. It’s fully reusable, has more than twice the thrust of the Saturn V rocket and can carry 100 tons into orbit. The massive rocket is central to Musk’s aspirations to create a self-sustaining base on the Moon and, eventually, a city on Mars.

Part of what makes Starship so important is how cheap it will make bringing things into space. If successful, the price of each flight will be US$2 million. By contrast, the price for NASA to launch the Space Launch System is likely to be over $2 billion. The reduction in costs by a factor of a thousand will be a game-changer for the economics of space travel.

Jupiter beckons

The Moon and Mars aren’t the only celestial bodies getting attention next year. After decades of neglect, Jupiter will finally get some love, too.

The European Space Agency’s Icy Moons Explorer is scheduled to head off to the gas giant midyear. Once there, it will spend three years studying three of Jupiter’s moons – Ganymede, Europa and Callisto. These moons are all thought to have subsurface liquid water, making them potentially habitable environments.

Additionally, in September 2022, NASA’s Juno spacecraft – which has been orbiting Jupiter since 2016 – is going to swoop within 220 miles of Europa, the closest-ever look at this fascinating moon. Its instruments will measure the thickness of the ice shell, which covers an ocean of liquid water.

Seeing first light

All this action in the Solar System is exciting, but 2022 will also see new information from the edge of space and the dawn of time.

After successfully reaching its final destination, unfurling its solar panels and unfolding its mirrors in January, NASA’s James Webb Space Telescope will undergo exhaustive testing and return its first data sometime midyear. The 21-foot (6.5-meter) telescope has seven times the collecting area of the Hubble Space Telescope. It also operates at longer wavelengths of light than Hubble, so it can see distant galaxies whose light has been redshifted – stretched to longer wavelengths – by the expansion of the universe.

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By the end of the year, scientists should be getting results from a project aiming to map the earliest structures in the universe and see the dawn of galaxy formation. The light these structures gave off was some of the very first light in history and was emitted when the universe was only 5% of its current age.

When astronomers look out in space they look back in time. First light marks the limit of what humanity can see of the universe. Prepare to be a time traveler in 2022.

Chris Impey, University Distinguished Professor of Astronomy, University of Arizona

This article is republished from The Conversation under a Creative Commons license. Read the original article.

People living in the western U.S. have been concerned about wildfires for a long time, but the past two years have left many of them fearful and questioning whether any solutions to the fire crisis truly exist.

The Dixie Fire in the Sierra Nevada burned nearly 1 million acres in 2021, including almost the entire community of Greenville, California. Then strong winds near Lake Tahoe sent the Caldor Fire racing toward homes, forcing the evacuation of tens of thousands of people – including one of us. They followed destructive wildfires in 2020 in California, and Colorado and Oregon also saw devastating fires in the past two years.

As foresters who have been working on wildfire and forest restoration issues in the Sierra Nevada for over a quarter of a century, the main lesson we gather from how these fires have burned is that fuels reduction and forest restoration projects are our best tools for mitigating wildfire impacts amid a changing climate, and not nearly enough of them are being done.

A new 10-year plan announced by the U.S. Forest Service in early 2022 aims to change that. It outlines an ambitious strategy, but Congress will now have to follow through with enough funding to carry it out.

Fuels reduction projects can work

The Dixie and Caldor fires provided evidence that forest fuels reduction projects can work.

The fires spread quickly over vast areas, but both burned less severely in areas with proactive forest restoration and fuels management projects, including near South Lake Tahoe and near Quincy.

Fuels reduction projects include thinning out trees, burning off woody debris and reducing “ladder fuels” like small trees and brush that can allow fire to reach the tree canopy. Forest restoration projects focus on forest structure, density and composition as well as reducing fuels.

These projects create more open forests that are less likely to fuel severe megafires. They also create strategic areas where firefighters can more easily fight future blazes. And because fires burn less intensely in thinned forests, these projects leave more intact forest after a fire for regenerating new trees and sequestering carbon.

A new 10-year plan

The Forest Service’s new 10-year plan sets a goal to treat as much as 50 million additional acres across the West over 10 years, just under 80,000 square miles. For comparison, the Forest Service treats around 2 million to 3 million acres a year now.

The first priorities in the plan are high-risk areas where communities have been threatened by out-of-control fires, including in the Sierra Nevada in California, the eastern side of the Rockies in Colorado and parts of the Pacific Northwest and the Southwest.

The Forest Service already has a “shared stewardship” agreement with California, reached in 2020, aiming to treat 1 million acres annually by 2025. Though, research indicates that current levels of treatment are closer to 30% of that million-acre goal. Remember that 1 million acres is about how much the Dixie Fire burned.

A lingering question is how the 10-year plan will be paid for, considering that it will require a workforce larger than the U.S. has seen in decades.

So far, Congress has approved additional funding through the 2021 infrastructure bill, which included about $655 million a year for fire management for five years. That’s in addition to the Forest Service’s annual funding for this work, which was about $260 million this fiscal year.

But in California alone, a group of scientists, land managers and former government leaders has recommended spending $5 billion a year on proactive management, roughly equivalent to what was spent to suppress fires in the state in 2020. Known as “The Venado Declaration,” this proposal, championed by former Gov. Jerry Brown and former Cal Fire Director Ken Pimlott, calls for addressing forest resiliency on every acre and acknowledges that more than just funding is needed. It also discusses building infrastructure and a workforce and reevaluating regulatory barriers.

Four key steps

To manage fires in an era of climate change, when drier, hotter weather creates ideal conditions for burning, experts estimate that the area treated for fuels reduction needs to increase by at least an order of magnitude. We believe government needs to accomplish these four things to succeed:

1) Drastically increase funding and staff for agencies’ fuels reduction projects, as well as outreach, cost-sharing and technical assistance for private forestland owners. The new plan is a good start. Funding more federal and state agency positions would add forest restoration capacity for the long term. The Biden administration’s proposal for a Civilian Climate Corps could also bring in more young workers.

2) Reduce regulations on forest and fuels management efforts for both public and private land. While California and the federal government have made recent strides to streamline regulations, land management agencies need to acknowledge the biggest risk is doing nothing. Agencies need to plan larger restoration projects and drastically cut the time needed to implement them.

3) Invest in communities’ capacity to carry out local forest restoration work by providing long-term support to local organizations that provide outreach, technical assistance and project coordination services. Funding restoration through competitive grants makes development of long-term community capacity challenging at best. The new plan’s inclusion of state, tribal and private lands is an opportunity for partnerships.

4) Provide funds and financial incentives for at-risk communities to retrofit homes to withstand wildfires and reduce fuels around homes, communities and infrastructure.

Amid a changing climate, we will have to learn to coexist with wildfires in the U.S. West. This will require concerted action and a cultural shift in how we view and manage our forests and communities to be resilient.

This is an updated version of an article first published on Oct. 13, 2021.

Ryan E. Tompkins, Cooperative Extension Forester and Natural Resources Advisor, University of California, Division of Agriculture and Natural Resources and Susan Kocher, Cooperative Extension Forester and Natural Resources Advisor, University of California, Division of Agriculture and Natural Resources

This article is republished from The Conversation under a Creative Commons license. Read the original article.