Economics in the News – April 10-16, 2023
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Lunch is lagging behind in downtown areas, with the rise of working from home. Office occupancy rates are half of pre-pandemic levels despite the efforts of management to bring workers back to the office. The result has created another obstacle for restaurant owners, who are having to revise operations in order as inflation is also taking its toll.
Even when workers go to a restaurant for lunch, most are opting for takeout. Hybrid workers who used to go out to eat three-to-four times per week, now go once a week when they go to the office. As a result, the redistribution has decreased the restaurant traffic in downtown areas and increased it in neighborhoods. In addition, employers who are trying to attract workers back to the office are going to greater lengths in providing high-end corporate cafeterias to remain on-site. [The Washington Post]
o The green tax credits from last year’s climate law are trending to become more popular than previously anticipated. While it would help reduce carbon emissions, it would increase cost to US taxpayers. The 2022 law was passed to spur a clean energy future, using incentives to encourage consumers to purchase products such as electric cars and solar energy.
Environmental advocates praise the faster than anticipated results, including reduction in carbon emissions, higher wages for workers on clean energy projects, and supply chains that are less reliant on China. However, experts say that the faster results could have a cost, claiming that it will reduce the long-term budget deficit. [The Wall Street Journal]
o Chinese consumers are once again spending. China’s economy is recovering faster than expected after lifting “zero-COVID” measures such as shutdowns and mass testing in early December that depressed growth. China’s economy expanded 4.5 percent in 2023’s first quarter, according to the country’s National Bureau of Statistics.
The growth was driven by a 10.6 percent increase in retail sales for the previous year. The Chinese government has taken steps to stimulate the growth, investing in high-speed rail lines, highways and bridges. In addition, the People’s Bank of China freed commercial banks to lend more money. [The New York Times]
o Several of the largest banks in the United States unveiled earnings that surpassed expectations in the year’s first quarter. JP Morgan Chase, Wells Fargo and Citigroup all beat expectations, weeks after a banking crisis shut down two mid-sized banks and unnerved regulators and depositors. Banks have been able to approve loans and have benefitted from rising interest rates.
The nation’s largest bank, JP Morgan said that its customer deposits had risen slightly, benefitting from depositors pulling their money from smaller banks. Meanwhile, Wells Fargo and Citigroup posted similar results. [The New York Times]
o The cost to travel remains high. The expense of airfare in February was 27 percent higher than the same month a year prior, according to the US Bureau of Labor Statistics. Meanwhile, the cost to rent a car was 37 percent higher in February than a year earlier. Despite the higher costs of travel, younger Americans remain eager to book a trip to their favorite destinations. Ninety percent of 30-to-44-year-olds intend to travel this summer, while 87 percent of those between the ages of 18 to 29 years old.
Younger Americans are ignoring broader economic trends. On top of the higher costs, savings are down while debt is up. In addition, many younger college graduates could once again face the burden of student loans, as payments could start again this year. [Associated Press]