Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o The US decision to coordinate with Japan with a rare intervention in foreign markets to prop up the Japanese yen was one of several reasons the S&P 500 ended the week at an all-time high. With Japan being the largest foreign holder of US government debt, a recent increase in Japanese government bond yields began to exert pressure on US Treasuries because Japan would typically sell its Treasuries in order to support its own currency. If Japanese investors would have sold, it would have pushed US interest rates higher, which would increase the costs of corporate borrowing while creating panic among investors.
The Treasury’s intervention also aided fears of the rising costs of borrowing for artificial intelligence (AI). Now for the Treasury department, there is a risk with strengthening the yen too much, as higher Japanese bond yields could lead investors away from US assets to Japanese assets. Japan’s interest rates have remained low for much of recent history because growth and inflation have been low. [The New York Times]
o Attendance at Disney’s US-based theme parks in Florida and California increased three percent last quarter, according to the company’s most recent earnings report. That is in contrast with Comcast-owned Universal parks, which warned of a pullback at its theme parks. Disney reported revenues of $7.12 billion for its domestic theme parks and cruise business, marking an 11 percent increase from last year. In addition, souvenir and food sales increased seven percent.
It is noteworthy because theme parks are a sign of consumer confidence. And Americans are opting to spend heavily on travel but are being more selective on where they spend their money, which explains why the two theme park giants can have different perspectives. It can create winners and losers, even in the same market. [The New York Times]
o Perhaps more than ever before, NBA players are faced with a decision to pursue championships or maximize their earnings. The league’s collective-bargaining agreement imposes harsh sanctions for any teams that spend over its second apron. Because of such, teams are opting to send top players to rival teams rather than face the financial consequences. The system is meant to create parity within the league and has been successful with eight different teams winning the last eight championships. NBA Commissioner Adam Silver insists the new CBA is working the way it was intended.
One of the top examples came with Jaylen Brown, one of the top players on the Boston Celtics, was traded to the Philadelphia 76ers. Brown led the Celtics to an NBA Championship two seasons prior, but his and teammate Jayson Tatum’s combined salaries would have made it such that it would have been difficult to build a championship-level roster in future years. LeBron James made headlines later in the offseason when he opted to play in Philadelphia on a league minimum deal, instead of a supermax for one of the sport’s most legendary players. One of the sport’s top young players, Victor Wembanyama also opted to leave money on the table, opting to build a team around him in pursuit of a championship. [The Wall Street Journal]
o The number of 25 to 34-year-olds living with their parents has nearly doubled since 2005, with about 20 percent living with their parents, according to the Urban Institute. Many parents are concerned that their children have it more difficult than they did, achieving financial independence at a later age, as costs for housing, food and energy have seen substantial increases.
Adult children are faced with obstacles that their parents did not face, including being more likely than three decades ago to have student loan debt. And while the share of mortgage debt was about the same, the median amount of that is much larger. [NPR]
o The first seven months of the year has revived going to the movie theater. Global ticket sales are on pace for their best year since 2019, up 15 percent compared to last year. With hits such as Spider Man: Brand New Day, The Odyssey, Toy Story 5, five movies this year have eclipsed $1 billion in global ticket sales. And two more big hits are expected later this year, so that number could increase to seven which would mark the second-most on record.
While overall attendance is still down, analysts believe that this year is encouraging when it comes to the movie industry. First and foremost, it shows that young people are still interested in going to the movies, as part of a desire for experiences in a communal setting. Hollywood, in recent memory, has created a pipeline on prebranded products, leaving little creativity for new movies. [Bloomberg]
