Economics in the News – Jan. 10-16, 2022
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
- Inflation remains a threat to the economic recovery, as it has surged to its highest level in 40 years. The United States consumer price index (CPI) was up seven percent in December compared to last year. What everyday spending habits have most impacted American wallets?
Food has been heavily impacted, as grocery prices have increased 6.5 percent since last year. Gas and energy costs are also higher, as Americans who heat with natural gas can expect to pay 30 percent more than they did last winter. Housing prices and cost of rent also increased last year, with overall housing climbing 4.1 percent. The health care industry continues to struggle with overwhelming demand, as price increases have amounted to 2.5 percent. [The Washington Post]
- China’s economy grew 8.1 percent in 2021 but four percent in the fourth quarter. Slow growth in the second half of the year has economists worried. The Omicron variant is spreading across China, leading to restrictions and fears of more disruptions of supply chains.
The world’s demand for electronics, furniture and other products has produced record-setting exports, but consumers in China have become more cautious and home buying has slowed. [The New York Times]
- What role does automation play in the widening inequality? According to influential MIT economist Daron Acemoglu and others, it is attributable to half or more of the increasing gap in wages over the last 40 years. According to Mr. Acemoglu, men without college degrees are especially impacted.
With the next wave of artificial intelligence, Mr. Acemoglu says it can be used to assist workers and make them more productive in order to supplement their work. Most notable are the technologies that replace workers but do not increase productivity, such as automated customer service or self-checkout lines. Mr. Acemoglu argues that truly significant technologies create new jobs elsewhere, lifting employment and wages. [The New York Times]
- A volcanic eruption and tsunami caused significant damage on the main island of Tonga. An undersea volcano erupted Saturday, generating an ash cloud and triggering a tsunami. Advisories were issued to stay away from beaches in New Zealand, Australia, Japan and the west coast of the United States.
Tonga’s largest island, Tongatapu, sustained significant damage, leaving it cut off from international connectivity. The governments of New Zealand and Australia are sending aid, as well as the Red Cross. [The New York Times]
- China issued some of the most intense crackdowns on cryptocurrency trading and mining last year. However, the Chinese government seems to be embracing other forms of blockchain technology such as non-fungible tokens or NFTs.
A Chinese state-backed blockchain technology company called Blockchain Services Network is being setup to allow individuals and businesses to buy, sell and trade NFTs. The NFTs will only be able to be bought using Chinese yuan instead of cryptocurrency that is commonly used to trade outside China. However, businesses are not allowed to make profits on NFT sales and individuals aren’t allowed to resell them. [FORTUNE]