Economics in the News – July 4-10, 2022
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
- The 2020 COVID-induced recession lasted for two months, but its impact has been long-lasting amid a recovery. Instead of a long recovery in its aftermath, the upturn of the economy was a quick, V-shaped recovery which largely had to do with government response and the unusual nature of COVID. But its impacts on supply in certain industries remain noticeable, akin to how certain industries, such as housing, are still recovering from the 2008 financial crisis.
Many automakers shut down factories and stopped ordering parts. Staffing for airlines was impacted between layoffs and failure to retain or replace retiring pilots. Oil companies accelerated the closures of existing factories and pushed back planned future investments. Each of these logical decisions has delayed a full recovery. [Bloomberg]
- More than 300 new independent bookstores have opened in the United States in the last couple of years. With the new openings, the book-selling business is becoming much more diverse. Many of the bookstores are thriving, rebounding after a 30 percent slump in sales throughout the industry in 2020. Many of the new bookstores are run by a more diverse population, despite the industry historically being dominated by white owners.
The rebound is surprising, as brick and mortar stores face heavy competition from Amazon and others in the e-commerce business. However, roughly 827 million print edition books were sold in 2021, an increase of 10 percent over 2020, according to NPD BookScan. [The New York Times]
- Sri Lanka’s debt-laden economy has collapsed. Prime Minister Ranil Wickremesinghe announced that the country has run out of money to pay for food and fuel. It’s seeking assistance from neighboring countries, such as India and China, as well as the International Monetary Fund to help pay for imports of necessities. Economists point to years of mismanagement and political corruption as the reason for the collapse.
Sri Lanka has seen its currency – the Sri Lanka rupee – has fallen 80 percent, making imports more expensive and exasperating inflation. Food costs have risen 57 percent. The country relies on the tourism industry, which has been heavily impacted by the pandemic and a 2019 terrorist attack. The Sri Lankan government owes $51 billion and is unable to make interest payments on its loans, sending the country close to bankruptcy. [Associated Press]
- The four-day workweek is making its way to the United States. The four-day workweek has picked up momentum in recent years, with more studies to determine whether employees can remain just as productive with fewer hours. Early conclusions are that the four-day workweek isn’t for all jobs. It may be easier for office jobs than in other industries such as manufacturing.
Twenty-two companies throughout the United States are using a six-month pilot program called 4 Day Week Global. The requirement through the program calls for no reduction in pay but a substantial reduction in hours. The 22 United States-based companies in the program are joined by 70 companies throughout the UK and companies throughout Australia, New Zealand and Canada. [NPR]
- Less than half of pre-pandemic office workers are returning to the office, even accounting for those who have adopted a hybrid schedule. It’s even more pronounced in large cities across America. Two of the biggest factors given by employees include long commute times and concerns about crime and safety, including on public transportation. Meanwhile, the local economy is hurt. Small businesses that cater to commuters are among those that suffer the most.
Many employers are reluctant to take a hard line in bringing workers back to the office, fearing the 68 percent of workers in North America who say that they would seek a new job if their employer insisted upon a return to the office. Two out of three workers whose jobs can be completed remotely say that they prefer a hybrid schedule of days in the office and working from home. Many businesses are offering more perks to lure employees back to the office, including free lunch, more office space and collaboration-focused areas. [The Wall Street Journal]