Economics in the News – June 19-25, 2023
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Are you among the many Americans who want to lose weight? A drug – Ozempic – has gained in popularity in recent years to help users shed pounds. However, the medicine must be injected, turning people away from the weight-loss drug. A pill form of the weight loss drug is in the works, which could become an option for many who have a distaste of needles.
Weight-loss medicines are among the top areas of drug research, with companies such as Pfizer, Novo Nordisk and Eli Lilly developing their own medicines. The furthest along is a pill from Novo Nordisk which has an experimental drug that people took for 68 weeks and participants lost up to 17.4 percent of their body weight. Novo Nordisk plans to ask US and European drug administrators for approval later this year. Analysts have predicted that pill forms of weight-loss drugs could eventually make up 15 percent of the total market and generate $100 billion in worldwide sales. [The Wall Street Journal]
o Many restaurants have a shortage of staff and customers are feeling the impacts in service. Customers are becoming more frustrated with pandemic-era surcharges that remain on their restaurant bill, while restaurants remain short-staffed and struggle to hire positions such as dishwashers and cooks. Fast-food restaurants are operating with just under 10 percent fewer employees than in 2019. Meanwhile, full-service restaurants had seven percent fewer employees, according to Market Intelligence by GuestXM.
Wages increased 5.2 percent in April from last year for hourly restaurant and bar workers, according to the Labor Department. But those increases have forced many restaurant owners to change their labor models. Some restaurants are working to improve their service through hands-on training and better technologies. [The Wall Street Journal]
o Millions in Texas have been under an extreme heat advisory since June 14 with the summer just beginning. Meteorologists are forecasting temperatures to remain scorching with cities across the state reporting high temperature records. The extreme heat is putting a strain on the state’s electricity system. Texas is distinctively vulnerable to power failures because it is the only state in the continental US disconnected from the national power grid – avoiding federal regulation.
State officials are turning to batteries the size of a Mack truck for assistance. Battery storage aids wind and solar energy sources because it allows them to capture and store the energy at times when it may not be available and then make it available at peak hours. For traditional power plants, they have found ways to use the batteries in the same way, helping power grids during peak times. In recent years, Texas has become a national leader in battery storage with a third of the nation’s capacity. Still, Texas plans to nearly double the amount of battery storage on its grid within the next year. [The Washington Post]
o Many college graduates will need to begin budgeting for their student loan payments. More than three years after the pause was put into effect as a cog pandemic-era relief for households, the debt-limit deal struck by the White House and Republicans requires for the pause to end by Aug. 30, 2023.
By the end of August, according to Goldman Sachs, the forbearance on student debt will amount to $185 billion that would’ve otherwise been paid. The pause allowed for borrowers to free up cash, coinciding with higher credit scores and allowing people to take on additional debt. With the payment pause ending, already tight budgets are going to tighten further for millions of families, forcing many borrowers to dig into retirement accounts or drop long-term care insurance. [The New York Times]
o States are turning to other measures as state fuel taxes are generating less revenue each year due to improved fuel efficiency and the rise of electric vehicles. Analysts project that the gap could reach $67 billion by 2050 just accounting for improved fuel efficiency. Many states have implemented revenue-generating measures, including additional taxes, registration fees for electric vehicles, and per-kilowatt-hour taxes to electricity accessed at public charging stations.
Three states – Virginia, Oregon and Utah – are experimenting with charging drivers based on their road usage. Mileage-based user fees are attracting much of the attention for research. Virginia’s program, which launched in 2022, is the largest in the nation which will lead to valuable insights. States are grappling with social and environmental implications of their plans for their plans. [Associated Press]