Economics in the News – March 21-27, 2022
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
- The war in Ukraine and the COVID-19 pandemic have caused governments and companies to retreat from the ideas of globalization. American and European leaders have implemented sanctions to sever major parts of Russia’s economy. During the pandemic, companies have reorganized how they obtain their goods due to soaring costs and ongoing global supply chain issues.
The moves change course from a post-Cold War economic and foreign policy. For decades, business leaders have pushed for globalization to expand their markets and exploit cheap labor and fewer environmental standards. Consumers have benefitted from lower prices. But tensions in China and Russia have forced political and business leaders to change their strategies and businesses to adapt and become more resilient. [The New York Times]
- Inflation is soaring and interest rates are on the rise. But the average savings rate at large banks in the United States is only about 0.06 percent. Banks are able to keep the savings rate low because they have excess cash on hand. Total deposits at US commercial banks were more than $18 trillion during the pandemic compared to $13 trillion pre-pandemic.
The real savings rate was the lowest it has ever been in February at negative 7.8 percent. That means that a person’s savings loses value relative to inflation. Americans are taking more risks, such as taking out loans and using that money as a substitute for their savings. Many Americans are also putting their money in stocks and other investments. Others are buying real estate. [The Wall Street Journal]
- A single Bitcoin transaction today requires enough energy to power the average American household for 73 days. The crypto mining industry has faced intense criticism from politicians and environmentalists that it uses too much energy and its harmful for the environment.
Companies in the crypto mining industry are embarking on a rebrand, an attempt to change the perspective that their mining is harmful for the environment. Cryptocurrency miners have turned to renewable energy sources in order to address the criticism. [The New York Times]
- Gas prices are near an all-time high. According to AAA, the average price of gas per gallon is $4.24 as a result of Russia’s invasion of Ukraine and other factors. But what is the true cost of driving? The cost that operating a vehicle imposes on society.
Roads need to be maintained and repair costs are funded by the government. The pollution released by a car worsens air quality, contributing to health ailments. Sitting in traffic wastes people’s time and harms overall economic productivity. What do you think is the true cost of driving? [TIME]
- Many students that have graduated high school since the COVID-19 pandemic began have put off going to college. Many have opted to go straight to work instead. Two-year programs at community colleges have been among the hardest hit, with enrollment down by roughly three-quarters of a million students. However, many are opting to go to trade schools, earning associate degrees in a field such as HVAC or automotive repair.
There’s a shortage of qualified construction workers, where experienced workers are aging out. For some graduates of trade programs, it could mean securing a higher-paying job without taking on much debt. According to a study from Georgetown University’s Center on Education and the Workforce, a growing number of people without a bachelor’s degree are earning more money than their peers that went to a four-year college. [NPR]