Economics in the News – March 28-April 3, 2022
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
- Fertilizer prices are up 27 percent in 2022 and 130 percent over the last year. With the rise in fertilizer prices over the past year, farmers are re-calibrating the amount of corn and soybeans they will be planting this spring. Two of the most popular crops in US farming, corn requires much more fertilizer than soybeans do.
Farmers will dedicate roughly two million more acres to soybeans this year, as opposed to corn, according to a Bloomberg survey. In addition to the spike in fertilizer price, other costs such as fuel, machine parts, herbicide and feed for livestock are worrying. Prices have been the result of high demand and exacerbated by the war in Ukraine, as Russia is the world’s biggest fertilizer producer. [Bloomberg]
- The federal government is supposed to resume collections on student loan debt, beginning May 1, for the first time in two years. Payments have been paused since March 2020 as a COVID-19 pandemic relief measure.
Experts believe that an extension is likely in the works, as loan servicers have been told to hold off in notifying borrowers. The Education Department is the primary lender for Americans who borrow money to attend college and outsources the work to six vendors. [The New York Times]
- Consumers are cutting back on household items ranging from laundry detergent to snacks and soda, as inflation impacts American checkbooks. Shoppers are buying in smaller quantities, switching to store-name products and hunting more rigorously for deals.
The shift in mindset is more pronounced among low-income households. With more savings during the pandemic, many lower-income families that typically buy lower-priced household goods, switched to pricier brands. With inflation soaring, many are opting back to less expensive options. [The Wall Street Journal]
- Chelsea Football Club – one of the most well-known and lucrative brands in sports – has been put up for sale after Russian oligarch and the UK government sanctioned club owner Roman Abramovich because of his ties to the Kremlin. Chelsea has reportedly attracted bids of around $3 billion, which would make it the largest sports-team transaction ever. Currently the $2.4 billion that billionaire hedge-fund manager Steve Cohen paid for the New York Mets in 2020 is the most.
Abramovich bought Chelsea in 2003 for €140 million with the team accumulating a total net loss of €894 million over that nearly 20-year period. Abramovich has said that he wouldn’t receive any proceeds from the sale and will forego the €2 billion in loans that the club owes him. The interest in acquiring Chelsea comes at a time when the English Premier League is seeing widespread growth among US audiences. [The Wall Street Journal]
- President Joe Biden unveiled a plan for the largest-ever release from its emergency oil stashes. The goal is to draw one million barrels of oil per day for the next six months from the nation’s Strategic Petroleum Reserve (SPR). The SPR is a stockpile of crude oil that the United States maintains in case of emergencies, such as a hurricane or a war. The SPR dates back to the 1970s, with more than 500 million gallons stored in underground salt caverns in Texas and Louisiana.
The move is a reaction to soaring gas prices due to Russia’s invasion of Ukraine, sending crude prices surging. It’s an attempt to push oil prices down after the national average for a gallon of gas soared above $4 a gallon. [NPR]