Economics in the News – May 23-29, 2022
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
- As prices soar, many critics are expressing doubts about the official inflation figures calculated and distributed by the Department of Labor. Skeptics over the government figures cite the lack of home prices in the Consumer Price Index and the governments use of rental prices. Critics also point to economists using product substitutes to determine pricing.
But economists say that the figures provide an accurate snapshot of rising prices. Economists argue that owning a house is an investment and should be treated as such, while renting represents consumption because it doesn’t leave you with an asset to sell down the road. And the basket of goods is updated every few years to reflect what people are spending their money on. [The New York Times]
- Inflation, climate change and the shock of the war in Ukraine has increased the fears of a global food shortage, according to the United Nations. The UN estimates that global food prices have climbed roughly one-third in the past year, while fertilizer prices have climbed 50 percent and oil prices are up two-thirds.
The number of severely food-insecure people has doubled since the start of the pandemic to 237 million. Additionally, more than 500 million are experiencing famine. Wheat harvests globally have been disrupted, driving up prices. The crop has been destroyed in India due to devastating temperatures that reached 120 degrees in Delhi, while Russia’s invasion of Ukraine has impacted the harvest season in one of the world’s top wheat exporters. [NPR]
- Is your family planning a trip this summer? Prepare to pay higher prices for airfare and hotel reservations. Experts are forecasting pre-pandemic crowds at tourist destinations throughout the summer, but airlines have thousands fewer employees now than they did in prior to the pandemic. That has resulted in canceled flights and higher prices.
Domestic airline fares are 24 percent higher than they were in 2019, averaging $400 for a round trip. Airlines are blaming the increase on the cost of jet fuel, but the number of flights has not recovered to pre-pandemic levels. Meanwhile, accommodations for hotels and are up roughly 33 percent over what it was last year due to the increase cost for supplies and a tight labor market. [Associated Press]
- Worries of stagflation and a return of the 1970s are beginning to grow among experts. Stagflation occurs when there is inflation accompanied by little or no economic growth. For Americans living in the 1970s it brings back memories of long gas lines and shuttered factories.
Most economists agree that the US economy will avoid a recession, but between supply chain issues and rising consumer prices at the fastest pace in decades problems are piling up. By raising interest rates, the Federal Reserve is hoping to cool growth and tame inflation without causing a recession. [Associated Press]
- Good news for teenagers wanting to work during the summer months! Jobs are expected to be plentiful throughout the summer, with more openings and better pay than typical. Economists say that the labor market for high school and college students is the highest level in 15 years with 32.8 percent expected to work.
Teens are the beneficiaries of the slow return of older workers to customer-service jobs due to continued health concerns pertaining to the COVID-19 pandemic. Teens looking for work can expect higher pay – maybe $17 or $18 per hour, by some retailers – and greater flexibility. [The New York Times]