Economics in the News – Nov. 20-26, 2023
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Did you shop on Black Friday this year? The days of shoppers lining up before a store opens or rushing to buy inexpensive goods has evolved. Retailers begin offering promotional discounts well before Thanksgiving and continue those discounts well beyond. In addition, many shoppers opt not to fight the crowds in stores, instead opting for the convenience of online shopping.
The history of Black Friday shopping dates back to the 1960s with Philadelphia police officers credited for coining the name. Shoppers would storm some retailers on the day after Thanksgiving and the day before the annual Army-Navy game, overwhelming the city’s police force. Today, sales are being introduced earlier, many deals can be found as early as October. This year, experts anticipate Black Friday to be the third busiest day for retailers this year, behind Dec. 23 and Dec. 16. [The New York Times]
o Assisted-living centers have become a desirable option for the aging baby boomer generation to retire. Roughly 850,000 older Americans live in assisted-living facilities, which have become one of the more profitable segments of the long-term care industry. They offer the opportunity to continue living independently with activities and a staff to help take care of you, more than a traditional nursing home. However, most Americans are unable to afford them due to their cost.
It often costs residents $5,000 or more to live in the highly profitable facilities, in addition to extra fees. Fees may range from $12 for a blood pressure check to $315 per month for daily help with an inhaler. Charges to help residents with daily tasks such as shower, go to the bathroom or go to the dining room are often added on too. Unlike most residents of nursing homes where care is generally paid for by Medicaid, assisted-living facilities have residents or families shoulder the costs, often requiring those who can no longer pay to move out. The facilities argue that its pricing structure pays for increased staffing and avoids saddling residents with services that they don’t use. [The New York Times]
o The IRS is delaying implementation of a requirement passed by Congress in 2021 to report payments of $600 or more from their gig jobs such as Uber to selling concert tickets. Companies will be required to send the tax form 1099-K only to people who made more than $21,000 and 200 transactions on such platforms. The IRS will now require companies to send a 1099-K form to anyone who made more than $5,000 in transactions on their platforms starting in 2025, and will implement the $600 requirement the following year. The change allows Congress more time to change the law.
The change doesn’t change the amount of taxes owed, users are still required to report earnings from those apps. The change was sought to assist gig workers to make their taxes more straightforward, instead of having to keep meticulous records of their income over the course of the year. Many companies have lobbied against the change, including platforms used for selling event tickets, used clothes and artwork, as well as payment apps. [The Washington Post]
o Higher cost of living has many Americans dipping into their retirement savings to assist in paying housing and medical bills. Americans outside of the wealthiest 20 percent have run out of extra cash savings generated early in the pandemic and now have less cash on hand than before the pandemic, according to a Federal Reserve study on household finances.
During the third quarter, 2.8 percent of Americans took a loan against their 401(K) retirement account, an increase from 2.4 percent during the third quarter of 2022. Loans taken against a 401(K) must generally be paid back over as long as five years, with interest. The overall retirement account balanced decreased with the average 401(K) balance of $107,000, down four percent from the second quarter. [Bloomberg]
o Sunday was the busiest day in the history of US air travel, as the Transportation Security Administration screened 2.91 million passengers on the final day of the Thanksgiving weekend. It surpassed the 2.88 million passengers who flew on June 30 of this year, while seven of the 10 busiest air travel days in US history have come in 2023.
More than 7,600 flights into, out of, or within the United States were delayed, according to flight tracker FlightAware. The most notable of the delays came in the Northeast, but there were few cancellations. Only 55 flights of the 45,000 that hit the skies were cancelled. New York’s John F. Kennedy International Airport was the most impacted in terms of departures, with 265 flights delayed, while Boston’s Logan International Airport were the most likely to have a delayed arrival. [Barrons]