Economics in the News – Oct. 20-26, 2025
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o The United States federal government shutdown is now in its fifth week. For government employees whose livelihood relies on the government, they are facing a scenario where bills are quickly mounting while there is no end to the shutdown in sight. Many have had to turn to other side hustles to scrape by, while some are now relying on food banks, further stressing the food banks that have been impacted by budget cuts.
While federal law requires back pay for federal workers once funds become available, President Donald Trump has said that all federal workers may not receive it. There is mounting concern for pivotal industries, such as the Transportation Security Administration. The current shutdown could become the longest standoff in American history, surpassing the 34-day shutdown during Trump’s first term. There are currently no scheduled negotiations. [The New York Times]
o Retirees will receive a boost on their Social Security benefits next year. The Social Security Administration announced an annual cost-of-living adjustment of a 2.8 percent monthly increase. It will go into effect in January and benefit an estimated 75 million Americans. The average monthly benefit amount will increase by around $56.
The cost-of-living adjustment – known as COLA – is a benefit when many seniors are struggling financially to keep up with inflation. The National Council on Aging found that four of five Americans over the age of 60 does not have the financial resources necessary to handle a financial hardship, such as sickness or divorce. In addition, many Americans currently working will depend on Social Security in retirement. [The New York Times]
o The state of North Carolina used to be known as “The Furniture Capital of the World.” However, with the rise of imports from Asian countries and consolidation, many furniture companies outsourced jobs overseas, leaving many in the Piedmont region of the Tar Heel State without a job.
President Donald Trump recently levied a 25 percent tariff on lumber, upholstered furniture and kitchen cabinets. However, that’s done more harm than good with industry experts suggesting that the costs of the tariffs have eaten into profits. If Trump gets his wish and furniture is once again manufactured in the United States, the companies will have to invest to pay for labor and train it for the necessary skills. [The Wall Street Journal]
o Germany is seeking to boost its military. The German government will vote next month on a bill that would require all 18-year old men requiring that they fill out a questionnaire about their willingness to serve. Meanwhile, women would have the option whether to fill out the questionnaire. A recent survey found that 54 percent of Germans support mandatory military service, but young people vehemently oppose it.
Germany has long been criticized for its investment in military defense. But they have agreed – thanks to ongoing threats from Russia and demands by President Donald Trump – German Chancellor Friedrich Merz has pledged to devote five percent of gross domestic product (GDP) to military spending by 2035. Germany did away with obligatory military service in 2011, believing that Europe was at peace and opting to go with a professional, volunteer army. [The Washington Post]
o Increasingly, couples around the United States and the world are opting to be single-child homes. According to the United Nations, the number of children being born into the average family has dropped by nearly half since the 1970s.
Economists warn the ramifications for the global economy, as populations become significantly older and even shrinks. Countries such as China, India and Japan are already seeing ramifications of an aging population with deaths outpacing births. According to experts, an aging population will create issues in the labor market, including worker shortages and a decline in young consumers. In addition, current retirement and health care systems could be significantly challenged, even while people are living longer than ever. [NPR]
