Economics in the News – Oct. 31 – Nov. 6, 2022
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Prices for new cars are falling. According to research from J.D. Power, the average price for a new car in July was a record $46,173 but declined to $45,600 in October. Prices remain 33 percent higher for consumers than before the pandemic. Inventory is picking up on dealership lots, up 46.9 percent from September 2021.
Still auto executives expect that a pent-up demand will boost keep car prices elevated for the foreseeable future. The average interest rate for a new-car loan was 5.7 percent in the third quarter, an increase from 4.3 percent in the second quarter. [The Wall Street Journal]
o How much are you willing to pay for your Twitter handle? Or Instagram? Or Facebook? Social media companies are increasingly charging for exclusive features and content, while consumers spend more time on social media platforms.
More than 1.5 million people are paying for exclusive features on Snapchat, while subscribers on Twitch are paying $24.99 to watch others play video games. The average user spent seven hours across 10 social media apps. The online ads businesses that social media companies centered their business strategies around have suffered due to a weakening economy and ad tracking changes instituted by Apple. [The Wall Street Journal]
o When Russia invaded Ukraine, historic sanctions were enacted from global leaders designed to cripple the Russian economy. How have those sanctions impacted Russia? The World Bank projects for Russia’s economy to contract 4.5 percent, while the International Monetary Fund projects a 3.4 percent contraction.
But the sanctions have not been as effective as many leaders hoped. The New York Times provides five ways that the sanctions have impacted Russia in finance, trade, technology, energy and elites. [The New York Times]
o Evidence shows that workers are less productive. According to the Bureau of Labor Statistics, productivity plunged at its sharpest pace since 1947. Economists and business leaders are unsure of the cause, because the sudden switch to remote work at the start of the pandemic increased productivity.
Productivity is critical to the economy and is a driver in standard of living. Higher productivity helps combat inflation because more goods and services will be available at lower costs. One theory to explain the decline in productivity is the labor market. Companies are losing high performers for other jobs with higher wages and more flexibility. [The Washington Post]
o Soccer enthusiasts can now play as their favorite characters from the popular Apple TV+ comedy series “Ted Lasso.” The fictional AFC Richmond squad and Nelson Road Stadium can be played in FIFA 23, which launched in September. The effort is part of a collaboration between Electronic Arts (EA) and the Emmy-winning show. More than 10.3 million people bought the video game in the first week it was released, marking the best-ever debut week for a FIFA game.
It's estimated that more than 150 million people across 200 countries buy and play FIFA each year. EA has produced the game since 1993 and it has reportedly generated more than $20 billion in sales. The 2023 FIFA version is the last to use FIFA due to a licensing dispute, with the game next year to be called “EA Sports FC.” [The Athletic]