Economics in the News – Sept. 11-17, 2023
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o As baby boomers are aging and are becoming part of the elderly population, the homeless population has also risen to the point of becoming a public-policy crisis for taxpayers. The Department of Housing and Urban Development say that older adults are the fastest-growing segment of the homeless population, accounting for a greater percentage of the overall number of homeless people.
Rising housing costs and other financial shocks have overwhelmed aging Americans who depend on fixed incomes. In many of their final working years, baby boomers have had to endure the 2008 real estate crash, as well as the COVID-19 pandemic. Low-cost assisted living facilities which were never equipped to handle the larger baby boomer generation, have been forced to close due to staffing shortages and financial issues. [The Wall Street Journal]
o In December 2022, Ghana had to come to an agreement with the International Monetary Fund (IMF) for a $3 billion loan. It marked the 17th time since Ghana gained independence in 1957 that the country turned to the IMF for a bailout. Its latest crisis stemmed from the COVID-19 pandemic, Russia’s invasion of Ukraine and increased food and fuel prices. The government owed $63.3 billion at the end of 2022 to foreign creditors and homegrown lenders. Ghana last turned to the IMF in 2015, and to its credit, it was among the world’s fastest growing economies within three years before the COVID-19 pandemic.
The cycle of crisis and bailout has impacted poor countries throughout Africa, Latin America and Asia for decades. The debt load for developing countries tops $200 billion and threatens to upend their economies. Climate change is expected to snowball the issue, with United Nations analysts estimating trillions of dollars in new financing to be needed to mitigate the impact on developing countries. The IMF has laid out a detailed rescue plan for Ghana to reign in its debt and spending, raising revenue and protecting the most vulnerable. [The New York Times]
o Union workers of the United Auto Workers (UAW) walked off the job at plants in Ohio, Michigan, and Missouri, as part of a strike advocating for pay increases up to 40 percent. The union’s three-year contract with automakers General Motors, Ford, and Stellantis – the owner of Chrysler, Jeep and Ram – expired on Thursday with the unions and the companies remaining far apart on new deals.
The conflict, if extended, could have consequences for American car buyers. First, it would reduce the number of new cars available for sale, which could fuel higher car prices, further fueling inflation and force the Federal Reserve to keep interest rates high. Auto production remains in recovery mode from the impact of the pandemic, which caused shortages on semiconductors and other components. Dealer inventories remain low, meaning that a lengthy strike could make it difficult to find popular US-made models. [The New York Times]
o As America continues to return to a more pre-COVID environment, traffic for the morning commute has gotten busier. The rate of people working from home dropped from 18 percent in 2021 to 15.2 percent in 2022, according to a US Census Bureau survey on life in America. As a result, the average commute increased by nearly a minute, as employees returned to offices. Americans who moved to the suburbs in 2020 and 2021 are now faced with longer commutes.
The rate of people commuting to work alone in a vehicle climbed from 67.8 percent in 2021 to 68.7 percent in 2022, while Americans use of public transportation rose from 2.5 percent to 3.1 percent year-over-year. [Associated Press]
o Starbucks, the iconic coffee chain, wants to move away from disposable cups by 2030, citing sustainability. The cups account for large portions of its overall waste and greenhouse gas emissions. Starbucks wants to push more suppliers in its production to provide recycled material and partners, such as universities, to have the ability to handle reusable cups.
To incentivize customers, Starbucks is offering a $1 discount per drink for customers. At their pilot stores, Starbucks is providing customers who forget to bring their cups a reusable cup that can be recycled. It is the latest effort for Starbucks to be a leader in sustainability, as their new stores are being certified for energy efficiency. The company has also established goals, specifically in 2008, to use 100 percent of recyclable or reusable cups by 2015. Starbucks has been increasing the amount of recycled material in disposable cups for the last several years, with a goal to have all cups at least 30 percent of recycled material in all US-based stores in 2025. [Associated Press]