Economics in the News – Sept. 25 – Oct. 1, 2023
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Increased interest rates, tighter lending standards and higher operating costs have strained small business owners, as bankruptcy filings have increased since the pandemic. Nearly 1,500 small businesses have filed for Subchapter V bankruptcy this year through Sept. 28, nearly the same amount as all of 2022, according to the American Bankruptcy Institute.
In addition, small business loan delinquencies and defaults have increased since June 2022 to above prepandemic averages. Seventy-three percent of small businesses reported that rising interest rates were having a negative impact on their business, according to a survey of more than 1,500 small business conducted in late August and early September by Goldman Sachs. [The Wall Street Journal]
o Policymakers at the European Central Bank are the latest group experimenting with artificial intelligence (AI). The central bank is looking to use AI to better understand inflation and support oversight of the big banks. The central bank is looking to use language models, such as ChatGPT, for assistance in preparing summaries and briefings that could be used to assist policy, make the bank’s public statements easier to understand, and analyze documents provided by banks.
The European Central Bank is the latest central bank to announce an exploration of uses of AI. Central banks are not usually on the cutting edge of advanced technology and central banks are treading lightly as the benefits and risks of the technology continue to be explored. But no organization wants to be left behind as AI becomes increasingly accessible. [The New York Times]
o The NFL is capitalizing on the Taylor Swift frenzy that has broken out with the pop star in attendance to watch the Kansas City Chiefs play the last two weeks. After rumors spread of her attendance at the Kansas City Chiefs at New York Jets game, ticket prices for the game soared more than 40 percent. Her prior week’s attendance at the Chiefs vs. Chicago Bears game saw a major television ratings spike, with 24 million viewers tuning into the Fox Sports broadcast. That made the game the most-watched NFL game on any network for Week 3.
Travis Kelce, the Chiefs tight end whose box Swift sat in, has benefitted from the frenzy as well. Sales of his jersey spiked 400 percent after Swift’s initial appearance at the Chiefs vs. Bears game. In anticipation for her appearance to the Chiefs vs. Bears game, Fox’s music department sought permission to use her songs on air during the game but the request was denied by Swift’s team for privacy reasons. [TIME]
o Viewers of Amazon Prime Video will have to pay extra to keep watching their favorite shows and movies on the streaming service ad-free. Starting early 2024, Amazon Prime Video will join other streaming services to add different tiers of subscriptions. Members of Amazon Prime can pay an additional $2.99 per month to keep their service ad-free
Amazon Prime Video joins the likes of Disney and Netflix in creating tiers of subscriptions. Disney will begin charging $13.99 per month for ad-free Disney+ beginning in mid-October, a cost that is 75 percent more than the ad-supported option. Netflix already charges $15.49 per month for its ad-free plan. [Associated Press]
o As the calendar has turned to October, millions of Americans are faced with the reality of repaying their federal student loans with monthly average payments in the hundreds of dollars. As a result, many borrowers are taking on additional hours of work, cutting expenses, and looking for options to reduce their monthly payment.
Since student loan payments paused at the start of the COVID-19 pandemic, credit card debt has surpassed $1 trillion for the first time. More than half of student loan borrowers added credit card debt during the pandemic, according to credit bureau TransUnion. With pandemic savings already dwindling, the impact of millions of people having less discretionary income on the economy remains unclear. [Associated Press]