Economics in the News – Sept. 26 – Oct. 2, 2022
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
oThe 2022 World Cup begins next month. Qatar, a small oil-and-gas rich country, will welcome the 32 best international soccer teams and an estimated one million fans for the biggest global sporting spectacle. Eight new soccer stadiums and a $29.8 billion subway system have been specially built to allow an estimated one million visitors to move throughout the country.
However, due to its size, Qatar is essentially hosting the World Cup in one city, providing pressures that no other host country has experienced. Just 44 miles stretch between the northernmost stadium and the southernmost stadium in Al Wakrah. Accommodations for visitors, teams and family members has been the most persistent point of worry. Other concerns include security where Turkey has agreed to supply 3,000 riot police and airport style screening to be used. Finally, transportation remains a worry despite the new subway system that was built specifically for the World Cup. [The Athletic]
o Used car demand has ballooned in recent years amid a pandemic-fueled shortage on new vehicles. Computer chip shortages decreased the supply of new cars, increasing the price for a new car. As owners see their trade-in values balloon, many budget-conscious buyers have been pushed out of the car market due to concerns over affordability.
As the US government provided many Americans with stimulus money throughout the pandemic, families bought expensive used cars and drove CarMax and its rivals to double-digit sales growth. CarMax saw its profit drop more than 50 percent in the second quarter, while its sales rose two percent. Analysts expect the prices of preowned vehicles to continue to moderate after an extended run-up. [The Wall Street Journal]
o Wall Street closed out its third straight losing quarter, as September marked the worst month for the S&P 500 since March 2020 and the start of the COVID-19 pandemic. The benchmark index lost 9.3 percent throughout the month, as the tech-heavy Nasdaq composite dropped 10.5 percent in September and 32.4 percent this year. The Dow Jones Industrial Average lost 8.8 percent in September.Global financial markets continue to struggle with global investors fearing a possible recession. Tensions between most of Europe and Russia following their invasion of Ukraine have also played a role, as has a controversial tax cut plan in the United Kingdom and a fear of worsening inflation. [Associated Press]
o Hurricane Ian bore down on Florida as a Category 4 hurricane on Wednesday, bringing among the highest winds recorded in United States history. Later in the week, the storm’s path led it to the Carolina’s and the northeast as a tropical system. As hurricanes become more prevalent and destructive, experts question if the exposed communities on barrier islands should keep rebuilding.
Many barrier islands, such as Fort Myers, Florida, Pawleys Island, S.C., and the North Carolina Outer Banks bring tourists and are crucial to the local economy. But the costs associated with rebuilding these communities are increasing with the more frequent destructive storms in their path. [Associated Press]
o Why does the US dollar remain strong in comparison to many other global currencies? The dollar has climbed nearly 20 percent in value, according to the U.S. Dollar Index. For Americans, a stronger dollar means less expensive imports and trips abroad, but a strong dollar can put other countries trying to boost their economy in a challenging position.
Most commodities are traded in dollars, making necessities such as oil and wheat more expensive. A strong dollar also places other countries in a tough position in handling interest rates and public debt. As such, other countries feel the effects of diminished purchasing power as their government attempts to combat inflation and a weakened currency. [The Washington Post]