Halloween Brings An Economic Treat

     According to the National Retail Federation, consumer spending on Halloween-related items is expected to reach an all-time high of $10.14 billion in 2021. That is up from the $8.05 billion U.S. citizens spent in 2020, during the pandemic. On average, consumers plan to spend a little more than $100 on costumes, candy, decorations and greeting cards, about $10 more than they spent last year. Americans are nearly back to pre-pandemic levels — at least for Halloween, anyway. The NRF says 65% of Americans plan to participate in Halloween activities this year, just under the 68% that planned to participate in 2019, before the pandemic. That is great news for state and local economies who earn revenue from all the pumpkin patches, hay rides, and corn mazes. 

    Since there will be more people out trick-or-treating than last year, homeowners will have to make sure to have more candy out for children. The Mars Chocolate North America factory in Topeka can produce 14 million bite-sized Snickers candy bars and 39 million M&Ms — enough to fill 1.5 million fun-sized packs — each day, according to some reports. That’s about 8,000 pounds of cocoa butter, and 117,000 pounds of peanuts. States like Kansas will play a starring role in filling the candy bags on the holiday. Milk from western Kansas dairies is dehydrated and turned into milk powder that likely makes it into candies all over the U.S. and the globe. In a country hindering from a worker shortage and a supply chain crisis, at least we can thank Halloween for maybe sparking some economic growth into our economy.  

Source: Halloween brings an economic treat (farmprogress.com)

Squid Game cryptocurrency rockets in first few days of trading

         Squid Game is a Korean survival drama in which contestants who are deeply in debt play children's games in order to win a ton of cash. Those who lose or refuse to comply with the strict rules of the games face a death sentence. It has attracted more than 142 million audiences during its first four weeks from launch and became Netflix’s most-watched series to date. People’s obsession with this Squid Game renders it influential not only in the film industry but also in a rather unexpected area - the cryptocurrency sector of the white-collar blockchain industry.

        Devoted fans of the show created an online version of the game, for which participants need the Squid cryptocurrency – SQUID to play. The rules of the online align with the show in which players will go through multiple rather simple games to win big money at the end. Players pay an entry fee, so the reward pool gets larger as more people participate. What’s different about the game online is that gamers only win money tokens and they play without deadly consequences. "Squid Game" popularity spread like wildfire, and so did SQUID. According to CoinMarketCap, SQUID was worth $0.01 cent on Oct.26th and rose to $6.27 on the morning of Oct. 29th – a 62,600% increase.

        As the market capitalization of SQUID reached 184 million dollars, questions and concerns were raised. It has been criticized for not allowing investors to resell their tokens. The only explanation given by the company is that “it is using ‘innovative’ anti-dumping technology that limits people from selling their coins if there are not enough coins being bought in the market”. Besides, some experts warn prospective investors that cryptocurrencies that were developed upon speculative frenzies carry a substantial amount of risk since the values of these kinds of cryptocurrencies are bound to fluctuate. For example, people’s obsession with Squid Game will not last forever, and when the passion dies down, investors whose money tokens are tied up in the currency will face a significant loss. 

Credit: https://www.bbc.com/news/business-59059097

Trouble In Ecuador

     At the moment, Ecuador is going through mass riots throughout the nation. Protestors have blocked roads and planned marches causing a state of emergency. The plan for the rioters and protesters is to peacefully enter the heavily secured presidential palace. Why is there widespread out-roar in Ecuador?

    Last week the president of Ecuador Guillermo Lasso recently increased the price of fuel in the country. This brought outrage across the nation and the people of Ecuador demanded it be reversed. Due to this pressure President Guillermo Lasso decided to fix the price of fuel with petrol costing $2.55 a gallon and diesel $1.90 a gallon. This was released after a constant increase in fuel prices freezing the costs to one stable price. These inflated gas prices aren't coming from no where though, Ecuador has been experiencing a very unstable economy due to the COVID pandemic. Although the President offered somewhat of a solution to the people, the people rejected it a preferred to go along with the rioting and protesting.

    Do you think President Guillermo Lasso is doing the best he can for his people or trying to save face while only being on the job for five months so far?

https://www.aljazeera.com/news/2021/10/26/indigenous-lead-protest-against-ecuador-economic-policies

Restaurants prep for long-term labor crunch by turning to robots to work the fryer, shuttle food to tables

 

The COVID-19 pandemic has caused many problems for people and businesses. One of the obstacles that have arisen during the pandemic is labor shortage issues. Many companies are not finding enough workers or not finding enough qualified workers to fulfill their positions. One of the industries that have suffered from the pandemic is the restaurant industry not finding enough servers to treat their customers. To combat this issue restaurants have started looking at unique ways to fulfill their server position using technology. 

At Inspire Brands’ Innovation Center in Atlanta, robots made by Miso Robotics have taken on a server and fry cook role. These robots have been featured in many restaurants including CaliBurger, WhiteCastle, Buffalo Wild Wings, Domino’s, and Chiptole. Miso Robotics has a goal of these robots becoming mainstream in 2022. The fry cook robots help to relieve the dangerous, boring job and the server robots help deliver food quicker. These robots can be very beneficial in helping ease the labor shortage issue in the restaurant industry. “The National Restaurant Association recently reported that 4 in 5 operators are understaffed. This includes 81% of full-service operators and 75% of limited-service operators. Robotics can help ease the staffing challenges and speed up operations”. Any technology increase ideally should increase the supply of jobs, even though some jobs will be lost to these robots. 

One issue with these robots is although they are being used to ease the labor shortage issue, producing the robots is a problem because of the labor shortage issue. The robots use AI technology to operate and other industries such as automotive, electronics, and metal also use AI technology and those other industries are more lucrative than the restaurant industry. 

Although there are problems with producing robots to operate as fry cooks/servers I believe that it will be more efficient to have them. By implementing restaurants robots one would be able to receive their food faster as well as not have to worry about having a server they did not get along with. Increasing technology would also increase the supply of jobs which would be beneficial. Although it may be years until these robots become mainstream I think it is a unique way to fix the labor shortage issue. 

by: Kate Rogers -CNBC

https://www.cnbc.com/2021/10/22/restaurants-looking-for-labor-and-speed-turn-to-robots-.html

Afghanistan Faces Economic Challenges

 In Afghanistan, following the return of the Taliban, a humanitarian crisis is on the horizon. Within the months of the Taliban's reign, humanitarian efforts have been almost entirely cutoff. Along with this, the Afghan economy has teetered on the edge of collapse due to the strict rules and regulations that have been harshly implemented. Without any help from the outside, it is unlikely that we will see any improvement, and this is bad news for the million children that are at risk of starvation. 

Before Afghanistan was reconquered by the Taliban, the country was heavily dependent on foreign aid efforts to feed its impoverished families. The Taliban claims that the US is holding funds hostage from them and therefore they can not provide the humanitarian efforts that are neccesary to help the hungry population. The US is currently freezing over $9 billion in assets from the Taliban, and other countries have made it a point to do the same until they have proven that they have rolled back their previously harsh ways. There is no way to know exactly how much funds that the Taliban has access to, but one thing is for certain, and that is that there is very much uncertainty about the future of Afghanistan and its economy. There is not much food, the economy is on the decline, and the Taliban are doing very little to help the problems that are running ramped in their country. 

Link: https://www.cbsnews.com/video/afghanistans-economy-is-on-the-brink-of-collapse/#x

U.S lifting travel restrictions

 As of November 8th, international travelers will again be allowed to travel into the United States. This will end a 21 month ban in which some citizens of certain countries were denied travel rights to the United States. The ban first began when Trump was in office where he banned Chinese citizens from traveling to the United States. From there it then spread to other countries receiving similar bans with little reasoning as to why. These bans effected countries such as: China, Canada, Mexico, Brazil, and much of Europe. In terms of the economy though, this move should help boost the travel economy in the United States. Within a week of this news plane ticket sales have already spiked and will be interesting to see how much lifting this ban will help the struggling airline industry. Not only that but one could expect for tourism to increase as well considering the lift of sanctions. In result this increase in tourism could help benefit the United States economy as a whole. It will be interesting to see how the international travel is handled and if it will lead to a spike in Covid again, and if so does Biden impose the travel ban again. Lastly, it will be interesting to see how much this move benefits the economy not just from a travel standpoint, but as a whole as well. 

Yellen not concerned with rising inflation

U.S. Treasury Secretary Janet Yellen had confirming words for the economy today as she said the United States was not losing control of inflation. She even stated that she expects inflation levels to return to normal by the near-end of next year. 

Yellen also went on to explain that President Biden’s spending through his domestic infrastructure and ‘Build Back Better’ packages will be allocated throughout the next ten years. She failed to mention the impact of this on the inflation rate, but we can expect that with high government spending prices will rise. However, this seems to not be a concern to the U.S. Treasury Secretary. 

Backing up her claim that normal levels won’t return until late next year, Yellen said, “On a 12-month basis, the inflation rate will remain high into next year because of what's already happened. But I expect improvement by the middle to end of next year - second half of next year.” 

We know that the ongoing problems with the supply chain have caused enormous problems in a growing demand United States economy which definitely doesn’t benefit the inflation rate. Yellen stated that she expects these bottlenecks to fade away in the near future. 

Regardless of the ongoing economic conditions, The Federal Reserve will keep its promise to keep interest rates near-zero and until the economy is back to full employment and an inflation rate of 2% or better. 

Article : https://www.reuters.com/world/us/yellen-says-us-has-options-raise-revenue-pay-build-back-better-bill-2021-10-24/ 

President Biden, Taiwan and Chinese control

 In East Asia, many countries are connected through many things such as History, Business, Trade, and politics, making the area one of the most unique Socio-Political areas in the world. One of the main Socio-Political topics in East Asia is that of Taiwan and China. For many years China has had control over Taiwan, and as such does not recognize it as a sovereign and independent nation. Despite Taiwan's best efforts, they are still under Chinese rule. The United States is an example of such a country, that as of late, thinks Taiwan should be independent. 

On Thursday, October the Twenty-First, President Joe Biden made a comment saying that if China were to attack Taiwan, the United States would defend them against a potential Chinese invasion. China did not take kindly to the comments made by President Biden, as Foreign military spokesperson Wang Wenbin commented on this issue saying " When it comes to issues related to China’s sovereignty and territorial integrity and other core interests, there is no room for China to compromise or make concessions, and no one should underestimate the strong determination, firm will and strong ability of the Chinese people to defend national sovereignty and territorial integrity" Weng went on to say that Taiwan is an "Inalienable" part of China's territory and China does not intend to have any foreign intervention as it is strictly internal. While the war between China and Taiwan does seem very unlikely, it seems the U.S is more than willing to cut ties with a growing superpower, to help defend Taiwan.

Sources: https://apnews.com/article/joe-biden-china-beijing-taiwan-f4fdeb6e15097d55f5d4c06b5f8c9c29

As Starbucks Workers Seek a Union, Company Officials Converge on Stores

 As Starbucks Workers Seek a Union, Company Officials Converge on Stores

https://www.nytimes.com/2021/10/18/business/economy/starbucks-union-buffalo.html 

A couple of Starbucks store in Buffalo, New York is making an effort to unionize. In late August, these stores filed for union elections. Around the same time, Starbucks began sending officials out to stores. These officials include managers and top corporate executives from out of town. There has also been an increase in staffing. Those in the unionization effort feel that these actions are a countermeasure to intimidate workers into not voting for a union. The increase of staffing has mostly been teenagers, who are not eligible to vote in the union election. Starbucks claims that these are not intimidation tactics, but instead to fix longstanding problems in the workplace. 

Currently, none of the US locations for Starbucks are unionized. If the stores in Buffalo are able to form a union, it will be the first time there is a union for company-owned stores in the United States. In the Unites States, unions have had a brutal history when it comes to corporations. When people first began unionizing, they were brutally put down by hired "tough guys" and even the government. I hope that the stores who want to unionize are able to do so, as I think that unions are an important tool for the everyday worker. This fight for a union is just one of many acts of labor activism currently happening in the US. 

Why won't Australia give up coal?

Australia is known to be one of the most pollutant countries in the world. Australia 2030 pollution emissions are twice as much of what USA's and UK's emissions are. Yet, with climate change being a huge problem around the globe Australia refuses to give up coal. Australia is one of the world's largest fossil fuel producers. They will continue to mine for coal because: 

1. Loyalty to the industry 
2. Market monopoly 
3. Not wanting to go green. 

Loyalty to the industry: 

Australia has relied on coal for years to save its economy. Coal mining has helped Australia's economy for decades. The coal mining industry supports a huge workforce in the rural areas and is also credited for the country's wealth which is why the government can not abolish it. 

Market Monopoly:

The demand for coal is still there and Australia is one of the top coal producers. Hence, a lot of international income flows into the country. India and China alone use up 64% of Australia's coal. With the high demand, Australia continues to profit from this industry. 

Not wanting to go green: 

The argument is that even if Australia stops cola production, the alternative for the country is liquified gas. The government has already pledged half a billion dollars to new gas basins and plants, defying global calls for an end to new fossil fuel projects.

Apart from this the government has cut the renewable energy funds and has also withdrawn from the UN's Green Climate Fund. 

Are economic growth and high exports good enough reasons for Australia to keep mining coal? 

Source: https://www.bbc.com/news/world-australia-57925798

Inflation Surges Worldwide as Covid-19 Lockdowns Ends and Supply Chains Can't Cope

 

Rising Inflation, as a surge in demand after the easing of Covid-19 lockdowns, has been confronted by supply bottlenecks and rising prices around the world. Central banks responded differently to the sharp consumer-price increases in every country. Most of them increased the interest rates except two, the Federal Reserve and the European Central Bank. The reason why their responses differ is mainly due to the reason whether a further increase in prices will feed further cycles of inflation or fade out. The largest central banks are relying on that there are sufficient under-utilized workers available to keep wage rises in check and households as they have a track record of keeping inflation low. In poorer countries, the largest share of spending usually goes to food and energy that have seen the largest price rise. In Chile, the central bank increased its interest rate to 2.75% by 1.25%, which is the biggest rate increase in 20 years. Price rises began to accelerate in March, and the inflation rate was above what the central banks had expected. According to the chief strategist at UBS Research, Emerging markets are turning hawkish because there is a risk of inflation expectation going much higher.” Without increases in wages to match, many households are in financial difficulty.

 

https://www.wsj.com/articles/inflation-sets-off-alarms-around-the-world-11634304187

A real-time revolution will up-end the practice of macroeconomics

  The article I read was called "A real-time revolution will up-end the practice of macroeconomics" and was found on the Economist. The article talks about how data that central banks use such as GDP and productivity are data sources that lag behind because of how long it takes to compile that data. They then use that data to make big policy decisions that can affect millions of people. If the data is bad or is received to late it can lead to bad decisions that can ruin an economy. An example used in the article is if the Fed could have had real-time data in 2007 they could have cut interest rates to 0 then which would have helped the economy out a lot.  

According to this article these changes to using real-time data could be happening sooner then we think. The pandemic started central banks and governments had too use other forms of information like tracking contactless payments , and JP Morgan giving them information on peoples bank accounts/credit cards to see if they are spending money or not. This is instead of the official surveys they normally use that take time to make. 

There are obviously some issues that arise with using real time data. One of which is what if the central bank overreacts to a data trend that may just be an anomaly? They could then hurt the economy by over adjusting when it doesn't necessarily need it. Could it also lead to a more centrally planned economy if there is adjustments and interventions every day with the daily data? Some very interesting things to think about.  

https://www.economist.com/leaders/2021/10/23/a-real-time-revolution-will-up-end-the-practice-of-macroeconomics

 We see more progress in the fight against Covid-19. Health officials saying that infections are going down. While the number of people qualifying for a booster is going up. Around 10 million Americans are eligible for booster shots. Pfizer announced that its vaccine for children is more than 90 percent effective against a virus. Health regulators will be reviewing the data that could soon clear Phizer’s coveted vaccine for children ages 5 to 11. This week Biden administration outlined a strategy to vaccinate around 28 million children. Also, CDC signed off on Moderna boosters for individuals 65 and older, adults with a bad health condition, and those at higher risk of catching the virus. For the J&J vaccine, adults who have been vaccinated for at least two months can get boosters too. 

Is the world economy entering a wage-price spiral?

 Both wage growth and inflation are really high. What does this mean for America amidst the recovery of the Covid-19 pandemic?

In the past year, the American hourly pay rose by 4.6% and there was consumer-price inflation of 5.4% which is canceling any increase in pay that we have seen in the past year. This is not only happening in the United States but as well as in Germany and Japan the public-sectors are asking for a pay increase. 

What are the causes of these higher prices? It is the high demand for goods with the blockage of supply chains as well as energy prices have escalated. We know the cause for the increase in consumer-price inflation but is still unknown the exact cause of wage growth is. Is it because workers are unwilling or unable to take the many jobs that are at hand? Additional reasons for this labor shortage could be the struggle to move through professions or to a different physical place, as well as the continued fear of the Covid-19 virus. Is it from the lingering effects of the economic stimulus that are keeping workers from finding work? Or is it that people now put time with their families above their careers? All of these could be the cause for the increase in the wage but it is not possible to say which one exactly.

There are three ways to avoid long-lasting inflation; firms could absorb higher wages in their margins rather than raising prices, productivity growth could make a higher increase in real-wage sustainable, or idle workers could return to the labor force.

The unknowing of the cause of wage growth makes it difficult for central banks to make their decisions. They have to focus more on labor supply due to it taking about 18 months for the central bank’s policies to go through the economy. So far the recovery from the Covid-19 pandemic is mediocre, and there are minimal signs that the end of the stimulus plan increased the number of people returning to work.

https://www.economist.com/leaders/2021/10/16/is-the-world-economy-entering-a-wage-price-spiral

Inflation in Moldova

Moldova is currently in the midst of an energy crisis. Prices of energy have been rising and Moldova receives almost all of their energy supply in gas supplied by a Russian company, however only 67% of their gas needs are being satisfied. Because of this Moldova's parliament declared a state of emergency to secure more. Negotiation attempts with the Russian company have been made but were unsuccessful. Moldova even accused Moscow of intentionally undersupplying them but Russia denies doing anything intentionally. The state of emergency allows Moldova to look towards other European countries for their energy supply. The rising energy prices combined with the global supply chain issues and pandemic recovery has resulted in rising costs for most products in the economy. Food prices have been effected the most rising by 8.3% compared to the 6.7% inflation rate. This was unexpected by the National Bank of Moldova and they are scrambling to react appropriately. The inflationary pressures are on the demand side so they have raised their interest rate from 4.65% to 5.5% to discourage borrowing and encourage savings. They do not expect a quick recovery and fear the inflation rate may exceed 10%. Moldova relies heavily on foreign aid and are again looking for outside assistance to  stabilize them through this crisis.

https://www.euronews.com/2021/10/22/europe-s-energy-crisis-moldova-declares-state-of-emergency-over-gas-prices

Australia and Climate Change

Australia, a nation among the developed, is currently one of the most prime advocators of coal and fossil fuels. Prime Minister Scott Morrison, from the Liberal Party, is a conservationist who is still stuck in the past with supporting and subsidizing coal mining and fossil fuels extraction.

He has only recently agreed to attend the UN Climate Conference in Scotland, and that was not without criticism from Queen Elizabeth II and mocking from a billboard in Times Square.

Australia is currently the largest exporter of coal and has suffered among the most from wild fires. But still, Australia doesn't have any concrete plans for working towards curbing climate change, whereas other developed nations all have pledged in some manner to reduce emissions by 2050, or even 2030! The Liberal Party and the National Party have used coal as their political agenda.

And as much as I hate to say this, because I am from India, Adani, one of India's largest industrialist, is looking to invest in Australia to build the world's largest coal mine. And the current Australian government is ready to provide subsidies for this investment to happen.

Australia, is like a black mole, because it is becoming the sole reason for negating other developed nations' climate change efforts. It is not only slowing other countries' efforts, but also pulling their efforts because only when everyone work together does any real change take place quickly.

Article: https://www.nytimes.com/2021/10/21/world/australia/australia-coal-fossil-fuel-carbon.html

Interest rate cuts in Turkey

Turkey has been suffering with severe inflation, where people are complaining and crying about how they will feed their children if the prices keep rising. While this is happening, Turkey’s central bank announced a bigger-than-expected interest rate cut. Opposition parties and the people are really concerned and questioning the independence of the central bank. Opposition leaders have condemned this action. Meral Aksener, head of the country’s third largest opposition party, called it “an irrational decision made by a frivolous government through an unqualified bureaucrat.” With all this going on, Lira has hit an all time low with this action. It is now at 9.49 against the US dollar. This year alone, Lira has lost 20% of its value. Import companies were already at a verge of bankruptcy when the Lira was at 8 against the US dollar, now it is even harder to continue business and pay off debt. This interest rate cut has triggered a chain reaction and caused a shift in related economic behaviors. This entire situation is reminding people of the inflationary cycle that gripped in the 1990s. Signs indicate that turkey is going towards a breaking point. When the inflation is already 5 times the target value, interest rate cuts don't make sense. It will eventually increase the long term interest rates. This action is a lot of risk and not consistent with the macro economic fundamental. Is the central bank really independent in Turkey or the people claiming it to be influenced by the ruling party is true. 

source:

https://www.aljazeera.com/economy/2021/10/21/as-turks-wrestle-with-inflation-central-bank-cuts-rates-again

Scrapped Plans for Free Community College in the U.S.

 In the U.S. Congress, the passage of the 2 major infrastructure bills has been halted as internal debates inside the Democratic party continue. A major concern by one of the senators is the enormous price tag of the larger bill of $3.5 trillion. In these debates, there are concessions being made to substantially lower the spending in this bill to make it more palpable for more fiscally conservative members.

One of the major pieces of this bill that has now been taken out is the spending allocated for free community college. This section would have guaranteed paid community college for people of color and low income to have a chance at higher education. However, this piece of legislation will be cut out to ensure that the rest of the bill can pass with all Democrats on board.

In my opinion, this was one of the most important pieces of this bill as higher education is extremely important for future prosperity of the United States. More well educated workers can encourage more businesses to keep their operations in the US as they can better guarantee the quality of their products. This can also lead to more innovative products to be invented domestically to give US companies an advantage in the global market. There are societal issues that could have been addressed as well. Income discrimination is a fundamental problem in the United States as systems in place make it harder for people of color to climb up in the social hierarchy. One of those systems is in our education as it is one of the best ways to climb out of poverty. Higher levels of education ensures better employment and higher wages to provide for their families. But the extremely high price for higher education has only raised the barrier to entry. Without free community college, there will be no incentive for the free markets to correct this market failure as there is no economic benefit in doing so.

Credit: https://www.nbcnews.com/politics/congress/democrats-abandon-free-community-college-white-house-warns-social-safety-n1281939

How Banks will Respond as Interest Rates Rise

As the economy is getting back to pre-pandemic levels we are going to see the interest rates rise fairly quickly by the time 2022 rolls around. There is going to be an extremely large change in mortgages over the coming months, but the question is just how big?

According to the Mortgage Bankers' Association, there is going to be approximately a 33% decline in mortgage originations. This is due to the fact that they also predict that interest rates will rise to 4%. Interest rates right now are sitting around 3%. The interest rates are going to increase drastically in a very short period of time according to their projections. They also project that this will result in a 62% decrease in refinances. 

Due to a large decrease in mortgages being taken out, lenders are going to have to look at other options to make up some of this lost revenue. One of the suggestions made by Marina Walsh was for these lenders to focus more on their servicing business. 

Source: https://www.cnbc.com/2021/10/18/real-estate-mortgage-originations-will-drop-33percent-in-2022-as-interest-rates-rise.html 

China's Power Shortage

 China is undergoing a rough economic patch at the moment. Their steel mills are having power cuts, property companies are purchasing less construction material, and the country is also under more floods as of recently. China is still growing but at a slower rate than they were last year from 4.9 percent to 7.9 percent. China's industrial output has not been very good as it put up numbers last quarter more similar to when the pandemic first hit. 

The Chinese government has recently put a limit on energy use. This is stemming from concern with climate change and also income inequality in China. This has backlashed on China as the industrial side of the country is short on power and now burning coal, which goes against one of the reasons they have for limiting energy use in the first place.

https://www.nytimes.com/2021/10/17/business/economy/china-economy-gdp.html

Retail Sales Rise in September Better Than Expected

 https://www.usnews.com/news/economy/articles/2021-10-15/retail-sales-rise-in-september-better-than-expected

As we get closer to the holidays, it is expected to see rises in retail sales. This article discusses how retail rates rose by 0.7% in September which was higher than expected. After a 0.9% increase in August, economists predicted a drop of about 0.2% due to consumers being "skittish" about the delta variant and the rising inflation. One of the top contributors were food and gasoline. Gasoline sales were up 38.2% from a year ago and food service establishments saw an increase of 29.5%. They suspect that this is due to students returning to school and workers returning to the office played a role in the increase in gas sales and food sales. With people returning to work, it likely means that most of those people will be going to food establishments for lunch, thus increasing the sales. 

The article goes further to discuss how it is expected that sales increase into October with the spending for Halloween and then holiday shopping. It continues to be somewhat of a concern as to how the economy will perform during the holiday months due to the delta variant, labor and material shortages, and rising prices for many products. The reach of the coronavirus has proved to be more pervasive than expected earlier this year which has resulted in global supply chains which has been one of the biggest unexpected results. Additionally, this has caused bottlenecks of key components used across the economy from housing to auto production and has, in turn, raised prices.

What do you think will happen with retail sales with the supply shortages and the holidays being impacted by covid?

Americans were kidnapped in Haiti

 This morning American missionaries were kidnapped somewhere in Haiti. Seventeen people including children snatched by gangsters. One of the kidnapped messaged for help n a WhatsApp group. This happened in Port-au-Prince, the capital of Haiti. Haiti is the poorest country in the western hemisphere. Thousands of people leaving their homes in recent months and seeking safety at the U.S. border. In July of this year, the country’s president Jovenel Moise was assassinated in his home. With the government divided and the economy cratering, most of Port-au-Prince has fallen to armed gangs. In this chaos, kidnapping became a huge business. Men, women, and children were snatched at gunpoint for a little as a hundred dollars. At least 328 people were kidnapped in the first eight months of 2021, according to UN data. In my opinion, the UN should send the military to Haiti in order to stop this chaos.

LA port to open round the clock to tackle shipping queues

As Christmas approaches, businesses especially small to midsized businesses are getting concerned due to the global supply chain issue since most of them do not have huge warehouses to store goods. As retailers rushed to restock their inventories from Asia, the shipping system struggled to keep up. As a response, the Port of Los Angeles in California, one of the largest ports in the United States, will start operating 24 hours a day to handle more goods at night after a similar move by the nearby Long Beach port.
            So how did this happen? The Covid-19 pandemic is definitely at the bottom of the problem. As the center of manufacture, China exports around $2000 billion every year. The shutdowns of factories and ports in China led to shortages of children's toys, timber, new clothes, and pet food in the U.S. and elsewhere, while also pushing up consumer prices. What made the situation worse is that the shortage of labor in the U.S. resulted in the lack of lorry drivers and port staff to unload and deliver the goods when ships reach the ports. Therefore, containers are getting stacked up and ships are getting congested in ports. For example, on one day in September, a record 73 ships were forced to queue outside for a berth in the Los Angeles port. It had to move 30% more shipping containers than usual in August, while Long Beach moved an extra 23%. The shortage of drivers also means that there is a delay in returning empty containers for re-use, which further exacerbates the situation because it not only drives up the shipping fees that businesses have to pay but also causes a longer-than-usual delivery period of the goods.
            Besides major ports picking up night shifts to reduce their empty container stocks with the help from Walmart, UPS, FedEx, Samsung, The Home Depot, and Target, the White House has been making attempts to tackle the supply chain problem in general. Early this year, a Supply Chains Task Force was established and a Port Envoy was appointed to find remedies for the disruption. Not to mention the effort that the Biden administration put into passing the $1tn (£730bn) infrastructure bill which includes investments in improving the logistics of ports in the United States.
 
Credit: https://www.bbc.com/news/business-58901777 
            https://www.bbc.com/news/business-58895246

3 US-based economists win Nobel for research on wages, jobs

     A U.S.- based economist, David Card, won the Nobel prize in economics on October 11th for pioneering research about the labor force. The research showed how an increase in the minimum wage does not hinder hiring and immigrants do not lower pay for native born workers. Joshua Angrist and Guido Imbens shared the award with Card.

    In a study published in 1993, Card looked at what happened to jobs at Burger King, KFC, Wendy's, and other fast food restaurant called Roy Rodgers when New Jersey raised its minimum wage from $4.25 to $5.05. Using restaurants in eastern Pennsylvania, Card and his late partner Alan Krueger found that an increase in the minimum wage had no effect on the number of employees. Card and Krueger's studies changed economists' views of wage laws. From the year of their study to 2000 less people agreed with the statement that minimum wage laws increase unemployment.

    Card and Krueger's research produced conclusions into why a higher minimum wage would not reduce employment. One conclusion was that companies are able to pass on the cost of higher wages to customers by raising prices. Also, if a company is a major employer in an area, it may be able to keep wages particularly low, so it could afford to pay a higher minimum without cutting jobs. Higher pay would attract more applicants, boosting labor supply. Their research deserved an award and made a huge impact on other economists. It is too bad that Krueger died in 2019 and was not able to share the award.

    Card also found that an rush of immigrants into a city does not cost native workers jobs or lower their earnings. Card studied the labor market in Miami when Cuba allowed their citizens to leave in 1980. The 125,000 people who left Cuba resulted in a 7% increase in the Miami's workforce. However, Card discovered no negative effects for Miami residents with low levels of education. Some work even showed that increase immigration can have a positive impact on income for people born in the country.

     Angrist and Imbens won their half of the award for working out the methodological issues that allow economists to draw conclusions about cause and effect according to strict scientific methods. They figured out to isolate the effects of things like an extra year of school that enabled researchers to draw clearer conclusions about cause and effect, even if they are unable to control factors they way scientists in a lab can. For example, Imbens published a paper found out that a basic income prize of $15,000 did not have much effect on a person's likelihood to work.

    

Source: 3 US-based economists win Nobel for research on wages, jobs (apnews.com)

Is Poland going to exit the European Union?

 Last Thursday,  Poland’s Constitutional Tribunal ruled that parts of EU law are incompatible with the country’s constitution, undermining the legal pillar on which the 27-nation bloc stands. After this controversial court ruling, 100,000s rallied in support of  European Union Membership. In more than 100 towns and cities, demonstrations took place and even abroad. This shows the strong opinion of the people who really support EU and want to stay a part of it. On 10/10/21, people came out with banners saying "we are staying". The opposition party in Poland right now said that the ruling party wants to leave the European Union so that they can violate democratic rules without being accountable to anyone. People are however fearing that how Brexit suddenly happened when no one anticipated it, Polexit might happen as well. The ruling party has said that people who are protesting are protesting against the constitution. While the Prime Minister accepted and welcomed the court ruling, he said he has no intention of leaving the European Union and the party said that his idea of 'Polexit' is an invention of a weak opposition that has no other ideas. The European Court of Justice said that it is violation of the European Union law for Poland's new regulation of appointing Supreme Court Justices. While Poland is in a a tussle and the people vs government are of different opinions, the outcome can be either too damaging to Poland or the matter can die down. But if 'Polexit' has chances, it might be very big for European Union and the effects can be anywhere from good to bad. It would be hard to anticipate how this would affect the economy.

September Jobs Miss Economists Estimations

U.S. employers in the month of September hired less workers than expected as supplemental unemployment benefits expired.

The unemployment rate fell to 4.8% as nonfarm payrolls increased by 194,000 workers in September. 

Economist were expecting the addition of 500,000 new jobs and an unemployment rate of 5.1%.

The labor market is far from what we want as an economy but it is also far from total devastation. As COVID begins to go in our rear-view mirror, we can have optimism going forward on the labor market. President Biden commented on the September unemployment rate as “progress”. 

The September report was the first since the $300 per week supplemental unemployment benefits that expired early September on the fifth. This is an influential factor that need to be thought about when interpreting Septembers statistics. Other factors that are influential in Septembers statistics are increasing vaccine mandates in workplaces and the Child Tax Credit which pays families up to $3,600 per child per year. 

Noticeable job gains and losses were :

Leisure and Hospitality (+74,000)

Business Services (+60,000)

Retail Trade (+56,000)

Local Government Education (-144,000)

State Government Education (-17,000)

  

Optimism going forward is essential in this job market for the economy as progress is underway with more to come. Even as targets are missed, the economy’s job market is sloping upwards. 

Article : https://www.foxbusiness.com/economy/jobs-nonfarm-payroll-report-september-2021.amp

Why the latest series of Facebook leaks is more politically potent

 Facebook, the biggest social media platform in the world may finally be held accountable for their “two-faced” toxicity. Frances Haugen who was a previous worker at Facebook just testified highlighting Facebook’s “moral bankruptcy” and Facebook downplaying its adverse impacts on teenage depression and ethnic violence.

For many years there has been suspecting of the negative impacts that social media has on young adults, but never any means of proving it, but now Haugen has released corporate documents to prove of Facebook’s ignorance. She proved that Facebook did research that showed there was a relationship between Instagram use and teens’ suicidal thoughts and eating disorders. Facebook still ignored their findings and still prioritized sending teens this content that elevated their anxiety. In 2018 another person outed Facebook for releasing data used for political profiling for Donald Trump’s campaign.  Mark Zuckerberg did apologize for this and agreed to a settlement with America’s consumer protection agency. Although Facebook did have a 5 billion dollar settlement for their 2018 data leak, no laws have been changed to hold accountable tech bosses for their poor behavior.

How is congress going to take action to control tech bosses? It is hard to say if they will come out with a law soon to protect social media users, but the hope is that this will trigger more whistleblowers to come out about these major issues. If anything there is a hope that Congress will at least focus in on protecting children online. Congress could strengthen the Children’s Online Privacy Protection Act that protects children under the age of 13, and raise that age. Legislative proposals are also taking aim at marketing and design features that cause social media to be so addictive for the young.

There is a high chance that there will be many more leaks for the social media powerhouse. Facebook’s vice president of policy and global affairs defended the company and expressed that they took down 49m posts last year that violated policies on terrorism and hatred. In 2021, there is little to no privacy with 70% of the US population owning a social media account. Facebook has violated so many people’s privacy, can no longer count on privacy either.

https://www.economist.com/united-states/facebook-flounders-in-the-court-of-public-opinion/21805344

TSMC and Sony considering joint chip factory, Japan gov't to help -Nikkei

 Ever since the start of the Covid-19 pandemic in early 2020, there has been plenty of shortages and problems with supply chain management, none more so in the Chip industry. The shortage rightly named the "Global Chip Shortage", has caused major price hikes in several industries, mainly the automotive and computer industries. The largest producers of these chips are located in Taiwan and are called "Taiwan Semiconductor Co. LTD." have been having trouble keeping up with the demand and have been falling behind in production, i.e supply. 

To combat the high demand, TSMC has teamed up with one of the biggest electronic companies in the world, Sony, in Japan to jointly build a microchip factory. The plant is going to be built in Southern Japan and will produce chips for automobiles, cameras image sensors, and other various products which have been affected by the global chip shortage. The operations are hoped to start in 2024, but as of now there is no further information has been provided.

The reasoning behind this partnership is very interesting to me as it shows a newfound sign of economic partnership between the two East Asian countries. TSMC has been concerned with the longevity and concentration of its chip-making in Taiwan, as China has not ruled out their use of force over this island which they technically have control over. On the other hand, Japan and its officials are worried about the supply chain stability of its various industries, as it has the biggest automotive company in the world, Toyota, and due to this chip shortage, they have been forced to cut production. Either way, you look at this situation, both counties could benefit from this joint production and find new economic growth and political allyship.

Source: https://www.reuters.com/technology/tsmc-sony-eye-joint-chips-factory-japan-govt-help-nikkei-2021-10-08/

The pandemic changed the trajectory of America’s overdose and suicide crises

 The pandemic has been tough for many people during this pandemic, suicides have decreased about 5%, while those numbers dropped during the pandemic the drug overdose epidemic increased about 30%. This is very surprising because prior to the pandemic these trends were highly correlated. One reason for this massive increase in overdoses is the increasing popularity of fentanyl, “Preliminary data indicates that, while heroin overdose deaths dropped in 2020, deaths involving fentanyl grew exponentially”. Another reason for the increase in overdoses is the COVID restrictions that states placed that caused people isolate themselves. There has been no proven theory to describe why these trends suddenly diverted from each other. Economists have come up with theories to explain one of the trends individually, but have not found any evidence to explain the split. 

Something to note is that although there is no theory to explain why trends diverted from each other, British researchers have said that this is because suicide experiences a disaster shock. British researchers have found evidence that following a disaster such as Hurricane Katrina the suicide rate decreased in the short run and then resumed exponentially in the long run. The researchers are worried that the decrease in suicide rates is just temporary and that the trend in the long term will follow closely again with the overdose rate. 

source: https://www.vox.com/policy-and-politics/2021/8/12/22619913/covid-19-us-suicides-drug-overdoses-2020-fentanyl

North Korea Accepts Medical Supplies

 As of Thursday, North Korea began accepting medical supplies again from the world health organization. It is currently unknown as to whether or not there has been or is an outbreak currently in North Korea. The acceptance of this aid has been long overdue as North Korea had the aid in route to them but then rejected it at the last minute. North Korea was also excepting many other types of medical supplies from outside the country but that was all rejected when the borders were sealed off when cover was deemed a national threat. Up to now North Korea has also denied the entrance of any outside vaccine into the country as well which also posses questions again at the country handling of covid and if there has been any significant outbreaks within the country. All in all it will be interesting to see with North Korea allowing for health supplies to come into the country if that will open the door for any big pharmaceutical companies to get in and and find a way to get rights at supplying the country with their medical supplies. Another interesting thing to look at will be the state of North Korea with covid and if they will ask for more outside assistance if the virus becomes too bad to handle. 

Polexit

Poland's top court ruled on Thursday, that some of the European Union's articles were "incompatible" with the Polish Constitution, which prompted fears of Poland exiting the Union. Pro-EU-membership Poles organised a protest against the ruling and leaving the bloc.

Basically, the court rejected the idea that the EU has power over national legislation in some judicial areas. The fears of Poland leaving the  EU has been building up for years already, and this is the latest in those line of fears. Many Poles do not want Poland to leave the bloc and hence the massive protests.

Even the EU does not want Poland to leave the bloc, and they do not support the court's ruling. The European Court of Human Rights, that has no relation to the EU, has alleges that one of the judges appointed in the Polish court, was done so illegally. And moreover, tensions are rising against the current Polish government regarding it's top court consisting of mostly judges who would stand in favor of the ruling party.

The Prime Minister of Poland says that Poland being a part of the EU is important, and will not leave the bloc, but they're only words and anything could happen, especially in these obvious circumstances. With the post-Brexit effects Britain is facing right now, it is safer for Poland to stay in the EU for a couple more years, if not decades, and properly plan it out and plan out for the unforeseen too.

Article link: https://www.bbc.com/news/world-europe-58863680

The China Effect

It is no doubt at this point that China plays huge role in the global economy, and its internal issues send a ripple throughout the economies of other countries as well. Located at an epicenter of trade, and a hub for supply chains, the global economy may yet again face another crunch.

The most recent factors indicating this is the cash crunch at the China Evergrande Group. While its $300 billion plus in liabilities makes it a big deal for note holders, the real economic fallout for the world was always going to be contained so long as China’s central bank kept liquidity ample and regulators prevent any “Lehman moment.” 
But a power crunch curbing production in the factory to the world — that’s clearly going to send some shock waves through the global economy. Many companies located within the US have already been struggling due to so much of their manufacturing being present within China-- inclusive of small and big companies such as Nike, Apple and Tesla too. This may also indicate slower growth in China too.

After the pandemic, the world has already faced a huge low and hardships within supply chains. These factors suggest that companies should begin diversifying their supply chains, perhaps bring them more local/domestic, as to avoid such problems. It will be interesting to see what happens from here.

Consumers Ramped Up Spending in August as Inflation Remained Elevated

 

In August, personal spending increased by 0.8 %. Personal income increased by 0.2% which reflects the increase in wages and federal government’s distribution. However, some states ended their pandemic related supplemental payments. During the peak of covid, consumers spent less on airline tickets, hotels and dining outside, and now they have accumulated substantial savings and furthermore, are benefitting from increase wages and abundance in job openings. Chief Economist at RSM US LLP, Joe Brusuelas, thinks that the demand for the next 2 to 3 years should remain strong as the growth continues well above the long-term trend. He also thinks that due to the excessive demand supply shortages may create some hurdles. Such as, global chip shortage has adversely affected the auto industry as well as the tech industry. To be more specific, Ford paused their production due to chip shortage, as well as Apple Inc. as they are overdue for a new MacBook Pro, but due to supply chain issues they have pushed back the launch. The biggest source of U.S. economic growth and the main tool for rapid recovery from the pandemic is consumer spending, and the economy expanded from 6.3 % in the first quarter to 6.7% in the second quarter. Consumers avoided purchases of vehicles which may reflect high prices and low inventories. However, according to University of Michigan’s survey, the consumer sentiment index increased from 70.3 in August to 72.8 in September.  Analysts expect that consumers are to spend more during this holiday shopping season than last year, since consumers were not able to shop during the pandemic. In addition, consumers are also booking in advance for the upcoming months.

 

Thus, if the consumer demand exceeds the supply of the good and services, an example of this would be chip shortages, the price would increase, and if this goes on inflation would increase.

 

 

Cambon, S. C. (2021, October 1). Consumers ramped up spending in August as inflation remained elevated. The Wall Street Journal. Retrieved October 1, 2021, from https://www.wsj.com/articles/consumer-spending-personal-income-inflation-august-2021-11633027180?mod=hp_lead_pos4.

China's tensions with Taiwan

China has again said it will reunite Taiwan with the mainland. Tensions ramp up further between Beijing and the government of Taiwan. President Xi Jinping told a communist party gathering that such a move would happen peacefully and said Chani could never tolerate any form of separatism. Taiwan has responded by saying, “it is a sovereign nation and its people will decide their future”. This speech was made just before the national day of Taiwan. Compared to the speech, which was made in July, it had a soft tone. Xi Jinping said that he wants to see a peaceful reunification. People from Taiwan have been witnessing what’s been happening in Hong Kong for the past few years. The suppression of political freedom and freedom of speech. Nearly 90% of Taiwanese people reject the one country two system framework. Beijing sees Taiwan as a province that has to be handed back to the motherland. In my opinion, the Chinese president wants to become a national hero of the country in rejuvenating the Chinese nation. He is still to compete in his second term next year. Thus this achievement would give him a big advantage in upcoming elections.  

Coronavirus in DR Congo: How funds went missing

 https://www.bbc.com/news/world-africa-58834108 

There has been poor management of the covid funding that the IMF gave Congo last year. Only $6m of the $363m Covid funding provided by the IMF has been publicly accounted for.

 DR Congo is one of the 50 countries across the globe that has failed to fully vaccinate 10% of their population [ this is a target that was set up by the World Health Organization (WHO)].

Some estimates suggest that 0.1% of the country's 89 million people have been vaccinated.  According to WHO, more than 57,000 people are known to have contracted the virus and 1,086 of them have died. 

Some of the challenges include the country's heavy reliance on the Covax Scheme*, an underfunded health system that is already wrecked by concurrent outbreaks of measles, Ebola, and cholera, mistrust in authorities, and conflict between the government and armed groups in the eastern region of the country. 

The country is plagued by corruption and this is not the first time that funds have disappeared.

 At least $240,000 went missing in the purchase of ambulances and vehicles for the health ministry's covid response.

 Two former health ministers have been arrested over corruption allegations in recent years - one is currently serving a 5-year jail sentence, and the other is free on bail and denies the allegations. 

Researchers say that the health ministry has used emergency situations and international funding "to pay bonuses to staff who are not normally well paid". The report says that the health ministry declined to reveal how many staff it paid or how much was paid in bonuses. 

*Covax scheme was created last year to ensure that covid vaccines are made available globally, with rich countries subsidizing costs for poorer nations. The scheme hopes to distribute enough vaccines to protect at least 20% of the population in low-medium income countries - starting with healthcare workers and the most vulnerable groups. (https://www.bbc.com/news/world-55795297)

Corruption in Moldova

     In 2014 it was discovered that approximately $1 billion was stolen from the Moldovan government in a scheme to clean Russian money. The huge amount lost had significant impacts on Moldova's economy. For context, their GDP at the time was just over $8 billion so when news of the scandal broke there was public outrage and nationwide protests. Foreign aid came to a halt and inflation spiked to nearly %10 in 2015.  Ever since the countries leaders have been focused on rooting out corruption. 

    They are not currently apart of the EU but are being considered. They neighbor EU members Romania and Bulgaria who have the most similar cultures too Moldova. However, Russia still has strong influence in Moldova and any current corruption is likely tied to them. In 1991 Moldova left the Soviet Union and has been slowly integrating with central and western Europe since. Becoming an EU member would mark in important milestone in this integration and be a huge benefit to the Moldovan people and economy.

What is the UK's inflation rate and why is the cost of living going up?

https://www.bbc.com/news/business-12196322 

Energy bills, grocery bills, and other household costs are increasing in the UK. Prices rose by an average of 3.2% over the last year and the Bank of England suspects that it could increase to above 4% by December and stay that high into the spring. Why is this happening? The demand for oil and gas has increased worldwide which has pushed the price up. This impacts household heating bills and businesses that run machinery, heat offices, and transport goods. The increases in costs for businesses are often then transferred over to consumers when they buy the products. 

There are supply shortages all across the world which are impacting countries everywhere. Bottlenecks have been occurring in building materials and computer chips which is increasing prices. The government is unwinding the support it gave businesses during the pandemic which has resulted in an increase in prices for those business's goods. Finally, businesses are struggling to find workers as a result of the pandemic and Brexit. This also makes it more difficult for businesses to meet demand and pushes costs up.

How will this change in the UK economy impact the United States? It likely will decrease the number of tourists going to the UK, thus decreasing demand which may allow for stabilization between demand and supply.

One TR Coin

 One TR Coin 

This article on the Economist talks about the issue of the debt ceiling which has been a big issue in the news. This article then talks about this very odd movement to combat the debt ceiling. This involves a loophole in legislation where we could apparently mint a coin with a value of a trillion dollars and it has to be made out of platinum. The idea is that we mint the coin and "pay it" to the federal reserve and this would allow us too still pay bills while the politicians argue over the debt ceiling still. Even more surprising to me at least this idea has support from Nobel Prize award winning economist Paul Krugman. 

While there is some mild support for this coin there are other obvious legal concerns. It would also undermine the Fed and create a situation where the Fed becomes more reliant financially on congress which I think is a terrible thing. The question however is would this be better then the government defaulting on its debt? I think while the effects of this coin wouldn't be great, it would be better then any outcome where the government defaults.  The effects of that would be felt throughout the world and would be devastating. So I think this coin should only be minted as an absolute last minute necessity to avoid that.

Social Media Monopolies

On Monday, October 4th, 2021, there was a social media outage. Facebook Inc's services went off for about 6 hours. This outage was one of the longest ever recorded in history. Facebook received 10.6 million, worldwide, complaints due to it. Once the problem was dealt with, all the apps went back to working faster than ever. Mark Zuckerberg commented "I know how much you rely on our services to stay connected with the people you care about." and then apologized for the outage. Mark Zuckerberg lost $6 billion due to the outage, depriving him of the 'Richest man in the world" title. Facebook Inc shares also went down by 4.9% on the same day as the outage.  

People and businesses worldwide were affected by this service. Facebook apologized for the disconnect and said it was due to a network issue. Facebook's direct quote was "faulty configuration change". This six-hour outage affected small businesses, bloggers, students, e-commerce, and essential communication. Some small businesses reported a loss in revenue as they struggled to get in touch with clients, while others have started to rethink their marketing strategies. 

Facebook Inc's services went down for all the apps which include WhatsApp, Facebook, Facebook Messenger, and Instagram. Facebook is slowly growing and becoming a social media monopoly. What we witnessed on Monday was one of the biggest consequences of monopolies. It was not just one social media app that went down. Snapchat and Twitter were the only other commonly used app that people were able to communicate on. This is why monopolies are troublesome for societies. Do you think that Facebook is growing into a social media monopoly? What other repercussions can occur due to this?  

Source: https://www.wsj.com/articles/facebook-instagram-whatsapp-experiencing-outage-11633363936

US Senators Agree to Extend Debt Ceiling to Avoid Default

 US Senators Agree to Extend Debt Ceiling to Avoid Default

https://www.bbc.com/news/world-us-canada-58835517 

The United States currently has a large deficit and in order to combat it has set a debt ceiling. Recently, the government has been threatening to default, which would cause the global financial system to spiral and put the US into another recession. The debt ceiling limits the amount of money that the government can borrow to bridge the gap between the amount of taxes it collects and the amount it needs for government programs. 

Recently, the Republicans are the ones calling for a hard debt ceiling in order to curb the Democratic agenda. However, when the Republicans were in charge of the government they constantly increased the deficit, putting the US into more debt. Despite their cries against it, they realized that in order to avoid economic catastrophe, they needed to extend the debt ceiling. They did so with less than two weeks to default. 

This instance does a great job of illustrating the polarization of American political parties. Each wants to spend money to benefit their party objectives, but will throw a fit when the other party tries to do so. I believe that US politicians need to look beyond party lines and do what is best for the greater good of the American people.