Week of January 9th, 2023

Econ Extra Credit newsletter #133

Google, for instance, has more than $116 billion in the bank, but isn’t rushing to pay off its borrowings.

It knew all along.

Many of the videos show creators reacting to a filter that generates a random answer to questions like “What Disney princess are you?”

In the face of high inflation, rising interest rates and a slowing global economy, banks are setting aside reserves — just in case.

The Securities and Exchange Commission is suing Gemini Trust Company and Genesis Global Capital for selling allegedly unregistered securities.

The SEC’s crypto exchange lawsuit is the latest effort to regulate a largely unregulated industry. Then: the state of crypto mining.

The fall in the price of bitcoin combined with a surge in energy prices have made this a tough year for businesses that mine crypto.

Yesterday, the Department of Justice reached a settlement with the California-based City National Bank over accusations of mortgage “redlining” in Latino and Black neighborhoods in Los Angeles County. The settlement is the largest in U.S. history, clocking in at $31 million. The storm in California is helping the drought situation, but there’s now talk of improving the state’s stormwater storage system. And, the BBC’s Ben Chu reports on the dire economic and political situation in Sri Lanka. 

The infrastructure to capture California stormwater could be decades away, officials say.

The deadline is this week to file challenges to FCC maps that will be used to dole out $42.5 billion in funding.

A new study finds that Exxon, the multinational oil giant, conducted in-house research as early as the 1970s that accurately predicted climate change, only to publicly downplay the issue. This, as some states sue the company and other fossil fuel producers over allegedly misleading the public for decades. China’s government is looking to regulate some of its most successful tech firms by buying so-called “golden shares,” which allow shareholders more control over company decisions. And, states and communities are scrambling to meet the federal government’s deadline on new broadband internet funding. 

From the BBC World Service: China is moving to take “golden shares” in local units of some of its biggest tech firms including Alibaba and Tencent. It comes as Beijing continues to seek greater control of companies that have boomed in recent years, and crucially the content they supply to millions of users. Plus, the Swedish mining company LKAB says it has found Europe’s largest known deposit of rare earth minerals in northern Lapland. But mining can be controversial in the region. We hear from a town in the Arctic north which is deeply divided over a British company’s plans for a new iron ore mine.

Researchers could face obstacles trying to study the social media platform, and officials might be prevented from communicating with its millions of users.

Plus, an episode made for movie buffs.

We take stock of December’s consumer price index. Plus, how Black farmers are planting seeds for the next generation of farmers of color.

Ashanti Williams and Arian Rivera of the Black Yard Farm Collective talk about moving their farm to a new location and working with kids.

After raising prices last fall, Kristin Thalheimer Bingham, co-owner of Dean’s Sweets, describes her expenses and product pricing.

Today’s inflation report showed that both the rent and owner-equivalent rent indexes rose 0.8% in December.

Per the consumer price index, bread and cookies cost more dough because their ingredients do too. Yes, the government tracks cookies.

Prices were up 6.5% over the past year, well above the Fed’s targets but the smallest increase since October 2021. It’s a sign that inflation is easing.

Chinese officials have lifted the harshest restrictions of the zero-COVID policy, but consumers are still cautious amid surging infections.

Inflation tapered off a bit at the end of December, according to the latest data from the Consumer Price Index released this morning. That was in line with predictions and spells good news for many economists, including policymakers at the Federal Reserve, but what was really behind the slowdown? Susan Schmidt helps break down this morning’s numbers. The World Bank released a report this week predicting a sharp global economic downturn in the next year, which would hit developing nations particularly hard. And, for our Econ Extra Credit series, we delve into the seminal “Pumping Iron” bodybuilding documentary with journalist Oliver Lee Bateman. 

Investors originally thought the documentary was boring, so the filmmakers added drama and conflict.

The projected slump would put the global economy on a razor’s edge, World Bank researchers say.

The U.S. labor market has been stalwart in adding strong numbers of jobs seemingly month after month for a while. One thing that’s driving those numbers, despite the Federal Reserve’s best efforts to tame inflation, is entrepreneurship. KPMG Chief Economist Diane Swonk tells us how dynamism in the economy among small businesses and entrepreneurs is adding more jobs. The owners of Subway, the widespread fast-food chain, are reportedly seeking to sell the company in a deal that could fetch billions of dollars. And, state government budgets are being helped by inflation. 

From the BBC World Service: The International Monetary Fund says it’s increasingly concerned that many low-income countries are at risk of default, caught out by the rise in interest rates. We take a look at what has happened in two countries that have already defaulted – Lebanon and Sri Lanka. Plus, in France large-scale strikes by medical staff including family doctors have become a regular feature since Christmas. Funding reforms are now being introduced to break what President Macron called a “sense of endless crisis”.

Web users in that state now have to upload their digital ID to prove they’re 18 or older to access a site that contains at least 33% adult content.

Plus, what you need to know about crypto and your taxes.

Threats like climate change and the war in Ukraine will continue to challenge the world economy. Plus, small businesses get recession-ready.

The World Economic Forum’s new report identifies a long list of interconnected economic threats that could feed off of and worsen each other. But there is a caveat.

Mall manager Alana Ferko is coming off a strong holiday shopping season coupled with new business from a Hollywood production.

Small business owners continue to face a lot of uncertainty over COVID, rising interest rates, and the possibility of a recession. So many are taking steps to prepare for a potential downturn in 2023.

Fewer tech millionaires were minted in 2022, hurting California’s bottom line, while in Texas, the oil and gas industry boomed.

With nurses facing burnout like never before, some hospitals are exploring remote work options that could keep experienced RNs on the job longer.

It used to be the top mortgage lender in the country.

The Biden administration unveiled this week a new proposal to extend relief to lower and middle-income student loan borrowers. This, as the administration’s original plan to cancel a certain amount of student debt remains in judicial limbo. Plus, Amazon is planning to launch its new “Buy with Prime” service, which would be implemented on e-commerce websites as a quicker payment option. And, Russian competitive gamers are fleeing the country amid the War in Ukraine and finding new prospects in Serbia, the BBC’s Guy De Launey reports. 

The Port of Los Angeles, which frequently ranks as the busiest in the U.S. alongside its sister port in Long Beach, has lost traffic recently due to concerns among shippers about ongoing labor negotiations between dockworkers and their employers. We talk to the Port of LA’s Executive Director about how they’ve been affected by the labor situation. Plus, the South Korean company Hanwah Q CELLS announced it will invest around $2.5 billion into U.S. solar manufacturing, starting with a manufacturing plant in Georgia. And, Japanese clothing giant Uniqlo said it would raise wages in Japan by up to 40 percent, reports the BBC’s Mariko Oi. 

From the BBC World Service: The global economy is “perilously close” to a recession, warns from the World Bank. Ayhan Kose, the bank’s acting vice president for Equitable Growth, Finance, and Institutions, tells us how earnings growth in almost every part of the world is likely to be slower than it was during the decade before Covid-19. Plus, wage rises are on the way for some workers in Japan after the clothing retailer Uniqlo promised a 40% lift. And, we find out how Serbia’s gaming industry is benefiting from Russian exiles.

Executive Director Gene Seroka says traffic has slowed in part because of labor talks between dockworkers and their employers.

A beta version of a Roomba snapped a photo of a person on a toilet and sent it to the cloud. That and other leaked photos shed light on the data supply chain that powers smart home automation.

OffBeat owner Phillip Rollins says January and summer are his “most hated months” because business is so slow.

Plus, some New Year’s resolution-keeping advice.

Russia’s primary export grade of crude oil is trading at less than half the global benchmark price, thanks to a price cap and European embargo. Plus, the impact of Disney’s in-office plans.

People who borrowed less than $12,000 for undergrad schooling could have debt forgiven after making regular payments for a decade.

In a note to employees, CEO Bob Iger said, “in a creative business like ours, nothing can replace the the ability to connect, observe and create with peers.”

Whether they $60 a barrel price cap will continue to work in the long run is an open question though.

People who struggle to afford food have 20% higher health care costs than those who don’t, partly the result of a cheaper, less healthy diet, a study finds.

The deluge in California is set to continue, with forecasts predicting further extreme weather in the coming days. The state has seen at least 14 deaths and a bevy of property damage resulting from flooding and mudslides. We look at the weather situation in the Golden State. Plus, Fed Chair Jerome Powell made comments today in Sweden suggesting further rate hikes to fight inflation, and that the Fed would not prioritize fighting climate change. Also, the House of Representatives voted today to strip funding from the IRS in a largely-symbolic measure. And, the BBC’s Will Bain takes a look at the economics of China’s reopening. 

Tens of thousands of people remain without power as flooding and midslides prompt evacuations

Journalist Rob Walker talks about the potential merits of keeping some of that old clutter around the house.

A new report out today details the US climate picture from 2022. On the good side, renewable energy output surpassed coal for the first time — on the bad side, carbon emissions ticked up slightly, just over 1 percent from the previous year.  We break down the details. And, a chat with journalist Rob Walker about the merits of keeping all that old clutter around the house. 

From the BBC World Service: At what age should you be able to retire? French President Emmanuel Macron is set for another showdown with trade unions as he tries to reform the state pension system. Plus, how smog is causing parts of India to grind to a halt. And, we hear from Seoul in South Korea where there are tight anti-Covid restrictions on travellers from China.

At CES 2023, automakers and tech companies demonstrated their efforts to keep pace with electric vehicle demand and help consumers make the most of the time devoted to charging their cars.

It’s already newsworthy.

Some big banks will report earnings this week, and economists will be watching. Plus, the design trend behind Kia’s confusing new logo.

The tractor maker will allow farmers access to manuals and tools they need to fix increasingly high-tech agricultural machinery.

On Friday, Bank of America, Citigroup, Wells Fargo and JPMorgan Chase will post earning reports. Parts of their business struggled in the fourth quarter.

… and now plans to move back to Arizona.

A logo expert weighs in on “KN car” confusion and the wider design trend Kia’s logo exemplifies.

The Federal Trade Commission’s proposed ban on noncompete agreements would affect many workers in sectors like fast food and retail, where these agreements can be a cheap way of retaining employees.

The business of elevating homes is growing as sea-level rise and wetter storms increase flood risk in many parts of the country.

Over half a million workers were hired in the health sector last year, bringing the total number up near pre-pandemic levels. However, more personnel are needed as the population ages and backlogs remain from the peak of the pandemic. Also, a preview of tomorrow’s summit between President Biden and the leaders of Canada and Mexico. Then, economist Julia Coronado takes us through what’s been going on in Brazil’s economy. And, the view from China as it reopens its borders, including the one between Hong Kong and the mainland. 

The recent jobs report shows a marked rise in the number of healthcare jobs added to the economy.

Immigration has been found to have a litany of benefits for the host country, but one that’s often underappreciated is the boost in innovation brought by new arrivals. We chat with Marketplace’s Chris Farrell about a study that goes into the details. Also, a look at Brazil’s economy amid a tenuous political situation. And, Chinese captain of industry Jack Ma is giving up control of Alibaba’s financial affiliate Ant Group. 

Chris Farrell says that immigrants can benefit the US economy in hard-to-quantify ways, such as innovation.

From the BBC World Service: After more than 1,000 days, the world’s most populous nation and second-largest economy is open to the world again. On Sunday, China threw open its borders to foreign business travelers, students and tourists in a move seen as one of the last significant rollbacks of the country’s strict zero-COVID policies. We bring you the reaction from within country, the cautious welcome from nations around the world and we also explore what the economic prospects are for China.

Major companies like General Mills and General Motors have suspended advertising on the platform — but many companies are sticking around.