Week of January 23rd, 2023

Econ Extra Credit newsletter #135

New data shows signs that homebuyers are feeling less discouraged.

Consumers are saving more and spending less. Today, a look at what that means. Plus, surging retail returns give a boost to liquidators.

The savings rate went up half a percentage point in December, but it’s still not back to pre-pandemic levels.

Aiming to keep consumers safe, the Food and Drug Administration has rules for the information placed on packaging.

There are public holders and government agencies, which all comes into play in the congressional debt ceiling battle.

Until recently, consumers had been spending less on goods and more on services. That’s changing. Here’s what it could mean for inflation.

Everyone from publicly traded companies to individuals working out of their garages are buying and reselling liquidated items.

We explain why rising debt payments owed by low-income countries are a U.S.-China issue.

The Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures price index, out this morning indicates that inflation tempered last month. FHN Financial Chief Economist Christopher Low helps us look behind the numbers. And, China’s holdings of developing countries’ debt is beginning to play into the wider U.S.-China relationship, says David Dollar of the Brookings Institution. 

Across the board, we’re seeing less big scientific breakthroughs. So what’s going on?

A new paper finds that the rate of scientific innovation has been on a steady decline, despite living in the most technologically advanced age in the history of humanity. According to co-author Russell Funk, a professor at the University of Minnesota, helps us understand what’s going on. This round of corporate layoffs could portend a larger slowdown in the labor market, which has remained hot. And, yesterday’s GDP numbers may be good on the surface, but there are some less-than-ideal signs deeper in the report. 

From the BBC World Service: In a special programme from Dresden in east Germany, we hear from one European green tech company – Solarwatt – who are calling for the EU to give the industry similar tax breaks and financial incentives to those introduced by President Biden in the U.S. We also talk to the semi-conductor manufacturer Global Foundries about how to keep the supply chain secure, amid concerns about China’s data collection. 

SCOTUS may hear two cases on social media regulation and free speech as early as next year.

Plus, it’s almost burrito season!

We’re diving into the good and bad news of today’s GDP report. Plus, canceled housing contracts help sink new home sales.

They’re down about 26% compared to a year ago.

“We’ve had a huge increase in co-working memberships and demand for that, as well as meeting room rentals,” said Audrey Hoyt, co-owner of The Pioneer Collective.

A good portion never make it back to store shelves.

The economy grew, but not as much as expected. Some parts of the economy are slowing, but not as much as expected.

Housing is one of the biggest parts of inflation, but current metrics lag by about a year. The new tenant repeat rent index aims to change that.

As mortgage rates have fallen from their peak above 7% late last year, the National Association of Home Builders confidence index has turned positive after 12 months of declines.

Today’s GDP numbers likely lifted many an economist’s spirits — the economy grew at 2.9 percent in the fourth quarter last year, a solid showing despite inflation pressures and the threat of recession. KPMG Chief Economist Diane Swonk helps us dissect what’s in today’s report. Boeing is being sued for fraud over faults in its 737 MAX plane that caused two fatal crashes. And, a look at the effects of the increasing amount of private money flowing into drug rehabilitation programs. 

Dina Temple-Raston, host of the Click Here podcast, walks us through the polarizing school safety proposal.

The maker of the Taser, the weapon meant to be a non-lethal option for law enforcement, is toying with the idea of selling drones with Tasers attached. Among the potential clients: schools. We talked to Dina Temple-Raston, host of the “Click Here” podcast, about her reporting on the story. Southwest is facing a probe on whether the airline booked more flights than it could cancel at the time of its mass-cancellation debacle. And, there are storm clouds hanging over the housing market, but there are some signs they may be lifting a bit. 

From the BBC World Service: A deal has finally been done to send American and German tanks to Ukraine. President Volodymyr Zelensky says they need to be delivered quickly, but just how realistic is that – and how costly? We hear from the former commander of the British Army’s tank regiment. Millions of Pakistanis were left without power this week after a major failure of the country’s energy grid. The system is back up and running but businesses tell us they fear more cuts, and the disruption they bring. And, how the Dutch have made more space for cyclists by building an underwater bike park.

Small third-party sellers hope to cash in on the online giant’s “trickle-down monopoly,” says Moira Weigel of Northeastern University.

The national median rent has shot up more than 20% since 2020. So how do landlords set their prices? Plus, private equity comes for addiction treatment.

Long story short, it would be very bad.

Facing a prolonged megadrought, Western states must prep for huge water-use cuts.

“We think about our marketing team more like ‘Saturday Night Live,’” says Mike Cessario, the beverage startup’s co-founder and CEO.

The national median rent has risen over 20% since 2020, according to Apartment List. And the use of pricing algorithms used by some of the nation’s biggest corporate landlords might be playing a role.

The personal consumption expenditures price index, better known as the PCE, tracks what we paid for goods and services in the previous month.

When a new operator took over an addiction treatment center in Nashville, former employees say they saw cutbacks.

The corporate earnings season has thus far been a downer. Yesterday, Microsoft announced its profits fell 12 percent last quarter, which comes after major banks reported similarly poor performances. We check in with Susan Schmidt, head of the State of Wisconsin Investment Board, about what to expect as companies continue to report earnings. Copper prices are surging worldwide, partly due to China’s re-emergence after lifting its Covid lockdown restrictions. And, a report from the BBC’s Sally Nabil from Egypt about the country’s worsening economic situation. 

University of Michigan’s Erik Gordon says Musk may have offered us salient advice: don’t take what he says as gospel.

The Conference Board’s closely-watched index has fallen consistently since February 2022, indicating higher risk of recession.

Tesla and Twitter CEO Elon Musk is once again defending himself against a lawsuit. This time, plaintiffs are suing Musk over a 2018 tweet saying he was considering taking Tesla private which caused investors to lose money. Erik Gordon, a professor at the University of Michigan, helps us break down the suit. And, the Department of Justice is suing Google’s parent company, Alphabet, over allegations that the company has monopolized the digital advertising business.

From the BBC World Service: We hear from the Amazon workers in the UK who are staging their first strike in a dispute over pay and conditions. Plus, a German union says Ford is planning thousands of job cuts in Europe. What’s driving the group’s future strategy? And, Egypt is struggling with rising prices, a weak currency and a cash-strapped government. What impact is that having on day-to-day lives?

The technology would need to remove millions of tons of CO2 a year to make a difference, says Aniruddh Mohan of Princeton University.

It’s not just about gas stoves.

Monthly data from the Federal Reserve shows a slowdown in shipments, new orders and employment in the sector.

The metal is crucial renewable energy technology and the transition away from fossil fuels.

We’ll look at why production and hiring in the sector lost steam toward the end of last year. Plus, Howard University receives a $90 million military research contract.

HBCUs like Howard often lost out on research grants due to systematic underfunding. Now there’s a push to fund more research at HBCUs.

In Southern California and South Carolina, businesses are looking for loans. But in the Midwest, owners are hesitant to borrow.

“This battle that the big streamers are undertaking … it could turn into a bloody battle, and there could be victims of it,” said NYU professor Luis Cabral.

The amount of workers mostly working at home has tripled over the past several years, blurring the line of what constitutes a “workplace.”

The CEO of Live Nation, a live entertainment company bought by Ticketmaster over a decade ago, is facing a grilling on Capitol Hill over last year’s online sales debacle Taylor Swift concert tickets. This, as it reportedly faces a probe by the Department of Justice. There’s data today that orders from factories are down, which comes amid a spate of bad news for the sector. And, as part of our Econ Extra Credit series, we delve into how social media and algorithms promote a certain body image…and how that can translate into harm for some people. 

Expect questions about Taylor Swift.

A conversation about how extreme fitness goals can affect our mental health.

Amazon announced it will launch a new subscription drug service dubbed Amazon RxPass to complement its existing pharmaceutical products. The service, which will offer generic medications for $5 a month with Prime membership, will be the latest attempt by the online retail behemoth to make waves in the healthcare space. And, as part of our Econ Extra Credit series, we delve into the extreme fitness industry with Stephen Mayville, a Reno-based psychologist who studies muscle dysmorphia and steroid misuse. 

From the BBC World Service: Twitter stands accused of skipping rent to King Charles III. The Crown Estate in the U.K., which manages property belonging to the reigning monarch, has filed court proceedings against the firm for arrears on its headquarters in London’s famous Piccadilly Circus. Plus, questions are being raised over Ticketmaster and whether it has a monopoly. We look at what U.S. regulators could maybe learn from Europe. And we hear more on those plans for a common currency in South America.

Hundreds of thousands have been affected in the current layoff cycle. Headcounts rose 30% to 50%, but so far, the downsizing is in the single digits, Anup Srivastava says. “I think the correction is not complete yet.”

Plus, Earth’s core changes directions?

Hint: It has to do with the tight job market and old unemployment systems. Plus, an MBA class tackles uncomfortable workplace conversations.

The eurozone, the world’s largest currency bloc, is both a blueprint and cautionary tale for the two countries.

Role-playing is key in training to fix interpersonal problems on the job. “It’s not about being right or wrong, it’s being effective,” a facilitator says.

Seven banks, including Wells Fargo and Capital One, are launching a competitor to services like Apple Pay and PayPal later this year.

A majority still think the country is headed for a recession. But the majority’s shrinking.

The job market is still tight, so many who’ve lost jobs rejoin the workforce fast. Others aren’t eager to deal with the unemployment insurance system.

With the latest inflation report indicating a moderation in rising prices, some CEOs and economists are changing their tune on forecasts of a potential recession this year. Julia Coronado explains what’s driving optimism the near-term economic future may not be as bad as originally predicted. As Lunar New Year festivities kick off worldwide, China is having to balance celebrating one of the country’s most important holidays with a severe Covid situation. And, Chris Farrell talks about the potential benefits of the bigger Social Security checks that went out this month. 

Some officials want a 0.75% rate hike at the next meeting. Others think a 0.5% increase is enough.

This month Social Security checks went up by an 8.7% cost of living increase. But what happens to social security in the future?

The holiday season may be over, but another “season” is now upon us — the one to pay your taxes. The IRS’s window to submit tax returns is open from now until around April 15 for most people, and the agency is promising better service than in recent years when it experienced crippling delays. Renters nowadays are having to spend higher and higher proportions of their income on housing, which takes away from spending in other areas. And, some of the Federal Reserve’s highest-profile figures are publicly disagreeing about how much to hike interest rates in the near future. 

From the BBC World Service: We examine why Brazil and Argentina are exploring a common currency. Both countries have been wracked by economic demons – with Argentina in particular suffering one of the highest inflation rates in world. Plus, why Pakistan is facing power cuts. And we meet the Hongkongers celebrating Lunar New Year in the U.K.

Water officials in California’s Central Valley plan to cover some of their canals with solar panels, hoping the devices will conserve water by preventing evaporation.