Week of February 13th, 2023

Econ Extra Credit newsletter #138

And there’s a lot at risk.

People are worried about inflation and a recession, but retail sales are strong. What gives? Plus, checking in on the FCC’s broadband map.

The federal infrastructure law provided $40 billion to bring internet access to every American. But some communities still have none.

Data released this week shows there’s a disconnect between what people say and what they do.

Most home improvement projects don’t break even, a new study says. But the value of an upgrade may be more than financial.

Harvard University alone has a $51 billion endowment.

“It’s fun but it’s difficult to know how much to make when everyone comes in on the same day,” said Kristin Thalheimer Bingham, co-owner of Dean’s Sweets in Portland, Maine.

A new report from the Federal Reserve Bank of New York says credit card debt reached all-time highs at the end of 2022, around $986 billion in total. A look into why that matters, and what it says about the economy. As Turkey recovers from a devastating set of earthquakes that rocked the country’s southern region this month, questions are arising about a so-called “earthquake tax” that’s been in place since 2004. And, while revenue from online ads shrinks for giants like Meta and Alphabet, small businesses are keeping up their advertising campaigns.  

How a department store more than a century old has survived two pandemics, the Great Depression, and multiple recessions.

Some small firms can’t afford not to advertise.

There have been some contradictory signs coming out of the job market in the past month — some big tech companies are announcing layoffs, but other places say they’re hiring lots of workers. We look into what to make of the wider labor market picture. It’s time for the renewal of the Farm Bill, the massive agricultural spending law, and Congressional Republicans are aiming to trim SNAP benefits, formerly known as food stamps. And, we talked to the head of a Pennsylvania department store that’s been open for 118 years. 

From the BBC World Service: After the United Nations launched a $1bn appeal to help those affected by the earthquakes in Turkey and Syria we speak to our reporter to find how much it will cost to rebuild the affected areas. We hear about a major Chinese businessman who has been reported missing, and we ask Manchester United fans who they want to buy their club with a deadline looming.

Software company RealPage and several property management companies have been accused of artificially inflating rent prices. Heather Vogell of ProPublica delved into the issue.

Lawsuits have been brought against companies accused of age discrimination.

Wholesale prices rose 0.7% in January, showing that inflation is sticking around.

House Speaker Kevin McCarthy has compared the federal budget to a household’s credit limit, but economists don’t buy that analogy. We’ll unpack the differences.

Homebuying can be a real dilemma for seniors.

Congress will be debating food aid programs covered by the bill, just as pandemic-era funding increases for food aid expire while grocery costs remain high.

Alexandra Light is looking to transition from a full-time dancer to a full-time choreographer.

Several factors have pushed up the cost of ads during the pandemic. Even so, many small businesses don’t have much of a choice but to keep advertising.

The hospitality industry, for example, is on a hiring binge.

It’s like comparing apples and oranges, professor Golnaz Motie says, because the government has many more tools and huge immediate obligations.

Theatres were one set of businesses that were hit hardest by pandemic shutdowns, which forced many workers to be cut or furloughed. We check in with the Minneapolis-based Children’s Theatre Company to see how things are going. Today’s Producer Price Index data confirms what other recent inflation data is showing: rising prices aren’t slowing down nearly fast enough. And, a new report from the Congressional Budget Office says that the U.S. could default on its debt as soon as July should Congress fail to agree to raise the debt limit. 

How a children’s theater company is ensuring the show will go on after pandemic.

Standardization of electric vehicle chargers across the country mean they’ll be able to serve all models of cars.

China announced this morning that defense giant Lockheed Martin and a unit of Raytheon would go on a blacklist, which follows similar American moves last week. It’s the latest incident in the Chinese balloon saga that has seen the U.S.-China relationship sour further. The White House’s new standards for electric vehicle chargers could bring about new business opportunities. And, we check in with an egg farmer about how the industry is doing amid its recovery from a severe avian flu outbreak.

From the BBC World Service: Nigeria allows the use of old notes to ease new problems – for now. A plan to replace notes has been beset by problems with a scarcity of cash leading to riots in some cities. Our reporter explains the backdrop and we hear from those affected in Lagos. Plus, one of the world’s biggest chip companies says its intellectual property has been stolen. And, why New Zealand is struggling with a shortage of eggs.

Sam Krouse, co-CEO of MPS Egg Farms, says wholesale prices are down as farms recover from avian flu and consumer demand eases.

Cryptocurrency has disproportionately attracted Black investors.

Some people are selling expensive homes and using the cash proceeds to buy more affordable ones. How does that hurt first-time buyers?

America has always been obsessed with wealth, but Hollywood’s cynicism is growing. Why? Plus, when rug-cleaning videos mean extra revenue.

Federal subsidies, part of the White House’s electric vehicle push, aren’t the only way Tesla stands to make money on the expansion.

“It has become so easy,” said Samad Abdulai, owner of C3 Laundry Services.

We spent despite being whipsawed by economic news. Raises and slowing inflation helped.

Many older people have lower incomes and less time to pay off loans than younger counterparts, making lenders hesitant.

What happens to all the unused confetti?

Society’s evolving views of the wealthy have brought dark humor to pop culture.

The latest number on consumer spending are out this morning, and they indicate that people are continuing to buy stuff despite economic anxiety and inflation. Susan Schmidt walks us through what that could mean for rising prices. Meanwhile, at the Fed, central bankers are signaling that further interest rate hikes are needed after yesterday’s less-than-great inflation data. The EU is looking into using seized Russian assets to fund the rebuilding of Ukraine. And, the economic point of view from Rockwell Automation, a company that specializes in being a sort of “manufacturer for manufacturers.”

Blake Moret, chairman and CEO of Rockwell Automation, says that the manufacturing sector remains strong despite a recent slowdown.

There’s a new race to the moon underway between private firms offering cargo-carrying services. This is just the beginning of a new age of space commercialization, says The Economist’s Tom Standage. The Securities and Exchange Commission is issuing new rules that tighten the window companies have to execute stock trades, which comes in response to the 2021 GameStop trading fiasco. And, natural gas firms, flush with profits, cut back hedging last year. 

And this it’s private companies that are racing to get to the moon first.

From the BBC World Service: The European Union has formed a working group to look at the idea of using seized Russian assets – from central bank reserves to superyachts – to help rebuild Ukraine. Plus, the war in Ukraine contributed to soaring energy prices in Europe. Now a mechanism to limit natural gas prices on the continent has came into effect. We look at how it works and the impact it could have. And finally, why the British Royal Family has chosen not to include an infamous diamond in a coronation crown.

Firms pledged to improve DEI after George Floyd’s murder. Cutting those roles now sends a “chilling” message, a strategist says.

What industrial policy means for the U.S. economy.

Want to balance the federal budget? A video game lets you do it. Elizabeth Newbury of the Federal Games Guild and Wilson Center explains.

It takes a versatile person to go from setting interest rates to setting an economic agenda, one expert says.

The entrepreneur behind a Florida cat cafe hopes 2023 brings reduced costs and many more adoptions.

The Bureau of Labor Statistics changed how it measures consumer prices. Why? Plus, a closer look at the role of hedging in the energy industry.

The Bureau of Labor Statistics has updated its CPI formula to make it better reflect changes in consumer spending.

Locking in future prices can be expensive — and risky. But it can protect producers and consumers from price spikes.

Russia’s invasion has displaced millions of people. Some are rebuilding their lives and businesses in other countries.

Today’s inflation report showed a slight tapering in rising prices — it was 6.4% compared to 6.5% in December. That’s a marginal improvement, but it’s still much too high for comfort for the Federal Reserve and market watchers who may have been expecting a sharper decrease. The Fed’s Vice Chair, Lael Brainard, has been tapped by President Biden to lead the U.S. Council of Economic Advisers. Some states are moving to expand Medicaid to food-related health services, which would represent a shift from previous programs. And, why colleges may soon begin implementing more programs designed for midcareer professionals. 

A handful of states received federal waivers allowing use of Medicaid funding for medically tailored meals or nutrition counseling.

Chris Farrell discusses college programs that may portend a return to class for older workers, making the schools “centers for lifelong learning.”

This Valentine’s Day, lots of people are going to be out in search of love — in the case of online romance scammers, they’ll be looking for a big payday. We talked with Dina Temple-Raston, host of the cyber-focused podcast “Click Here” about the proliferation of online romance scams and what her conversation with a former scammer revealed. Ford announced it will be cutting its workforce in Europe by more than a tenth, which the company said will allow it to invest more into electric vehicle manufacturing in the U.S. And, online scammers are exploiting the earthquake in Turkey and Syria by creating fake donations accounts. 

Reported romance scam losses in 2022 were $1.3 billion, but that’s likely an undercount.

From the BBC World Service: Ford is cutting jobs to get over its next big hurdle: transitioning to electric vehicles. 3,800 jobs are going at the car maker, as part of a major restructuring programme in Europe. We find out why. Plus it’s all change at the Bank of Japan, as Kazuo Ueda is nominated to be its new head. And, we talk to an old-fashioned Irish matchmaker on Valentine’s Day.

The balloon has put a spotlight on surveillance tech. The University of Michigan’s Javed Ali says it’s also revealed gaps in U.S. security.

And what’s the story behind all this “rainy day” business?

No aliens to see here.

January’s consumer price index comes at a “critical time” for the Federal Reserve, the markets and consumer expectations. Plus, British companies get creative to tackle plastic packaging.

The Treasury Department has temporarily OK’d relief transactions. But most major money transfer companies won’t remit aid from the U.S. to Syria.

The British government has imposed a far-reaching ban on single-use plastics, creating opportunity for environmental entrepreneurs.

Households and businesses cut consumption by 20%. A mild winter also helped. Conservation efforts and a warm winter helped.

Rachel Abrams and James B. Stewart report how CBS, and Sumner Redstone’s media empire, became center stage for an epic #MeToo moment.

CPI looked like it was heading in the right direction — that of lower inflation — at the end of 2022. Is that trend going to continue?

As the new Congress gets underway, one priority for a bipartisan group of senators led by Massachusetts’ Ed Markey is getting rid of corporate “junk fees,” starting with ones airlines charge parents to sit with their young children. It’s a sentiment that’s been echoed by President Biden, who focused on extraneous fees in his recent State of the Union address. Recent economic data has been positively upbeat, but economist Julia Coronado warns that some of the good news could be overstated because of seasonal trends. And, a look inside the world of regenerative agriculture, a greener alternative to traditional farming. 

Most executives predict that consumers will continue to be more selective this year.

Remote work doesn’t just help employees, it can benefit companies too.

Some farmers use methods that reduce carbon and raise crops more sustainably. They hope for support in the next federal farm bill.

The remote working trend that started during the pandemic may be tapering off as employers require employees to come back in the office, but it’s likely to stick around in some form. According to Chris Farrell, that’s because employers that offer remote work will now be able to distinguish themselves in the labor market. The U.S. government is imposing economic restrictions on the Chinese firms that manufacture balloons from U.S. technology. And, consumers in the coming year may be a bit more inclined to shop cautiously as the economy slows and pocketbooks tighten.

From the BBC World Service: There’s been no rest for industrial unrest in Europe as another week of strikes kick off across the continent. We hear from France, Portugal and Spain. Plus, the authorities in Turkey make arrests over suspected building violations in the wake of the deadly earthquake. And, many economies depend on remittances – money sent home from workers or families overseas – but tighter budgets around the world mean less money is being sent to Pakistan at a time when it’s struggling with a foreign currency crisis.

In the year of grinding battle since Russia invaded, innovations and foreign assistance in cybersecurity, crowdsourcing apps and geolocation have fortified Ukraine’s defense.