Economics in the News – Dec. 13-19, 2021

Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.

• The Bank of England has raised interest rates, becoming the first major advanced economy to raise interest rates since the COVID-19 pandemic began. The decision comes, as central banks worldwide are shifting their focus from stimulating the economy to slowing inflation. The consumer price index (CPI) in the United Kingdom was 5.1 percent, more than double the targeted 2 percent.
  
  The Bank of England took a more proactive approach than the European Central Bank. The decision from the Bank of England to raise its benchmark rate to 0.25 percent from a record low 0.1 percent came as a surprise due to the threat that the omicron variant poses across the United Kingdom. [Associated Press]
  
• The Federal Open Market Committee announced that it would cut back on COVID-19 stimulus by slowing its bond-buying program that was used to bolster the economy throughout the pandemic. Projections released from the meeting show that policymakers expect to raise interest rates three times in 2022 from the current near-zero rates.
  
  The Federal Reserve plans to taper the bond-buying program, putting the program on track to end in March. The Fed wants to end the bond-buying program before it raises interest rates to make it more expensive to borrow for a home, car or business. Chairman Jerome Powell said that the ending of the bond-buying program will allow the Fed to react to a range of economic outcomes in the future. [The New York Times]
  
  
• Honesty is the best policy. Small businesses have learned that transparency about price increases with customers has boosted their businesses. Like every business, small business owners have had to navigate supply chain challenges, labor shortages, increases in prices to raw materials, and economy-wide inflation. Instead of subtly raising prices and hoping consumers don’t notice, many businesses are finding creative ways to inform their customers as a way to gain trust.
  
  While big companies may be comfortable with sly tactics such as keeping prices the same, but giving consumers slightly less product, many up-front small businesses are built on authenticity. Many small businesses have had success with being up-front about price increases and have found that customers are understanding. [TIME]
  
  
• Much of the nation’s $23 trillion economy is riding in the back of tractor trailers. With the pandemic upending consumer habits, there is much more that needs to be hauled than drivers willing to haul it. The American Trucking Association (ATA), who represents the trucking industry’s largest carriers, says that the United States has a shortage of 80,000 truckers. The reasons for the shortage are due to the unappealing lifestyle and stagnant compensation, while a small percentage of workers are women.
  
  President Joe Biden’s administration is looking to bolster the trucking industry, which faces competition from distribution centers and warehouses.Part of his $1 trillion infrastructure bill includes a pilot apprenticeship program for young drivers, ages 18-21, promotes the hiring of female truckers and authorizes a compensation study.[The Washington Post]
  
  
• Santa Claus is in high demand. With vaccines widely available, many people are preparing to celebrate the holiday season in person this year after many families took precautions to protect against COVID-19 last year. It’s estimated that there are 10 to 15 percent fewer Santa entertainers this year, despite a 120 percent increase in demand.
  
  Those who portray Santa tend to be older and overweight, factors that make them more vulnerable to COVID-19. Some of the entertainers have died due to COVID and non-COVID related reasons, while others have chosen to retire from portraying Santa. [NPR]