Economics in the News – Dec. 4-10, 2023
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Japanese baseball superstar Shohei Ohtani has signed a record-breaking 10-year, $700 million contract with the Los Angeles Dodgers. The deal, which includes all-guaranteed money, is the largest single contract signed by an athlete in North America. It eclipses by more than $275 million the contract signed by his former Los Angeles Angels teammate Mike Trout in 2019, and it surpasses the $50 to $60 million that Argentine soccer star Lionel Messi is earning each year to play for Inter Miami.
By offering Ohtani such a large sum of money, the Dodgers are banking that he can not only help them win championships on the field but also grow their international presence. Due to Ohtani’s legendary status in Japan, Japanese companies will rush to buy advertising at Dodger Stadium. Even still, due to Major League Baseball’s revenue-sharing agreement, with clubs sharing the revenue from national and international broadcast rights and merchandise sold out of the team’s home market, the Dodgers are banking that Ohtani will become the dominant face of the franchise to deliver multiple championships. [The New York Times]
o What was once considered routine – the art of check writing and dropping it into a blue metal box on the street – is now a high-risk endeavor. That’s because check fraud from fraud artists and sophisticated crime rings has risen over the last few years. The practice has put financial institutions on high alert. However, keeping customers’ accounts safe can be inconvenient for customers who may suddenly find their accounts frozen or shut down.
However, fraudsters aren’t just going through blue metal mailboxes, they are leveraging technology and social media to commit fraud on a grander scale. Thieves can buy stolen checks and can purchase bank accounts in which to deposit them, along with the phone number and device used to create that account. Banks and credit unions are expected to file nearly 540,000 suspicious activity reports tied to check fraud this year, a record. Despite the risks in check writing, the typical American consumer wrote about 1.5 checks per month in 2022 or about 3.8 percent of the total number of payments made in a month. That number is down from 2015 where a typical consumer wrote 3.1 checks per month, accounting for six percent of the total number of payments. [The New York Times]
o The United States is experiencing a factory-building boom as more megafactories are being built to support the semiconductor and electric vehicle industries. The boom on factories has been aided by public incentives, and companies wanting to bring some of their operations back to North America after dealing with overstretched supply chains during the COVID-19 pandemic. The value of new manufacturing construction projects totaled a record $102 billion last year.
But in the United States, manufacturers’ have commonly failed to find all the employees needed to run their factories. As an example, Intel is one of the companies building a new facility for the first time in 40 years, in a location near Columbus, Ohio. The facility is expected to house roughly 115,000 jobs by the end of the decade, but the Semiconductor Industry Association warns that as many as half could go unfilled. [The Wall Street Journal]
o McDonald’s is testing a new concept to sell customizable drinks and treats to compete with mass coffee chains such as Starbucks and Dunkin’. McDonald’s plans to open 10 new stores that it will call CosMc’s through the first half of next year and plans to study the results of those stores before determining whether to expand. One of the test stores will be located near its headquarters in Chicago while the rest will be placed in Texas.
CosMc’s plays a role in McDonald’s plans for expansion with its menu and service times. In total, McDonald’s plans to open 10,000 new stores over the next four years to reach its goal of 50,000 restaurants. CosMc’s is named after a space alien character the company introduced in the 1980s. With the new coffee shop, CosMc’s will also serve snacks and items such as the Egg McMuffin. [FORTUNE]
o How did Mariah Carey’s Christmas carol “All I Want for Christmas is You” become a staple of the Christmas season? The song debuted in 1994 and has reached No. 1 on Billboard’s Hot 100 chart for the past four years, measuring the songs airplay, sales and streaming throughout the year. At least one expert expects the song to soon exceed $100 million in earnings. The song peaked at 387 million streams in 2019, the 25th anniversary of its release.
When the song debuted in 1994, most artists during that time started writing holiday music when they were past the peak of their careers. But, in 1994, Carey was at the height of her career. Today, the co-writers of the song – Carey and Walter Afanasieff – have a complicated relationship themselves, and are also being sued by the authors of a different song with the same title after Carey’s bid to trademark the title failed. [Associated Press]
