Economics in the News – Jan. 15-21, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Israel’s neighbors – Egypt, Lebanon and Jordan – are feeling the economic impact of the Israel-Gaza War. The United Nations Development Program estimated in a three-month assessment that the war has cost those three countries $10.3 billion, or 2.3 percent of their combined gross domestic product. An additional 230,000 people in these countries are expected to fall into poverty.
Attacks on the Red Sea from the Houthi rebel group in Yemen have caused a drop in shipping traffic crossing into the Red Sea from the Suez Canal, which has been a major economic blow for the region. The canal typically carries 11 percent of global maritime trade, and traffic has been down 30 percent in Jan. 2024 compared to Dec. 2023 and revenues were 40 percent weaker than 2023 levels. In addition, the three economies have seen an alarming drop in tourism due to fears of escalation in the region. [The New York Times]
o Treasured by many sports lovers, the company that publishes Sports Illustrated – the Arena Group – announced that it would be laying off many of its employees, leaving the future of the beloved magazine in doubt. Despite assurances from Arena Group that they planned to continue publishing the magazine and website, it seems that the brand and quality of the product will be severely diminished.
Sports Illustrated, a weekly sports magazine, was once an essential for sports fans and was a major part of Time. At its peak, it had more than three million subscribers and was considered a top job in the sports journalism industry. Sports Illustrated has struggled to adapt to a digital media landscape and was a culprit of mismanagement. The magazine now is published monthly instead of weekly, and many of its stories are written by underpaid contractors. [The New York Times]
o Fans of teams across MLB, the NBA and NHL will soon have a new option for watching their favorite teams. Diamond Sports, who owns the broadcast rights to 37 sports franchises in three of the four most popular professional leagues in the United States, has arranged a $450 million plan to pay creditors that would allow it to continue broadcasting beyond 2024. The reorganization plan includes an investment from Amazon, which hopes to broadcast the teams on its Amazon Prime streaming service.
Pending the approval of a federal bankruptcy judge, Amazon would have a 15 percent stake in what would become a new company. The new deal would likely bring a new name for the stations, which have been branded by Diamond with the Bally name. [The Athletic]
o The S&P 500 closed the week at a record high last Friday, Jan. 19. The index rallied 1.2 percent to close at 4,839.81, led by shares of big tech and optimism for economic growth. The new record high surpasses the previous mark, set in Jan. 2022.
The S&P 500 surprised many investors in 2023 fueled by fears that the Federal Reserve’s aggressive approach to fight high inflation would bring on a recession. Artificial Intelligence has boosted the hopes of investors, especially among the big tech companies. Optimism is also contributing to the gains. [NPR]
o More of today’s youth are taking on part-time jobs after school hours and during the summer, changing a trend of Millennials not working in their teen years. According to the Labor Department, 37 percent of 16-to-19-year-olds either had a job or were searching for a job last year. That marks the highest annual rate of teens in the labor market since 2009. Entry-level positions and jobs in retail have become prevalent for teens.
High school-aged workers have cited several reasons for their decision to work, including financial independence and the opportunity to try new things. Others are working out of necessity, to help their parents with the rent or utilities. Employers have taken steps to improve starting pay, which benefits young workers. The uptick in young workers is a change from the decline of youth employment since the late 1970s. Part of the decline is due to high school becoming more demanding and college acceptance becoming more competitive. Labor economists do warn that working during the high school years does come with risk, including lower grades and less likelihood of graduation. [The Washington Post]
