Economics in the News – Jan. 29 – Feb. 4, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Managers of electric grids are becoming increasingly concerned about surging energy demand on the coldest days of the year. The hottest period of the summer has long stressed the electric grid, but because of aging utility equipment, many grids are more strained in the winter season. According to the North American Electric Reliability Corporation, the electricity demand during the winter, compared with the current level, is expected to exceed the growth in demand in summer by 2033.
A major contributor is the increasingly use of electricity to power heaters at homes that previously used oil and gas furnaces. Electric heat pumps become less efficient in colder temperatures, causing electric utilities to work even harder when it’s frigid. The aging and poorly maintained power lines and utility equipment is another concern. In many parts of America, the electric grid was designed to handle high demand during the summer, while utilities typically shut down power plants and other parts of the grid for maintenance during the non-busy season. Experts fear that the high energy demand in multiple seasons will make it more difficult to repair and improve stressed and aging systems. [The New York Times]
o Boeing executives are faced with a difficult decision. How to emphasize the safety of its aircrafts, specifically after multiple incidents involving its Max airplanes, while reassuring investors of their financial performance. Specifically, the incident on a Max 9 Alaska Airlines flight where a panel blew off mid-flight is still under investigation. The National Transportation Safety Board is expected to release a preliminary report on the incident in the coming days.
Some aviation experts and executives believe that Boeing’s safety problems and financial performance are connected. They believe that the company has put a great emphasis on increasing profits to aid shareholders through dividends and share buybacks and hasn’t focused enough on engineering and safety. With Boeing scheduled to report fourth-quarter earnings, it will be imperative for the company to carefully navigate its most recent crisis as its reputation among regulators, airlines, travelers, and investors is at risk. [The New York Times]
o Viva Las Vegas. For the first time in NFL history, the most popular game in America – the Super Bowl – will take place in Las Vegas. The game, which will be played at the Las Vegas Raiders’ Allegiant Stadium, will pit the Kansas City Chiefs against the San Francisco 49ers. But by placing the Super Bowl in America’s sports betting capital, the NFL has changed its attitude toward sports wagering.
With the widespread adoption of legalized sports wagering in 38 states across the country, the NFL has embraced a practice that it once adamantly rejected. This year’s Super Bowl will feature commercials for bookmakers, as well as pregame shows discussing the betting lines and top prop bets. Why did the NFL change its positioning when it comes to sports wagering? First, was the opportunity to sign new sponsorships. More importantly, it was a way for the league to appeal to a younger audience after seeing a 10 percent decline in TV ratings for the 2017 season. The result is the highest TV ratings this season since 2015, a seven percent increase compared to last year. [The Wall Street Journal]
o The anticipated debut of the Apple Vision Pro arrived Friday, Feb. 2. The Vision Pro – a virtual-reality headset that places digital computing around the user’s environment – is Apple’s biggest new product release in nearly a decade. The headset has a cost of $3,499. Apple has distinguished the Vision Pro by avoiding previously coined phrases, such as virtual reality or Meta’s metaverse, instead opting to call it a “special computing” device.
Analysts project that initial sales of the Vision Pro to be between 160,000 and 180,000 units, far behind the number of preorders of the Apple Watch that debuted in 2015. Apple’s challenge with the Vision Pro will be marketing and selling the product to mainstream consumers, as it has so far mostly appealed to gamers. Another challenge for Apple will be finding third-party apps enticing enough to draw consumers. Apple is on track to have more than 200 apps specifically for the Vision Pro, which lags severely behind the 3,000 apps available for the Apple Watch debut. [The Wall Street Journal]
o Elon Musk announced that his startup Neuralink has implanted the first human with a brain microchip, the latest step to connect the human brain to computers. The trial, called The PRIME Study, aims to provide individuals with quadriplegia the ability to control external devices with their thoughts. The technology is far away from allowing companies to read minds, as it is aimed to help only those who experienced the greatest degree of impairment.
Experts predict that the technology, known as brain-computer interface (BCI), will present a wide array of opportunities, especially for people with disabilities. The technology has the potential to allow paralyzed patients the ability to control their arm or move a cursor, while a trial demonstrated that a patient could control a video game with their thoughts. However, the risks that come with the implants are substantial. One potential danger is that the BCI could trigger epileptic attacks. Other risks include unknown factors and potential long-term risks in ensuring the implant continues to function. [Bloomberg]
