Economics in the News – Jan. 3-9, 2022

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

• The Federal Reserve and top central banks around the world are dealing with rising inflation due to lags in the global supply chain. Turkey is dealing with an inflation rate over 21 percent, leading to economic turmoil after years of broad growth. By comparison, the United States is dealing with an inflation rate that’s at a 39-year high of 6.8 percent, while the global average equals 3.5 percent.
  
  Turkey is an emerging market with an expanding middle class. In order to curb overheating economies, many central banks in emerging market countries use interest rates to increase the cost of borrowing and keep control of inflation. However, Turkey President Recep Tayyip Erdoğan has cut the interest rate three times since September 2020 which has caused the value of the Lira to fall. Economists are concerned that a further collapse of the Lira will trigger a bank run. [The Wall Street Journal]
  
  
• Tesla sold 936,000 cars globally in 2021, an 87 percent increase from 2020. Meanwhile, Ford and General Motors each sold fewer electric cars than they did in 2020, mostly due to a shortage of computer chips and soaring car prices. How did Tesla avoid some of the challenges that other car manufacturers had?
  
  They manufactured more in-house whereas traditional car manufacturers count on outside suppliers for much of their software and computing expertise. Now, many of the traditional car companies have announced the hiring of engineers and programmers to design their own chips and write their own software. [The New York Times]

• According to a survey, only 17 percent of workers have received raises that kept up with inflation over the past year. According to the survey conducted for The New York Times by Momentive, formerly known as SurveyMonkey, most workers say that they have either received raises that lagged behind inflation or didn’t receive a raise at all.
  
  Government data shows that wage gains are outpacing inflation in several sectors of the economy, including the service sector. Despite the concerns, most Americans have said that inflation had not yet had a major effect on their finances. Only 11 percent plan to ask for a raise if inflation continued. [The New York Times]
  
  
• More than 23 million Americans have adopted a pet during the COVID-19 pandemic, according to the American Society for the Prevention of Cruelty to Animals [ASPCA]. Americans spent $21.4 billion through November 2021 on nonmedical pet supplies, plus an additional $28.4 billion on dog food.
  
  With millions of Americans preparing to return to work or enjoy social activities, many new pet owners have to adjust to the financial burdens and logistical challenges that come with having a pet. Doggy daycare and boarding sites are reporting months-long waiting lists, while veterinary practices are busy keeping up with the surge in pets. [The Washington Post]
  
  
• Many commuters and travelers along Interstate 95 in Northern Virginia and Washington, D.C. were recently stranded due to a winter storm. For some, the traffic stand-still became a 20-plus hour ordeal with many motorists spending the night in their vehicles.
  
  The backup was caused by a truck that had jackknifed, leading to a chain reaction of other vehicles that had lost control. Luckily, there were no reports of serious injuries or deaths. [Associated Press]