Economics in the News – Jan. 30 – Feb. 5, 2023
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Some major Chinese businesses are investing aggressively in Mexico, establishing factories to manufacture goods before transporting those products to the United States duty-free. Despite the political strains between the governments of the two global powers, Chinese companies are looking to preserve their sales in the United States.
The COVID-19 pandemic disrupted supplies of various products in which parts made in Asia were stuck at ports. That has led to the trend known as nearshoring. International companies moving production closer to customers to limit their vulnerability to shipping problems and geopolitical tensions. More American businesses are demanding that their suppliers set up plants in North America or risk losing their business. In response, Chinese businesses ranging from electronics to clothing to furniture are setting up manufacturing plants in Mexico. The Mexican state of Nuevo León has benefitted, as nearly $7 billion of foreign investment in 2021 has come to the border state. Chinese companies were responsible for 30 percent of foreign investment in Nuevo León, second only to the United States. [The New York Times]
o Boeing handed over the final 747 aircraft that it plans to build. The final aircraft was handed over to US air cargo operator Atlas Air in a ceremony, becoming the 1,574th model built in Boeing’s Everett, Wash., plant. The Boeing 747 earned the nickname “Queen of the Skies” and is perhaps the most recognizable commercial airplane ever built.
The Boeing 747 was originally designed in the mid-1960s at the request of Pan American World Airways. The aircraft took its maiden commercial voyage in 1970, carrying 300 passengers from New York to London. The aircraft became popular with airlines because it allowed for tickets to be sold at more reasonable prices, creating affordable air travel for the masses. But as more efficient and larger airplanes became popular, the 747 has increasingly fallen out of favor with passenger airlines. [The New York Times]
o Rent prices across the United States are out of control. A recent report from Zillow, concluded that a full-time worker earning the national minimum wage of $7.25 per hour would need three roommates earning the same amount to afford a typical two-bedroom apartment. Zillow based its affordability on spending an average of 30 percent on rent, which falls in line with the recommendation of financial experts.
Zillow’s report found that only 10 of the 50 most expensive cities to rent in the United States require two or fewer full-time minimum-wage employees. In each case, those cities have a minimum wage higher than $10 per hour. Cities such as Austin, Atlanta, Charlotte, Nashville, Dallas, Raleigh, Miami, San Antonio, Fort Worth, and Honolulu were ranked as the most unaffordable cities with a $7.25 minimum wage. Furthermore, more millionaires are opting to rent rather than buy homes, with households making $150,000 or more increasing at a rate of 82 percent over the last five years. [FORTUNE]
o President Joe Biden announced plans to allow the health emergencies for addressing the COVID-19 pandemic to expire on May 11. The move would end the national emergency and public health emergency declarations and pave the way to treat the virus as an endemic threat to public health managed through normal authorities. It would cause the costs for the COVID-19 vaccines to increase, with Pfizer announcing that it will charge $130 per dose.
COVID-19 has been declared as a public health emergency since Jan. 31, 2020, by former Health and Human Services Secretary Alex Azar. Former President Donald Trump declared a national emergency in March 2020 and the emergencies have been extended since that time. More than 1.1 million people in the United States have died from COVID-19 since 2020, according to the Centers for Disease Control and Prevention. [Associated Press]
o Have you made your Super Bowl plans for this year’s big game? Fox Sports has sold out its advertising space for Super Bowl LVII which will pit the Philadelphia Eagles against the Kansas City Chiefs. Every year, advertisers vie for the opportunity to get their products in front of more than 100 million people. This year, Super Bowl ads sold out early with more than 90 percent of the inventory selling before the end of the summer.
This year companies will shell out between $6 to $7 million for a 30-second space, with a few ads selling for more than $7 million. Last year’s game was labeled as the Crypto Bowl because of the presence of four different cryptocurrency companies. This year will be absent of any cryptocurrency company due to the fallout from the FTX filing for bankruptcy amid a scheme to defraud investors. Fans can expect plenty of ads from established brands, including leader Anheuser-Busch with three minutes of ad space. Packaged foods such as M&Ms and Doritos, as well as tech companies, automakers and streaming services, have purchased commercial time. [Associated Press]
