Economics in the News – July 22-28, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o While many officials are anticipating upcoming interest rate cuts in the United States and other major global markets in the coming months, decision makers at Japan’s central bank are considering when to raise interest rates. The Bank of Japan lowered interest rates in 2016 below zero and kept them at those levels until March 2024.
The combination of a rate hike in Japan and a rate cut in the United States has investors on edge. Investors have sought to exploit the favorable spread between the US dollar and yen, making it the second most commonly traded pair of currencies in the world. The weak yen has allowed investors to invest in higher-yielding assets abroad. As the rates in Japan increase, money could shift out of the United States, potentially putting Wall Street under pressure. [The New York Times]
o Support for the WNBA has never been greater. There is more money than ever coming into the WNBA from sponsors, ticket sales, and the new recently signed media rights deal. But player salaries continue to lag behind. The league has never been profitable, meaning that players’ salaries and benefits are a fraction of NBA players. But while the league wants to make every effort to protect its competitive balance, some team owners are ready to make significant investments into their players.
For the first time this season, teams are traveling to away games via charter flights, and some owners, such as Las Vegas Aces and the NFL’s Las Vegas Raiders’ owner Mark Davis, are going above and beyond. Teams are making a greater effort to enhance practice facilities and locker rooms, beyond what the scope of the league’s norms. [The New York Times]
o Recent graduates who began college during the COVID-19 pandemic are bringing their views and experiences during that period to the working world. Some of those graduates are supply-chain majors, who were drawn to the field by the turmoil and challenges faced by communities and businesses when the pandemic disrupted the global supply chains.
Not only are those interested in logistics careers taking supply chain classes while in school, but they are also appealing for students in other areas, such as finance, marketing, to bridge an information gap many companies found in their operations during the pandemic. The field is projected to become more competitive, with hiring expected to grow 18 percent over the next decade, according to the Bureau of Labor Statistics – far above the average three percent growth in all job categories. [The Wall Street Journal]
o College football and video game aficionados have anticipated the debut of “EA Sports College Football 25” for months. It marks the first college football game released to the public in more than a decade in the aftermath of a class-action lawsuit involving its use of a college basketball player’s likeness in another of its sports titles. But with the NCAA establishing its new name, image and likeness rules in 2021, EA announced plans to reboot the popular game.
To develop the game, EA relied on artificial-intelligence, collecting headshots from schools of athletes to create their in-game character. The company secured the likeness of more than 11,000 players and had three months to get them into the game. EA offered all current players at the Football Bowl Subdivision level $600 each, plus a deluxe copy of the game that retails for $99.99. So many players opted in, that EA was unable to fit all of them into the game. The cost for EA to pay the athletes is $7.7 million, before creation and marketing expenses. Analysts anticipate that EA will sell more than four million units, adding to more than $240 million in sales. [The Wall Street Journal]
o The United States is facing a crunch for its Social Security program, which analysts project will be depleted in a decade. That would trigger massive cuts for retirees and disabled who rely on the monthly income. American policymakers are looking globally for lessons, how to support retirees.
However, making side-by-side comparisons with other countries is difficult because of economic, political and demographic differences. But many countries have altered their public-pension programs, while Social Security has been largely unchanged since 1983. While the statutory retirement age in America is 66 or 67, depending on your birth year, that is higher than all but nine countries. Globally, the median retirement age is 61. Several countries have adjusted their retirement age upward in recent years, such as France who raised it from 62 to 64. Social Security is funded by taxes paid by workers and their employers over their working years, but it is far below the global average of 16.3 percent tax rate. In the US, workers pay 6.2 percent of their wages, while workers pay an additional 6.2 percent, adding up to 12.4 percent. [The Washington Post]
