Economics in the News – July 29 – Aug. 4, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o The Chinese government wants to further restrict what their citizens can do online. Already, apps and websites must verify a person with their phone number, which is tied to personal ID numbers that all adults are assigned. Chinese regulators have proposed taking over the verification process from the companies, giving people a single ID to use across the internet. The Chinese government has exercised tight control over information, closely monitoring behavior on the internet.
Those opposed believe that a system of national internet IDs would give the government too much power to what people do online, making Chinese citizens fearful of using the internet impacting businesses that sell goods online. Supporters of the proposal believe that it is a way to combat too many apps and websites having someone’s personal information, helping to protect privacy and prevent fraudulent activity. [The New York Times]
o America’s gross national debt topped $35 trillion for the first time. The debt the United States is facing is accumulating more quickly than many economists had predicted as the costs of federal programs in recent years have exceeded expectations. The Republican nominee Donald Trump and the presumptive Democratic nominee Kamala Harris have not addressed the debt burden in detail on their respective campaign trails.
Two of the biggest drivers of the national debt are Social Security and Medicare, but both political parties are reluctant to enact cuts to those programs due to fear of losing votes. The Treasury Department borrowed $234 billion in the second quarter, and expects to borrow $740 billion from July through September. The budget office predicts that annual interest costs will rise to $1.7 trillion in 2034 from $892 billion this year. Next January, lawmakers will be faced once again with raising the nation’s debt limit, while also deciding on Trump’s tax cuts enacted in 2017. Budget groups say that extending the Trump tax cuts would cost $4 trillion over 10 years, while democrats want to preserve the tax cuts that have benefitted the middle class while increasing taxes on businesses and the rich. [The New York Times]
o Consumers are fed up with paying higher prices for food, and food companies want to protect their profits. So, numerous restaurants are promoting a wide range of deals to keep customers dining at their restaurants and buying their brands. Americans have spent more of their income on food in the past two years than they have in three decades. Executives in the food industry maintain that they increased prices in recent years to cover rapidly escalating costs for labor, ingredients and transportation.
Food prices have become a hot topic, that it even became a topic of discussion during the Presidential debate between Donald Trump and Joe Biden. Long-time rivals Burger King and McDonald’s began a $5 meal deal campaign in June to bring back the customers that it had lost due to rising prices. Starbucks has also pledged to increase its number of promotions to bring in customers. While grocery snacks giant Mondelez plans to offer discounts and less-expensive packs of favorite snack items such as Oreo’s, Chips Ahoy and Ritz crackers. [The Wall Street Journal]
o Soaring prices have new couples shrinking their guest lists and cutting costs for their wedding days. Four years of rising costs for catering, floral arrangements, photography and cakes by more than 20 percent, are forcing more couples to make more budgetary decisions when wedding planning. Many couples are opting for smaller weddings, or a later celebration. Or even eloping.
Wedding rates continue to fall, reflecting changing societal norms for young Americans. Many are seeking to have their finances in order and a stable career before getting married. Economists cite the rising costs of labor for disrupting pricing norms for a wedding, as weddings tend to be labor-intensive requiring dozens of people for tasks such as setting up tables, catering, pouring drinks, etc. [The Washington Post]
o The US Department of Transportation wants to eliminate “junk fees” charged by airlines for seating families together. Some airlines, including Alaska, American, Frontier and JetBlue, have voluntarily eliminated the fees. The new rule, if it is approved, could save families hundreds of dollars on round-trip tickets.
The proposal would apply to families traveling with children aged 13 or younger. When a child’s age is noted when booking the ticket, airlines would have to provide adjacent seating within 48 hours of purchase. If adjacent seats are unavailable, then the airline would be compelled to offer the traveling family a full refund or the option to wait for nearby seats to become available. If no seats were available at the time of travel, families would be eligible to rebook on the next flight, free of charge. [NPR]
