Economics in the News – June 17-23, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o This fiscal year’s federal deficit will hit $1.9 trillion this year and, according to experts, the national debt is projected to exceed $50 trillion by 2034. Policymakers and politicians are facing urgency on the campaign trail, while vast portions of the tax code are set to expire next year which could potentially lead to a steep tax hike on individuals and families. Congress also suspended the debt limit in 2023 and that also expires next year, leading to a potential showdown between political parties.
On top of the surging national debt, Medicare and Social Security funds are running low, which could lead to a cut benefit for millions of Americans. The debt burden creates a risk in bond markets as creditors become skeptical of the government’s ability to pay it off. That could potentially lead to high federal interest rates, and force Congress to divert a significant portion of tax revenue to debt service. [The Washington Post]
o What economic impact is Taylor Swift having as her Eras Tour jets across Europe? Hundreds of thousands of her fans – Swifties – are spending money on airfare, hotels, tickets, restaurants and friendship bracelets for the chance to catch Swift in concert. The popularity of the Eras Tour has central bankers concerned that the demand for hotel rooms and flights could push prices that feed into each country’s inflation rate.
Swift performed in Lisbon on May 24 and 25, and the most recent data shows that Portugal’s inflation rate accelerated, in part, due to the increased change in prices “from a major cultural event.” It has previously been estimated that Swift’s tour could generate a $4.6 billion economic impact in North America. In England, where Swift is currently performing, she is expected to have a $1.3 billion impact. [The New York Times]
o The impact of the shipping diversions because of attacks on the Red Sea are beginning to be felt, as gridlock and soaring costs ensue at the start of the peak shipping season. Backups are growing at ports in Asia, including in Singapore, Malaysia, South Korea, and China, as well as parts of Europe that include ports in Spain and Portugal.
Importers and exporters are concerned that backups could expand as the demand picks up in the coming months ahead of the peak shipping season. That could drive freight rates close to pandemic levels, when space was scarce and market prices soared above $20,000 for shipping a 40-foot container. The week ending June 14 saw shipping costs for a 40-foot container climb to $4,119, marking the highest rate since Sept. 2022 and more than triple the cost last year. [The Wall Street Journal]
o Summer has arrived and that means higher electricity bills. The average US monthly electricity bill is expected to be $173 for the months of June, July and August – a three percent increase from last year. This month is likely to finish as the warmest June dating back to 1950, after the weekend brought triple digit heat to the Southeast.
Areas along the Pacific Ocean and in New York, New Jersey and Pennsylvania are likely to see the largest increase in their bill. However, New Englanders can expect to receive lower bills than in 2023, according to the Energy Information Administration. Residents of Texas, Oklahoma, Arkansas and Louisiana can also expect lower bills, despite still being among the highest in the country. The heat wave comes on the heels of a warm winter season where a lot of natural gas was left unused. [The Wall Street Journal]
o The threat of cyberattacks is greater than ever, with the number of cyberattacks doubling over the last five years, according to the FBI’s Internet Criminal Complaint Center. The growing threat has produced a booming job market for cybersecurity specialists, with unfilled positions more than tripling worldwide since 2013.
Cybersecurity is attracting many from Gen Z and mid-career job seekers, who obtain degrees and certifications from colleges and universities, who have expanded their course offerings on cybersecurity. The job seekers come from a variety of backgrounds but many were previously in other tech industries and telecom. [The Washington Post]
