Economics in the News – March 11-17, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o As the demand for lithium has soared, with its use in electric vehicles and more consumers shifting away from traditional gas-powered vehicles. The United States lags behind other countries in producing lithium, creating only one percent of the lithium used domestically. Nearly 95 percent of the world’s lithium comes from Australia, Chile, China and Argentina.
The Energy Department is offering a loan of $2.3 billion that would aid in financing the construction of a lithium carbonate processing plant in Nevada. If the loan is completed, the plant would be next to the mine site that contains the largest known lithium deposit in North America. The project could support the production of batteries for up to 800,000 electric vehicles per year and create 1,800 construction jobs, as well as 360 operations jobs. The project would aid in President Joe Biden’s administration goal of having electric vehicles make up half of new car sales by 2030. Native Americans tribe members, ranchers and environmental groups have previously opposed the mine project due to its potential impacts of groundwater and the local wildlife habitat. [The New York Times]
o Over the last decade, Facebook has declined in popularity among younger people as a social site. That includes Gen Z, who opt to use social time on Instagram, TikTok and Snapchat. However, many in Gen Z are finding alternative uses for Facebook – its Marketplace. For a generation that prefers shopping secondhand and is environmentally friendly, Facebook Marketplace has become a go-to source of secondhand goods.
Marketplace launched in 2016 and has over one billion monthly active users, ranking it second for sites offering secondhand goods, behind eBay. Marketplace is free to use, and is trusted among young people over Craigslist due to the profile and ratings system, along with the built-in messaging. For many 20-somethings without much disposable income, Marketplace is a good way to find deals on items that they would otherwise be unable to afford. [The New York Times]
o ESPN, owned by The Walt Disney Company, is seeking to reinvent its business, as it looks to fend off its greatest threats in decades. It has branched outside its comfort zone, hoping to build a large enough digital business to fill the financial hole as Americans continue to turn away from traditional cable TV. Despite that, ESPN generated $2.8 billion in operating income for Disney in 2023, including TV ratings that remain up two percent in 2023 and eight percent in 2022.
Last year, ESPN became involved in sports gambling, after partnering with PENN Entertainment to launch ESPNBet. Personalities at ESPN have evolved too, including the controversial deal to sign sports talk host and former YouTube star Pat McAfee – a push for attracting younger viewers. The cable business at ESPN has been contracting since 2011, with only 29 million American families paying for cable packages that include ESPN. As ESPN faces more competition for rights to various sports and leagues, including Amazon Prime Video and AppleTV+, ESPN could potentially bid for a smaller package to leagues such as the NBA. ESPN is also in the process of launching a sports-only streaming service, partnering with Discovery, Fox, and Warner Bros., for a service that is expected to launch in fall 2024. [The Wall Street Journal]
o Proposed changes could lower the costs to sell your home. The National Association of Realtors agreed to pay a settlement that accused the industry group of artificially inflating real estate commissions. For decades, sellers have paid realtors a five to six percent of the sales price as a commission.
The rule changes has the potential to lower fees paid by the sellers and also to lower home prices overall, aligning fees to the true value of services from real estate agents. The proposed settlement would bar agents from using multiple listing services to post commissions they offer to buying agents. The option to denote buyer compensation will not appear in the multiple listings services. It’s likely that agents representing buyers will have to seek compensation directly from their clients because they will no longer get a guaranteed commission from the seller. The agreement still needs approval from a federal judge before it takes effect. [The Washington Post]
o America will average about 42,600 job openings for plumbers, pipefitters, and steamfitters over the next decade, according to the United States Bureau of Labor Statistics. The average annual salary for those positions as of May 2022 was $65,190 – higher than the average annual salary of $61,900.
Despite the decent salary, the United States faces a shortage of plumbers, as more plumbers are retiring than being hired. Plumbing faces the perception of being physically taxing with long hours, part of the explanation of why young people are avoiding the industry. An analysis conducted by Lixil Americas found that the current shortage cost the economy around $33 billion in 2022, and that will only continue in the future as the US will be faced with a shortage of 550,000 plumbers by 2027. Industry experts do not believe there is a quick fix, explaining that bolstering the pipeline will require significant investment in recruiting and training. [Bloomberg]
