Economics in the News – May 11-17

Economics impacts our lives every day. Below are some of the top storylines from this past week in economic news.

• With the rise in streaming platforms in households, large cable and satellite TV companies are now seeing an even further decline in customers. More businesses, such as restaurants and hotels, are cutting the cord on cable or pausing subscriptions in order to save money during the coronavirus pandemic. The largest companies have lost more than two million customers in the first quarter of 2020 – the industry’s sharpest decline on record.  [The Wall Street Journal]
  
  
• When the economic contraction caused by the coronavirus first began, many government officials were hoping that the economy would bounce back quickly, resulting in a V-shaped recovery where GDP would return to the all-time high levels before the pandemic caused lockdown restrictions. Economists are now predicting that a slow recovery will result in more of a ‘swoosh’ and it will take several years to fully recover. [The Wall Street Journal]
  
  
• More than 36 million people in the United States have filed for unemployment benefits over the last eight weeks with three million additional people seeking unemployment the week ending May 9. Unemployment reached 14.7 percent in March, the highest since the Great Depression, when it is estimated 25 percent of workers were unemployed. [NPR]
  
  
• Job losses during the coronavirus pandemic have hit the poor the hardest. A Federal Reserve study suggests that of the 36 million who applied for unemployment benefits, 39 percent earned $40,000 or less per year before losing their job. That compares to 13 percent of those earning above $100,000 per year. Education has also played a factor because 60 percent of workers with a bachelor degree could retain their jobs because they are able to work from home, compared to 20 percent of workers with a high school degree or less. [The New York Times]
  
  
• For years, Bill Gates, the co-founder of Microsoft Corporation, has warned that the biggest potential catastrophe the world faced was a pandemic. He believes countries aren’t investing enough to fight new infectious diseases. Gates, a philanthropist and co-chair of the Bill & Melinda Gates Foundation, has committed $305 million to research for COVID-19 vaccines. [The Wall Street Journal]
  
  
• Under normal circumstances, people who harvest crops are living in difficult conditions – low pay, cramped living quarters and long, grueling labor in the fields. With the dangers of the coronavirus pandemic, those workers condition are now more dire than ever. Many of the workers, who are illegal immigrants, have no sick pay or will not receive any government benefits, putting the health and safety of workers at risk and causing a major threat to the United States’ food supply. [NPR Indicator for Planet Money]
  
  
• Consumer prices suffered their steepest month-to-month fall in April since the Great Recession – a 0.8 percent drop. With business shutdowns and reduced economic activity that the coronavirus has caused, deflation may pose a serious economic threat for the first time since the Great Depression. [The Associated Press]
  
  
• The United States and many other countries around the world are in a recession. Gross domestic product (GDP) in the first quarter of 2020 was at its lowest mark since the Great Recession. However, GDP only includes goods and services that are bought and sold. It doesn’t include the social distancing efforts made by millions of Americans to protect public health. If it did, perhaps we are not in a recession. [The New York Times]