Economics in the News – May 6-12, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Attacks by the Houthi militia in Yemen in the Red Sea continues to burden global supply chain companies. Due to the threats of attacks, cargo ships have regularly diverted the dangerous areas to take a longer route to Europe around the southern tip of Africa. However, the Houthis have recently expanded their attacks to ships traveling in the Indian Ocean.
The threat to vessels in the Indian Ocean has added further difficulties. Global shipping company Maersk warned that customers could expect surcharges on shipping invoices due to the higher costs to ship goods safely, an increase of 40 percent in fuel use. [The New York Times]
o Twenty years ago, the popular documentary film “Super Size Me,” was released, in which Morgan Spurlock documented the effects of eating nothing but McDonald’s for 30 consecutive days had on his health. The film raised awareness for the impact that fast food has on one’s health.
However, two decades later, the fast-food industry is more popular than ever. There are now 40 chains with 500 or more locations in the United States, and fast food is the second-largest private employment sector in the country. Roughly 86 million Americans – 36 percent of the population – eat fast food on any given day with the top reasons being its convenience, price, and taste. The stock price of Mcdonald's has even benefited, increasing 1,000 percent since the film was released, including a new all-time high in January. [The New York Times]
o Business in the WNBA is booming! And former Iowa women’s basketball star Caitlin Clark is at the center. The league’s season tips off on May 14. Clark was drafted by the Indiana Fever with the No. 1 overall pick. And after averaging just over 4,000 fans per game last season, the Fever expect to be at or near a capacity crowd of more than 17,000 fans for each of their 20 home games this season.
While the WNBA has experienced strong growth in its viewership and attendance, Clark is expected to lift the league further. Clark provides the league a household name after her to boost its marketability to the mainstream audience. With the WNBA negotiating a new media rights contract, Clark has helped give the league leverage to double its television revenue in its next deal. [Bloomberg]
o Those in Gen Z are starting out their adult lives with greater credit burdens than generations before them. The average credit card balance for Gen Z, between the ages of 22-to-24 years old was $2,834 in the last quarter of 2023, compared to an average of $2,248 average inflation-adjusted balance in 2013. The rising debt load reflects the rising costs for food and housing at the beginning of their careers, along with the burden of paying back student loans.
Younger people are more often delaying homeownership and marriage, while relying more on family if they get into financial trouble. While the annual average wage for recent college graduates was $60,000 in 2023, compared to $58,858 in 2020, the cost to rent has soared. The median rent in the United States in January was $1,987, a 22 percent increase over the past four years. With that increase, the number of renters who are paying more than one-third of their paycheck each month towards rent has climbed. [The Wall Street Journal]
o The popular Siracha chili sauce could be headed for another shortage. Manufacturer Huy Fung Foods has sent a letter to its wholesale buyers that it plans to pause production of Siracha until after Labor Day. The reasoning behind the pause is due to its crop of red jalapeño peppers are not ripe enough to produce the sauce.
It marks the second shortage of the popular sauce, as production has been halted at least three times since 2020. But persistent drought conditions in Mexico have led to a chili shortage to Huy Fong Foods and other competitors, which is an example of how environmental challenges are affecting the food supply. [The Washington Post]
