Economics in the News – Nov. 13-19, 2023
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o If you’re traveling this week ahead of Thanksgiving, brace yourself for long lines and delays. The Transportation Security Administration expects an estimated 30 million passengers to fly throughout the Thanksgiving holiday, an 11.5 percent increase over last Thanksgiving. Meanwhile, AAA expects that 49.1 million Americans will drive to their destination, an estimated increase of 1.7 percent. In addition, Amtrak is expected to see a two percent increase in riders compared to last year, with 750,000 expected to travel by train.
The weather could impact travel plans with weekend storms forecast throughout New England and rain in California. A strong cold front is expected to move east which could impact air travel. On the road, Thanksgiving is one of the busiest times of years to travel with AAA estimating that drivers in the Los Angeles area will have to spend 88 percent more time on their route than usual on Wednesday before Thanksgiving. Drivers on the Baltimore-Washington Parkway are projected to spend 71 percent more time on the road, starting on Wednesday. However, drivers will get a reprieve at the gas pump with average gas prices expected to fall to $3.25 per gallon. [The New York Times]
o How much money does it cost to become the top English Premier League team? Manchester City, the winners of the exclusive treble for the 2022-23 season, paid out a British soccer record of more than $500 million on player salaries. It trails only soccer power FC Barcelona in player salaries, but Manchester City has not suffered a financial crisis like their Spanish rival. City has been backed by the money of its owner Sheikh Mansour bin Zayed al Nahyan, the brother of the ruler of the United Arab Emirates.
Along with the player salaries, Manchester City announced record revenues for the year ending in June 2023 of nearly $900 million, marking a British soccer record, while earning a profit double what it did a year prior. The overnight success of Manchester City has been controversial among soccer experts because of allegations of inflated sponsorship deals with companies in the U.A.E. and misreported salaries. The club has won four of the last five English Premier League titles. [The New York Times]
o Hydrogen fuel is gaining in popularity among trucking companies. It’s following is coming from heavy duty truck operators who believe it is the future for the trucking industry for zero-emission technology. One benefit of hydrogen is that it offers longer trips and faster refueling than battery-cell technology. It also allows truckers to carry heavier loads because they aren’t carrying industrial-scale batteries.
However, the technology of hydrogen-powered vehicle technology lags behind battery-electric trucks, especially considering increasing regulatory demands. California is requiring as of Jan. 1, 2024, that new trucks at the state’s seaports to be zero-emission vehicles. The cost is also an issue for operators, as battery-electric and hydrogen fuel-cell trucks start at roughly $450,000, which is triple the cost of a diesel truck. Truckers say that battery-electric trucks are useful for short trips but for trips over 100 miles they find the limited battery range limits their usefulness. Hydrogen trucks have a range of up to 500 miles and take about 30 minutes to refuel. With a lighter fuel-cell that is several thousand pounds lighter, truckers can haul heavier loads. [The Wall Street Journal]
o Argentina’s President-elect Javier Milei plans to adopt the United States dollar as Argentina’s national currency, ditching the peso. The proposal is part of his plan to eradicate the rampant inflation that has long ravaged the country’s economy. By removing its national currency from circulation, Argentina’s central bank would no longer have the power to print additional money. Economists have pointed to Argentina’s uncontrolled printing of money for fueling its 143 percent inflation.
Milei, a libertarian economist and political outsider, faces obstacles to dollarize Argentina, including the challenge to gain support through the country’s government. Another challenge could be Argentina’s courts, as changing of the currency could prove to be unconstitutional. If adopted, Argentina would join a host of smaller countries to use the dollar, including Ecuador, El Salvador and Panama. For those countries, the dollar created economic stability and brought inflation under control, while making it impossible for the government to print more money at will. [The Wall Street Journal]
o Paying added fees, whether it’s for an airline ticket or for a ticket to a sports game or concert, is frustrating for customers. President Joe Biden started a campaign last fall to crack down on the added fees and to force the companies to show the full price before paying for the tickets. According to an estimate from the White House, added fees have cost Americans at least $64 billion annually.
Companies are fighting back. They have fought even the most basic of charges that would require them to be more transparent about hidden charges. Money lobbyists are trying to protect corporate profits. Live Nation, the parent company of Ticketmaster, has fought back on disclosing fees for games and concerts because the company says they are unable to force venues it doesn’t own to be transparent about fees. Similarly, credit card companies are fighting back the government’s proposal to limit credit card fees. Customers that fall behind on their credit card bill can face a penalty as high as $41 per month, an amount that can push cash-starved Americans further into debt. Credit card companies have used a defense that limiting a credit card late fee would pose a “moral hazard” if tardiness was accepted. [The Washington Post]
