Economics in the News – Sept. 16-22, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Three Mile Island – the site of the country’s worst nuclear power accident – will re-open to help power Microsoft’s growing artificial intelligence (AI) ambitions. A deal was struck between Microsoft and Constellation Energy to revive the plant, with Microsoft signing a 20-year power-purchase agreement. Constellation expects to spend $1.6 billion to restart the reactor by early 2028. This marks the second attempt to revive a closed nuclear reactor, with a planned restarting of Palisades nuclear reactor on the shores of Lake Michigan in Oct. 2025 after that plant was mothballed in 2022.
Three Mile Island’s Unit 2 reactor was shut down after a partial core meltdown in 1979 that led to five days of panic. The incident heightened awareness of potential safety problems for nuclear power plants and has impacted the industry for decades since. The undamaged Unit 1 reactor remained in use and closed due to economic pressure in 2019, but with more data centers, new domestic manufacturing, and a push to electric power transportation the power demand has heightened. [The Wall Street Journal]
o An increasing number of Americans are falling behind on their bills. According to an August report from the Federal Reserve Bank in New York, roughly 9.1 percent of credit-card balances turned delinquent over the past year – the highest rate in more than a decade. Higher interest rates on credit cards on top of soaring grocery prices has led an increase in low-income earners holding larger credit card balances, leading to an increase in delinquencies.
At an eight percent rate, auto delinquencies are also at their highest rate in more than a decade. The average interest rate on a 60-month new car loan was 8.2 percent in May, which is an increase from 5.3 percent in 2019. The number of delinquencies on auto loans is especially worrisome because car payments are among the last bills consumers stop paying. [The Wall Street Journal]
o The Federal Reserve lowered its benchmark rate last week for the first time in nearly four years, signaling a turning point from the pandemic economic era which led to 40-year high inflation. However, the era is certain to linger for the foreseeable future.
Rent is harder to cover, homeless shelters are have seen a shift of who is using them, from the homeless to those with jobs that don’t go far enough to make ends meet. Food insecurity for poorer Americans has also failed to recover from the early days of the COVID-19 pandemic. The middle class is feeling less secure about their retirement savings and future. It is more difficult to get approved for business loans, making it more expensive for businesses to start or expand. However, the period hasn’t been difficult for everyone. Those who already owned assets have enjoyed a period of strong economic growth, climbing stock prices and resilient home prices. That has led to an increase in household wealth, helping families across the income spectrum. [The New York Times]
o Tupperware – the brand known for food storage – has filed for Chapter 11 bankruptcy due to changing consumer habits and increased competition leading to a sales decline. Tupperware’s patents expired in the 1980s, leading to an increase in competition entering the market. In addition, the company failed to innovate or expand into other household categories, while inexpensive alternatives led to diminishing nostalgia.
Tupperware was founded in 1946 by inventor Earl Tupper, and rose to prominence in the 1950s when saleswoman Brownie Wise recruited women across the country to host their own Tupperware parties. According to experts, due to the brand power of Tupperware, a retailer or another homewares group could be interested in acquiring the brand at a low cost. [The Washington Post]
o Electric vehicles (EVs) manufactured by General Motors now have access to Tesla’s supercharging network. That marks another step for a universal public charger network for electric vehicles across the United States. The deal makes an estimated 17,800 Tesla superchargers available to owners of GM EVs, with the cost of a $225 adapter.
GM joins the likes of Ford and Rivian to distribute adapters for their EVs, with BMW, Honda, Hyundai, and Mercedez-Benz pledging to make their cars compatible in the near future. Sales of EVs have been slowing industry-wide, leading some automakers to prioritize hybrid vehicles instead of electric vehicles. [The Washington Post]
