Is Pacific Sunwear Going Out of Business? - Kate Previte

Kate Previte

Mrs. Straub

AP Economics

Insight

08 April 2016

Is Pacific Sunwear Going Out of Business?

We all have our favorite places to shop. Whether it comes to buying clothes, food, or other items, we all have our preferences. While this may be true, what are you supposed to do when your favorite clothing store goes out of business? That is what is currently happening to me, and I’m sure many of you, as Pacific Sunwear, otherwise known as PacSun, files for bankruptcy as we speak.

Since the 2008 recession, households in the U.S. are not taking in nearly as much income as they were prior. Although there was a peak in 2013, it still does not make up for the deficit. When a recession occurs, aggregate demand decreases, due to the money supply decrease. In more relatable words, a recession leaves the average family with much less money to spend on luxury stores, such as PacSun, leaving those stores with a decrease in demand for their items. As you can see in figure 1 below, prior to the 2008 recession, real median household income in the U.S. had peaked at around $57,500 annually. Following the recession, the income as of 2014 had only gotten back up to about $53,750 annually. While that is an improvement, that is an average of $3,750 less per household each year. That loss of income affects higher priced items- such as clothes at PacSun, the most, leading them to have to file for bankruptcy.

Figure 1.Graph showing annual real median household income as of 2014 in the U.S. (The Economic Collapse).

Snyder, Michael. “Real Median Household Income – Federal Reserve.” The Economic Collapse. The Economic Collapse, Web. 22 Nov. 2015. 08 Apr. 2016.

Although the store has not yet filed for bankruptcy, according to an article published by The New York Times, they are not the only ones affected by the recession. “PacSun joins a string of retailers that have filed for bankruptcy over the last year, including American Apparel and Quiksilver, as the industry struggles to keep up with changing consumer tastes and a shift to shopping online” (Tabuchi), (see figure 2). While filing for bankruptcy may sound detrimental to some, the store could save itself by doing so. By filing, PacSun will be “under a debt-for-equity restructuring agreement, the company plans to be taken private by Golden Gate Capital” (Tabuchi). Since they are being taken private by Golden Gate Capital, this means that, “[The deal will] convert more than 65 percent of its debt into equity and receive at least $20 million in new capital from the private equity firm Golden Gate, the retailer said in a statement” (Tabuchi). By filing for chapter 11 bankruptcy, the store has the option to either decrease its number of stores, or renegotiate the rent that they pay for their space in shopping malls (Tabuchi).

Figure 2. Picture displaying that American Apparel has gone bankrupt. (Fashionating World).

“American Apparel Claims Bankruptcy Not a Deterrent to Its Future.” Fashionating World. FashionatingWorld, Web. 16 Oct. 2015. 08 Apr. 2016.

Pacific Sunwear as of right now, will “continue to operate [its 601 stores] without interruption to customers, employees or vendors” (Tabuchi). This may be true as of right now, but what is to happen in the future for the store that we all know and love? The only thing we can do as of right now is wait and see what will happen. What do you think will happen to PacSun?

Works Cited:

“American Apparel Claims Bankruptcy Not a Deterrent to Its Future.” Fashionating World. FashionatingWorld, Web. 16 Oct. 2015. 08 Apr. 2016.

Snyder, Michael. “Real Median Household Income – Federal Reserve.” The Economic Collapse. The Economic Collapse, Web. 22 Nov. 2015. 08 Apr. 2016.

Tabuchi, Hiroko. “Pacific Sunwear Files for Bankruptcy.” The New York Times. The New York Times Company, Web. 07 Apr. 2016. 08 Apr. 2016.

The Economics of Elections - Evan Hoffins

Evan Hoffins

Mrs. Straub

AP Economics

5 April 2016

The Economics of Elections

With presidential primaries underway, most Americans have been thinking hard about their favorite candidates and who they want to represent our country as the next President. While it is easy to get caught up in the politics, debates, issues, and promises that these candidates publicize, many people forget about the economic impacts of the massive presidential elections that occur every four years.

The funds raised by politicians each election are massive, and possibly much greater than most realize. In the last election in 2012, the total money spent was more than 6.2 billion dollars, an impressive figure considering how the 2008 election raked in around 5.2 billion and the 2004 election a cool 4 billion (“Money Behind..”). If this trend continues, this year’s election will cost around 7 billion dollars!

So what happens with all that money? A good portion of it is spent on campaign promotions like commercials, radio advertisements, and mailed flyers or posters, while some of it is simply spent on campaign expenses such as staff members’ salaries or flights to and from campaign cities (Curry). All of these forms of spending campaign money are beneficial to supporting the economy. Commercials and radio advertisements provide a source of income for media companies both big and small, stimulating both local economies and big corporations and increasing the aggregate demand of the economy. Similarly, the printing industry sees greater demand for posters and printing opportunities, and so do airlines in charge of transporting campaign staff and other public volunteers to various events on the campaign trail. Because of the election, millions of dollars are spent toward wages for campaign staff that are kept employed by the election. It is reported that Hillary Clinton spent over 20% of her campaign funds on staff payroll alone (McLaughlin par. 1).

It is also important to note, however, that not all of the money being donated to campaigns is being utilized for what we expect. A good sum of money is actually just being saved by candidates in a sort-of “reserve” that is only used in case it is absolutely needed. This amount saved can be anywhere between 50 to 100 million dollars (Curry). This saving has the potential to be harmful to the economy, depending on what the candidates do with it. If the candidates simply save the money by some sort of private means, and not deposit it in a bank, then the money is simply taken out of active circulation, and does so at the cost of those supporters who contributed the funds to the cause. However, if the money is deposited into a bank account, then that bank can lend that money out as loans and further contribute to the welfare of the economy by increasing the money supply due to the multiplier effect.

For most of us, these details do not affect our voting decision, but considering that many citizens are financial contributors to their political parties, it may be enlightening to further understand where their donation money is really going.

Works Cited

Curry, Tom. "Where Does All That Campaign Money Go?" Msnbc.com. 2007. Web. 03 Apr. 2016.

McLaughlin, Seth. "History Is Repeating Itself: Hillary Blows through Millions to Pay Massive Staff." Washington Times. The Washington Times. Web. 03 Apr. 2016.

"The Money Behind the Elections." Opensecrets RSS. Web. 03 Apr. 2016.

Poll Booths. 2016. Web. 3 Apr. 2016. <http://mynewsla.com/wp-content/uploads/2014/11/16-9-Poll-booth.jpg>.

Sea World - Sydney Wagner

Sydney Wagner

Mrs. Straub

AP Economics

5 April 2016

Seaworld

Seaworld is known for its unique marine life and exciting events that show the animals and trainers performing amazing stunts. But after relentless criticism about how they treat their animals, Seaworld announced that they will end orca breeding inside of their parks. Among the mixed reactions “animal activists were delighted, while it disappointed many marine scientists, who say they will gradually lose vital opportunities to learn things that could help killer ha;es in the wild” (Kay). As the current population of whales in the park remains constant, biologists are rushing to collect and analyze enough data.

(Kay)

As for the park, ticket sales have decreased ever since the documentary entitled “Blackfish,” which questions the orca care and focuses around the death of a trainer during a performance in Orlando. The decrease in spending in the parks results in a decrease in revenue. With dwindling revenue and the whale population, most past customers are turning to other parks or staying home. In Florida, most turn to the Disney parks or Universal to make up for the amusement they got when visiting Seaworld. This fact allows the other parks to increase their ticket sales and develop repeating customers for future sales. For others, staying home allows them to save money for future endeavours.  This could lead to an increase in spending within their home towns, or an increase in investments. The extra spending money gives the consumers more spending power to decide where their money goes.

Although the new announcement has questioned the fate of Seaworld, animal activists and competitors are benefiting at the expense of the marine park. If the ticket sales continue to decrease, the employment of the park will begin to decrease while price levels increase in order to keep up with the expenses. This will eventually lead to an increase in the unemployment for the states that house a Seaworld park. As the employees look for new jobs they will be experiencing frictional unemployment. As this develops, the demand for careers in marine biology will increase in the states while the supply decreases.

Many families will take their vacations to new destinations but Seaworld is still holding on. In captivity orcas can live to be well over 50 years and the parks currently have half of their whales that are younger than 20 years.This means that the shows and research will continue until the final whales pass away in their cages. For many, the whale shows will become more and more special and the trainers will begin to appreciate their jobs knowing that an expiration date has now been put in place.

Works Cited

Kay, Jennifer. “Scientists bemoan SeaWorld decisions to stop breeding orcas.” The San Diego Union-Tribune. The San Diego Union-Tribune, 2016. Web. 4 Apr. 2016.  

Do movie theaters help the economy?

Danielle Sallman

Econ

Mr. Reuter

April 6th, 2016

Do movie theaters help the economy?

The amount of money people spend on movie ticket yearly is rising in numbers as better movies start to come out. Most people go to movies with their friends at least twice a month which initially results in quite a bit of money getting spent at the movie theatre. With this money being spent there is a demand for more movies. According to The Numbers web page it said that the top movie in 2015 is Star Wars with over 2 trillion dollars in sales in the worldwide box office. The amount of tickets sold for a general movie is alway rather high because everyone wants to see the new popular movie that everyone is talking about. But what amount of the money actually goes back to the theatre? According to themovieblog web page, it says that the theatre only get about 25% of the money of profits because the rest goes back to the companies who make the movies. How does this affect the economy? Well the amount of money that goes back to the movie production companies goes back to producing more money to make newer movies that you will eventually go to see. It’s a circle of money spending in reality.

When the recession hit, people had other things on their mind than spending ten dollars to see a movie and then buying 20 dollars worth of snacks or more depending on if it was just you or if you were with a family member. Movie theater trips can be expensive and not everyone can go every single week but during the recession the amount of people who would go to movies at least once a week was deflating quickly.

Not many people would guess this but in 2010 the number of people who go to see movies dropped by 1 million, which would definitely affect the profits earned. But in 2016 with numbers steadily rising it is safe to assume that movie theaters are helping our economy.

Work Cited

Acuna, Kirsten. "Movie Ticket Sales Are Down 100 Million From A Decade Ago [Chart]." Business Insider. Business Insider, Inc, 04 Sept. 2012. Web. 06 Apr. 2016.

CNN. Cable News Network, n.d. Web. 06 Apr. 2016.

"Economics Of The Movie Theater ? Where The Money Goes And Why It Costs Us So Much." The Movie Blog. N.p., n.d. Web. 06 Apr. 2016.

"Movie Box Office Records." The Numbers. N.p., n.d. Web. 06 Apr. 2016.

Susman, Gary. "Movies And The Economy: Courting Adults In A Time Of Declining Film Attendance." The Huffington Post. TheHuffingtonPost.com, n.d. Web. 06 Apr. 2016.

Terrorists Break Down the Economy

Rodney Brandenburg III

Mr. Reuter - B2

Econ

23 March 2016

Terrorists Break Down the Economy

As we all have seen in our lifetimes, there are groups of horrible people who try to destroy countries with violence at a completely new level. Here in the United States we have only directly felt the wave of one major event: The 9/11 attack on the World Trade Center. The immediate effect was the wave of fear sweeping over the nation and the economy was thrown down the drain. Demand had decreased severely for the airline industry, and New York was thrown into a state of chaos for a few days. The entire goal of the attack was to cripple our economy, and it nearly succeeded. We were forced to close the stock market for four trading days, which are essentially the same as business days (Monday thru Friday), in order to collect ourselves and ‘control’ the situation. Once the stock market opened up on September 17th, the DOW dropped 7.13% which remains the largest one day drop ever.

Overall, the 9/11 attack worsened the already painful 2001 recession that had started earlier that year. The attack caused the economy to contract 1.1%, which added to the debt and extended the recession. The long term effects don’t come directly from the attacks, but from the response from President Bush. The War on Terror added over $1.8 trillion dollars to the total debt of the country, which would eventually lead to the 2011 debt crisis. The debt crisis was caused by the ‘tea party republicans’ refusing to raise the Debt Ceiling, this was to attempt to prevent the national debt from rising any higher. However, in 2013, the government was forced to shut down for 16 days, due to the same reason. Even today, the 9/11 attacks are affecting the economy which shows that the terrorist group's plans had succeeded.

Attacks in France

After the major terrorist group, Al Qaeda, was destroyed we thought we had nearly won the War on Terror. We were right for a few years however, in November of 2015 a new threat emerged when bombs were detonated in Paris, France. These bombings occurred in an extremely public area and were completely uncalled for. Following the attack, reports say that the damage caused will cost upwards of €2 billion, which may only be a 0.1% decrease in the GDP of €2 trillion but for a country that hasn’t been able to have much economic growth, this decrease could be detrimental. The major source of harm to the economy may not be the attack itself, but the effects on tourism and retail trade.

The public attack would definitely cause people to rethink their trip out to France, but it would also deter the people who are already there causing them to shorten their trip and not buy the things they might have before. The decrease in tourism would effectively decrease the demand for things like ‘I Heart Paris’ shirts and all of the other kinds of souvenirs. The leads to a surplus of these items which would definitely hurt the economy, especially since France is a popular place for people to visit. In addition to the actual goods that are sold, the country will also miss out on much of its hotel and airline income since less people are going to visit. In the end, France will be able to recover from such an attack, but not before losing much of its revenue from the popular tourist locations and goods.

Attack in Belgium

Much like the events that occurred in Paris, the bombings in Belgium will definitely harm the tourism. However, Belgium is known for it’s huge spike in tourism during the Easter season. Many people chose to visit the many churches and places of worship in Belgium and with this attack people will be less likely to go. Much of Belgium's popular items like it’s chocolate will now be in a Surplus since they would produce more due to the large amount of people coming in. Since the attacks in Belgium are so recent there isn’t much to say about the long term effects, but it would most likely appear similar to the long term effects of Paris, since they both rely heavily on their tourism industry to add to their economy. Many people go straight to the physical damage caused by the terrorist attacks in countries, but the buildings, streets, and metros can be repaired. The lives are forever lost and the country remains forever changed. The economy is another thing that can be heavily altered by these events, which could lead to even an even more difficult time for the families that lost mothers, fathers, brothers, and sisters. Overall, Terrorism affects the entire country, people, governments, and the economies as well, and in the end, some of these things will never be able to return to ‘normal’.  

Amazon's Increasing Effect on the US Economy

Danae Krieger

Mr. Reuter

Economics

5 April 2016

Amazon’s Increasing Effect on the US Economy

Americans have been accustomed to shopping at the same stores, such as Walmart, J.C. Penney, Sears and Target, for their entire lives. At first they had to physically go to the store to get what they needed. Then, eventually came the luxury of making purchases from the comfort of their own homes. Despite this normality of buying the same products from the same place, Americans became eager to try a new service--Amazon--that is strictly online. It did not take long for Amazon to grow in popularity, especially since they developed the Amazon Prime membership option, which both they and the consumer benefit from. However, Amazon’s success has begun to make a negative impact on its competitors and, ultimately, America’s economy.

With an increasing demand for making purchases on Amazon, many companies are being forced to close some of their stores. Walmart, in particular, is closing 269 stores: 154 in the United States, including 4 in the Milwaukee area, and 115 overseas. This has the potential to result in the loss of up to 16,000 jobs, with 10,000 of those being in the United States. This large amount has the potential to hurt the American economy: 10,000 people being put out of their jobs means an increased unemployment rate, lower income for consumers (and therefore producers as well since the consumers can’t spend as much), resulting in the occurrence of the income effect. And this is considering Walmart’s numbers alone.

Other stores, including Macy’s, Sears, and J.C. Penney are following Walmart’s lead. Though they are not closing as many stores, they all are facing economic problems. Macy’s will close 40 locations, Sears 50 and J.C. Penney 39. These are only four of the stores on the long list of companies that have plans to close some of their doors throughout the world by the end of 2016.

In 2013 Amazon was the largest online retailer in the United States. Also, they were responsible for almost 25% of the retail sales growth in 2015. Now, the once prosperous companies that had little fear of competition are slowly getting put out of business. It seems as if Amazon is creating a monopoly, even though it will never successfully happen since monopolies are prohibited in the United States. As the illustration below depicts, Amazon was even successful in beating Apple in 2013, and by a whopping $49.6 billion.

Amazon is gaining power, and doing so quickly. It is almost scary to imagine what these numbers will look like after at the end of the year when many of their competitors have down-sized and as the number of online shoppers is expected to continue increasing (see below). It is probable that Amazon, and any comparable services that may be developed in the future, will become the preferred method of making purchases.

In an attempt to revive themselves, Walmart has plans to “invest further in online operations and pour money into improving customers' experience” which may drag down their earnings for the fiscal year as much as 12% (Associated Press). This may provide some relief to America’s economy as they and other stores battle against the overwhelming power of Amazon.

Works Cited

Tabuchi, Hiroko. "Walmart to Close 269 Stores as Retailers Struggle." The New York Times. The New York Times, 15 Jan. 2016. Web. 04 Apr. 2016.

"Wal-Mart to Close 269 Stores, including 4 in Milwaukee Area." N.p., n.d. Web. 04 Apr. 2016.

Amusement Parks

Andrew Mielke

Mr. Reuter

Economics

April 3, 2016

Amusement Parks

As a child everyone dreamed of going to Disney World, and if you were lucky that dream came true and you were able to experience the magic that Walt Disney had imagined. However, as children we never thought of the economic benefits that Disney World and other amusement parks and attraction across the world bring. The IAAPA (International Association of Amusement Parks and Attractions) did a study to specifically describe the benefits that come with amusement parks and attraction big and small.

The IAAPA researched 400 amusement parks and attractions in the United States  in 2011 there were 375 million guest annually through all of the amusement parks and attractions in the nation. The IAAPA then estimated that those 400 places produced an economic impact of $219 billion in 2011, of that $219 billion, theme parks, amusement parks and water parks then directly generated $55 billion in 2011. These numbers stem from the ticket prices, memorabilia and the many food chains that reside in amusement parks and attractions. The amount of money and that can be produced by simple attractions and amusement parks is very interesting considering that 90% of all the amusement parks operate year round. Also you would have to consider the fact that billions of dollars is also put into the upkeep and improvements that are needed to keep the parks functional.

Not only do the amusement parks and attractions produce a large amount of income, but they also are able to create millions of jobs. The amusement park industry is a leader in the creation of non-exportable jobs in the U.S.. The industry directly creates 1.3 million jobs and indirectly creates 1 million job, such as steel manufacturing, creating a total of 2.3 million jobs alone in the U.S.. Even more interesting is that of 204 people surveyed, 28% of those people said that they would want to work at an amusement park.

Another fact to ponder is that that many of the guest that go to these amusement parks go often, at almost a yearly rate.In a similar surveyed conducted like the one above 204 people were surveyed and 25% of the people said they have been to an amusement park in the last 12 months and 43% of people said they were planning on visiting an amusement park in the next 12 months, such a constant and reliable infrastructure of the amusement park industry. Many of these people that come as guest are families with children of 2-18 years of age.

The amusement park industry is one of the best and biggest in the world, not only do they have millions of people visit each year but they produce an extreme amount of money for such an enjoyable and ageless experience for all ages. Also, the amount of jobs that the industry produces is just another bright star that the industry is able to bring to the economy. As the U.S. population increases the more and more popular and successful the amusement park industry is able to become.

Works Cited

"Amusement Parks and Attractions Industry Statistics." IAAPA. International Association of Amusement Parks and Attractions, 2012. Web. 3 Apr. 2016.