FED’s Monetary Policy Meeting

Michael Miosi
AP Econ Blog
Mrs. Straub
5/1/2018

FED’s Monetary Policy Meeting

On 5/2/2018 the FED will be holding one of its 8 yearly meetings to discuss how to move forward with the economy in terms of monetary policy and what they should change before the next meeting which occurs in June. Your average American would say the small changes they may make are irrelevant and in turn just ignore the fact that it occurs, however, as you will learn by reading there really is a lot to it. In this meeting, the FED can lower, raise or maintain the federal funds rate based on how they see fit.The FED prefers keeping the Federal Funds Rate at between 2 and 5 percent as this indicates a healthy economy. In this range, the GDP grows while also keeping unemployment where it should be naturally, at around 5% as well as keeping inflation rates at or below the target of 2%.So as you can tell, they historically play changes pretty close to the chest, however, there have been times in the past that they have decided the necessary move is a drastic change. For example, in 1979, to combat double-digit inflation rates the federal funds rate was raised 20% leaving it at an all-time high. On the other end of the spectrum, the lowest mark ever was in 2008 to combat recession as the federal funds rate dropped all the way down to 0.25%. While of course since America is currently neither in a recession or experiencing extreme inflation, we can expect much smaller changes than that in this months meeting.

The impact of this meeting reaches wide as it hasn’t even happened yet and we have already seen change stem from it. Because economists believe the FED is going to be raising interest rates, investors have all been recently on a scramble to invest in the U.S. dollar as to benefit from this increase. Do to this the U.S. dollar has surged up in worth, gaining half a percent on the rate between it and the euro as well as reaching key levels on the Australian dollar, Swedish crown, Swiss franc, British pound and other emerging currencies. Now, I’m not an economist, but the topics regarding this meeting that I have discussed as well as the many others I’m sure someone more qualified could tell you, I believe it is pretty clear these meetings are important and carry a lot of weight.

Works Cited

Amadeo, Kimberly. “Highest and Lowest Interest Rates and Why They Changed.” The Balance, www.thebalance.com/fed-funds-rate-history-highs-lows-3306135.

CNBC. “FOREX-Dollar Roars into Positive Territory for 2018 before Fed Meeting.” CNBC, CNBC, 1 May 2018, www.cnbc.com/2018/05/01/reuters-america-forex-dollar-roars-into-positive-territory-for-2018-before-fed-meeting.html.

Target's Drive up Service

Target’s Drive Up Service

Jesse Weyer

Over the years major retailers such as Walmart, Sam's Club, Target and many more have been making headlines over topics varying from online ordering, wage raises, yodeling kids and much more. However, recently Target has announced their very own version of pick and saves drive up service. They are simply calling it “Drive up”. Target says that their newly introduced ship from store option where consumers could order items off the shelves and have them shipped straight to their homes become a huge success over the holiday season. Fueling the idea of consumers no longer having to wait 2 days for their items to arrive but just simply driving up to a designated parking spot. Target says the app works by guests placing an order and getting a confirmation when their order is ready (taking no longer than 30 minutes). Guests then are able to pick when they will arrive and items will be brought out to the guests car in no longer than 5 minutes. 

Dawn Block, senior vice president of Target Digital says “Stopping for diapers and toilet paper may not be glamorous, but it’s still on a lot of our to-do lists. Drive Up is our latest effort to make it easier and faster for busy guests to conveniently get what they need, and simply get back to their day.” Not only is drive up now a change to the way consumers are shopping but it also is a new generation of careers available that previously had not been. Jobs are becoming available at pay rate of Target’s  $12 minimum, adding to the overall health of the economy. 

Works Cited: 

“Drive Up : Target.” Target : Expect More. Pay Less., www.target.com/c/drive-up/-/N-9d42z.

“Target Launches Drive Up Service in Twin Cities Area – For Days When You Don't Want to Leave the Car.” Target Corporate, corporate.target.com/article/2017/10/drive-up.

Revenue Increase during the NBA Playoffs

Revenue Increase During the NBA Playoffs
Owen Krumenacher

As the NBA playoffs are now underway many teams are winning, and winning big.  Not only are they winning games they are winning when it comes to their profit gained during these next few weeks to come.  The playoffs started April 12th and will be going until at least May 31st when the finals begin.  In this time teams are going to racking in big money and TV networks are really going to be bringing in the money.
When the playoffs start, for the 16 teams involved it is a big opportunity to gain money.  Ticket prices are going to increase about 4.5%, and ticket sales will increase various amounts.  The ticket sales increase changes due to stadium seating and what a teams average sales was during the season.  In addition to ticket sales, most venues through all games played will sell-out.  For example, the Milwaukee Bucks played their first home game during their series against the Boston Celtics at the BMO Harris Bradley Center on Friday.  It was the first game all season in which the stadium sold out and had all 20,000 seats filled.  What helps with sales is the demand for tickets.  Playoff games are more rare to see, and have more consumer interest, which means it’s much easier for a consumer to buy that $98 ticket during the playoffs, compared to a regular season game ticket that costs $98  As the average ticket costs around $98, for the Bucks that means they made around $1,960,000 off the one game.  This story is the same for all teams that are participating in this years playoffs.
It’s not only an increase in ticket sales that is bringing in the money, there’s concessions sales and merchandise sales.  When your team makes the playoffs, instantly merchandise that states somewhere that the team is in the 2018 playoffs is made and then sold at the stadium.  With people coming in, now that the shirts or sweatshirts say 2018 playoffs people are sure to buy it, and when one sweatshirt costs upwards of $40 and possibly $50, just off two sales that’s $80-$100 dollars for the team.  In addition to the merchandise, many teams have even stated they are rising concessions stand prices.  An example of this is the Boston Celtics.  The stated they will be increasing prices of the their concessions stand items.  The percentage they increased their product buy is not known, but not matter what it is, an $11 Cheeseburger and fries is always going to be  a lot, and always going to be profitable.

Outside of teams making money, it expands to the companies who provide the games on TV.  ESPN, ABC, TNT, and many other companies are making around $3 million a game off of viewership and ad revenue.  For a company to make an ad and get it put on during the game comes at a hefty price.  It isn’t close to what it costs for the Superbowl, but it has the same increasing trend.  WIth these prices in place it makes gaining profit much easier for both the NBA and the network companies.
Lastly, cities hosting make money off the playoffs.  Just like any other sporting event you get people coming in from the opponents state, and you also have your own fans coming to your area for the day.  With this, cities are seeing an increase in spending each day there is a game held.  Many fans after the game or before are going to go out and eat, or spend their time doing something that is going to cost them, and the local businesses and city win in this case. 
Overall all sporting events have an economic impact on their team and local area, but the playoffs help more than others.  Although prices aren’t as high as Superbowl tickets, or World Series prices, what makes a big impact is the length.  When the playoffs almost span an entire two months, that’s two months of high spending and a high revenue increase.



Works Cited
“2018 NBA Playoffs Schedule, Matchups and News.” ESPN, ESPN Internet Ventures, 19 Apr. 2018, www.espn.com/nba/story/_/id/23027084/2018-nba-playoffs-schedule-matchups-news.
“Boston Celtics Tickets.” Boston Celtics, www.nba.com/celtics/tickets.
Himmelsbach, Adam. “Rising Ticket Prices and a Waiting List Are Byproducts of Celtics' Upward Trend - The Boston Globe.” BostonGlobe.com, www.bostonglobe.com/sports/celtics/2018/04/01/celtics-continue-hot-ticket/Xv6EiRaxSGpJdbWqXGSf6M/story.html.
Imgur. “Concession Stand Prices at the NBA Finals.” Imgur, 5 June 2015, imgur.com/gallery/mI8eT34.
“TD Garden – Boston Celtics.” Stadium Journey, stadiumjourney.com/stadiums/td-garden-s93.

The Harmful Effects of Yang's Universal Basic Income

The Harmful Effects of Yang’s Universal Basic Income

Recently a newcomer to the political scene, Andrew Yang, has announced that he will be running in the 2020 presidential campaign on the democratic platform. While a new candidate is relatively boring news, Yang’s entire campaign rests on his idea to “implement a Universal Basic Income, ‘the Freedom Dividend,’ of $1,000/month, $12,000 a year for every American adult between 18 and 64”(The Freedom Dividend). Universal Basic Income, referred to as UBI from here on out, isn’t a particularly new idea. But it has been gaining some traction within particularly left leaning groups because of recent advances in automation.

Yang’s believes that implementing UBI is necessary because according to him automation will upset America’s economy by displacing enough workers to cause either a significant depression or at the very least more poverty. Here’s the catch that Yang likes to brush over though, a conservative estimate of the number of eligible citizens is 201,945,890(U.S. Census Bureau). Which means that the cost of implementing his UBI is about 202 billion usd a month or $2.43 trillion annually. That number is over half the total U.S. federal budget last year and more than four times the annual military spending. To put that into perspective, if the U.S. Government were to cut all subsidies and spending in: Medicare and Health, Military, Food and Agriculture, Education,Transportation, Science and Environmental efforts then there would be just enough money to implement UBI, assuming there was still a country left to give it to and no government overhead.

So something's got to give obviously, and that “thing” is that Yang proposes a 10% VAT in order to cover about a third of the UBI costs. He has yet to state how he will get the rest of the money. For those that don’t know, VAT stands for value added tax and functions essentially the same as a sales tax, but with the producer paying the tax instead of the consumer. The effects of such a tax are quite simple, prices of goods and services affected will go up in price by about 10%, or more accurately, the supply graph in a supply and demand graph will shift upwards resulting in a new equilibrium price that in this case will be about 10% higher.


Value added taxes are dangerous for several reasons. First of all, they are hidden from consumers. If you or I went to buy gas there is no way for us to know whether the government is taking 5% of our purchase or 20% despite still having to pay that amount of money. Secondly, VAT is regressive since it is a consumption based tax meaning that you are hurt more the poorer you are. Considering that this tax is supposed to fund a program to help poor people that seems a bit backwards to me. Additionally, taxes beyond a certain level have been proven to reduce economic growth(Gale) which means that the quality of life overall will not increase as quickly as it has in past, potentially leading actually worse conditions for Americans even with an extra $1000 in their pocket every month. Unfortunately the economic effects of a rise in taxation as extreme as this one is unstudied, but they will for sure be harmful to the economy.

Yang hopes that the economic benefits of automation and more spending money for low income groups will offset the tax burden, but even optimistic economists are quite uncertain about the effects of UBI since the trials in Canada and Scotland are under a year old and the trial by the Finnish government only targeted unemployed citizens There are a couple of other problems theorized to be inherent to UBI that I haven’t mentioned yet. For one, the inflation of prices for staple goods and services such as food and housing is likely to increase as an increase in disposable income could shift the demand curve to the right. Unemployment would also decrease significantly since UBI is a disincentive to work. This unemployment means we produce less as a country, meaning we have less money, making UBI even harder to pay for.

Finally consider immigration problems. What will certainly happen if the U.S. were to start giving all people “free” money? We become an immigration hotspot for everyone, which means that the smart and productive potential immigrants are less likely to get in and we will be flooded with immigrants that provide no value. Additionally, the increased taxes will cause companies and people capable of moving away to do that. Without the rich paying the taxes the government would have to increase taxes more, causing more people to move away, eventually ending up with a situation like Chicago; and let me tell you, the U.S. does not want to emulate Chicago.


Works Cited
“File:TaxWithTax.svg.” Wikipedia, Wikimedia Foundation, en.wikipedia.org/wiki/File:TaxWithTax.svg.
Gale, William G., and Andrew A. Samwick. “Effects of Income Tax Changes on Economic Growth.” Brookings, Brookings, 8 Aug. 2016, www.brookings.edu/research/effects-of-income-tax-changes-on-economic-growth/.
“The Freedom Dividend.” Andrew Yang for President, Andrew Yang, www.yang2020.com/policies/the-freedom-dividend/.
“U.S. Census Bureau QuickFacts: UNITED STATES.” Census Bureau QuickFacts, 2018, www.census.gov/quickfacts/fact/table/US/PST045217.

Walmart

Austin Salbeck




With all of the different businesses out in retail, Walmart and there partner company Sam’s Club, are some of the most successful businesses still around for over 40 years the company has been growing and growing. Founded by Sam Walton, Walmart was to help customers get what they needed and also their employees by giving a various amount of jobs and all different positions. 

As of late last year, Walmart has been closing down their grocery stores known as the neighborhood markets costing people their jobs and removing a local store out of some areas. Now as of earlier this year, Walmart and Sam’s Clubs have closed over 60 stores affecting thousands of workers and customers. Employees were given no information about this prior until the day of closing. After this Walmart also eliminated some of their higher positions in stores such as some management positions on no notice as well. I find this to be strange as Walmart has been making more and more profit over the years and that there are stores all over states and even in some other countries as well and then they give no notice to employees about them being let go from their jobs. I find this to be morally wrong and then afterwards, they decide to give new employees and some current positions as well an increase by a dollar every hour. It may seem like a little amount but it all adds up in the end. Even though Walmart is a large company, you would think they would have some decency to tell their employees that they lost their jobs due to the store shutting down then just letting them come to their store and see a large “Closed” sign.

Works Cited

Peterson, Hayley. “Walmart Is Abruptly Closing 63 Sam's Club Stores and Laying off Thousands of Workers.” , Business Insider, 11 Jan. 2018, www.businessinsider.com/walmart-suddenly-closes-sams-club-stores-2018-1.

Trump’s Budget Affecting Women

Trump’s Budget Affecting Women
By: Hunter Hext

The movement of Women’s Rights has been a hot topic dating all the way back to the mid 1800’s. Throughout the years women have gained many opportunities in the workforce from earning middle management positions to running for president. However, recent budgeting by the Trump Administration is hurting foundations supporting women. A form of gender-based budgeting found that the deepest cuts in the budget were in programs that spent more on women than on men. A few of the main ones were in Medicaid, housing assistance, and low-income energy assistance. The main reason that these three will be the big sores for women organizations is because typically women benefit from social safety net spending more than men. In fact, women receive roughly 70 percent of their total spending from Medicaid. This will lower the consumer spending because women won’t feel as though they can put their money into a foundation that’s getting cutted financially. In addition to Medicaid, the budget also plans on cutting food stamps where the majority of these funds are spent on women.

Trump’s cuts in the budget for women organizations could either hurt or help us from a foreign exchange standpoint. Many women organizations are not just international, but reach out globally, touching many countries that the United States trades with or helps out. The budget cuts could hurt from a health standpoint, in the sense that foreign aid is allocated for vaccines, health services, and HIV/AIDS treatments. If these things our cut out of the picture, it is likely that countries will view the United States negatively, possibly affecting the trade from smaller countries to the United States. 




On the contrary of implementing a budget deficit in regards to women, Trump is planning on performing a budget surplus in regards to men. The largest concern in Trump’s eyes is the unemployment insurance for men. Under Trump, the government spending is going to boost
to make up for the lost consumer spending.

Personally, I believe funding cuts for things such as reproductive health are doing much more than strictly improving women's health. In fact, it pauses the need to create the conditions that allow both women and girls to make positive decisions in their everyday live and also gives them more control over their futures. In cutting access to these foundations, female education is hindered and so is their ability to earn sustainable incomes and participate actively in society. Equal spending for females can potentially build the economic, political, and social aspects of our economy. After all, everyone is going to pay the same price for a bag of chips at the local Pic ‘N Save.

Works Cited

Bui, Quoctrung, and Susan Chira. “How Trump's Budget Affects Women.” How Trump's Budget Affects Women, The New York Times, 24 May 2017, www.nytimes.com/interactive/2017/05/24/upshot/how-trumps-budget-affects-women.html?rref=collection%2Ftimestopic%2FEconomics&action=click&contentCollection=timestopics®ion=stream&module=stream_unit&version=latest&contentPlacement=17&pgtype=collection.

“This Is How Trump's Proposed Budget Cuts Will Hurt Women and Girls Around the World.”Global Citizen, www.globalcitizen.org/en/content/stop-the-cuts-to-womens-programs/.

China-U.S. Tariff Dispute

China-U.S. Tariff Dispute

Written by: David Bell

If you have been watching the news lately, there is a dispute between China and the U.S. regarding tariffs. China has imposed a tariff of up to 25% on 128 american goods. This is targeting goods such as pork, wine and fruits. Those products had a worth of up to $3 billion for our economy.

Although this sounds bad for the U.S. because we are going to need to pay more for these goods since China imposed a tariff on them, President Trump has imposed $60 billion of tariffs on alleged intellectual property theft on China. To make that more clear, China has stolen some of our trade secrets and is now selling them for cheaper. For example,  American Superconductor started doing business in China. The company partnered with Sinovel, which manufactured the wind turbines while American Superconductor made the technology that powered the turbines. This partnership turned AMSC into a billion-dollar business. They built a factory in China, a design center in Europe, and added hundreds of jobs in both of those countries (Massachusetts).

  After working so well together, Sinovel started to show signs of refusal. They owed AMSC about $70 billion on a shipment it had already received, and also refused a shipment that was ready to go. The AMSC stock price had been almost cut in half overnight, losing about a billion dollars in shareholder equity causing them to cut around 700 jobs. McGahn, CEO of AMSC, said “Wall Street had written us off as dead”. That is a big deal for a company, when a credible source that many people rely on called your business “dead”. The graph below shows how from the years 2000 to 2007, China’s IP theft cases were increasing dramatically.

                                                                                   

(Fig. 1. This shows the IP theft cases for China between the years 2000-2007)

After the refusal of many shipments, AMSC was wondering why China stopped doing business with them. After investigation, Dejan Karabasevic, an employee of AMSC confessed to giving China the source code for the wind turbines because China bribed him with $2 million, women, an apartment, and a whole new life in China.

You are probably wondering how IP theft relates to tariffs. Well if a country's trade secrets are being stolen by a country that they do a lot of business with, you are going to put tariffs on the goods that the other country needs out of retaliation. In this case, imposing tariffs on goods that China needs will cause a lot of positives and negatives for the economy. A positive would be that we impose tariffs on goods that China is very dependent on so in the long run we earn more money on those goods. A negative to imposing tariffs would be that China might retaliate and impose tariffs on the good we are dependent on. And when retaliation happens between countries it is called trade wars. I feel as though trade wars and tariffs are means of negotiation, if done right, they will benefit the Economy. If both parties come out of the negotiation feeling equitable about the situation, they will feel that it was a success.

You might say that imposing tariffs on goods that China buys from us will cause our economy to lose money, but in reality, trade wars and tariffs help regulate the prices to better our economy as a whole in the long run.

Works Cited

“Here's How the China-U.S. Tariff Talks May Already Be Hurting America's Job Growth.” Fortune, fortune.com/2018/04/23/tariffs-trump-china-list-trade-war-jobs/.

Lawder, David, and Howard Schneider. “Donald Trump's next Chinese Tariffs Likely to Hit Consumers' Wallets.” Global News, 22 Apr. 2018, globalnews.ca/news/4159908/donald-trump-chinese-tariffs-effects/.

The Massachusetts-based energy technology company won a landmark case in January against its former Chinese partner Sinovel. “Chinese Trade Secret Theft Nearly Killed My Company.” CNNMoney, Cable News Network, money.cnn.com/2018/03/23/technology/business/american-semiconductor-china-trade/index.html.

The United States has long said that intellectual property theft has cost the US economy billions of dollars in revenue, and thousands of jobs. “How Much Has the US Lost from China's Intellectual Property Theft?” CNNMoney, Cable News Network, money.cnn.com/2018/03/23/technology/china-us-trump-tariffs-ip-theft/index.html.