National Defense Spending - Is an Increase Necessary?

 National Defense Spending - Is an Increase Necessary?

Written by: Dom D. 

The conflict between Russia and Ukraine has raised defense spending not only across the warring countries, but in the United States as well. The graph below displays national defense spending in 2020 to showcase just how much it increases across a span of 2 years: During the month of March following the initial invasion, president Joe Biden called for a 30 billion dollar increase on national defense spending, from 782 billion to 813 billion. The unanticipated 4% increase in budget made some happy, but several members of congress called for a minimum 5% increase and as much as a 7% increase. Though the U.S. has made it clear that they intend to stay out of armed conflict with Russia, national defenses are still being bolstered in response to the war. This supposed conflict of interest raises an important question: Is this increase in spending necessary, and when it takes effect, what will it do to the economy?

To trace the roots of whether the spending is necessary, it is important to refer to the fiscal policy and the allocation of funds in relation to achieving macroeconomic objectives. The federal budget, which is used to sustain economic growth and price level stability, plays a large role in government spending tactics. Increasing spending toward the military is an example of expansionary fiscal policy, but this can have some negative ramifications for our current economic climate. The United States is currently facing an inflation crisis, with energy bills increasing by 30.3%, food prices increasing by 9.4%, and vehicle costs increasing by 13.2%. An expansionary fiscal policy could damage the economy by further widening the inflationary gap we already face. As mentioned earlier, there is talk about needing to increase the national defense spending further, even more than what Biden has already proposed. The argument to increase spending correlates with expansionary fiscal policy due to the fact that the addition of this policy would cut tax rates while also increasing government spending in order to “put more money into consumers' hands to give them more purchasing power; It also reduces unemployment by contracting public works or hiring new government workers, both of which increase demand and spurs consumer spending, which drives almost 70% of the economy” (Amadeo, 2022). While this sounds like a good thing, more disposable income and job availability will only lead to further inflation. As shown by the graph below, increasing defense spending will increase consumer demand and shift the aggregate demand curve to the right, increasing the inflationary gap already seen.

Now that we have established how the increase occurs for national defense spending and the strong forces behind this change, is it now time to figure out exactly why Biden, the rest of congress, and the general public want to see this increase. There is the argument that increasing national defense spending could still benefit the economy in some way, but there are still more effective means of stimulating or contracting an economy than through military funding. The consensus among economists is that, “A larger budget gives the country more funds to promote and defend its global interests, but it also reduces funds available for domestic programs, including those that might do more to boost economic growth” (Rooney et. al, 2021). Military spending may provide new jobs as a side-effect, but its main purpose is for defending our global interests, and the money would be better spent to benefit jobs programs, if necessary. With the United States’ position in the conflict firmly neutral and military spending not being an effective medium for economic change, I see no reason as to why national defense spending should increase any further.

Works CIted

Mcleary, Paul, Lee Hudson, Connor O’Brien and Bryan Bender. “Biden requests $813B for national defense.” Politico, March 28, 2022 

https://www.politico.com/news/2022/03/28/biden-requests-largest-defense-budget-00020859

Amadeo, Kimberly. “Expansionary Fiscal Policy and How It Affects You.” The Balance, April 5, 2022

https://www.thebalance.com/expansionary-fiscal-policy-purpose-examples-how-it-works-3305792 

Rooney, Bryan, Grant Johnson, and Miranda Priebe. “How Does Defense Spending Affect Economic Growth?” RAND Corporation, 2021. https://www.rand.org/pubs/research_reports/RRA739-2.html 

“United States Inflation RateApril 2022 Data - 1914-2021 Historical - May Forecast.” United States Inflation Rate - April 2022 Data - 1914-2021 Historical - May Forecast, https://tradingeconomics.com/united-states/inflation-cpi 

Impacts of Inflation on Automobiles

 Impacts of Inflation on Automobiles

Written by: Emma K. 

The world as we know it today is run on automobiles. As of 2019, there were 276 million registered vehicles in the United States (“Car Ownership Statistics” Lena Borrelli 2021)- a number significant enough where anything done to disrupt its market would create an immense impact on the economic state. Recent events involving the inflation of gas and the price of cars in general, have caused tremendous impacts on the economy and US citizens, looking to see if a better fate is on the horizon. 

In order to understand where we are at today, it is important to first look at how we got here. Taking the increase of car prices, especially used, into consideration, the inflation was caused by many different factors, but arguably, the root of the issue stemmed from the supply of a chip that is installed in cars. The shortage of a seemingly, simple chip caused more trouble than one would assume. These chips are responsible for many essential roles in cars such as: powering the dashboards and diagnostics- without these chips, new cars cannot be produced. However, the inflation was not necessarily seen as intensely with new cars.  As seen in the Bureau of Labor Statistics, accessed via FRED, the rate of inflation on used cars and trucks is not only the highest since 2008, but also, much higher than the increase on new vehicles. So what does the shortage of a chip that is installed in new cars have to do with the price of used cars? Shouldn’t the price of new cars rise too? Well, as the new car market is scarce, consumers turn to the used car market instead. As the demand for used cars increases so does the price. Normally, as these prices continue to rise, they must eventually stop before rising above the price of new cars. However, due to the shortage of new cars, there doesn’t seem to be a cap for where these prices stop. 

Not only has the actual price of vehicles increased, but so has the price of owning one. “On Monday, 3 January 2022 AAA reported that the average cost of a gallon of gas was $3.28 after steady growth since hitting a pandemic low of $1.94 in May 2020” ( “What has been the increase in the price of gas in 2022?” William Gittins). Even in the past few weeks, the gas prices have seen another increase. It is no surprise the prices rose again after the pandemic low reported by the AAA, but the war in Ukraine has continued to accelerate the increase to an unheard degree.  In order to support the Ukranians, the United States halted imports of Russian oil. Unfortunately, as our oil supply then decreased, the prices of oil inflated immensely, as seen.

Clearly, from the inflation across the board, it seems as though it is becoming a luxury just to own a car. For consumers, the impact hasn’t been small. Ryan Kelly, Chris Kukla, and Ashwin Vasan at the Consumer Financial Protection Bureau released an article stating that they believe that as the size of car loans increases, it will put more pressure on the budget of the consumer. Specifically they share, “Auto loans are already the third largest consumer credit market in the United States at over $1.4 trillion outstanding , double the amount from 10 years ago and expected to grow further”. As consumers can see a rough market in front of them, it causes them to be less likely to participate, only lowering the aggregate money supply. It also doesn’t help encourage consumers to spend when the price of gas is so high. With consumer’s seeing a need to be more cautious with their money, the stimulation of the market is dropping.

An efficient economy cannot continue like this forever, so how the United States moves forward to improve the market for cars will be essential. Many sources state that prices of cars won’t be coming down anytime soon.The key will be fixing the supply of new cars. However, there is more hope for the prices of gas. Advisors from Forbes created a list of four things the White House is hoping to do to combat the inflation of gas including: authorizing E15 gasoline sales this summer, implementing a gas tax holiday, releasing oil from the strategic reserves, and lifting sanctions on Venezuela. If success can be found in decreasing the price of buying and owning a car, positive economic effects can be found as consumers will be more willing to invest and spend their money. 

Borrelli, Lena. “Car Ownership Statistics.” Bankrate, www.bankrate.com/insurance/car/car-ownership-statistics/#:~:text=There%20are%20276%20million%20vehicles%20registered%20in%20the%20U.S.%20as%20of%202019.

Ryan Kelly, Chris Kukla. “Rising Car Prices Means More Auto Loan Debt.” Consumer Financial Protection Bureau, 24 Feb. 2022, www.consumerfinance.gov/about-us/blog/rising-car-prices-means-more-auto-loan-debt/.

Smialek, Jeanna. “Few Cars, Lots of Customers: Why Autos Are an Inflation Risk.” The New York Times, The New York Times, 10 Apr. 2022, www.nytimes.com/2022/04/10/business/economy/cars-inflation.html.

Smith, Kelly Anne. “4 Ways the White House Wants to Lower Gas Prices-Will They Work?” Forbes, Forbes Magazine, 13 Apr. 2022, www.forbes.com/advisor/personal-finance/how-will-gas-prices-go-down/.

Thompson, Wesley Wren and Keenan. “Here's What's Going on with Used Car Prices-It's Not Just Chips.” Autoweek, Autoweek, 1 Nov. 2021, www.autoweek.com/news/industry-news/a36863741/used-car-prices-skyrocketing/. 

The Wisconsin Housing Market

 The Wisconsin Housing Market: 

Written by: Mitchell Eldredge 

What are some recent effects of the housing market in Wisconsin?

As of 2021, the total value of housing in Wisconsin had the greatest rate of increase in about 15 years. As a consumer in the market for a house, this could come off as frightening because the spread of homes available is lessening while the price of each is on a great increase. The average value of a single residential property in Wisconsin increased at a rate of 34.4% from $126,500 to $170,000 in a matter of 6 years. This is considered a statewide increase, however the urban counties that took the greatest hits include Milwaukee, Winnebago, and Kenosha. There are many that are being affected, however the majority are millennials; this is because in the past 3 years, millennials in the housing market have increased to a great extent. 

Why is this happening?

According to the Wisconsin Realtors association, the increased rates across Wisconsin are mainly due to the recent inflation. However, other factors include an increase in the amount of millennials reaching the age in which they are in the market for a house as well as a limited supply of homes. In 2021, the percentage of millennials (ages 23-31) in the housing market rose to 43% from 37% the year previously. During the beginning stages of Covid-19, millennials took advantage of the pandemic and cut their costs of rent by moving in with family. As a result, in 2019 those under the age of 25 accounted for only 14.86 percent of the total housing market. This number has more than doubled in 2 years as the nation has progressed through Covid-19.  As a result of inflation, construction costs have increased significantly and with this, there have been persistent labor shortages in wisconsin. Evidently this has led to a housing shortage statewide. 

Bibliography

Daykin, Tom. “The Value of Wisconsin Properties Sold in 2021 Increased at the Fastest Rate in 15 Years. It's Another Sign of a Strong Housing Market.” Milwaukee Journal Sentinel, Milwaukee Journal Sentinel, 24 Mar. 2022, https://www.jsonline.com/story/money/2022/03/24/wisconsin-home-property-sales-values-increased-rapidly-2021/7142902001/. 

“January 2022 Home Sales Report.” Wisconsin REALTORS® Association, https://www.wra.org/HSRJan2022/. 

Giovanetti, Erika. “'Wave of Millennial Buyers' Flood the Housing Market amid Record-High Home Prices: Report.” Fox Business, Fox Business, 6 Apr. 2022, https://www.foxbusiness.com/personal-finance/millennial-homebuyers-housing-market-rising-prices. 

The Economic Effects of China’s “Zero COVID” Policies

 The Economic Effects of China’s “Zero COVID” Policies

Written by: Will Smyczek

Although it is essential for China to keep its citizens safe and healthy, there is a certain point when changes need to be made to uphold economic growth and stability for the greater good of the citizens and people of the workforce.

The “Zero COVID” policies that China has implemented have damaged their economy and is something to keep an eye on for the rest of the world as well. If you are unfamiliar, these policies include mass testing, border restrictions, and strict lockdowns. They held a teleconference with more than 100,000 officials in China to discuss keeping the economy strong and focusing on growth looking into the future. 

So how bad is it? With a record-breaking number of students about to graduate from colleges, there is a youth unemployment rate of 18.2%, this will have a strong impact on these students as they enter the workforce and begin their careers. The timing couldn’t possibly be worse for them to graduate as many will likely miss out on opportunities or have to postpone prior career plans a few years when the economy might be stronger. 

With on-and-off lockdowns, due to the omicron variant spreading to China, affecting many cities, including the capital of China, Shanghai, factories have been shutting down, and later opening back up again for production. Citizens or “consumers” have been restricted to their homes as well. This has led to China’s GDP growing only 4.8% in the first 3 months of 2022, with the goal of 5.5%. Considering the lockdowns and current condition of China with the “Zero Covid” policies. The economy can certainly reach their economic goals if they decide to diminish these policies. 

Since these policies were implemented, the cases in China have made up only a small fraction of the amount compared to the USA, so they are clearly effective for keeping citizens safe, however the economic and social impacts will come back to bite them if they don’t address the other concerns that come along with this COVID prevention strategy. 

These policies can be pretty difficult on citizens with the contact tracing and mass testing. Let’s say you lived in an apartment in Beijing, if there were 300 people who lived in your apartment complex and only one resident tested positive, everyone would have to stay isolated at first and be tested every 48 hours. Roads have been blocked to prevent people from traveling. Some of these policies create great inconveniences that have a potent effect on citizen’s lifestyles. “There will likely come a point when the costs [of zero COVID] outweigh the benefits,” says Zhangkai Cheng, a respiratory specialist at Guangzhou Medical University. “Whether that point has arrived is up for debate.”

The World Health Organization had some concerns with these policies as well. "The virus is evolving, changing its behavior," said Dr Tedros Adhanom Ghebreyesu of the WHO. "With that... changing your measures will be very important." Although the omicron variant is more contagious, it comes with a lower risk of hospitalization. This backs up the point that it is vital to protect the safety of your citizens, but at the same time, weighing your options to make sure that what you are doing is most valuable is key.

Considering the greater likelihood of the omicron variant spreading, it simply doesn’t make sense to shut down large cities after only a handful of cases. This is a good concept to safeguard the health of citizens in China, but the economic and social punishments are far too severe to ignore. Dialing back these policies and making them a little bit less harsh will dramatically improve the economic state of China.

Sources Cited

Chengevelyn. “China Holds an Unprecedented, Massive Videoconference on the Economy.” CNBC, CNBC, 27 May 2022, https://www.cnbc.com/2022/05/26/china-holds-an-unprecedented-massive-videoconference-on-the-economy.html.

“China Quietly Plans a Pivot from 'Zero Covid'.” Science, https://www.science.org/content/article/china-quietly-plans-pivot-zero-covid.

“Foreign Investors Are Fleeing China.” The Economist, The Economist Newspaper, https://www.economist.com/finance-and-economics/2022/05/22/foreign-investors-are-fleeing-china?itm_source=parsely-api.

“How Xi Jinping Is Damaging China's Economy.” The Economist, The Economist Newspaper, https://www.economist.com/leaders/2022/05/26/how-xi-jinping-is-damaging-chinas-economy.

Mozur, Paul, and Alexandra Stevenson. “In China, Concerns Grow over the Economic Impact of 'Zero Covid.'.” The New York Times, The New York Times, 26 May 2022, https://www.nytimes.com/2022/05/26/world/asia/china-economy-zero-covid.html.

Song, Wanyuan. “China: Why Is the Who Concerned about Its Zero-Covid Strategy?” BBC News, BBC, 17 May 2022, https://www.bbc.com/news/59882774. 

College Tuition Skyrocketing

 College Tuition Skyrocketing

Written by: Aiden Burkemper 

It’s no secret that college is expensive and the price of tuition is only going up but why is that? There are numerous factors relating to college tuition rising at a rapid rate, before getting to that we should first take a look at how much college tuition has actually risen. 

“In 1980, the price to attend a four-year college full-time was $10,231 annually—including tuition, fees, room and board, and adjusted for inflation—according to the National Center for Education Statistics. By 2019-20, the total price increased to $28,775. That’s a 180% increase.” (Forbes.com) That is a huge increase especially when adjusted for inflation as the cost on average to go to college now is almost triple the cost just 40 years ago that is a concerning increase. Within a few more decades that cost of tuition on average will only continue to rise at that rapid rate which will greatly affect future generations as it already has massively affected this generation with over half of students who receive their bachelor's degrees ending up in thousands of dollars of debt. 

There are a few reasons for why colleges and universities are rising so fast, one of them is because of how much more colleges offer now, they offer many more courses, extra help, mental health help, and so many more great things which makes the schools cost more to attend to make up for the extra costs on the school to get these things. 

Another reason is the rising demand for colleges and limited supply for this rising demand. “Between 1990 and 2020, the total number of college students in the U.S. increased from 13.8 million to nearly 20 million.” (affordablecollegesonline.org) With college degrees becoming vastly more important in today’s society to get better and more desirable jobs students are much more encouraged to attend universities to get these degrees which gives colleges a reason to increase prices because they know students need these degrees more and more and are willing to spend more. Colleges are essentially an oligopoly as they have very limited competition that being other universities which allows them to raise prices without driving consumers out of the market which has partly led to this massive increase in cost of tuition. 

Another reason is the cost of administration services is growing as now there are so many more employees employed in colleges to help with the administration, registration, etc. That now college professors don't even make up half of the employees, paying these salaries costs lots of money and because of that prices for students to attend these colleges gets driven up. 

There are many more reasons why the cost of college has risen so dramatically, but it is clearly becoming a problem. “College costs outpaced inflation by 28 percent at public institutions and 19 percent at private nonprofit ones in the decade preceding the pandemic, according to the National Center for Education Statistics.” With how bad inflation is getting recently this tuition problem is shockingly bad and continuing to get worse and something needs to be done with these students suffering from thousands and thousands of dollars in debt justy getting a bachelor's degree, not to mention the students furthering their degrees past that. If something isn’t done soon students will continue to suffer. 

Work Cited:

McGurran, Brianna. “College Tuition Inflation: Compare the Cost of College over Time.” Forbes, Forbes Magazine, 28 Mar. 2022, https://www.forbes.com/advisor/student-loans/college-tuition-inflation/#:~:text=Between%201980%20and%202020%2C%20the,there's%20more%20to%20the%20story. 

“Tuition, Fees Continues to Rise as Pandemic Inflation Woes Hit Colleges.” NBCNews.com, NBCUniversal News Group, https://www.nbcnews.com/news/education/tuition-fees-continues-rise-pandemic-inflation-woes-hit-colleges-rcna14292. 

“What Factors Are Driving Rising College Costs?” Affordable Colleges Online, 14 Jan. 2022, https://www.affordablecollegesonline.org/college-resource-center/news/what-factors-are-driving-rising-college-costs/#:~:text=Rising%20Demand%20and%20Limited%20Supply&text=The%20pressure%20to%20pursue%20higher,colleges%20to%20raise%20their%20prices. 

Drive a Tesla, Save Your Wallet Not The World

 Drive a Tesla, Save Your Wallet Not The World

Written by: Isaiah Wilson 

A trip to the gas station used to be filled with very little emotion, a few candy bars, and maybe a soda, but now it is an experience drivers, young and old, are beginning to hate. With the cost of regular gas soaring above $4.00 per gallon, many US drivers ask themselves who's to blame, and the truth is, there are many different reasons for the recent pain at the pump. Federal taxes account for about 18 cents per gallon currently. The cost of crude oil continues to rise, and due to the elasticity of gas, almost all of these expenses get pushed onto us, the consumers. So with the price of gas only seeming to know one direction, is it time for us to head to the nearest Foot Locker and get the best pair of walking shoes money can buy, or is there an alternative? 

Many say no. 

The solution may just come from the well-known Tesla brand electric cars. As more and more consumers become accustomed to the idea of driving past their friends in a piece of electro-automotive glory, more people begin to ask themselves if it's worth it. An article by FinanceBuzz.com ran the numbers, and they add up to an economic nightmare for gas-guzzling drivers. If you were to drive a Toyota Camry that gets about 32 MPG and drive 15,000 miles per year by the end of one year, you'd be at about $1,589 in gas, says Finance Buzz. Conversely, if you were to drive a Tesla Model S the same distance, you'd only be spending roughly $555. So with over a $1000 difference, the answer seems simple right? Well, not exactly installing your at-home Tesla charger can be pretty pricey, so let's look at how this looks over a few years of driving. 

Even despite a hefty upfront cost by year two, the Tesla yet again has the Camry beat, and this time it's by nearly a grand. 

As young people without oodles of expendable income, it may not make sense to jump on the newest Tesla and watch your ROI soar. However, as a world of high gas prices and inflation becomes one that we seem to be endlessly trapped in, maybe a trip to the Tesla dealership is worth the drive. 

Works Cited

Runkle, Larissa. “Is a Tesla Worth It? We Compare All the Numbers to a ‘Normal’ Car.” FinanceBuzz, 6 May 2022, https://financebuzz.com/is-a-tesla-worth-it. 

Tepper, Taylor. “Why Is the Price of Oil Rising?” Forbes, Forbes Magazine, 14 Mar. 2022, https://www.forbes.com/advisor/investing/high-oil-prices/. 

“Why Are Gas Prices so High, and What Will Bring Them down?” NBCNews.com, NBCUniversal News Group, 12 May 2022, https://www.nbcnews.com/business/consumer/why-gas-prices-high-when-will-back-down-rcna28314. 

Social media was one of the most impactful additions to the field of marketing.

 Social media was one of the most impactful additions to the field of marketing.

By: Justin Wiggins

The first social networking site that resembled our modern depiction of social media was SixDegrees.com. SixDegrees was founded in 1997 and began a new era of marketing strategy, but it wasn’t until 2006 when Facebook signed the first social media Ad deal, “a display partnership with JP Morgan Chase to promote Chase credit cards.”

This Ad deal was quickly followed by YouTube launching ads in 2007, Twitter doing the same in 2010, Instagram and Pinterest in 2013, and finally Snapchat in 2014. This new era of advertising was marked by the development of targeted advertisements.

Targeted advertisements allowed for a far more precise and dexterous use of advertisements. Since people were already logging into social media platforms such as Facebook and YouTube with their age and gender, basic assumptions could be made about their preferences in products, and more importantly, the marketing style that they’re most receptive to. These basic statistics on their own are quite powerful marketing tools, but when combined with the data gained from countless hours of media consumption, advertisers are able to become as persuasive as someone who has known you for years.

All of this new and shockingly precise data that is available to anyone who will pay for it, creates a clear demarcation between the old era of marketing and contemporary marketing. The gap between these two marketing eras is so vast, that I would go as far as to say that it’s one of the most influential and impactful additions to the field of marketing.

Why the Music Industry is one of the most important industries

 Why the Music Industry is one of the most important industries

Written by: Jack Davis 

Everyone is aware that the music industry is quite a large industry. Through research, I discovered that it is actually quite larger and impactful than I had originally thought. Contributing a staggering 170 Billion USD to the annual GDP, as well as employing 2.5 million people nationwide, the Music Industry is one of the most important industries in the US. 

Starting off, the music industry contributes around 170 Billion USD to annual GDP every year. This is a massive amount of money, and it has been increasing due to streaming becoming more accessible and easier to come across. According to IFPI, there were 341 million paid music subscriptions by the end of 2019, which is slightly less than 11% of all smartphone users. These are massive numbers, with large amounts of money circulating due to streaming alone, not to mention concerts and the creative process. Spotify alone has 182 million Spotify Premium users worldwide, according to statista.com.

As you can see, Spotify's monthly active users has only increased since 2017, and has shown no sign of slowing down. This is how streaming plays into the massive GDP boost that the music industry delivers. This is one reason why I think the music industry is one of the most important industries in the US.

Aside from raking in the sheer amount of money that it does, the music industry also employs 2.5 million Americans, according to riaa.com, a well reputed company in the music industry. According to statista, there are 157.54 million people employed in the US. This means that 1.59% of all employed Americans are employed in the music industry. The vast majority of these employees come from live performances, distribution, travel, recording, and streaming. This just helps create an idea of how large the industry truly is, and why it is one of the most important industries in the US.

Works Cited

Götting, Marie Charlotte. “• Spotify users - subscribers in 2022.” Statista, https://www.statista.com/statistics/244995/number-of-paying-spotify-subscribers/. Accessed 30 May 2022.

Lewis, Jaron. “Uncommon Ways The Music Industry Affects The Economy.” Omari MC, https://www.omarimc.com/uncommon-ways-the-music-industry-affects-the-economy/. Accessed 30 May 2022.

“New Report: How Music Powers the American Economy.” RIAA, 9 February 2021, https://www.riaa.com/new-report-how-music-powers-the-american-economy/. Accessed 30 May 2022.

Stone, Jimmy. “The State of the Music Industry in 2020.” Toptal, https://www.toptal.com/finance/market-research-analysts/state-of-music-industry. Accessed 30 May 2022.

Reshoring Initiatives Impact US Economy

 Reshoring Initiatives Impact US Economy

 Written by: Logan Schill 

“Reshoring involves the return of the production and manufacturing of goods to the company’s original country. It is the opposite of offshoring, which is the process of making good overseas to try to reduce the cost of labor and manufacturing,” cited by Freight Waves.

American offshoring started in the 1970’s by prominent public US companies. In the early 2000’s, US manufacturing companies created another boom to the world economy with their offshoring initiative and efforts to save money by bringing in products manufactured in Asian-Pacific countries such as China, Taiwan, Sri Lanka, Malaysia, Indonesia, India and Vietnam to mention a few because they are low-labor cost countries. Building a stronger world-wide economy provided cost savings to US manufacturing companies for both consumer and industrial market goods. However, events such as worldwide Covid-19 pandemic and the Russian-Ukraine War, have created supply chain issues in the United States.

Companies did not have a balanced manufacturing plan for a massive world-wide pandemic that has created supply chain disruptions for raw materials to US manufacturing companies and finished goods for consumers. The complexity of the Russian-Ukraine war has magnified supply chain issues. With severe supply chain issues and significantly increased freight costs, several US companies are now looking toward a reshoring initiative. Products will be manufactured in the US creating jobs and an upswing to the US economy.

Reshoring efforts can add up to $443 billion dollars to the US economy according to Thomas Net.  In its 2021 State of North American Manufacturing Annual Report, Thomas found several shifts in domestics sourcing trends and supply chain demands in the post-pandemic world.  The survey found that 83% of North American manufacturers are likely to reshore products, up 54% in March 2020.  According to the findings, if manufacturers bring on just one single-contract domestic supplier, $443 billion could be added to the US economic value.

One key factor for reshoring are the increased costs of freight. Chart on the right indicates rising cost of containers from China starting in July ’21 to beginning of 2022. Costs were around $2,500 per container in August to a high of $20,000 per container in September ’21. Average cost from July ‘21 to start of 2022 was $14,487.09 per container.

One specific product in high-demand has been nitrile gloves. Post-pandemic the US government and distributors are sourcing domestically. Production for nitrile gloves is increasing with two manufactures in the states. Nitrile gloves are an important personal protective equipment (PPE) item used by workers in many industries including medical, laboratory, automotive, food processing and several other industries. More than 95% of nitrile gloves are manufactured in Asia and less than 1% have been manufactured in the US.

SHOWA Group and US Medical Glove Company (USMGC) are both domestic manufacturers of nitrile gloves. SHOWA Group is expanding operations in Alabama, and USMGC has leased a one million square foot facility in Illinois to ramp up production.

SHOWA Group is installing two new production lines to double their production to 800 million gloves per year. SHOWA plans to add two more production lines in the near future to increase their output to 1.2 billion gloves per year. Increase in production will add nearly 100 new jobs to the SHOWA Group team. 

Reducing carbon dioxide emissions is an environmental impact reshoring products back to the US as indicated by the artboard on the right from SHOWA Groups website.

According to Richard Hepell, President and COO of SHOWA stated in a CNN interview, “We are trying to make sure the US Government knows we have a facility here. We’re bringing in the latest high-speed monorail production lines that will product three times more gloves per hour. This will help bridge the gaps between costs differences in Asia and US. The key to this is making sure to continue to invest in new technology, keep an eye on what’s happening in Asia, and then try to stay ahead of the curve in the US to keep us competitive.

USMGC will house up to 80 American-made nitrile glove machines capable of producing up to 8.1 billion gloves per year. The vision to create four major manufacturing hubs will create more than 3,000 direct jobs and 10,000 indirect jobs created in the US. “American customer service, reliability and quality control can only be delivered by eliminating dependence on foreign made machines, not just foreign made gloves,” said US Medical Glove CEO, Dylan Ratigan.

According to Nick Mallinger, President of Tanis Incorporated, “We are seeing our business increase as companies continue the reshoring initiative. We do business with both SHOWA Group and US Medical Glove Company. We are also working with Peleton, who recently purchased Precor in North Carolina. Peleton was having freight and logistics issues getting their equipment made overseas, so they purchased Precor to have control of their products and logistics domestically manufactured in North Carolina.”

Offshoring will continue to be part of the US economy. However, reshoring initiatives will be an ongoing effort as US manufacturers continue to battle raw material delays or shortages, freight costs and logistic issues. Reshoring is necessary to rebalance costs and the supply chain, especially in the United States. Reliable, dependable, and quality manufacturing companies have an opportunity to thrive with the current reshoring initiatives. Manufacturers will have more control of their products and costs as well as having the ability to hire more labor.

Works Cited

“Artboard 1.” SHOWA Gloves, https://www.showagroup.com/wp-content/uploads/2021/02/Made-in-USA-glove-reduces-impact-on-environement.pdf. Accessed 30 May 2022.

“Made in America.” SHOWA Gloves, https://www.showagroup.com/us-en/showa-made-in-america. Accessed 30 May 2022.

Mahoney, Noi. “Can US cash in on reshoring manufacturing opportunities?” FreightWaves, 6 January 2022, https://www.freightwaves.com/news/us-cash-in-on-reshoring-manufacturing-opportunities. Accessed 30 May 2022.

“NEW REPORT: Reshoring Could Drive $443 Billion in U.S. Economic Value Over Next 12 Months.” Business Wire, 2 June 2021, https://www.businesswire.com/news/home/20210602005529/en/NEW-REPORT-Reshoring-Could-Drive-443-Billion-in-U.S.-Economic-Value-Over-Next-12-Months. Accessed 30 May 2022.

“US Medical Glove Leases Almost 1 Million Sq. Feet for Nitrile Glove Factory.” PR Newswire, 26 August 2021, https://www.prnewswire.com/news-releases/us-medical-glove-leases-almost-1-million-sq-feet-for-nitrile-glove-factory-301363781.html. Accessed 30 May 2022.

The Biggest Issue for Businesses Right Now: The Supply Chain Crisis

 The Biggest Issue for Businesses Right Now: The Supply Chain Crisis

Written by: Johnny Maasch 

Lately, we have been going to stores or gas stations sighing at the unbelievably high prices. We are paying so much more now compared to a year ago. And quite possibly, we could be paying even more another year from now. This is a big issue for us, but for businesses, an even bigger issue. Some may believe that higher prices should not be worse for businesses because they will make more money, right? Wrong! The prices are rising because there is a supply chain crisis, meaning that the steps it takes to obtain and sell a product are much more expensive. This leads to consumers being less willing to consume those products, hurting businesses. The supply chain crisis is the biggest issue for businesses right now because the pandemic led to slower transportation of goods, transportation has increased in price, and shipping containers are becoming extremely expensive.

Before diving into the reasons why the supply chain crisis is the biggest issue for businesses right now, it is important to provide context on what the supply chain is and how this crisis began. The biggest factor that began supply chain issues was the pandemic. The pandemic proceeded to cause layoffs, a decrease in productivity, and reduction in shipping. At the same time, China was sending shipping containers to any country, even if they did little trade with them, such as countries in West Africa. This led to empty shipping containers to pile up all around the world, resulting in a shortage.  Because there are now less workers and fewer containers to ship with, a supply chain crisis began.

First, multiple national lockdowns slowed down the transportation of raw materials and finished products. Because of this, the manufacturing process was largely disturbed. In addition, workers were getting quarantined left and right and some governments were closing factories, causing the number of producers to dramatically decrease. Recently, Shanghai has been in a total lockdown where “25 million people have been ordered to stay home.” (Brant). Many suppliers in Shanghai are being shut down because of this, meaning that many products are laying in factories instead of being distributed. All of this leads to a lack of workers, supplies for businesses, and sales. Many companies were not prepared for these tremendous effects. 

In fact, Ernst & Young LLP (company known for business consulting) conducted a survey on 200 senior supply chain executives in 2020. The survey looks at the pandemic’s impact on those companies. As shown in the picture below, most of the responders claimed that this had negative effects on their company. 

https://www.ey.com/en_us/supply-chain/how-covid-19-impacted-supply-chains-and-what-comes-next 

Second, transportation costs are insanely high, leading to the cost of products to increase. And if the cost of products is higher, less people will purchase them, and businesses will make less equity. From April of 2020 to April of 2022, a gallon of gasoline in the Chicago area has increased by about 42.5%. These costs have been increasing in the United States for several reasons, one being that we have discontinued the domestic production of oil. To add, a more recent reason would be since we have discontinued our imports of oil from Russia due to Russia’s actions against Ukraine.

https://fred.stlouisfed.org/series/APUS23A7471A 

Lastly, shipping containers are getting incredibly expensive while being in the wrong places. To dive deeper than explained before, in early 2020, China started to create half of the protective masks. Because there was such a high demand for masks during this time, China needed to meet that new sense of demand by sending more shipping containers to deliver these masks everywhere. Because some of these places were not too involved with China in trade, these shipping containers got stuck in the places they were sent. This ultimately led to a shortage of shipping containers for China, which is not great news because China needs shipping containers more than any other country. This hurts businesses because many countries get raw materials from China, and if there are no raw materials, there are no products to sell. And with shipping becoming more expensive and slow, companies will have to spend more, wait longer to receive products, increase prices, and less consumers will purchase.

Overall, there are many reasons why the supply chain crisis came to be. And, this is also the biggest problem for businesses because they need to wait longer, spend more, and increase prices while consumers will not consume as much. This will likely continue to be an ongoing issue for quite a long time, and some businesses may ultimately shut the doors if it gets too severe. So, do you believe the supply chain crisis is the largest problem for businesses right now?

Works Cited

“Average Price: Gasoline, All Types (Cost per Gallon/3.785 Liters) in Chicago-Naperville-Elgin, IL-in-Wi (CBSA).” FRED, 11 May 2022, https://fred.stlouisfed.org/series/APUS23A7471A. 

Gamio, Lazaro, and Peter S. Goodman. “How the Supply Chain Crisis Unfolded.” The New York Times, The New York Times, 6 Dec. 2021, https://www.nytimes.com/interactive/2021/12/05/business/economy/supply-chain.html?action=click&pgtype=Article&state=default&module=styln-supply-chain&variant=show®ion=MAIN_CONTENT_1&block=storyline_top_links_recirc. 

Harapko, Sean. “How Covid-19 Impacted Supply Chains and What Comes Next.” EY, EY, 18 Feb. 2021, https://www.ey.com/en_us/supply-chain/how-covid-19-impacted-supply-chains-and-what-comes-next. 

Baby Formula Bust: Shortages in Baby Formula Across America

 Baby Formula Bust: Shortages in Baby Formula Across America

Written by: Abby Rokus 

Over the past few weeks, baby formula has disappeared from shelves. This may initially seem like a COVID supply chain issue--and in part, it is. The center of the issue, however, surpasses typical shipping issues and ingredient shortages. Instead, it lies in America’s oligopoly over the baby formula market and refusal to trade with other countries.

Since the 1990s, baby formula producers have been the target of criticism. They faced lawsuits for creating barriers, such as fixing prices, to enter the market. The three largest manufacturers produced 90% of the formula consumed in the U.S., and their share has only increased as now 98% of formula consumed in the U.S. is produced domestically. As a result, consumers are overly reliant on producers and do not have many alternative options.

The problem is only exacerbated by government programs. For example, the WIC, or the Special Supplemental Nutrition Program for Women, Infants, and Children, provides grants that ensure access to food. According to the New York Times, this program “purchases more than half of all infant formula supply in the United States, with about 1.2 million infants receiving formula through WIC.” Not only are they the primary consumer of formula in the U.S., but state WIC agencies are also required to bid for contracts and WIC recipients are only able to buy formula from the single manufacturer the contract agrees upon. The producer then discounts the formula used by the agency. This results in a spillover effect to the general public as doctors and supermarkets are more likely to recommend and stock the WIC selected formula. WIC recipients should be allowed to choose from a variety of manufacturers in order to help diversify the market. This would break up the oligopoly and allow for more competition, ultimately benefiting families using the service.

Currently, only three brands are suppliers for the WIC. They include Abbot, Mead Johnson, and Gerber, which provide 47%, 40%, and 12% of formula for the WIC, respectively. Due to the WIC contracts, smaller companies do not have the financial incentives to enter the market. This has been a problem for decades, but we are currently seeing the effects due to one of Abbott’s plants closing on account of cases of bacterial infections. The closure resulted in recalls and stopped production of formula. They made the right choice as continuing manufacturing could have resulted in the deaths of more infants. On the other hand, when recalling the product, Abbott and the FDA should have planned for a substitute to be provided because families had no other options. This lack of foresight resulted in shortages as Abbott is one of the few formula manufactures in the U.S. and is the sole provider of formula for the WIC in nearly two-thirds of the country. Additionally, they are the main producer of specialized formula for young children who cannot consume regular products due to health conditions. Without Abbott, babies are currently being hospitalized due to not having access to the correct formula.

The government has also contributed to formula shortages by limiting trade with international companies. There are strict regulations on the labeling of formula and tariffs as high as 17.5%. This discourages trade amid the shortage despite European products being seen as equal to, or better than, American products. Canadian formula is also prevented from entering the U.S. due to low trade quotas, yet it would likely meet many of the FDA standards with minimal alterations. Thus, the U.S. should lower tariffs and remove quotas in order to prevent future shortages.

Due to few sellers and minimal trade, formula went out of stock in many stores. The out of stock rate for baby formula, according to CNN, was between 2% and 8% in early 2021. By April 2022, it reached 31%. Now, it lies at 40%, as seen in the first graph below. Some states are more affected by the shortages than others. For example, more than half of all formula was sold out in Missouri, Texas, the Dakotas, Iowa, and Tennessee at the end of April. The second image shows a map of which states have been the most affected by the shortages.

https://www.axios.com/2022/05/06/baby-formula-shortage-abbott-recall 

https://www.nbcnews.com/data-graphics/chart-baby-formula-supply-dwindling-months-rcna29475 

In response to the shortage, the FDA has allowed Abbott to start producing formula again. Although this is a beneficial step, it will still take the formula 6 to 8 weeks to reach shelves, and more needs to be done immediately. Waivers have also been granted to WIC recipients, allowing them to choose from multiple brands rather than just one. This lessens the problem of shortages, yet does not contribute to short term supply chain issues. The main strategy the U.S. is using to target this is reducing restrictions on international companies. A shipment from Germany last week included 35 tons of formula that would feed 9,000 babies and 18,000 toddlers for one week. While a significant amount, this was hypoallergenic formula for children who cannot tolerate regular formula. It was given to hospitals rather than supermarkets in order to assist a high risk population, so it will not be very helpful to the majority. There will, however, soon be a second shipment of regular formula that can be bought in grocery stores by all consumers.

Between families attempting to make their own formula and rationing the minimal amounts they have been able to buy in store, it is evident that the industry must change to avoid future shortages. Increasing competition, reducing barriers for imports, and preventing market consolidation are steps that must be taken to combat current issues. Hopefully with these changes, we will not see any sections of the supermarket barren in the future.

Works Cited

“Baby formula shortage turns 'terrifying': Out of stocks worsening.” Axios, 6 May 2022, https://www.axios.com/2022/05/06/baby-formula-shortage-abbott-recall. Accessed 24 May 2022.

Horsley, Scott. “Formula for trouble: How the US got into an infant formula mess.” NPR, 19 May 2022, https://www.npr.org/2022/05/19/1099748064/baby-infant-formula-shortages. Accessed 24 May 2022.

Kavilanz, Parija, and Ramishah Maruf. “The baby formula shortage is getting worse.” CNN, 11 May 2022, https://www.cnn.com/2022/05/08/business/baby-formula-shortage/index.html. Accessed 24 May 2022.

Ngo, Madeleine. “Baby Formula Shortage Has an Aggravating Factor: Few Producers.” The New York Times, 20 May 2022, https://www.nytimes.com/2022/05/20/business/economy/baby-formula-shortage-market.html. Accessed 24 May 2022.

Sandoval, Polo, and Samantha Beech. “Baby formula arrives in Indianapolis from Germany on US military aircraft to address critical need.” CNN, 22 May 2022, https://www.cnn.com/2022/05/22/politics/baby-formula-us-military-aircraft/index.html. Accessed 24 May 2022.

Wu, Jiachuan. “The Data Point: Baby formula supply has been dwindling for months.” NBC News, 19 May 2022, https://www.nbcnews.com/data-graphics/chart-baby-formula-supply-dwindling-months-rcna29475. Accessed 24 May 2022.

Used Car Prices Continue to Increase; why?, and when will they Return to Normal?

 Used Car Prices Continue to Increase; why?, and when will they Return to Normal?

Written by: Jake Sandlass 

Currently, the used car market in the U.S is breaking records… and not in a good way. As of November 2021, the average price for a used car was $29,011; a 21.4% increase in cost from the same time in 2020. Consumers looking for vehicles are paying drastically overpriced amounts or simply deterred from purchasing a car. The average price of used cars increased every month from February to November of 2021 and shows no signs of stopping anytime soon; but what's causing this?, when can we expect prices to return to normal, and what impacts is this having on the standard of living for a lot of Americans? 

For one, this is adding a ton of cars to the road that are dangerous, have outdated safety features, worn out parts, and in need of an upgrade as consumers choose to limp their car along until the market recovers. Personally, I have heard from several mechanics that my car is unsuitable to be driving on public roads and has several safety concerns… However, since the repairs are more than the vehicle is worth and I would need to pay upwards of $15,000 for a decent car I’m choosing to limp it along until it either quits on me, or the used car market returns to normal. Also, America is not very catering to people without motor-vehicles. Lack of public transportation can make it very difficult, even impossible to get to and from work, school, etc. Thus, people in sticky financial situations who may have had a vehicle quit on them can struggle to make an income and have a drastic decline in quality of life. 

But why is this happening? Well, the skyrocketing price of cars can be tokened to a few different root causes. For one, the worldwide shortage of microchips has pushed up prices for new cars thus increasing the demand in the used-car market. Early pandemic, microchip producers shut down to protect the health of workers, however consumer demand for electronics increased causing huge back-ups that microchip producers are still working to recover from. This then caused car manufactures to be unable to finish vehicles creating an 8 million car shortfall in 2021. Car manufacturers are also significantly underemployed, Kelly Blue Book said car manufacturers had more than 584,000 jobs in October 2021 they were unable to fill. With fewer new cars being produced, there are less people trading in their used ones causing prices to increase. Dealerships who previously had hundreds of new cars in their lots now have fewer than 10, according to KPMG. 

The question that consumers awaiting a drop in cost ask is when will the car market return to normal? While it's hard to say forsure, experts aren’t expecting much of a change until 2023. It is all dependent on the supply chain; when microchip production can catch up to demand and car manufacturers can reach full employment. Patrick Gelsinger, CEO of Intel, told investors in July 2021, that it will take another one to two years for the microchip industry to catch up to demand and we will continue seeing increasing prices in the used-car market through 2022. However, he is hopeful that we will begin seeing significant change early 2023. 

How has the Film Industry affected the economy and how has COVID-19 played a role in it?

How has the Film Industry affected the economy and how has COVID-19 played a role in it?

Written by: Gavin Long 

Many of you or I'm sure all of you have been to a movie theater or seen a movie inside of a theater at some point in your life. When you go to the movie theater it’s quite an experience. You go up to the counter, buy your tickets from the employee, get your snacks from the food service people And go and sit down and enjoy your movie. However in 2020 and 2021 this experience was taken away from us due to COVID-19. And like we studied in class, this was considered a recession. Prior to the COVID-19 pandemic, movie theaters and Hollywood contributed $504 billion to the U.S. GDP or 3.2% of the goods and services portion of GDP. This overall is a major reason why the Film Industry has affected the economy and the Film Industry has contributed a decent amount to total GDP

Here is a visual image of the Film Industry before COVID-19 and what happened during the pandemic recession. 

However something important to note is that when other countries produce a film that it does not count towards the U.S. GDP. A film can only count towards GDP if it is American produced. 

Furthermore, another reason why the Film Industry has affected the economy is because of positive externalities. Movies are filmed in many different locations of the world. For example, Harry Potter, a very popular film franchise, was filmed in the United Kingdom and Ireland. The positive externality of filming in those locations is that both of those locations have increased tourism by 50%. Also, some towns inside of the UK and Ireland have increased tourism as much as 200%. This is a positive externality because now those towns have more people going there and they have currency to spend. If they were to spend then that would contribute to the GDP. 

Overall these are just a couple of ways the Film Industry can impact the U.S. Economy. Through contributing to GDP and increasing tourism which is a positive externality, the Film Industry has a lot to offer for the economy even though it lost some revenue due to COVID-19. Do you think that the Film Industry has contributed a lot to the economy?

Works Cited 

 Name. “Popular Movies Can Increase Tourism to the Film's Location between 25%-300%.” Champion Traveler, https://championtraveler.com/news/popular-movies-can-increase-tourism-to-the-films-location-between-25-300/. 

Norah, Laurence. “The Top Harry Potter Filming Locations in the UK.” Finding the Universe, 8 Dec. 2021, https://www.findingtheuniverse.com/harry-potter-filming-locations-uk/. 

Rosal, Mel-Leo. “U.S. Film Industry Statistics [2022]: Facts about the U.S. Film Industry.” Zippia, Zippia, 11 May 2022, https://www.zippia.com/advice/us-film-industry-statistics/. 

The Financial and Economic Effects of Elon Musk Buying Twitter

 The Financial and Economic Effects of Elon Musk Buying Twitter

Written by: Evan Murphy 

On April 4th, 2022, Elon Musk announced he had purchased 9.1% of twitter. This news sent the stock prices soaring, and had people speculating. He was also offered a board seat by twitter’s board of directors, a move that would have restricted Elon to only owning a maximum of 15% of the company. Initially, Elon agreed, but later backed out. It was then on April 25th, 2022, that Twitter’s board of directors accepted Elon Musk's offer of $44 billion dollars for total control of the company, or $54.20 per share. Upon this completed transaction, twitter will likely also become a private company. Elon decided he wanted to purchase and control the entire company, and it looks like he is now doing so. But what financial effects does this major purchase have on not only the economy, but also on everyday consumers?

Although there has been an agreement for Musk to purchase Twitter, Twitter shareholders must approve the deal at the next annual meeting before it is finally official. So there is some chance that the deal could fall through, but the obstacles are seen as relatively insignificant, and Twitter expects the deal to close sometime later in 2022. But once the deal goes through, all stakeholders will be affected greatly financially. Twitter shareholders will receive $54.20 for each share of twitter stock they hold, as this is the price of shares after Elon purchased the company. This means a major cash influx for all stakeholders, especially those holding a significant number of shares. 

But Twitter’s switch to becoming a private company has other effects as well. With complete control over Twitter’s platform, Musk could make changes to put pressure on other tech companies, such as Meta Platforms Inc, the company behind the Facebook network, or other tech giants like Apple. Twitter could alter its approach to letting other companies on its platform, which could put pressure on other companies to take a similar path to Twitter.

Likewise, as a private company, Twitter would not be required to report on its financial performance in the same way that it does as a publicly traded firm. This means Twitter can be less transparent to investors in the social media and tech industries.

Elon Musk's purchase of Twitter, assuming it gets finalized, will have fairly substantial financial and economic effects. Whether more positive or negative, we’ll have to find out. But what we do know is that Twitter’s potential transition into becoming a private firm can have many effects on investors, as well as other firms. Musk will also be in full control of decision making, meaning he can easily implement new changes to twitter, revolving features, policies, etc. But to find out if these changes will have a more positive or negative impact, I suppose we’ll have to find out. 

Works Cited

Hawkins, Andrew J. “Elon Musk Buys Twitter: All the News You Need on One of the Biggest Tech Deals of All Time.” The Verge, The Verge, 16 Apr. 2022, https://www.theverge.com/23026874/elon-musk-twitter-buyout-news-updates.

jenn_elias. “Elon Musk's Deal to Buy Twitter Leaves Many Key Questions Unanswered.” CNBC, CNBC, 25 Apr. 2022, https://www.cnbc.com/2022/04/25/elon-musks-deal-to-buy-twitter-leaves-many-key-questions-unanswered.html.

Reiff, Nathan. “What Investors Should Know about Elon Musk Buying Twitter (TWTR).” Investopedia, Investopedia, 27 Apr. 2022, https://www.investopedia.com/what-investors-should-know-about-elon-musk-buying-twitter-5268075. 

Interest Rates Cause and Effect

 Interest Rates Cause and Effect

Written by: Tejas Babel 

Due to the recent inflation, the Fed has increased the interest rate, and has announced that it will continue to do so until the inflation problem is solved. What does this mean for the average American? How much does the rising interest rates affect people’s lives? And what does rising interest rates mean for the Economy? The Fed increases its interest rates by increasing the federal funds rate. If the Fed increases its federal funds rate it’s more expensive for banks to get loans; hence, banks increase their interest rates on the average person. 

The federal funds rate also directs the greater economy, or changes its course.  This transition is often in multiple stages; for example, in 2020 Fed decreased its interest rate to 0%, and within a week the effect could be seen on the stock market. A month later the larger gap between GDP and stock market was created. It took GDP another 6 months to bounce back, and it took even longer for businesses to get back into profits. Hence, some sectors of economy are affected immediately while others take longer to respond. Common Americans are usually the last to benefit, but first to be hurt from these.  

In 2020 the interest rates were decreased, but recently the Fed has been increasing them to slow down the economy and reduce inflation to 2%. according to investopedia, the markets will react inversely from 2020. To avoid this sudden change in the direction of the economy, the Fed is gradually increasing interest rates at 0.25% intervals (quantity easing). According to CNBC, The Fed is gradually increasing interest rates so they can spread out the effect of the economy slowing down, and get a gauge of how effective these monetary policies are. It’s possible for there to be another recession because of this change in interest rates, but Fox news said “ The changes are too subtle for the employers to do a 180 degree turn from hiring to laying off people.” Hence, it would be reasonable to accept the economy would slow down to a point where there would be jobs for everyone but fewer openings, and the prices will stabilize. 

The state of the US economy overall is in an interesting position because the overall demand for goods has increased and the price level for supplies has also increased. Normally an increase in price level of supply would result in stagflation, but the high demand for goods counter it, but also led to more inflation. With the increase of interest rates the Fed is trying to reduce demand, and hoping that supply shortages will end. Furthermore, the ban of Russian oil has led to another supply crisis and has halted the rising of interest rates. 

Contrary to March 2020 the economy will see decline but it will not be as sharp, and the economy will plateau for the next couple of years. According to Forbes, the upcoming years are looking prosperous for the US economy in regards to increase in real GDP. While GDP will see a 4% increase. The job market is also predicted to sustain its current level of wage. Although the jobs aren’t at risk, Americans' financial state is at risk, many people bought houses at the low interest rates after covid, many of those homeowners will struggle to pay mortgage and home loans at the higher interest rate. 

Interest rate

Inflation 

Historical interest rates have been around 5% -6% but since 2008 the interest rate has been close to 0%. They were rising until covid hit, hence the Fed will likely restore the interest rate to pre-covid rates and see how the economy reacts before taking further measures. So for the common person it means that the interest on their credit cards and home will increase to pre-covid levels. 

All in all, rising interest rates will not lead to a recession, but slow the inflation and negatively affect wages for low income, unskilled workers and job availability will decrease. The Fed also predicts that many private big infrastructure investments will be delayed. Although some people argue that the 2020 response will lead to excess inflation; hence, the 2022 counter response will lead to some recession. But according to investopedia, in march of 2020 the Fed had to take immediate radical action to get the economy out of a recession, but now the Fed has more time and this shift in monetary policy will be smooth and the average American will be affected to a minimum. Although the Fed has to be very careful and focus on the fridual supply side of the economy because the economy can very quickly move towards stagflation. 

Everything is More Expensive

Everything is More Expensive

Written by: Jensen Wallace

By now all of us have read about or experienced the large increase in gas prices throughout the US. There are three main reasons that gas prices are being affected this way. First of all, there is a large increase in demand for gas post-pandemic. Vaccines were distributed and people became more comfortable leaving their homes. This increase in demand made an increase in prices, about a 45% increase from the pandemic low according to economist Aimee Picchi. Another reason for the increase in gas prices is the cuts to oil production. During the pandemic, most oil producing nations cut their production by 10%. Now, the process of catching up to the demand is taking longer than most would’ve hoped. OPEC representative De Haan said, “the production is still far behind the curve.” The final important reason that gas prices are rising is the unfortunate situation in Russia. Russia is one of the largest oil producers and one that exports often to the US. Amid the conflict with Ukraine, President Biden has cut off oil and gas imports from Russia, thus lowering the supply and raising the price

While gas prices increasing is an obvious issue for a teenager from South Eastern Wisconsin, it is also an even larger issue for everything else. This discussion started at the dinner table between me and my dad. I was complaining about having to spend fifty dollars to fill up every once in a while. He then proceeded to explain to me that there was more to this gas issue than just that. He gave me a prime example of this which is what made me really dig deeper into this issue. My dad owns a septic tank business for which they need several septic trucks. He decided to buy a new truck which in any normal time would take about a month and a half to get. However, due to the gas issue it is going to take upwards of a year. This is because in order to make the truck you need fuel to make the parts. Fuel to deliver the parts. Fuel to deliver the truck across the sea from China. Fuel to run the truck. Now there is less supply of the septic service and the price for that goes up as well. There is fuel and gasoline throughout this whole process which really made me realize how much of an economic setback this gasoline issue is. 

https://journalistsresource.org/environment/gas-prices-effects-health-driving-economics/

https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=1005

Another great example of this problem affecting other things can be seen by comparing these two graphs. The graph on top shows the retail price of gasoline over the years of 2008-2015. The graph below shows the retail price of food goods over the years of 2001-2021. Due to the fact that the span of years of this data is different it makes it slightly more difficult to find similarities. However, when looking closer and comparing the years we can see the correlations. In 2008-2009 there was a spike downward in both graphs. They also correlate in 2014-2015. By comparing these graphs we see how the price of gasoline can also affect the price of foods as it affects the price of everything. 

Conclusively, in the future there should be more focus on avoiding relying on gasoline as much as we do. There are a lot of different ways to do this, but the most realistic and efficient solution would be putting a focus on green energy and converting our source of energy. There are various ways of doing this. For example, there are simple green energy sources like solar panels and wind turbines. These have become more popular, but to fill the need for gasoline there must be something more advanced. Recently there have been advancements in Carbon Dioxide Storage technology. This the idea of burning fossil fuels and taking the CO2 that would be released into the atmosphere and storing it miles below ground. This is just another green, efficient energy alternative. By turning our focus away from gasoline we will not have to worry about the issue of everything being expensive in the future.

Works Cited

“3 Reasons Why Gas Prices Are so High - and When They Might Come Down.” CBS News, CBS Interactive, https://www.cbsnews.com/news/gas-prices-high-expensive-come-down-cbs-news-explains/. 

Bhattarai, Abha. “Beyond the Pump: Record Gas Prices Are Pushing up Everyday Costs, Dampening Economic Recovery.” The Washington Post, WP Company, 16 Mar. 2022, https://www.washingtonpost.com/business/2022/03/12/gas-prices-economy-inflation/. 

Wihbey, John, and About The Author John Wihbey. “Gas Prices and Their Societal Effects: Health, Driving, Economics and Policy.” The Journalist's Resource, 17 Dec. 2020, https://journalistsresource.org/environment/gas-prices-effects-health-driving-economics-policy/. 

Free Trade?

Written by: Ashton Janowski 

A commonly debated topic in the US, and around the world today is whether or not Free Trade is a good or bad thing for an economy. Many economists go back and forth on the issue as there are definitely two sides to the argument, however after further research, it is clear which side's evidence outweighs the other.  Free Trade can be defined as a trade policy that does not restrict imports or exports. In simpler terms, this has a similar concept as a Free Market, just in trade terms. The US currently has 14 Free Trade Agreements (FTA’s) with 20 different countries. In 2018, the US imported $2.3 trillion worth of goods which was the highest on record for a single year. The goods that are imported include things such as manufactured goods, minerals, fuel, oil, machinery and other goods that our country doesn’t produce in excess here in the mainland. As a result, we set up trade agreements or Free Trade with other countries in order to import and export goods. It seems like a great thing for all involved, however there are people who disagree with the idea of Free Trade and think it is bad for the economy for a number of reasons such as putting workers in bad working conditions and causing job loss. Although their reasoning can be argued, that evidence does not outweigh the facts presented through research which makes it clear that Free Trade does indeed help the economy since it promotes efficiency and innovation as well promotes growth within the economy. 

Free Trade by definition allows countries to trade with one another without any limitations on imports or exports. This means that more products get shipped in and more products get shipped out for a lower price which helps both sides involved in a particular transaction. Since products in excess of 2 trillion dollars are being shipped into the US each year through Free Trade, this causes there to be a demand for companies to be efficient and innovative with the imports they are given from countries like China. According to mercatus.org, “Over time, free trade works with other market processes to shift workers and resources to more productive uses, allowing more efficient industries to thrive.” With this increase in efficiency among industries, these companies are able to become more innovative and produce more in less time. This leads to an increase in wages, being able to invest in things like infrastructure,and ultimately leads to a more dynamic economy that can take what they are given from other countries and turn it into something that the American people will continue to buy and put money towards. Along those same lines, Free Trade allows for new resources to be brought into the country which introduces new items that businesses in our economy can take advantage of and innovate into new products which can turn into money for them, and more importantly, our economy. 

A second argument that proves why Free Trade is a good thing for the US economy is that it promotes growth within the economy itself. According to corn.org, “Opening markets fuels export growth. Even growing imports can promote jobs here at home. Half of all imports are not finished consumer goods, but intermediate inputs used by U.S.-based producers.” What this means is that most of the imports coming to the US are raw materials that are turned into final products by companies here in the US. The companies need people to turn those raw materials into finished products so they hire people to do that which creates jobs, and as mentioned in the quote above, growing imports here in the US produce jobs for US citizens. Job creation is a big deal in promoting economic growth and Free Trade does just that for people no matter what field of work they’re in. Finally, in reference to the image below which is also from corn.org, you can see it’s a graph showing the economic growth from FTA partners across the world. The yellow section of the graph represents growth of other countries during the same time period in which a certain country  was part of an FTA. The green represents that individual countries growth during the same time. As you can see from the graph, the green exceeds the yellow in every country and by staggering numbers in some cases. This graph statistically proves that Free Trade promotes economic growth, and ultimately, almost every country involved in FTA’s economically grows during the time period in which they are in an FTA.

All in all, Free Trade has many positives, but there are also drawbacks to this style of trade such as deplorable work conditions and job loss when a particular trade is no longer traded between countries. Even with all of that taken into account, it is still clear to see that the positives that come with Free Trade such as promoting efficiency and innovation, as well as causing economic growth within a country outweigh the negatives by far. For that reason, it would be in the US’ best interest, and any country’s best interest, to continue their Free Trade Agreements in order to ensure their economy can continue to grow. 

Works Cited

“The Benefits of Free Trade: Addressing Key Myths.” Mercatus Center, 15 Sept. 2019, www.mercatus.org/publications/trade-and-immigration/benefits-free-trade-addressing-key-myths.

Kafele, Baruti Libre. “Free Trade Is the Key to Economic Growth: Baruti Libre Kafele.” FEE Freeman Article, Foundation for Economic Education, 9 Oct. 2016, fee.org/articles/free-trade-is-the-key-to-economic-growth/.

Pettinger, Tejvan. “Benefits of Free Trade.” Economics Help, 28 Mar. 2020, www.economicshelp.org/trade2/benefits_free_trade/.

Tim. “International Markets and Free Trade.” Corn Refiners Association, 4 May 2018, corn.org/policies/trade/international-markets-free-trade/. 

Supply Chain Issues and Failure to Recover

Supply Chain Issues and Failure to Recover

Written by: Lauren Mistele

Over the course of the last few months, it has been presented to the economy that supply chain issues are still very prevalent in our everyday lives and still fail to recover from when they began to struggle. As import rates continue to rise due to online purchases increasing, shipping continues to become more and more backed up without enough labor to fix the issue. After the Covid-19 pandemic started, supply chain issues began to rise at extremely high rates and we still fail to recover from this issue due to multiple factors. Supply chain still struggles due to the unemployment rates, lag in technology improvement, and resulting in longer delivery times as the main impact daily consumers notice/undergo.

First off, the labor shortage is greatly affecting the supply chain and halting the steps towards progressing back to where the economy used to be performing at. After the pandemic began, cyclical unemployment grew at an exponential rate due to the quickening failure of the state the economy was unfortunately in. As the economy slowly began to recover from the pandemic, many of the workers that were originally let go during this time have still failed to return to work, and now fit into the category of discouraged workers. With this gap presented for the labor force, the supply chain is greatly affected in the sense that there are not enough employed people to load and unload the exports/imports from the shipping containers. Along with unloading the goods, there are not enough drivers to transport these goods before they can even be unloaded. This labor shortage poses a very prevalent problem that our economy has to deal with in order to improve supply chain efficiency to boost the productivity of shipping as it was before the pandemic. 

In addition to the labor shortage being an issue for the supply chain, the lag in technology improvement leads to the lack of shipping being improved and delivery times becoming faster than they ever have been before. Connecting back to shipping issues, improvements are not able to be made within technology and certain goods as the parts to improve these goods are taking longer to be received or not received at all. The shortage in computer chip shipments has halted much of the technology improvement that is being attempted to occur. Also, with a decrease in the people in the labor force, there are more jobs available than people to fill the positions which occurs in a halt in productivity within areas of improvement. Overall, supply chain is not able to be boosted due to the halt in technology improvements which leads to the longer and constant delivery rates consumers are experiencing. 

As you can see in this graph, it is clear that delivery times are at the highest rates they have been since 2010 due to supply chain turmoil and the failure to recover from the issues presented from the pandemic

Although many economists and consumers believe that supply chains will be fixed as time goes on and as improvements are made, more action needs to be taken than just waiting for this issue to be solved based upon time. An increase in the labor force must occur to fill the positions that need to be accounted for in order to allow shipping to keep up with the high demand it is receiving and give the economy what it needs to make life better for all individuals pre-pandemic once again. 

Works Cited

“2022 Supply Chain Issues: Our Predictions on What to Expect.” AdRoll, 1 Apr. 2022, https://www.adroll.com/blog/2022-supply-chain-issues-our-predictions-on-what-to-expect. 

Goodman, Peter S. “A Normal Supply Chain? It's 'Unlikely' in 2022.” The New York Times, The New York Times, 1 Feb. 2022, https://www.nytimes.com/2022/02/01/business/supply-chain-disruption.html#:~:text=Normal%20Supply%20Chain%3F-,It's%20'Unlikely'%20in%202022.,year%2C%20and%20perhaps%20even%20longer. 

“How the Labor Shortage Is Impacting the Supply Chain: Would Immigration Reform Help?” The National Law Review, https://www.natlawreview.com/article/how-labor-shortage-impacting-supply-chain-would-immigration-reform-help. 

The Everlasting Economic Benefits of the Milwaukee Bucks

The Everlasting Economic Benefits of the Milwaukee Bucks

Written by: Avery Mueller

As many of us know, the Milwaukee Bucks season has recently ended in a devastating defeat to the Boston Celtics in the sixth game of the 2nd round of playoffs. This came to a shock to many Wisconsinites, after the Bucks last season ended in a championship -- bringing a sense of pride to all of those who watched back in the summer of 2021. Although this year’s season did not finish in the way many fans anticipated or wanted, we can look back on all of the economic advantages that the exceptional team has brought to Milwaukee in the past two years. 

The long term economic shutdowns due to Covid-19 had awful effects on urban economies, especially Milwaukee . According to City.Milwaukee.Gov, “Approximately 47% of Milwaukee workers with unemployment claims, or roughly 46,800 workers, filed at least three months of weekly claims during the COVID-19 pandemic. Over 26,000 workers filed at least six months of weekly unemployment claims from March 2020 through January 2021.” Many businesses were also shut down, as the lockdown continued (seen in the empty streets pictured).  Housing rates became inevitably more expensive than many could afford. Shortages were found in many stores city-wide. These profound impacts left many in Milwaukee hopeless, while struggling to provide for themselves and their families. 

It was almost a miracle that the Bucks 2020-21 season ended the way it did. The Milwaukee Convention and Visitors Bureau announced that the playoff game streak gathered a total of $57.6 million in direct and indirect spending (with 28 million gained during 6 game finals series in July alone). UrbanMilwaukee stated, “Direct spending, approximately $32 million, occurred in lodging ($8.4 million), recreation ($6.6 million), retail ($5.8 million), food and beverage ($5.2 million), transportation ($4.3 million), business services ($1.2 million) and space rental ($38,521).” These profits really pushed the economy in Milwaukee forward, and provided hope for many citizens and businesses -- hope that many hadn't felt for months.

Overall, there is no doubt in mind that the $250 million dollar Fiserv Form was a great usage of public financing, as they brought in almost $58 million dollars in just one season. Furthermore, the creation of the Deer District (an outside viewing option where fans gather together to watch the game) was genius, as it gathered 65,000 people in the final game. Of course, Deer District has a long way to go in terms of safety of its occupants, but the benefits are substantial considering its entry is free: thousands of dollars in parking fees generated, food and drinks being bought, merchandise being basically ripped off the shelves, hotel rooms being sold for the nights of the games, and so much more. The new spaces and updates to the Bucks arena and property was a great investment, especially during a time when Milwaukee needed it most. "I think it's been phenomenal for the city, it really has," Milwaukee Bucks co-owner Marc Lasry said. "That's the one thing you want. It feels like it brought the city together."

65,000 fans pack Deer District for Bucks Game 6 | FOX6 News Milwaukee (Link to FOX6 news report from game 7/20/21)

Though the Milwaukee Bucks 2021-2022 season didn’t end in the same championship fans had seen the previous year, it would be ignorant to say that all of the team’s hard work was for nothing; millions of more dollars were brought to the city, as tickets to Fiserv Form were sold out, and as the deer district started up again. This money contributes significantly to rebounds that some businesses hoped for, and the citizens of Milwaukee who still need to get back onto their feet, more than two years since the pandemic originally started. 

As many fans await the 2022-23 NBA basketball season to start, it will be thrilling to watch to see how the teams and players perform in comparison to previous years, and what economic influence that the Bucks will have on their city once again. 

Works Cited

“65000 fans pack Deer District for Bucks Game 6 | FOX6 News Milwaukee.” YouTube, 21 July 2021, https://www.youtube.com/watch?v=AIAVcoaSCpk&feature=youtu.be. Accessed 23 May 2022.

“Aerial views of nearly empty Milwaukee streets during the coronavirus pandemic.” Milwaukee Journal Sentinel, 2 April 2020, https://www.jsonline.com/videos/news/2020/04/02/drone-view-nearly-empty-milwaukee-streets-during-coronavirus-pandemic/5113163002/. Accessed 23 May 2022.

“Bucks Announce Adjustments To Deer District For Game 6.” NBA.com, 19 July 2021, https://www.nba.com/bucks/news/bucks-announce-adjustments-deer-district-game-6. Accessed 23 May 2022.

“The COVID-19 pandemic: Impacts on cities and major lessons for urban planning, design, and management.” NCBI, 18 September 2020, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7499053/. Accessed 23 May 2022.

“Economic Impact Data for Milwaukee Bucks Championship.” Visit Milwaukee, 27 September 2021, https://www.visitmilwaukee.org/media/press-releases/economic-impact-data-for-milwaukee-bucks-champions/. Accessed 23 May 2022.

Jannene, Jeramey. “Eyes on Milwaukee: Bucks Championship Had $58 Million Economic Impact.” Urban Milwaukee, 27 September 2021, https://urbanmilwaukee.com/2021/09/27/eyes-on-milwaukee-bucks-championship-had-58-million-economic-impact/. Accessed 23 May 2022.