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ECONOMICS IN THE NEWS - Aug. 31-Sept. 6 How Economics Impacts Our Lives on a Daily Basis

Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.

"There is one rule for the industrialist and that is: make the best quality goods possible at the lowest cost possible, paying the highest wages possible." -- Henry Ford, Founder of Ford Motor Company.
The Big 10 and PAC-12’s decision to postpone fall sports, including football, due to the COVID-19 pandemic has left businesses in college towns across the United States fighting to survive. Restaurants and businesses in State College, Pa., the home of Penn State, depend on football weekends for the majority of their business. Typically, more than 100,000 students, alums and fans flock to State College, Pa. each game to fill Beaver Stadium. Many visitors stay in hotels, dine at restaurants and buy Penn State apparel.

With an estimated $130-140 million economic impact of Penn State football on the State College, Pa., area, businesses are struggling to remain in business. The losses continue to pile up after students at Penn State, and other schools across the country, were sent home in mid-March to conclude the spring 2020 semester online due to the coronavirus. They will devastate the town if schools have to send home students again. [The Athletic]

Workers in the service industries have been impacted the most to COVID-19. Early in the coronavirus pandemic large businesses altered the way their employees work, allowing them to work from home where they are safer, and to help contain the virus. Services that catered to the larger employers such as restaurants, and office cleaning suddenly saw a sharp decrease in their demand. Those low-wage workers were furloughed. Many have since been laid off.

With white collar workers changing where they work, many service workers are worried whether their jobs will recover. Many economists fear that the economy, while it has improved, will not be able to sustain the number of jobs it once did. [The New York Times]

Escalating spending and reduced tax revenues have combined to increase Federal borrowing and has placed U.S. debt at its highest level since World War II. In 2020, the amount of debt will nearly outpace the economy’s GDP, the most accepted measurement of the size of an economy. US debt will likely exceed the economy next year.

The federal deficit is expected to reach $3.3 trillion in 2020, as the government was forced to spend to assist businesses and individuals. High unemployment, business cutbacks, and lower profits have reduced the government’s tax revenue. At the end of the current fiscal year, it’s estimated that total debt in the United States will be $20.3 trillion, while the Gross Domestic Product [GDP] of the economy is projected to be at $20.6 trillion. [The New York Times]

A great way to social distance is by spending time kayaking, bicycling or hiking. Sales of outdoor sports equipment has soared during the coronavirus pandemic. Bike sales were up nearly 63% in June from a year earlier. Kayak sales are up 56%, while sales of golf, hiking and camping equipment has soared with the pandemic.

Experts say that demand for outdoor gear has soared due to families being forced to cancel travel plans, leaving them with disposable income and free time to spend. [NPR]

Many Americans see Labor Day as the end of summer before the school year is back in full swing. However, Labor Day’s origins include violent strikes over working conditions, going back as far as the Industrial Revolution

Workers, including children under 15, worked 12-hour days, six days a week, frequently in dangerous conditions at factories, railroads, and mills. During the 1860s and 1870s, workers fought for recognition of their contributions with shorter workdays and safer working conditions. By 1894, Labor Day was made into a national U.S. holiday to celebrate the social and economic achievement of Americans. [National Geographic]