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Economics in the News - Sept. 21-27 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.
As unemployment climbed during the coronavirus pandemic and workers lost jobs, many Americans are taking their ideas and starting their own businesses.

According to the U.S. Census Bureau, applications for employer identification numbers required to open a business surpassed 3.2 million for 2020, compared to 2.7 million in September 2019. With built-up savings due to the 10-year expansion that the United States enjoyed following the Great Recession, many Americans are more willing to take on the risks associated with starting a business. [The Wall Street Journal]

2020 has been a big year for Initial Public Offerings (IPOs). More than 235 companies have joined the U.S. public markets, as $95 billion has been raised this year through IPO’s. The number of companies joining the markets is on track to become the most since 439 companies went public in 2000.

An estimated 80% of the money raised from the IPOs has come from healthcare, technology and finance companies. The largest IPO of the year is Rocket Companies with a $36 billion market capitalization, followed by Snowflake with a $34 billion market cap. [The Wall Street Journal]

China’s economy is expected to grow in the third quarter following its first contraction of the modern era in the first quarter of 2020. Consumer spending is driving the market. The wealthy are shopping, traveling domestically and eating in restaurants.

The middle class is spending as well with retail sales up 0.5% more than in 2019. The auto industry has benefited from the increase in consumer spending with sales of large and luxury cars up for the year. However, with one of the world’s highest levels of inequality, China's lower class is still feeling the impact of the coronavirus. Laid off workers are unable to find new jobs and the threat of a resurgence in cases still looms. [The New York Times]

Most governments in Latin America don’t have the financial capacity to deliver large sums of aid as seen in the United States, Europe and other developed nations. The pandemic has heavily impacted parts of Latin America where the region has seen a resurgence to its poverty rate.

The United Nations’ World Food Program estimates that a 270% increase in the number of people who will struggle to put a healthy meal on the table in the coming months. The Economic Commission for Latin America and the Caribbean estimates that 44 million Latinos in the region could enter extreme poverty this year. With an estimated 9.1% contraction to the region’s gross domestic product and unemployment to reach 13.5%, the region is facing its worst crisis in a century. [Bloomberg]

The COVID-19 pandemic has devastated the United States restaurant industry with millions of jobs lost and nearly 100,000 restaurants closed permanently. It may get worse when winter weather discourages outdoor dining.

Restaurants are expected to lose $240 million this year. During the summer months, restaurants have turned to outdoor seating and have been able to recuperate some of the losses with consumers willing to eat outside. With fall and winter approaching, restaurants are scrambling once again as cooler temperatures discourage consumers from eating outside. An increase in coronavirus cases and the hesitation to linger for longer meals indoors will discourage meal goers. [The Washington Post]

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