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Economics in the News - Sept. 7-13 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.
California is battling several of the largest wildfires in the state’s history. The devastation caused by climate change will have a taxing toll on the economy. Wildfires are nothing new in California, but they are now seen by economists as initiating more than localized shocks to the economy.

Economists are beginning to consider the possibility of a natural disaster igniting a financial crisis. Natural disasters could damage home values, increase insurance premiums, limit state tourism, lower tax revenues, while draining the state budget. [Reuters]

Do unemployment benefits deter workers from looking for work? Some companies say that they’re having trouble attracting applications for jobs, as the unemployment rate remains the highest it’s been in years.

The extra $600-a-week jobless benefit that was provided by Congress in March as part of the CARES Act temporarily provided families a lifeline to pay rent, buy groceries and pay utilities. The program expired July 31. The payment, for many, was larger than their previous income. As convinced as some employers are that the extra benefit slowed hiring, research suggests that it had little impact since most people look to the future. The answer has tremendous implications as Republicans and Democrats try to reach a decision on extending assistance to the unemployed. [The New York Times]

The coronavirus pandemic has changed how consumers spend their money, which has resulted in understating inflation. The Labor Department announced on Friday that the consumer price index (CPI) increased 0.4% higher in August, and 1.3% over the last 12 months.

During the pandemic, many consumers are spending less on gasoline, dining out less frequently, avoiding live entertainment, while dining at home more. Groceries should have a larger influence on the CPI. Grocery bills have been higher for many consumers with the price of food eaten at home 4.6% higher than 12 months ago. If food eaten at home were given a greater weight, the CPI would exceed 1.7%. The impact of higher food prices is being felt especially by low income families, who bargain shop and are more limited in their food. [NPR]

Amazon isn’t the only company that’s interested in delivering packages by drone. Walmart began testing drone delivery of food and household items, competing with Amazon for drone delivery to boost its e-commerce business.

Walmart began testing drone delivery in collaboration with Israeli startup company Flytrex Aviation in its Fayetteville, N.C. stores. The drones can fly up to 6.2 miles and carry packages up to 6.6 miles. The move comes as Walmart has heightened its competition with Amazon, unveiling a new membership program via the Walmart+ package to compete with Amazon’s popular Prime service. [Bloomberg]

Jane Fraser was tabbed as the next Chief Executive of Citigroup, making her the first female CEO of a major US bank. Fraser succeeds Michael Corbat to lead third-largest bank in the United States.

Fraser has been with Citigroup for 16 years and has specialized in cleaning up problems such as the mortgage arm during the financial crisis. Later she went to Mexico to clean up Citigroup’s scandal in Latin America. Last year was promoted to head the bank’s global consumer banking division. Now, her biggest challenge will be leading the bank through the current recession brought on by the COVID-19 pandemic. [The Wall Street Journal]