Foodborne Illness Outbreaks are Breaking Consumers' Banks... Here's Why

Outbreaks of foodborne pathogens like bacteria, viruses, and parasites can cause a variety of health concerns ranging from minor issues to kidney failure and death. Sprouts, infant formula, and cantaloupe have been contaminated consistently, resulting in outbreaks that have been managed by the FDA to protect consumers. However, these outbreaks do not just harm consumer health. They hurt the economy, too.

From 2013 to 2018, foodborne illness outbreaks accounted for an increased $2 billion in consumer spending. Why? While recent overall inflation has been generally low in comparison to previous years, this same trend is not reflected in the healthcare sector, which has seen significant increases in prices.

Three particular illnesses (Salmonella, Listeria, and Toxoplasma) have been the most significant drivers of inflation, accounting for the overall most expensive hospitalization-related illnesses from 2013 to 2018. As outbreaks occur, hospitalization rates increase, as does household spending. Hence, a lack of a food safety is just as much an economic concern as it is a health one.

The FDA must strengthen its regulatory policies to reduce foodborne illness outbreaks. If it fails to do this, more people will die, and those who survive will be faced with rising medical costs. In the long run, this will hurt the macroeconomy by driving up consumer costs.

https://www.cdc.gov/foodsafety/outbreaks/lists/outbreaks-list.html

https://www.ers.usda.gov/amber-waves/2021/april/economic-cost-of-major-foodborne-illnesses-increased-2-billion-from-2013-to-2018/

 

An optimistic take on the possibility of a recession in the US economy

This article takes a more optimistic view on the possibility of a recession in the US economy, stating that despite US economists predicting a recession, due to high interest rates and weakening consumer spending, the US economy may avoid a recession considering that inflation has started to show "widespread signs of easing." This may in part be due to the fact that the increase in US wages has started to slow down, which was a factor in the rise of inflation. 

The article does not suggest the US economy will be booming within the year, rather that the FED may be able to orchestrate a "soft landing" without having the economy reverse, and without having a major increase in unemployment. There will still be many people who have to go through hard times, but it will not be as widespread as in a typical recession.

 The article interviews Alan Blinder, a Princeton University economist who was a former vice chair of the FED, who states that "The most positive sign... is the ongoing slowdown in inflation. It has dropped from a peak of 9.1% in June to a still-high 7.1% in November." This is due to a multitude of factors, including the price of gas becoming more affordable and supply lines finally reverting back to form. Last year in mid-June, the price of gas was $5, now it's $3.27. 

The price of used cars, furniture and clothing have all dropped within the past few months as well. The article does state some of the reasons the US may dip into a recession, from businesses becoming anxious, political incompetence, and China's economy reopening and buying large sums of oil, which may raise oil prices in the US.


Article: https://apnews.com/article/inflation-business-compensation-and-benefits-economy-728bf4d2efd02b20de28db3e01ed25ba

Consumers remain skeptical of economic improvement, despite signs showing otherwise

This article goes over the recent numbers of the Conference Board’s consumer confidence index, which, "gaug[es] attitudes about the current and future strength of the economy." In December, the number was 109, and was expected to remain as such, but by January it decreased to 107.1.

Despite this decrease, the Present Situation Index grew from 147.4 in December to 150.9 in January. This indicates consumers may be growing more confident. However, while consumers are more confident about the short run, there is still concern over long run economic conditions.

The expectation index decreased from 83.4 in December to 77.8 in January. This is particularly concerning since an expectation index below 80 usually indicates an expected recession in the next year.

Consumers seem to be more concerned about some aspects of the economy over others. Ataman Ozyildirim, the Conference Board’s senior director of economics, states, "Consumers were less upbeat about the short-term outlook for jobs... They also expect business conditions to worsen in the near term." However, "Despite that, consumers expect their incomes to remain relatively stable in the months ahead.” Consumers' plans for buying automobiles and appliances remain unchanged, but consumers are likely to buy less houses.

The Federal Reserve sees their rate hikes as being successful at cooling down an "overheated economy" as evidenced by the "softer data on housing prices, wages, and consumer confidence at the turn of the year"

SOURCE: https://www.cnn.com/2023/01/31/economy/consumer-confidence-index-january/index.html

India's Budget 2023

The Indian government has presented its budget for the upcoming fiscal year 2023, which will begin in April. Their goals are to minimize the government deficit while boosting economic growth. They are spending around 550 billions, or 45 trillion rupees this year. 

The tax slab rates have been adjusted by the Indian government to make taxes easier to pay for those with lower incomes. People with incomes under Rs. 7 lakhs would not be required to pay taxes, and the new tax system will take effect automatically. 

Inclusive Development, Reaching the Last Mile, Infra and Investment, Unleashing Potential, Green Growth, Youth Power, and Financial Sector are the seven pillars of this budget.

More than 2.4 billion dollars have been set aside for the improvement and growth of Indian Railways technology. The amount spent on capital projects has climbed by 33% to 10 lakh crores, or 3.3% of the GDP. India's finance minister, Nirmala Sitharaman, has also committed to increasing funding for public transportation, buildings, infrastructure, healthcare, and education. 

I really appreciated that this budget increased the price of cigarettes from before and added a significant 16% tax to them, which I believe will assist the government lower sales of taboo goods. However, this budget has lowered the custom duty on a number of TV panel and mobile component parts.

This budget has made it possible for startups to carry over losses for up to 10 years, which will benefit business owners. Additionally, funds for agriculture acceleration are given out to support young businesspeople in India's rural areas. 

India is projected to increase by at least 7% this year.

Microsoft and Google job cuts

Microsoft cut 10,000 jobs due to the economic uncertainty and tried to shift their focus to growth and development. The cuts will impact less than 5% of their global workforce which is still a large amount of people. The reports showed that the layoffs mostly affect the engineering department.It's the largest layoff at Microsoft in about eight years, where the company cut more than 20,000 jobs in about a year. Microsoft also plans to make some new changes to its hardware portfolio and tighten up their leased office spaces which will cost them about $1.2 billion. 

Similarly Google cuts 12,000 Jobs due to economic pressure. Their 12,000 layoffs                          represent 6.5% of Google's 185,000. There are more employees are being laid off now than worked at Google in 2006, when there were just over 10,500 workers Google now plans to take its focus and direct the remaining work on to projects that are a that include in Ai

The question remains why are these big tech companies really laying off this many employees?  During covid these companies took a hiring spree and salaries were at an all time high as competition rose. This could mean that, in some ways, these cuts represent a pull back of hiring policies put in place since the pandemic.

https://www.forbes.com/sites/bernardmarr/2023/01/30/the-real-reasons-for-big-tech-layoffs-at-google-microsoft-meta-and-amazon/?sh=83606cf2b67d 

https://www.cnet.com/news/google-cuts-12000-jobs-amid-economic-pressure/  

PayPal's Plan to Lay Off 2,000 Employees in Coming Weeks

     PayPal announced their plan to lay off 2,000 employees in the coming weeks. This would amount to cutting out 7% of their workforce. President and CEO, Dan Schulman, said the change is to address the changing macroeconomic environment and focus resources on core priorities. PayPal's stock dropped 2% after these announcements. This announcement came after Workday, Google, Microsoft, Salesforce, and many other tech giants would all be laying off workers. 

    This trend of tech giants laying off workers is due to the fear of a recession upcoming. It is also being blamed on Covid-19 over-hiring. During the pandemic these tech companies boomed and experienced big growth thanks to their constant innovation and capitalization on current trends. This boom in growth allowed an increase in hiring and employees. Now as a recession is on the horizon and the companies are dealing with lowered stocks, less growth, and high inflation they are downsizing. 

    Many tech companies have stated that over-hiring in the previous years is the reason for their layoffs, but their maybe some other reasons behind the scenes. One maybe that the tech industry has always been a growth based industry. When the industry is down it is never down for long. These companies are not just gonna take an upcoming recession and there are a few ways they can continue their growth. One way is to sell more products or raise prices. Another way is to cut employees and lower expenses. The latter is the approach many companies have taken for the time being. Another reason for the layoffs could be because the companies see a need to innovate and must divert resources toward research and development. Some have also suggested that tech companies may just be copying each other and following the trend. 

    Articles: https://www.cnbc.com/2023/01/31/paypal-to-lay-off-2000-employees-in-coming-weeks-about-7percent-of-workforce.html

    https://www.forbes.com/sites/qai/2023/01/27/why-are-tech-companies-laying-off-all-these-workers/?sh=589666064fc6 

Nike is Suing Multiple Shoe Companies for Patent Infringment

Nike is suing Lulu Lemon for patent infringement related to at least four of the apparel company’s shoes, extending a contentious legal history between the two companies. Nike said it has suffered economic harm and irreparable injury as a result of Lululemon’s sale of the Chargefeel Mid, Chargefeel Low, Blissfeel and Strongfeel sneakers. Nike said its three patent claims focus on textile elements, including knitted elements, webbed areas and tubular structures on the footwear. One patent claim also addresses the footwear’s performance. Nike, which is based in Oregon, is seeking unspecified damages.

Nike filed a lawsuit against the streetwear brand in New York district court accusing Bape of trademark infringement and false designation of origin after 20 years. “Bape’s current footwear business revolves around copying Nike’s iconic designs,” the lawsuit reads. The lawsuit explains Nike’s long delay in pursuing legal action by saying that before 2021, the amount of sneakers Bape sold in the US was insignificant. Nike’s lawyers say that starting in 2021, Bape scaled up its footwear business and began to sell even more “copies of iconic Nike designs.” This escalation, Nike says, forced the lawsuit. Nike lawyers say that Bape’s sneakers have created confusion in the marketplace and that consumers could falsely associate its products with Nikes. In a warning letter to Bape in August 2022, Nike claimed that a recent collaboration between Bape and Marvel was likely to create an “erroneous association” between Bape’s shoes, Disney, Marvel, and Nike.

Nike has filed a trademark infringement lawsuit against two popular sneaker designers and the manufacturer of their footwear. The Swoosh filed yesterday in the southern district of New York a lawsuit that spans six different complaints. Nike says defendants Nickwon Arvinger and David Weeks of By Kiy LLC (aka Kool Kiy) and Bill Omar Carrasquillo of Reloaded Merch LLC (Omi aka “Omi in a Hellcat”) have been “promoting, copying, and selling” Nike’s designs, namely the Air Jordan 1 and Dunk, as their own. Along with trademark infringement, Nike says that Kiy and Omi’s designs are also grounds for counts of false designation of origin, unfair competition, and trademark dilution. The Swoosh’s lawyers ague that the alleged knockoff sneakers are likely to confuse customers about the origin of the products and Nike’s connection to them, especially on the secondary market where it highlights examples of resellers using variations of the Air Jordan 1 name to advertise Kiy’s products.

Nike has ramped up its battle with the online marketplace StockX, saying that it purchased four pairs of counterfeit shoes on the site, despite StockX's guarantees of authenticity. The famous footwear manufacturer was already in a lawsuit from February with StockX over what Nike saw as trademark infringement in the non-fungible tokens StockX was selling, and has amended the suit to include the latest accusations. Nike said in a federal court filing with the Southern District of New York on Tuesday that the shoes it had purchased and determined to be fake "had affixed to them StockX's 'Verified Authentic' hangtag, and all came with a paper receipt from StockX in the shoe box stating that the condition of the shoes is '100% Authentic.'" Nike said that StockX is diluting its trademarks while using them to heavily market NFTs, draw in consumers who know the brand and then benefit financially.

How do you think Nikes stock and worth will be after everything is said and done and will it change the sneaker economy forever?

Ford Follows Tesla in Cutting Electric Vehicle Prices

Ford and Tesla are two very well known vehicle manufacture companies. In recent news, Ford is beginning to curt prices on electric vehicles, similar to what Tesla has began doing. The Mustang Mach-E is getting a price reduction due to Ford being more interested in increasing the production rate of the sport utility vehicle. This is potentially one way that Fords wants to increase the competition in the electric car market. One factor that helps support the decision of Ford to decreases prices is because about two weeks ago, tesla announced that they will be cutting prices of Tesla Car models by 20% because of the softening demand for electric vehicles. 

Fords chief executive, Jim Farley, gave another reason on why Ford is decreasing prices on their electric vehicles. Jim stated on twitter " We want to make E.V.s more accessible, so we're increasing production and reducing prices across the Mach -E lineup" Ford's hopes is that with the increase in production, it will create an opportunity for dealerships and sellers to have a higher inventory of electric vehicles. When people see that there is a price decrease in electric vehicles, sales for the vehicles may increase as customers may be more interested more now than ever. Farley also added " With higher production, we're reducing costs, which allows us to share these savings with customers."

These statements and decisions made by ford is more of a response to Tesla's decision for price reduction. With these actions in place, this may help the market for electric vehicles as demands for them may increase because of the price reduction which would create a higher competitive market. Before, Tesla was the main company that everyone went to if they were looking for electric vehicles. With Ford creating their Mach-E models and increasing production of their sport utility vehicle, Ford will be able to set their feet in the door and become a fighting competitor with Tesla.

Main Source: https://www.nytimes.com/2023/01/30/business/ford-mustang-electric-prices.html

U.S. and India Form a Technology Partnership to Counter China

 The United States and India are forming a technology partnership aimed at promoting innovation and increasing competitiveness in the global market. The partnership will focus on the main areas of digital economy, research and innovation, infrastructure, and workforce development. The two nations will specifically be expanding cooperation on advanced weaponry, supercomputing, semiconductors and other high-tech fields. A successful partnership would offset China’s dominance of cutting-edge technologies.

This has been described as a “big foundational piece of an overall strategy to put the entire democratic world in the Indo-Pacific region in a position of strength,” by Jake Sullivan, the U.S. national security advisor. One motivation for this was the continued reliance on China for important goods like semiconductors and telecommunications parts, this is thought to have the potential to give China a military advantage in the future and thus the Biden administration has introduced more restrictions on the sale of advanced semiconductor technology to China in recent months.

The U.S. and India are also committed to greatly increase efforts to produce and develop defense technologies together such as jet engines, artillery systems, and armored infantry vehicles. Officials have also agreed to carry out the building of an advanced mobile network in India and look for new cooperation in semiconductor production. These efforts would mainly be aimed at increasing India’s chip research.

The main issue is that most of the decisions to collaborate will have to be made in the private sector where companies will likely be more concerned about the business implications rather than the governmental strategies at play. Many companies have already found it difficult to obtain the factory space and skilled workers needed to move supply chains out of China.

To address these issues both Biden and Modi are working to increase efforts to increase the industrial and innovation bases of the two countries. The key components of this are working through regulatory barriers such as visas for Indian workers in the U.S. and India changing its tax system to attract more manufacturers from foreign nations. The United States would also need to rework the restrictions that have been placed on transferring defense technology outside of the country. 

This collaboration is expected to result in increased investment and job creation for both the U.S. and India. The partnership will provide opportunities for startups to grow and to have better technology and digital infrastructure access in underdeveloped areas as well as increase the number of workers in tech-related fields.

https://www.nytimes.com/2023/01/31/business/economy/us-india-technology-partnership.html

How Increasing Interest Rates are Affecting Businesses and the Stock Market

 Since last March, the stock market has declined severely, meaning that of course interest rates have skyrocketed. This has affected both business profitability and the stock market in huge ways. 

To business owners, this means less profit potential right off the bat for those who have taken out loans in the past. These new interest rates will take out money out of the pockets of business owners. Not only will it affect the top of the pyramid, but all the way down through as well, right down to the sale of the goods and/or services. Because of wages being lowered in some scenarios, this forces firms to raise prices on good and services, and forces households to pay more for sometimes necessary goods, otherwise known as inflation.

Rise in interest rates can also hit some sectors of the economy differently than others. For example, the real estate industry has taken a huge hit, as housing prices continue to climb. To make matters worse for them, building supplies and labor has become more expensive as well, leading to less and less profit for these companies.

This also leads to businesses selling more stock, or taking out more loans in order to keep their business running. When the interest rates are higher, the interest expense that needs to be met makes a company even less profitable.