Economics in the News – Oct. 21-27, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o The National Football League (NFL) is seeking to grow its brand outside of the United States. During the 2024 season, the NFL will play five games in three other countries, including Brazil, England and Germany. Next season, the league plans to play a game in the city of Madrid for the first time.
The league is relying on its current teams to lay the foundations in various countries globally, with teams such as the Los Angeles Rams focusing on locations such as Australia and Japan, while the Miami Dolphins are seeking to gain attraction from countries such as Brazil and Spain. The Kansas City Chiefs have generated $1.1 million in revenue in Germany, as team owner Clark Hunt owns German soccer team Bayern Munich FC. The Pittsburgh Steelers are one of the teams with a focus on Ireland – a country with an estimated 350,000 NFL viewers and fans. Popularity has soared in Ireland due to the easy access of streaming packages, and games being played when few other sports are played. [The New York Times]
o The United States election is in its final stretch before election day. Organizations that track election polls consent that the race for the presidency between Democratic nominee Kamala Harris and Republican nominee Donald Trump is in a dead heat. However, prediction markets, which allow users to bet on election results are much more bullish on Trump’s chances to secure the presidency. Some of the markets have taken more than $100 million in wagers. But how accurate are the betting markets compared to traditional polls when it comes to election results?
There are pros and cons of market-based predictions compared to traditional polls, including sometimes being an accurate indicator of future results. While polls seek to measure actual voters preferences to gain a snapshot in time, prediction markets allow users to predict that a certain outcome will occur based on odds that change in accordance with the amount of money placed on a candidate. Proponents of prediction markets believe that having real money on the line encourages a more accurate market, while using the polls and forecasts to their advantage. However, there’s no clear indication that prediction markets are any better at predicting the results than traditional polls. In addition, betting on elections has long been prohibited by regulators in the United States, meaning that the prediction markets either have special permission or are offshore. [The New York Times]
o Gas prices are falling toward a three-year low, as the end of the election nears. The average price of gas is $3.14 per gallon across the United States. That brings it to within eight cents of its lowest point in three years. Across the Sun Belt, gas prices range from $2.70 to $2.90, according to AAA.
Falling fuel costs typically lifts presidential approval ratings while rising costs have the opposite impact. However, in this year’s election, voters are more concerned about the rising costs of housing, food and utilities. It’s also important to note that Presidents typically have little control over gas prices, they are determined by a mix of geopolitical and economic factors. For example, the spike in gas prices after Russia invaded Ukraine in 2022. [The Washington Post]
o For the second year in a row, existing home sales are on pace for their worst year since 1995. High home prices and elevated mortgage rates are keeping potential homebuyers on the sidelines. Other factors include climbing costs to insure a home, as well as the upcoming election. The affordability of buying a home has become an important campaign topic for voters.
The national median pre-existing home price in September was $404,500 – a three percent increase from a year ago. Economists and real-estate executives expected activity to pick up after 2023, but mortgage rates have remained higher than many had forecasted which has worsened the affordability of buying a home. [The Wall Street Journal]
o The days of multinational companies paying low wages to factory workers in a developing countries and shipping goods to developed countries could be shifting. The practice is less and less able to generate the economic expansion poorer countries need to raise their standard of living. In addition, automation has become increasingly prominent in factories, jumping threefold from 2012 to 2022.
Manufacturing today makes up a smaller portion of global economic output than it did two decades ago, with China accounting for an estimated one-third of goods produced, while the United States, Japan, Mexico and Germany account for an additional 45 percent. [Bloomberg]
