Nebraska's leading economic indicator rises 0.58% in June, signaling positive outlook. US economic growth increased last quarter to a healthy 2.8% annual rate, defying expectations. Plus, a comprehensive analysis of the economics of college football bowl games. Also, US economic growth ramps up, growing 2.8% in the latest quarter, with implications for the upcoming election.
Sources:
https://news.unl.edu/article/nebraskas-leading-economic-indicator-rises-058-in-june
https://www.kiiitv.com/article/news/nation-world/us-economic-growth-increased-last-quarter/507-391ab748-97f7-45cf-b594-53aed7df1190
https://gridironheroics.com/economics-of-college-football-bowl-games/
https://www.theguardian.com/business/article/2024/jul/25/june-inflation-interest-rates
Outline:
(00:00:00) Introduction
(00:00:40) Nebraska’s leading economic indicator rises 0.58% in June
(00:02:34) US economic growth increased last quarter to a healthy 2.8% annual rate
(00:05:57) A Look At The Economics Of College Football Bowl Games
(00:09:58) US economic growth ramps up, growing 2.8% in latest quarter
Simply Economics
Nebraska’s Economy on the Rise, US GDP Growth Surpasses Expectations
Nebraska's leading economic indicator rises 0.58% in June, signaling positive outlook. US economic growth increased last quarter to a healthy 2.8% annual rate, defying expectations. Plus, a comprehensive analysis of the economics of college football bowl games. Also, US economic growth ramps up, growing 2.8% in the latest quarter, with implications for the upcoming election.Sources:https://news.unl.edu/article/nebraskas-leading-economic-indicator-rises-058-in-junehttps://www.kiiitv.com/article/news/nation-world/us-economic-growth-increased-last-quarter/507-391ab748-97f7-45cf-b594-53aed7df1190https://gridironheroics.com/economics-of-college-football-bowl-games/https://www.theguardian.com/business/article/2024/jul/25/june-inflation-interest-ratesOutline:(00:00:00) Introduction(00:00:40) Nebraska’s leading economic indicator rises 0.58% in June(00:02:34) US economic growth increased last quarter to a healthy 2.8% annual rate(00:05:57) A Look At The Economics Of College Football Bowl Games(00:09:58) US economic growth ramps up, growing 2.8% in latest quarter
- Duration:
- 12m
- Broadcast on:
- 26 Jul 2024
- Audio Format:
- mp3
Good morning and welcome to Simply Economics. It's Friday, July 26th. On today's show, Nebraska's leading economic indicator rises by 0.58% in June and US economic growth increases to a healthy 2.8% annual rate. Plus we take a look at the economics of college football bowl games. This coverage and more up next. I'm David and you're listening to Simply Economics. We start off with some positive news for Nebraska's economy, which is showing signs of continued growth according to the latest leading economic indicator report from the University of Nebraska-Lincoln. The indicator, which is designed to predict economic activity six months into the future, rose 0.58% in June. For more on this, we're joined now by our Simply Economics correspondent. So what factors are driving this positive economic outlook for Nebraska? The report highlights several key components that contributed to the increase in the leading indicator. One major factor was growth in manufacturing hours worked in the state. Nebraska is benefiting from strong demand for food products, and US manufacturing activity as a whole is improving. This suggests the state's important manufacturing sector will remain a source of strength. The report also mentioned positive business expectations. What did it find in that regard? Yes, the June survey of Nebraska business indicated that respondents are planning to increase sales and employment over the next six months. This optimism among businesses bodes well for near-term economic growth in the state. When businesses are confident enough to boost hiring and expect rising sales, it often translates into real economic momentum. Were there any other notable data points in the latest report? The indicator includes six components in total. In addition to the manufacturing hours and business expectations, there were small increases in airline passenger counts and building permits for single-family homes in June. While not major drivers, these gains still point to steady economic activity. Overall, the continued growth in Nebraska's leading indicator suggests the state is weathering economic headwinds and is poised for solid growth to close out the year. While Nebraska's economic outlook seems encouraging based on the latest report, let's shift our focus to the national level. The U.S. economy accelerated in the second quarter, growing at a strong 2.8% annual pace despite the pressure of high interest rates. The GDP report also showed that inflation continues to ease while still remaining above the Federal Reserve's 2% target. Here to discuss the implications is our simply economics correspondent. So, what drove this stronger than expected growth in the second quarter? Overspending, which accounts for roughly 70% of GDP was a key driver. It rose at a 2.3% annual rate in the April/June quarter, up from 1.5% in the first quarter. Spending on goods like cars and appliances increased at a 2.5% rate after declining earlier in the year. Business investment also picked up, especially in equipment. However, a surge in imports, which are subtracted from GDP, did shave off nearly a percentage point from the overall growth rate. The report mentioned that inflation is easing, but still above the Fed's target. What did the data show on that front? The Fed's preferred inflation gauge, the PCE index, rose at a 2.6% annual rate last quarter. That's down from 3.4% in the first quarter. When excluding volatile food and energy prices, the so-called core PCE inflation increased at a 2.9% pace down from 3.7% previously. Though inflation is clearly moderating, but the Fed would like to see it closer to their 2% target before they'll be fully comfortable. With growth picking up and inflation cooling, is the US economy on track to achieve that elusive, soft landing the Fed has been aiming for? Many economists believe so. The latest figures should boost confidence that the US can tame inflation without tipping into a recession. The Fed has already hiked rates aggressively to slow demand and cool prices. With inflation now edging toward their target, Fed officials have signaled they're prepared to start cutting rates soon, possibly as early as September. Rate cuts would eventually reduce borrowing costs for consumers and businesses. Despite the more positive data, many Americans still seem concerned about the state of the economy. Why is that? While inflation has slowed sharply from its peak of 9.1% in 2022 to around 3% now, prices remain well above pre-pandemic levels. The economic slowdown also reflects the impact of much higher borrowing costs resulting from the Fed's rate hikes. So many households are still feeling the squeeze, even as overall conditions improve. The trajectory of the economy has also become a focal point in the intensifying presidential campaign. The GDP report noted that the slowdown earlier this year was largely due to swings in imports and inventories. Can you explain that dynamic? In the first quarter, a surge in imports and a drop in business inventories weighed on GDP, but economists largely discounted those factors as they can vary sharply from quarter to quarter and don't reveal much about underlying economic health. With consumer spending and business investment picking up in Q2, it seems those issues were indeed temporary and not signs of a more serious slowdown. Thanks for that insightful analysis of the latest GDP figures and what they suggest about the economic outlook. Speaking of economics, let's shift gears to the world of sports. College football ball games have become a staple of the American sports landscape with their number expanding dramatically in recent years. As of 2024, there are 41 post-season contests, each driven by the belief that they can generate sufficient revenue to justify their existence. This growth is fueled by various stakeholders, including event organizers, television networks, and local tourism boards. Here to discuss the economics behind these games is our simply economics correspondent. So what are some of the key financial incentives driving the proliferation of bowl games? Well David, there are significant financial motivations for bowl game executives to create and maintain these events. All salaries for managing a single bowl game can range from $200,000 to over $1 million, providing a strong incentive to keep these games thriving. Additionally, host cities often see a substantial economic uplift from bowl games, particularly during traditionally slow tourism periods. According to a football bowl association study, the 41 college football bowl games generate an estimated $1.5 billion in annual economic impact nationwide. That's a significant economic impact. But does the prestige of the game make a difference in terms of the financial benefits for the host city? Absolutely. The economic impact varies widely based on the prestige of the game. The New Year's six bowls, for example, have an average impact of $93.7 million, while smaller games have an average impact of $12.6 million. However, it's crucial to approach these figures with caution. Many studies define economic impact as money brought into the local economy that wouldn't have come otherwise, excluding spending by local residents. This more conservative approach provides a more accurate picture of a bowl game's true economic effect. What about the financial implications for the schools participating in these bowl games? They must be seeing a significant payout, right? Most bowl games offer payouts between $400,000 and $1 million, with more prestigious games offering significantly more. Marquis non-NY6 games offer $3 to $4 million, while NY6 games offer $18.22 million per conference. However, despite these payouts, many institutions actually lose money on bowl game participation after accounting for travel expenses and mandatory ticket purchases. Additionally, payouts go to conferences rather than directly to schools. If schools aren't necessarily profiting directly, what's the incentive for them to participate in these games? Despite questionable direct financial benefits, many schools view bowl games as valuable marketing opportunities. These events can increase visibility, attract potential recruits, and serve as a platform for promoting the institution. Additionally, bowl games provide valuable media exposure for host cities. For example, when the BCS was around, the Orange Bowl and BCS Championship games in south Florida generated an estimated $74.1 million in media exposure value for the region. Interesting. So what does the research say about the overall economic impact of college football games, including bowl games, on local economies? A study by economists Robert Bod, Robert Bauman, and Victor Matheson found no statistically significant evidence that college football games, including bowl games, contribute positively to local economies. Their analysis of 63 metropolitan areas hosting major college football programs from 1970-2004 showed no discernible impact on employment or personal income in the host cities. Thanks for the analysis on the economic impact of college football bowl games, it's a complex issue with many factors at play. Speaking of economic analysis, the U.S. economy grew at a faster pace than expected in the second quarter, according to the latest GDP report from the Commerce Department. GDP rose 2.8% in the three months to June, up from 1.4% in the first quarter and ahead of economists' expectations. Here to discuss the implications is our economics correspondent. So what's behind this stronger than expected growth? A few key factors seem to be at play. More spending, which makes up a large portion of the economy, remained resilient despite high interest rates and inflation. Businesses also continued to invest and build up inventories, and government spending provided a boost as well. It's a sign that the economy has been more resilient to the Fed's aggressive rate hikes than many anticipated. The report comes amid heightened focus on the economy as the presidential election campaign heats up. Both President Biden and former President Trump, who is running again, have been making their economic case to voters. What's your take on the political implications? President Biden was quick to tout the GDP numbers, saying they show the U.S. has the strongest economy in the world despite inheriting a crisis. Trump, meanwhile, has accused Biden of weakening the economy. Polling shows many Americans believe the economy is in a recession, even though it's not by the technical definition. So while the headline numbers are good for Biden, public perception may be more mixed. Looking ahead, what's the outlook for the economy? The Fed has been raising rates aggressively to combat high inflation. Could that lead to a slowdown later this year? Many economists do expect growth to moderate in the coming quarters as the impact of higher rates continues to play out. There's often a lag between rate hikes and their effect on the real economy. Some economists describe this as a perfect report for the Fed. Strong enough growth to avoid a recession for now, but not so strong as to force even more aggressive tightening. The big question is whether the Fed can pull off a soft landing, bringing down inflation without causing a sharp downturn. There are certainly a lot of moving parts in the economy to keep an eye on in the months ahead. Thanks for breaking it down for us. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics, we'll see you back here tomorrow. [MUSIC] [BLANK_AUDIO]