The United States’ economy continues to grow, and the possibility of a recession in the near future looks very slim. That’s a promising forecast for a country that had been rocked by economic collapse about a decade ago.

The question still remains; when the economy is booming, how do you prevent too much inflation that can stir markets for the worse?

The Federal Reserve aims to address this issue, keeping the booming economy in check by enlarging interest rates, as Goldman Sachs projected massive market swells and a strikingly low unemployment rate in 2018. Economists of Goldman Sachs also noted that there could be four Federal Reserve interest rates hikes in the next year, and that the United States unemployment rate, which hit 4.1 percent in October, could reach its lowest point since the 1960’s by the end of 2019.

“With robust growth momentum and no striking imbalances in the economy, near-term recession risk still looks fairly limited,” said Goldman’s chief economist Jan Hatzius, via CNBC. “But the strength is becoming ‘too much of a good thing’ and containing further overheating will become a more urgent priority in 2018 and beyond.”

The overall upswing of the United States economy is accompanied by a similar trend in overall global economic health, when viewed in terms of GDP growth. Germany, for example, displayed GDP growth of 3.3 percent in the third quarter, while the UK’s GDP grew 1.6 percent. Germany’s stock market index, Dax, is up 13 percent, per Express.

Marking the beginning of the United States’ recovery from the major 21st century recession at June 2009, the graph below details that the economy has been growing at a very similar rate for some time now.

But if this rate accelerates too much, over inflation is very possible, and therefore, like Hatzius said, the economy becomes ‘too much of a good thing.’ We witnessed the economy swell to unimaginable highs with risky subprime mortgages, a perfect example of an entity falsely fueling the economy while risk was wrongly assumed to be low.

Actually, a disinflationary trend—that is, a reduction in the rate of inflation—seemed to exist earlier in the year and was worrisome until the U.S. consumer prices, through the lens of core consumer price index (CPI), increased in October. Disinflationary trends lingering over longer periods of time concern Fed officials due to the potential to disrupt interest rate anticipations.

“The Fed has struggled this year in determining if the slowdown in core inflation has been due to a confluence of one-offs or more persistent disinflationary forces,” said Sarah House, an economist at Wells Fargo Securities, courtesy of Reuters. “The pickup clears the way for a December rate hike and supports the case for continued tightening in the year ahead.”

It seems to me like the Fed wants to appear more cautious than it has in the past, considering the financial struggles from ten years ago displayed a lack of governmental regulation as one of many undoings of the economy.

It’s no new, news that video games and their accompanying systems are cheaper than ever. A case study by IGN found that when accounting for inflation, video games in the modern era are certainly more cheaper than in the past. A $50 PS2 game in 2005 is worth $60 today and more drastically a $70 Nintendo 64 cartridge is worth approximately $100. However, while games can be seen as significantly cheaper in today’s era, the expenses for creating video games has certainly gone up.

A leaked development contract for 2014’s Destiny outlined budgetary payments of $140 million dollars.

The above represents just one game of dozens that are released throughout the year. When looking at the 2017 release calendar, at least two AAA games were released between January and December, all of them carrying comparable budgets.

While games have become undeniably cheaper when accounting for inflation, publishers still find themselves in need of money past the initial $60 entry fee.

Several years ago publishers began to offer content post-launch to increase longevity. Much of the content amounted to scrapped ideas for maps, weapons, and characters. Simply not purchasing the content carried no negative results.

In the years following publisher tactics have become more aggressive. Season passes as they are titled simply aren’t profitable given the nature of multiple releases a month. Console games have since taken on an approach seen in mobile gaming in which in-game purchases are encouraged to receive immediate benefits.

Much of these micro-transactions involve in-game currency which can be used to purchase items such as collectibles or cosmetics. Scaling from as low as a few bucks to as much as over $100 real dollars, these transactions aren’t necessary and can be completely ignored. For publishers, they are a lucrative opportunity to generate serious cash-flow. For example, Take-Two Interactive which is responsible for the Grand Theft Auto series reported in August nearly $500 million in profits from their in-game currency in just three months time.

Electronic Arts which became the exclusive publisher for Star Wars video games after Disney acquired the Star Wars IP for the paltry sum of just over $4 billion has released two titles in the years since.

In 2015 to coincide with the release of The Force Awakens, EA released Star Wars: Battlefront, a reimagining of the popular series on the Playstation 2 era of consoles. The game was reviewed well, however, sorely lacked content. Many maps and characters were held from release and were bundled part of the Season Pass which retailed at a whopping $50, nearly 90% of the cost of the base game.

Many fans at the onset of the release felt slighted. Eventually, EA discounted the base game within weeks of release to bring up the total cost to around what the base game originally was selling for. The game was reported to have sold-through 14 million copies in one year’s time.

Two year’s later and EA has released its sequel. It has more maps, more modes, and more characters. Downloadable content was even revealed to be free.

In place of a customary season pass, the game instead launched rife with mobile-esque micro-transactions transactions, however, unlike other games that offer pure cosmetics, these micro-transactions offered actual statistical advantages for players who chose to put down real money.

The problem runs much deeper than that. These in-game advantages are tied behind loot boxes. These boxes are entirely random and purchasing one does not have any guarantees. While they do carry the possibility of obtaining an in-game advantage item, it is entirely possible that a player receives purely cosmetic bonuses such as emotes.

Granted, these boxes also vary in cost with the most expensive of the bunch all but ensuring some sort of advantage. Those who wish not to participate in such practices are essentially left behind. More so, those do participate can come up empty handed much like real-life gambling.

The ensuing backlash from fans over their predatory nature and construction of an uneven playing ground forced EA to remove them for the time being, however, since then many have wondered whether such boxes should be made available at all.

In the time since then the Belgium Gaming Commission announced that it has opened a case in regards to these boxes and their slot machine like nature. Because players are unaware of what is inside, many are linking it to gambling. When spinning a slot machine, it is unknown what you’ll win if anything. In Belgium, companies involved with gambling are required to have a license in order to operate. More so, minors and those suffering from addiction are forbidden to play.

In China steps have already been taken in response to these practices. In March, developers of games featuring random loot boxes are required to reveal the odds of players receiving specific items. In one instance a rare item in free-to-play title Dota 2 has a mere 2% chance of appearing when players pay for one such box.

It has been reported, however, that it is only required for the Chinese version of the game to release such odds and it’s entirely possible that developers could boost drop rates in China in order to save face. Still, it is the first actual step in an effort to make consumers aware of what lies inside these boxes and potentially put these practices away for good.

In the time since this fiasco, EA’s stock has dropped 2,5% as of Friday, the release date of Battlefront II. In the entire month of November, it has seen its stock dip by 7% overall.

It remains to be seen where the company goes from here. They are stuck in a terrible predicament. The development of Battlefront II required three entirely different studios to complete the game which certainly wasn’t cheap. Throw in an aggressive marketing campaign and other costs and the game rivals the financial commitment of its movie brethren.

Star Wars itself is a large IP and while it would be easy to offer pure cosmetic bonuses in place of in-game advantages, that simply cannot be allowed. Each cosmetic variation would have to be approved by Disney and Lucasfilm and because Darth Vader has already been established to look a certain way, it is almost impossible to imagine some variation being allowed. As with such to help recoup costs from such an expensive development, this is almost the only logical way to do so, however, at the expense of players.

With the game releasing so close to another mainline Star Wars film, these boxes will have to be on hold for the time being. Disney won’t allow negative press to impact the release of The Last Jedi. In the time following the release, players will move past the game and the money that could have been made will be for naught. At that point the studio finds themselves at a loss, and potentially losing a huge IP.

Not only does this tale have future implications on the Star Wars video game franchise, but on gaming as a whole. If said boxes are considered gambling, than other huge franchises such as Call of Duty will find themselves in a similar predicament. At that point will games leave behind their cheap nature in favor of a higher upfront cost? All of this will be seen in the coming months and years.

References:

http://www.gameinformer.com/b/news/archive/2016/10/10/2017-video-game-release-schedule.aspx

https://kotaku.com/how-much-does-it-cost-to-make-a-big-video-game-1501413649

http://www.ign.com/articles/2013/10/15/the-real-cost-of-gaming-inflation-time-and-purchasing-power

http://www.ign.com/articles/2016/05/10/star-wars-battlefront-sales-top-14-million

https://www.theverge.com/2015/10/12/9512397/star-wars-battlefront-dlc-season-pass

https://www.gamespot.com/articles/gta-5s-online-mode-has-generated-half-a-billion-do/1100-6438765/

https://www.engadget.com/2017/08/03/gta-online-take-two-earnings/

https://www.theverge.com/2017/5/2/15517962/china-new-law-dota-league-of-legends-odds-loot-box-random

https://www.pcgamesn.com/dota-2/dota-2-treasures-china

http://money.cnn.com/2017/11/16/technology/battlefront-ii-star-wars-game-ea-costs/index.html

https://www.gamespot.com/articles/ea-stock-price-drops-after-star-wars-battlefront-2/1100-6455080/

As Italian, when I first moved to Los Angeles, it was not difficult to realize how much this city was driven on one hand by a great innovation, on the other hand by a very huge inequality. After living here for few days, it was easy for me to having a better sense of the social status of the people living in LA. Basically, you might trace a horizontal line that divides the city between north and south: norther you go, richer the people and neighborhoods you encounter, while southern you go the poorer are the people you encounter. Maybe this could sound a very approximate and stereotyped frame, but nobody can deny that, for someone you just move in LA, the impact with inequality is very strong: too many homeless people living alone in terrible situations along the streets, under the bridges, or in the tents – when they happen to be “lucky”. When I experienced this situation for the first time, honestly my first question was: how is a situation like this be possible in a rich and forward-thinking country as the United States? Yet, after few months living here I realized that, according to the current U.S. economy, unfortunately, it is totally possible. The United States is one of the most unequal country in the world (OECD Income Distribution Database).

According to an article published last week by the New York Times, U.S. elite professionals earn 3.5 times more than the typical (median) worker in all occupations. Its income inequality is testified by the Gini coefficient that, according to the United States Census Bureau, for the 2016 was 0.481. Such a huge different is overcame only by other two countries in the world: Israel and Mexico.

Additionally, when I looked at the NTY chart that refers to the analysis extracted from the World Income Database, I realized that even Italy (my home country) is much less unequal than the United States, where over the last year only the 1 percent’s share of national income has experienced a sharp growth: this information has really blown my mind, because before moving to the U.S. I believed that Italy was one of the worse country for what concerns inequality, because its rate has been rising without control. Actually, it is not.

What it’s really going on in the U.S.? Mr. Trump is taking advantage of the argument on increasing inequality spreading along the country, stating that the main causes of the rising poverty rate have to be referred to: the evil nations oversea, like China, that are responsible for unfair trade negotiations and stealing jobs to U.S. workers, or to the immigrants, who also steal jobs from U.S. workers. Conversely, others believe that the cause of this situation relies on the switch of the type of experts needed in the work place. The number of people employed in the information technology industry is still too tiny, and it has not been contributing to the rise of the average incomes.

Yet, one of the main reason, as the NYT states correctly, is connected to the fact that since 1980 all the norms, both legal or economical, have been shaped by the upper middle class. This factor has led the richer people increasing their influence in the political life so that they could execute their power on the economy, reforming and reshaping the norms according to their interests.

This issue inevitably refers to the recent, and debated, tax plan overhaul, that it does not seem helping to decrease inequality in the country.

As a result, as is shown in this interesting visualization, between 1980 and 2014 the largest income growth has been registered only by the 99.999^th percentile, a growth that will keep rising making richer people even more rich.

Prior to Snap’s IPO in March, it had been evident that Snapchat was on its way to revolutionize the virtual communication process. However, this vision has been a concern for Wall Street. Ever since they went public, the company has lost over $3 billion and has not traded above its IPO price of $17 a share since July, despite the 44% surge during their first day of trade (Yahoo Finance).

On Tuesday, November 7, the California-based company released an earnings report, which included revenue and user growth for the third quarter, that was well below Wall Street expectations. This report was followed by a statement from their billionaire CEO, Evan Spiegel. He startled investors with news that Snapchat will undergo some major changes, indirectly justifying that the mobile app is struggling to compete with its archenemy, Facebook.

Snapchat has never had a strong revenue model. The company has always relied on tailor-made, custom advertising, which has been their primary source of revenue. However, Spiegel announced that they will be implementing a more programmatic method, using automated auctions to bid on a slot. Sounds familiar, right? Yes, Snapchat advertisements may start to feel a lot more like what you see on Facebook and Instagram. This is expected to result in less human involvement and much cheaper ads.

Snap also plans to completely redesign the Snapchat app, which is expected to launch on December 4, 2017. According to Spiegel, the redesign will be focused on responding to the feedback that the app is “difficult to understand or hard to use.” Most Snapchat users, including myself, would agree that the platform can get a bit confusing, especially for the older crowd. Its IPO filings even included a step-by-step tutorial on how to use the application.

Spiegel agreed that the redesign could be disruptive to their businesses in the short term and that is it unclear how their community will respond to the changes. However, he went on to explain that this is a risk they are willing to take because they believe in the long-term benefits. Ironically, Snapchat needs to do what Facebook did years ago and cater towards different age groups, not just teenagers.

This may be the reason behind Tencent’s decision to acquire a 12% stake in Snap Inc. just hours after Spiegel’s announcements. According to Bloomberg, Tencent, the Chinese company behind WeChat, has developed very successful chat apps through engaging content, integrated services, and advertising (Bloomberg). It is apparent that they are trying to do the same with Snapchat, which has a larger U.S. audience than Tencent.

Will these serious changes help Snap Inc. climb out of its deep hole? As of right now, it is still unclear. Although investors might not be convinced, Spiegel and his team are confident that the long-term benefits will be worth it. I guess we will just have to wait and see.

 

finance.yahoo.com/quote/SNAP

https://www.bloomberg.com/news/articles/2017-11-08/tencent-buys-10-percent-stake-in-social-media-company-snap

https://investor.snap.com/~/media/Files/S/Snap-IR/reports-and-presentations/snap-inc-q3-2017-prepared-remarks.pdf

Fine art is a status symbol, both in societal terms and economic terms. The uber-wealthy pull out their wallets at art auctions hosted by Christie’s and Sotheby’s every year and contest for collectable pieces by the world’s greatest artists. The prices naturally fluctuate with the ebbs and flows of the global economy so when buyers up the ante, those price tags can be used as a gauge for confidence in the market. The more money people have, the more likely they will spend it. According to the Washington Post, Christie’s auction house set a record this year by auctioning off the most expensive painting in history. Leonardo da Vinci’s, “Saviour of the World” (Salvador Mundi) was auctioned off for an astounding $450,312,500, shattering the previous record by over $270 million dollars. Spending that kind of money on a collector’s item is a direct result of the economy as a whole and the conviction the wealthy have in it.

Economic indicators come in many forms, but art is one that could be considered unorthodox given only the wealthiest of society participate. Art auctions like Christie’s is an interesting way to look at the health of the economy. Price tags like the one on Leonardo da Vinci’s painting are not small and the growing economy allows for pieces like that to go for hundreds of millions of dollars. Fortune magazine examines the art auction market a little deeper saying “robust sales are a sign the world’s wealthiest people feel bullish—making a recovering art market something that point-one-percenters and the other 99.9% can be equally excited about.” The art industry as a whole has been in a slump since 2015 so the numbers being reflected in this year’s auctions are a good sign for the industry and the shareholders of the auction houses. Confidence in the buyers also creates confidence in the sellers. That confidence stems from a myriad of elements including a sky-high Dow Jones, planned tax cuts from the Trump administration and other indicators that signifying a robust marketplace.
According to the New York Times, the tax cuts also include a provision that restricts “high-end art investors to sell works and quickly replace them with pieces of similar value and [thus] defer paying federal taxes.” If passed, this loophole in the system could potentially halt liquidity in the U.S. market to some extent because people will sell less and not have as much money to spend. With that being said, the current art market is sitting pretty at $60 billion, but is mostly made up of pieces that go for $1 or $2 million, unlike da Vinci’s piece, with buyers who hope to use those “smaller” purchases as an investment that they can gain profit on by resale down the road. The fact that material objects can generate this much revenue is surprising in a time where people are starting to value experiences more and more in society. Although it is not the strongest indicator, the confidence in the art market is very telling in a macro-economic sense. It will be interesting to see how long the confidence remains and if the economy really starts to reflect the experience-leaning consumerist shift or if fine art will continue to be as expensive. In the art world, some of the wealthiest people in the world invest in timeless pieces of art that also help excite a market that only the 1% can participate in. Fine art as an economic indicator is one that you will only see thriving when the economy is hot, and thriving to the extent where a few hundred million dollars is spent on a single work of art. That is not chump change, so when that kind of money is used to purchase a collector’s item, it is easy to assume that the economy is doing well and expected to do so for the near future.

Travel is frequently an indicator of the health of the economy. It is often viewed as a luxury or an unnecessary expense and when times are tough, people generally sacrifice their travel to have some extra cash for other expenditures. However, with lower travel costs combined with a growing economy, travel may be placed higher on families’ priority lists. With the holiday season quickly approaching, travel is expected to increase dramatically for the remainder of 2017.

This year, AAA expects nearly 51 million Americans to travel 50 miles or more away from their home for Thanksgiving alone. This number is the highest volume of travelers since 2005 and is a 3.3% increase over last year’s travel numbers.While gas prices generally dip prior to Thanksgiving, this year the prices have continued to rise as the oil and gas industry still works on normalizing post-hurricanes. Even with the increased prices at the pump (as they hit the highest Thanksgiving period prices since 2014) travelers are willing to pay a bit more to visit family and friends for the holiday. Americans are expected to spend $800 million more on fuel for holiday travel this year compared to last year. In South Carolina alone, the price of gasoline is 32.5 cents higher per gallon this year than it was last year at the same time.

While the price of traveling by car has increased this year, the price of travel by air isn’t inexpensive either. The average cost of a Thanksgiving flight is $385 if booked by the end of October. The most congested cities for Thanksgiving travel are expected to be Los Angeles, New York, San Francisco, Atlanta and Miami.

Regardless of the high gas prices, projected travel numbers remain higher than they have been in years. AAA’s senior vice president, Bill Sutherland, credits the strong year for the travel industry to a strong economy and labor market that has fueled higher incomes and consumer confidence.

With this massive increase in holiday travel and spending in 2017, the country’s economy as a whole is bound to reap the rewards as well. The World Travel & Tourism Council noted that travel and tourism directly contributed to GDP growth by 3.1% in 2016. This growth was faster than the economy as a whole, which grew at 2.5% the same year.In addition to GDP growth, travel and tourism contributed to employment growth of 1.8% in 2016, which totals almost 2 million jobs. Looking ahead to 2017, travel and tourism’s contribution to the economy’s GDP is expected to grow even more by 3.5%. Much of that growth will more than likely come from this year’s holiday travel numbers.