Imagine for a moment what it would mean for our economy if we didn’t have maps: transportation, trade, resource extraction, disaster management – so much of what we do would be more complicated, to say the least.

As it turns out, we don’t have very good maps for most of the Earth’s surface, or more specifically, the seabed.

Researchers announced Friday that they have completed a map of just over a quarter of the world’s seafloor. It’s part of a long-term project funded by governments and nonprofits around the world that aims to map the entire seafloor for the first time. And it has significant global economic implications.

How accurately do you map the seafloor?

For thousands of years, people have sailed the seas without having any sense of what lies beneath them. We have not had the means to find out.

“That’s because most of the time the techniques were very, very primitive,” says Larry Mayer, professor and director of the Center for Coastal and Ocean Mapping at the University of New Hampshire.

By “primitive” he means a piece of lead at the end of a rope. “You can’t measure three quarters of our planet like that,” he said.

The sonar technology developed since World War II has made mapping the sea floor much more efficient, said Mayer. This requires special ships that crisscross the ocean and bounce sound waves off the sea floor, which can be expensive.

“The cost estimate was somewhere between $3 billion and $5 billion,” he said.

But what if you end up with a map of most of the Earth? “The cost estimate is really a bargain,” says Dawn Wright, oceanographer and chief scientist at the mapping company Esri. She thinks the project will more than pay for itself.

“There are so many benefits. We’re having this conversation because of the seabed,” she said.

Especially because of the data cables down there, which span a distance of almost 1.6 million kilometers.

And it’s not just the telecommunications industry that could use a better map. Tsunami forecasting, climate models, fishing, mineral extraction – and that small industry that transports a lot of the things we buy – are also important topics.

“Accurate seafloor maps help enable thousands of ships around the world to safely transport goods and services,” Wright said.

A study commissioned by the Australian government found that mapping the seafloor has added $9 billion to the Australian economy. The U.S. wants to learn more about its own seafloor because there is simply a lot of it, said Robert Ballard, president of the Ocean Exploration Trust.

“Fifty-two percent of the United States is under the sea. And I want to know what we own,” he said. That’s actually a basic inventory.

The researchers hope to have their map of the entire seafloor completed by the end of the decade.

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SALT LAKE CITY – Utah’s economy has been strong over the past year, adding a total of 38,100 new jobs since May 2023.

“The largest job gains were in the education and health care sectors, with 10,600 jobs added year-over-year, a growth rate of 4.6 percent, followed by the construction sector, which added 6,500 jobs, a slightly higher growth rate of 4.8 percent,” said Ben Crabb, chief economist for the Utah Department of Workforce Services.

The department’s employment summary for May shows the state’s seasonally adjusted unemployment rate is estimated at 2.9%, with about 51,900 Utahns unemployed. That’s lower than the national unemployment rate in May, which rose one-tenth of a percentage point to 4%.

“Despite a slight increase from historic lows two years ago, unemployment rates remain at historic lows and Utah’s economy continues to prove resilient to the current high interest rate environment,” Crabb said.

Crabb added that some industries are recovering after periods of recession.

“Industries that have faced challenges recently – including financial activities, information, and leisure and hospitality – are seeing some improvement as May employment estimates show the state’s economy is growing at a healthy pace, underpinning the positive outlook for steady growth for the remainder of the year,” he said.

President Joe Biden and former President Donald Trump have laid out starkly contrasting blueprints for the U.S. economy as they vie for a second term in November.

Trump has said he would seek to extend and expand his 2017 tax cuts, severely restrict illegal immigration while deporting millions of foreign-born residents, impose tariffs on all U.S. imports, and roll back much of Biden’s initiatives to transition the nation to clean energy.

Biden would extend some of the Trump tax cuts − but not for wealthy individuals and corporations – establish more targeted tariffs on Chinese imports and toughen immigration constraints but not nearly as dramatically as Trump.

He also would push a lengthy wish list of social service programs that would make child care more affordable, provide free college tuition, cancel more student loan debt and lower drug prices, among other proposals. But analysts say they’re unlikely to pass a divided Congress.

“Biden’s policies are better for the economy,” says Mark Zandi, chief economist of Moody’s Analytics. “They lead to more growth and less inflation.”

According to a Moody’s study, Trump’s plan would trigger a recession by mid-2025 and an economy that grows an average 1.3% annually during his four-year term vs. 2.1% under Biden. (The latter is in line with average growth in the decade before the pandemic.)

Next year, under a Trump administration, inflation would rise from the current 3.3% to 3.6%, well above the 2.4% forecast under Biden, the Moody’s analysis shows. Compared with Biden, the U.S. would have 3.2 million fewer jobs and a 4.5% unemployment rate, a half percentage point higher, at the end of a Trump tenure.

The Moody’s projections defy polls that have consistently shown Americans rate Trump a better steward for the U.S. economy than Biden. Forty-six percent of respondents trust Trump on the economy and 32% trust Biden, according to an ABC/Ipsos poll in late April. Their views on the economy are expected to be a major focus of a June 27 debate between the two candidates hosted by CNN.

Even right-leaning economists agree Trump’s trade and immigration policies would hobble the economy. Scott Lincicome of the libertarian Cato Institute says they would be “highly damaging to the U.S. and global economies.” He adds, however, that specific forecasts “should be taken with a grain of salt.”

Chris Edwards, another Cato economist, says Trump “has an edge over Biden” on the economy because Biden has used “trade rules, narrow tax breaks, corporate subsidies, regulations, antitrust, labor union rules” and other measures to “centrally plan” manufacturing, tech and other industries that should be left to free markets.

Moody’s study assumes a Biden administration would be dealing with a Democratic-majority House and Republican Senate as party control of the two chambers flips, while Trump would enjoy a Republican House and Senate, based on models that predict the likeliest election scenarios.

The estimates aren’t an exact science, and changes in the proposals would modify the economic impact. But they’re crunched by computer models that are based on similar policies over the past 75 years.

Here’s a breakdown of how their plans are projected to affect the economy.

Tariffs

Trump’s plan

Trump has signaled he would double down on the trade war he waged in his first term. Then, he imposed tariffs on one-tenth of U.S. imports, but they were limited to products such as steel, washing machines and solar panels, as well as many goods from China. Over the long term, a study by the Tax Foundation found, the $80 billion in tariffs would cut the nation’s gross domestic product, or output, by 0.21% and reduce employment by 166,000 jobs.

Trump is now saying he would impose a 10% tariff on all U.S. imports in an effort to protect U.S. manufacturing workers and narrow the nation’s trade gap.

Biden ‘s plan

Biden has kept most of Trump’s initial tariffs in place and recently imposed targeted tariff increases, such as a 100% levy on Chinese electric vehicles and solar panels. He probably would continue to use such tailored tariffs to help U.S. companies compete with government-subsidized Chinese companies, Moody’s says.

Impact

The effects of Biden’s tariffs on the broader economy would be minimal, Zandi says.

But as businesses pass their higher costs to consumers, Trump’s sweeping tariffs would increase annual inflation, now at 3.3%, by nearly three-quarters of a percentage point next year and a half point in 2026, the Moody’s estimate shows. The new costs would weigh on households as well as thousands of U.S. manufacturers that rely on imports of parts and raw materials to make their products.

Yet the levies won’t notably cut the U.S. trade deficit as intended, Moody’s says. By reducing imports and triggering higher inflation and interest rates, the tariffs would strengthen the U.S. dollar, which makes the nation’s exports less attractive to companies overseas. That would hurt U.S. manufacturers and workers and widen the trade gap.

“I think it would be bad for workers and bad for consumers,” says Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative think tank.

By 2028, the policy would translate to 2.1 million fewer U.S. jobs and a 1.7% smaller economy, according to the Moody’s estimates. That doesn’t include the probability that other countries would retaliate and set their own tariffs on U.S. exports, further damaging the U.S. economy and payrolls.

Taxes

Trump’s plan

Trump probably would work with a Republican Congress to extend his signature Tax Cut and Jobs Act (TCJA) for lower- and higher-income households – whose reduced tax rates are both set to expire in 2025 − as well as for corporations. Trump also has discussed reducing the corporate tax rate – which the act permanently slashed from 35% to 21% − to as low as 15%. Extending the legislation also would allow companies to continue to deduct new investments from their taxes immediately rather than over many years.

Lower taxes would be only partly offset by the higher tariffs and so would add to the $34 trillion national debt, nudging up long-term interest rates, such as for mortgages, over time, the Moody’s study says. Extending all expiring provisions of TCJA would cost $5.2 trillion through 2035, according to the Committee for a Responsible Federal Budget.

Biden’s plan

Biden would extend the lower personal income tax rates only for individuals earning less than $400,000 a year, trimming the deficit and curtailing inflation, Zandi says. Lower-earning households also are more likely to spend, rather than sock away, their tax savings, more efficiently goosing the economy.

Biden separately wants to raise the corporate tax rate from 21% to 28% but probably would not have the votes in Congress, Zandi says.

Impact

Economic studies disagree about whether the tax cuts have spurred more business investment as intended. But while extending the cuts would lead to more capital spending and economic growth, the benefits would be limited because the economy is already at full employment and it’s still tough for companies to find workers, Zandi says. As a result, the tax cuts would further push up still-high inflation that the Federal Reserve is trying to tame.

That would force the Fed to raise interest rates again or leave them higher for longer, increasing corporate borrowing costs and at least partly offsetting the benefits companies would derive from lower taxes.

A bigger deficit and higher interest rates would spook financial markets, and so the lower taxes overall would crimp economic growth despite the new business spending they generate, Moody’s say. But by sparking more investment and fattening corporate profit margins, they eventually should lead to more hiring and fewer layoffs.

By 2028, Trump’s tax cuts should mean about 450,000 more jobs than the Biden plan, Moody’s estimates. The inflation impact from the tax changes would be higher under Trump in 2025 and 2026 but modestly lower the next two years as stronger investment lifts productivity and curbs price pressures.

Cato’s Lincicome favors Trump’s plan, saying a tax cut is the most effective way to incentivize business investment that can increase productivity and prod companies to locate in the U.S. rather than overseas. But he agrees the move would spark higher inflation without similar-sized spending reductions.

Immigration

Trump’s plan

Trump has pledged to deport millions of undocumented immigrants, the largest such effort in U.S. history. He also would reinstate his “remain in Mexico” program that forces non-Mexican asylum seekers trying to enter the U.S. at the southern border to wait in Mexico for their cases to be resolved.

And Trump would restore the COVID-19-era Title 42 policy, which allowed U.S. border authorities to quickly return immigrants to Mexico without the chance to claim asylum, he told Time magazine in an interview.

Trump could take these steps through executive actions without congressional approval, Moody’s says.

Biden has been criticized for a surge in illegal immigration that has created a crisis at the southern border. There have been 8 million encounters at the U.S.-Mexico border since 2021 compared with 2.3 million during Trump’s term, the Moody’s study says.

Biden’s plan

Biden also would significantly toughen border enforcement. Early this month, he issued an executive action barring migrants who cross the border illegally from receiving asylum when the border is overwhelmed. Trump assailed the policy and said he would reverse it even though it mirrors Trump-era policies.

For the longer term, Biden is seeking funding from Congress for more border patrol agents, immigration judges and asylum officers to handle higher volumes of undocumented immigrants and asylum seekers.

At the same time, Biden’s proposed budget would increase the number of refugees admitted to the U.S. to as much as 125,000, double the 2023 level, according to Moody’s. And on Tuesday, he announced a new policy protecting the undocumented spouses of U.S. citizens from deportation.

Impact

Trump’s policies would reduce net immigration to the U.S. from about 3.3 million last year to just a few hundred thousand annually, compared with about 1 million – the historical average – under Biden’s plan, according to Moody’s.

Immigrants, both legal and undocumented, have powered labor force growth that has eased pandemic-induced workers shortages the past couple of years. That, in turn, has slowed wage growth that had helped fuel inflation. Undocumented immigrants alone accounted for about a third of U.S. employment gains last year – or about 1 million jobs, RBC Capital Markets estimates.  

Severely constraining immigration, as Trump is proposing, would reverse those gains, especially in industries that rely heavily on foreign born labor, such as agriculture, construction, restaurants, hotels and retail, Moody’s says.

That would dampen economic growth as companies rely on fewer workers to make products and services. It also would reignite inflation as wages climb, forcing the Fed to raise interest rates again or wait longer before cutting rates.

Inflation would be about 0.3 percentage points higher next year than under Biden’s plan, according to Moody’s. By 2028, there would be 1.5 million fewer jobs and the nation’s economy would be 0.8 percentage point smaller.

“We need more workers,” Cato’s Lincicome says. With baby boomers retiring in droves, “we don’t have a strongly growing native-born workforce anymore.”

The Inflation Reduction Act

Trump’s plan

Biden has spearheaded several new laws to spur chip production in the U.S., repair the nation’s frayed infrastructure and pave the way for more clean energy to deal with climate change.

Moody’s figures Trump would mainly seek to roll back the clean energy provisions of the Inflation Reduction Act, which provides grants and subsidies to promote wind and solar powered electricity, electric vehicles and other renewable energy projects.

Impact

Scuttling the $369 billion clean energy plan would do little to trim the budget deficit because it’s paid for by stricter IRS tax enforcement, various corporate tax increases and prescription drug price reform, according to Moody’s and a summary by Senate Democrats.

Lincicome and Edwards of Cato favor doing away with the clean energy measures, which they say distort private markets that wouldn’t be viable without federal subsidies. Instead, they support tax breaks to spur green energy production.

Scrapping the blueprint would mean more than a half-point drop in economic growth and about 450,000 fewer jobs in 2026, Moody’s estimates.

Social service policies

Biden’s plan

Biden is proposing a laundry list of new social programs to make child care more affordable, provide free college tuition, cancel more student loan debt, expand parts of the Affordable Care Act and lower drug prices, among other proposals.

Hold the pickle, and the AIMcDonald’s to end AI drive-thru experiment by late July, company says

Impact

Because his initiatives would be more than offset by new or higher taxes on the wealthy and corporations, his plan would trim the deficit and would be virtually a wash for the economy, Moody’s estimates. The proposals also have little chance of being approved by a divided Congress, Moody’s says.  

Contributing: Reuters

Amid the BRICS alliance’s efforts to de-dollarize, one financial expert recently declared that the United States is currently “in recession” as the country’s debt problems persist. Danielle DiMartino Booth, CEO and chief strategist of QI Research, recently spoke about the concerns facing the American economy.

In an interview with Fox News, Di Martino Booth said the country’s economy is “not in good shape.” She also noted that labor market and economic data from the state of California show that a recession “probably started around last October.”

Source: WatcherGuru

Also read: BRICS: Japan dumps $63 billion worth of US bonds on the market

US economy in recession, debt exceeds $34.75 trillion

In early June, inflation figures were seen as key data for the Federal Reserve’s future interest rate decision. The subsequent data in May showed that inflation had fallen to 3.3%, a marginal decline from the previous month and still well above the central bank’s long-standing target of 2%.

This has only increased the geopolitical pressures facing the country, particularly as efforts to bypass the US dollar in international settlements have increased. But things could get much worse. In light of the BRICS’ activities against the US dollar, one financial expert has declared that the US is already “in recession” and that a sovereign debt crisis is looming.

DiMartino Booth spoke about the increasing use of AI by large corporations and small businesses. She pointed to a study by Duke University that found that 75% of companies are cutting jobs and replacing them with generative artificial intelligence. In addition, 44% of small businesses made similar layoffs.

Source: investopedia.com / Getty Images

Read also: BRICS: Russia and North Korea announce historic agreement

Unemployment data is expected this week, which should provide a more accurate picture of the market situation. DiMartin Booth predicts that the data will continue to show “a continuation of the trend” of rising unemployment.

These decisions have only added to the pressure on the labor market as the technology industry continues to embrace artificial intelligence. These decisions would only lead to even greater concerns about the US dollar, especially in its battle against the BRICS nations.

US debt is expected to exceed $35 trillion in the coming months. In fact, recent reports show that the share of US Treasury bonds held by foreign companies has declined in recent years, to nearly 23% today, down from 34% ten years ago.

Italy’s new law regulates private sector space activities, requires permits and establishes a national space economic plan. It complies with international standards and creates a fund to support space innovation. It also requires insurance coverage for space operations.

The regulation of space. On Thursday, the Italian Council of Ministers adopted a key law on space activities and the space economy, marking a crucial development in the Italian regulatory framework.

• This new legislation, which is subject to further revision, aims to provide structure and guidance to a rapidly developing sector with significant economic potential.
• The bill aims to highlight the importance of filling a critical gap, bringing Italy into line with international standards and supporting the country’s space ambitions.

Italy’s Space Administration. The main objective of the bill is to regulate private sector access to space and to ensure that foreign companies operating from Italy and Italian companies operating abroad obtain the necessary authorization.

• Exceptions apply to activities of other nations that are already authorized and recognized under international treaties, thus facilitating international cooperation.
• The Italian Space Agency (ASI) is the regulatory authority responsible for monitoring compliance with the regulations and maintaining a register of space objects launched from Italy. The ASI’s supervisory powers include the revocation of authorisations in the event of non-compliance.

The blueprint. The core of the legislation is the development of a National Space Economic Plan with a term of five years.

• The aim of this plan is to identify the needs of the sector and to identify potential investments using public and private sources of financing.
• To support market growth for space-based innovations, a multi-year Space Economy Fund has been established to drive investment in infrastructure and projects, including those involving international cooperation.

In addition, the law provides… stipulates insurance coverage for space activities, requiring operators to have policies with a cover of up to 100 million euros per incident.

• This measure provides financial protection against damages arising from space operations, but less coverage is possible in lower risk cases.

The satellite spectrumIn addition, the law stipulates the efficient use of satellite communications spectrum and creates principles for the use of state- and EU-funded space infrastructure.

• This will promote fair access and competitive practices between private companies.

Yet while some of the most influential business leaders are calling for a plan of action, the government continues to spend so much money that government spending will increase by $2.1 trillion by 2034.

This is according to the latest report from the Congressional Budget Office (CBO). In February, the CBO predicted a deficit of $1.5 trillion for the current year, which is expected to rise to $2.6 trillion by 2034.

However, in a report released this week, the CBO wrote: “According to CBO’s current projections, the deficit for 2024 is $400 billion (or 27%) higher than the agency’s February 2024 projections, and the cumulative deficit for the period 2025-2034 is $2.1 trillion (10%) higher.”

Currently, America’s national debt stands at $34.7 trillion – although this figure itself is not the reason why many economists are worried. Rather, experts are concerned about America’s debt-to-GDP ratio, which indicates how much the country owes in relation to its production and thus the extent to which it is able to repay the debt.

The CBO did not have any rosy news to share in this regard either. It reported that the national debt will rise from 99 percent of GDP this year to 122 percent in 2034 – surpassing the previous high of 106 percent in 1946, at the end of World War II.

And war is once again one of the major factors contributing to America’s current spending. The CBO adds, “The largest contribution to the cumulative increase came from the implementation of recently passed legislation…that increased projected deficits by $1.6 trillion.”

“This bill included additional emergency appropriations that provided $95 billion in assistance to Ukraine, Israel and countries in the Indo-Pacific region.”

Add to the initial legislative changes the ongoing funding obligations America must meet by law, and this will increase spending by $900 billion by 2034.

While financial support for warring nations accounts for a large part of the increase between the February 2024 forecast and this month’s, other commitments form the core of the American bill.

What the CBO defines as mandatory spending includes Medicare and Social Security, as well as defense spending and unemployment benefits, among others. The CBO wrote, “The aging of the population is causing the number of Social Security and Medicare recipients to grow faster than the total population. In addition, federal costs per recipient for the major health programs continue to rise faster than GDP per capita.”

“As a result of these two trends, Social Security and Medicare spending will increase as a percentage of GDP from 2024 to 2034.”

“Predictable crisis”

There is still disagreement among experts about the extent to which national debt will become a problem. The decisive factors will be how necessary the experts believe the spending is and what prospects they have for future economic development.

Those who are optimistic hope that a rebound in economic growth will offset debt and interest payments in the future. They also add that the vast majority of spending in recent years – under different political parties – has been absolutely crucial for the country to deal with the coronavirus pandemic.

When it comes to economic growth, the CBO disagrees with this forecast. In its June update, the nonpartisan organization wrote that it expects the economy to grow more slowly in calendar years 2024 and 2025 than in 2023, and to grow by an average of about 1.8 percent between 2026 and 2034.

On the more cautious side of the argument are those who, while aware of the nature of spending in recent years, expect governments to show more restraint – or at least to come up with a plan for how they intend to limit spending in the future.

They include Jamie Dimon, CEO of JPMorgan Chase, and Paul Ryan, former Speaker of the House. Earlier this year, at an event at the Bipartisan Policy Center, Ryan called spiraling debt the “most predictable crisis we’ve ever had,” and Dimon wholeheartedly agreed.

Professor Joao Gomes, deputy dean for research at the Wharton School of the University of Pennsylvania, has also long warned of the “severe and … likely irreversible scars on our economy and society” if government spending continues unchecked.

Before appearing before the U.S. Senate Budget Committee in April, Professor Gomes told Fortune: “Frankly, it could derail the next administration. If they come up with plans for big tax cuts or another big stimulus package, the markets could rebel. Interest rates could skyrocket right there and we’d have a crisis in 2025. That could very well happen. I’m very confident that we’ll be there one way or another by the end of the decade.”

Subscribe to Fortune’s Next to Lead newsletter to receive weekly strategies on how to make it to the CEO’s office. Sign up for free before the newsletter launches on June 24, 2024.

Next year we will hit the debt ceiling and the fiscal responsibility caps will be lifted. We will have to make some difficult decisions. This year the Defense Department’s budget was 3.5% of our GDP and the State Department/USAID’s was 0.234%. This discrepancy and the Pentagon’s continued inability to provide a clean audit are unacceptable.

Strength is a necessary tool for peace, but it is not the only one. We must invest heavily in diplomacy and development aid. In a rapidly changing world, we must not cling to the Cold War mentality. We will only survive if we work together and use state-sponsored violence only as a last resort.

Senators King and Collins have done so many important things for Maine and our country, but their true legacy will be the endgame. Security based on nuclear intimidation is not real security. Our current strategy has compromised our preparedness. The Department of Defense budget is nearly equal to our national debt ($1 trillion). Funds must be allocated more wisely: our average life expectancy is lower than several other countries, our maternal and infant mortality rates are higher, our young people are helpless, and climate change is forcing us to deal with fires and floods. We must shape our country’s strategy to reflect our values ​​and our security, which should not lead to hostile relationships and an economy based on war.

Deborah Rivera
Brunswick

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The University Research Corridor, an alliance between the University of Michigan, Michigan State University and Wayne State University, reported an estimated $23.9 billion in state investments for 2023. The 2023 URC Economic Report detailed that for every dollar invested in the three Michigan universities, $24 was returned to Michigan’s economy.

Founded in 2006, the URC united the three universities into an established research group focused on academic research and economic development in Michigan. The URC has driven developments in industries such as sustainability, artificial intelligence, life and health sciences, and advanced manufacturing.

In 2022, the universities conducted $1.64 billion in life sciences research and development initiatives. Over the past five years, these institutions have conducted over $565 million in mobility-related research and development projects. In total, URC’s annual research and development expenditures total $2.87 billion, placing Michigan among the top 10 states with the highest academic research and economic development rates.

According to a press release from URC, this economic impact was greater than the revenue from the 2024 NFL Draft hosted in Detroit.

“For comparison, the NFL Draft had an estimated net economic impact of $165 million in Detroit,” the statement said. “The economic impact of the URC would be as if the NFL Draft were held across Michigan more than 144 times a year. Together, the URC universities employ nearly 71,000 people – more than GM and Ford, the state’s two largest employers.”

In preparing its annual economic analysis, the URC examines the three universities’ diverse expenditures in areas such as operations and research, student resources, income from university employees and alumni who live in Michigan. However, the expenditures of businesses founded by university alumni are not included in the revenue calculation.

According to the press release, the universities within the URC produce more medical professionals than any other university research cluster, outperforming other clusters in Massachusetts and California. The URC’s universities awarded more than 2,500 medical degrees last year for the fourth year in a row, representing a 21% increase in the number of medical degrees awarded over the past decade. In the press release, Brian Peters, CEO of the Michigan Health & Hospital Association, said he feels healthcare in Michigan has improved significantly thanks to the URC.

“The URC is a critical partner in strengthening the health workforce both in our state and across the country,” Peters wrote. “The URC’s contributions are critical not only to meet immediate workforce needs, but also to shape the future of health care and innovation through research partnerships with hospitals across the state.”

In an interview with The Michigan Daily, URC executive director Britany Affolter-Caine said the universities’ research extends beyond local communities to the entire state.

“I was very interested and committed to showing how everyone in the state benefits from our facilities and how we benefit the people of Michigan,” Affolter-Caine said. “If you live in Grayling, you may never visit one of our campuses, but you are likely either directly impacted or have a loved one impacted by our discoveries.”

Affolter-Caine said the URC serves as a public service provider for Michigan, supporting various research projects and developing the state economically and academically.

“By listening to the needs of communities and how they have evolved over time, I think what is unique to our cluster, which is one of the leading university innovation clusters in the country, is that we are in service to the public,” Affolter-Caine said. “We are here for the state of Michigan, and while some people don’t always agree, it’s my job to convey that on behalf of these three institutions.”

Marissa Sweeney, a junior at LSA and participant in the UM Undergraduate Research Opportunity Program, told The Daily that research is helpful because of the job opportunities it can create.

“Research impacts the surrounding areas,” Sweeney said. “Research also creates a lot of jobs, so it was helpful for me to be paid for it.”

Summer News Editor Andrew Baum can be reached at asbaum@umich.edu.

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Despite high interest rates, real estate prices have held up better than expected. But that does not mean that the real estate market is healthy.

When the Federal Reserve began raising interest rates in 2022, most economists thought the housing market would be the first to suffer: Higher borrowing costs would make buying and building more expensive, leading to lower demand, less construction activity, and lower prices.

They were right — at first. Construction slowed, but then picked up again. Prices stalled, but then started to rise again. Higher interest rates made it harder to afford a home, but Americans still wanted to buy.

The result is a housing market that is different and stranger than the one described in economics textbooks. Parts of it have proven surprisingly resilient. Other parts are almost completely locked up. And some seem to be on the brink, threatening to collapse if interest rates stay high for too long or the economy unexpectedly weakens.

It is also a market of stark contrasts. People who secured low interest rates before 2022 were, in most cases, able to see their home values ​​rise rapidly while remaining protected from higher borrowing costs. Those who did not yet own their own home, on the other hand, often had to choose between unaffordable rents and unaffordable house prices.

But the situation is complex. In some parts of the country, homeowners are facing exploding insurance costs. In some cities, rents have fallen. Developers are finding ways to make new homes affordable for first-time buyers.

No single indicator tells the whole picture. Rather, economists and industry experts say that to understand the housing market, you need to look at a range of data that sheds light on different pieces of the puzzle.

1. It’s hard to find a house to buy.

The rapid rise in interest rates depressed demand for homes because it made lending more expensive. But it also led to a sharp decline in supply: many owners are holding on to their homes longer than they otherwise would because they would have to forego the extremely low interest rates if they were to sell.

This “rate lock” phenomenon has led to a severe shortage of homes for sale. It’s not the only factor: Home construction had been stagnating for years before the pandemic, and retiring baby boomers were choosing to stay in their homes rather than moving into senior living communities or smaller condos, as many housing experts had expected.

Many economists argue that the lack of supply has helped keep prices high, especially in some markets. However, they disagree on the magnitude of this impact. What is certain, however, is that it is extremely difficult for anyone who wants to buy a home to find one.

2. Houses are unaffordable.

Already high home prices have soared during the pandemic, rising more than 40 percent nationwide from late 2019 to mid-2021, according to the S&P CoreLogic Case-Shiller price index. They have risen more slowly since then, but they have not fallen as many economists expected when the Fed began raising interest rates.

Rising interest rates have made those prices even more unaffordable for many buyers. Someone buying a $300,000 home with a 10 percent down payment could expect a mortgage payment of about $1,100 a month at the end of 2021, when interest rates on a 30-year fixed-rate loan were about 3 percent. Today, with interest rates at about 7 percent, the same home would cost about $1,800 a month, a nearly 60 percent increase in monthly costs. (That doesn’t even take into account the rising cost of insurance or other expenses.)

Economists measure affordability in different ways, but they all show pretty much the same thing: Buying a home, especially for first-time buyers, is more unaffordable than at any time in decades, or perhaps ever. An index from Zillow shows that a typical household buying the average home with a 10 percent down payment can expect to spend more than 40 percent of its income on housing costs, well above the 30 percent that financial experts recommend. And in many cities like Denver, Austin and Nashville — not to mention longtime outliers like New York and San Francisco — the numbers are much worse.

3. New houses fill (part of) the gap.

Perhaps the most surprising development in the real estate market over the past two years has been the resilience of new home sales.

Rising interest rates usually cause problems for property developers because the high borrowing costs drive away buyers and make construction itself more expensive.

But this time, with so few existing homes for sale, many buyers have turned to new construction. At the same time, many large builders have been able to borrow when interest rates are low and use that financial firepower to lower interest rates for their customers – making their homes more affordable without having to cut prices.

As a result, new home sales have remained relatively stable even as existing home sales have plummeted. Developers have tried particularly to appeal to first-time buyers by building smaller homes, a market segment they had virtually ignored for years.

It’s unclear how long that trend can continue, though. Many builders scaled back activity when interest rates first rose, meaning fewer new homes will come on the market in the coming years. And if interest rates stay high, builders may find it harder to offer the financial incentives they use to attract first-time buyers. Private developers began building new homes in May, the slowest pace in nearly four years, the Commerce Department said Thursday.

4. The rents are also unaffordable.

During the pandemic, rents skyrocketed across much of the country as Americans fled cities and searched for housing. Then they continued to rise as the strong job market boosted demand.

Rising rents contributed to a housing boom that created an oversupply of supply on the market, particularly in southern cities like Austin and Atlanta. This caused rents to rise more slowly or even fall in some places.

But this reticence has been slow to trickle down to the market. Many tenants are paying rents negotiated earlier in the housing cycle, and new construction is focused on the luxury market, which doesn’t do much good for middle- and low-income renters, at least in the short term.

All of this has led to a worsening crisis of rent insecurity. A record share of renters spend more than 30 percent of their income on housing, Harvard’s Joint Center for Housing Studies recently found, and more than 12 million households spend more than half their income on rent. Rent is no longer just a problem for the poor: The Harvard report found that rent is becoming a burden even for many households earning more than $75,000 a year.

5. There may be a postponement.

For the past two years, the real estate market – especially for existing homes – has been at a dead end. Buyers can’t afford homes unless prices or interest rates fall. Owners feel little pressure to sell and aren’t eager to become buyers.

What could break the deadlock? One possibility is lower interest rates, which could bring a flood of buyers and sellers back into the market. But with inflation proving stubborn, rate cuts do not seem imminent.

Another possibility would be a more gradual return to normality as owners conclude they can no longer delay a move and are more willing to make a deal, and as buyers come to terms with higher interest rates.

There are signs that this may be the case. More and more owners are putting their homes up for sale, and more are lowering prices to attract buyers. Builders are completing more and more new homes without finding a buyer. Real estate agents are telling of empty homes and homes that have been on the market longer than expected.

Few are expecting prices to drop. Millennials are in the peak home-buying phase, meaning demand for homes should be high. And because of years of under-construction, the country still has too few homes by most standards. And because most homeowners have enough equity and lending standards are tight, there probably won’t be a wave of forced sales like when the housing bubble burst nearly two decades ago.

But that also means the affordability crisis is unlikely to resolve itself anytime soon. Lower interest rates would help, but it will take more than that to make it possible for many young Americans to afford a home.

While inflation numbers usually make headlines themselves, last month’s numbers made the biggest headline of all.

Rishi Sunak’s surprise announcement to hold a general election on July 4 came just hours after the release of April’s inflation figures, which had a major impact on his decision to take the country to the polls, as many reports show.

There was more good news for the government on Wednesday as UK inflation fell to two per cent in May, hitting the official target rate for the first time in nearly three years.

Inflation numbers were one of the last major economic indicators to be released before Election Day. But inflation alone – while important – is not the only metric economists look at.

With James Carville’s immortal 1992 quote (“The economy, silly”) ringing in our ears, we bring you the latest in our series of data on how 14 years of Conservative Party rule has changed Britain – this time in relation to the economy.

Prices continue to rise

If one sentence can sum up how Britain has suffered in the years following the Covid pandemic, it is: “cost of living crisis”.

A combination of the pandemic and the war in Ukraine caused prices to skyrocket, particularly for food, energy and heating materials.

Food/CPI Chart

Inflation peaked at 11.1% in October 2022. Since then, with a few hiccups, it has fallen steadily, helping Rishi Sunak deliver on his promise to halve inflation in 2023.

However, food prices are still 20% higher than July 2021 levels and family budgets remain tight.

To illustrate, let us consider the cost of a staple food for the whole family, spaghetti bolognese, using the prices of individual items according to the ONS basket of goods.

Using this benchmark, we can compare what it would have cost to make spaghetti bolognese for a family of four six years ago: £8.44 in May 2018.

Food prices peaked later than general inflation. In June last year, the ingredients for a spaghetti bolognese cost £10.35 before falling back to £10.15 last month.

Interest rates could fall

In the 1980s, when house prices were low, interest rates were high. In the 2000s, interest rates fell as house prices soared. Then came the financial crash of 2008 and borrowing costs dropped to almost zero. Rising inflation in 2021 triggered a round of interest rate hikes to 5.25%.

Now we have the worst of all: high interest rates and astronomical real estate prices.

Graphic showing the bank’s base interest rate

Following the recent decline in inflation, Bank of England officials are expected to begin cutting the base rate in September and possibly again to 4.75 percent in December.

Other factors prompting the central bank to act include figures showing that the economy is growing slowly and unemployment is rising – both of which are the legacy of conservative governments that have focused on austerity rather than investment for 14 years.

Lower interest rates will give the economy a much-needed boost, but that’s not all. There are risks from the global economy and domestic price pressures. An escalation of the Middle East conflict could push up oil prices, while a defeat for Ukraine could lead to higher food and energy costs.

National debt remains high

Britain’s debt as a proportion of national income, or gross domestic product (GDP), has fallen sharply since the first half of the last century, when it soared to cover the costs of two world wars. In the 1990s, then Chancellor Gordon Brown ran budget surpluses – meaning the government spent less than it took in in taxes – and reduced total debt to less than 50 percent of GDP. After the 2008 financial crash, it rebounded to over 100 percent and is now at 97 percent, according to the latest official figures.

Even successive conservative governments have failed to reduce the rate anywhere near to pre-crisis levels.

Net debt chart

There is disagreement among economists about how much borrowing is too much. Labour, concerned about criticism that the government will be profligate, has promised to maintain a Conservative fiscal rule that forces the Chancellor of the Exchequer to cut the debt-to-GDP ratio in the final year of a five-year forecast.

France’s debt-to-GDP ratio is 114 percent, and without €10 billion in spending cuts it would be heading for 117 percent. Rating agencies that monitor debt levels have concluded that 117 percent would be too high and have downgraded France, warning investors that it is more likely that the country will default on its debts. Shortly after the latest downgrade, Emmanuel Macron called for new elections in France.

Are recessions a thing of the past?

When an economy contracts for two consecutive quarters, it is considered to be in recession. Some economists take a more severe view. The National Institute for Economic and Social Research says the contraction must occur over a full year, which excludes the 2023 downturn, when the economy contracted between June and December but grew slightly for the entire year.

There was a huge contraction in the Covid-hit spring of 2020, but the economic shutdown was by government order and there were numerous subsidies to help businesses and households. The government also mitigated the loss of income during the 2009 recession. So people have not had to survive without major government intervention since the 1990 recession, when tens of thousands lost their homes and many businesses went bankrupt.

Recession graph

Recessions are always around the corner. They usually occur when companies are at the end of their rope after borrowing heavily to grow. They can’t keep doing the same thing, especially if interest rates keep rising. But many other factors can also intervene.

The last 14 years have shown that shocks can come out of the blue and the government must be better prepared than in 2020.

There is a group of economists who believe that recessions are related to inflated housing prices and occur in 18-year cycles. They were right about at least the last two. If we dismiss the recessions of 2023 and 2020 as pandemic-related, the next big recession will occur in 2026.

Dependence on food banks has skyrocketed

Crucially, wages have stagnated while prices have soared, leading to more and more people relying on food banks. The Trussell Trust, the UK’s largest food bank charity, has been able to grow its business rapidly. From the number of food banks to the number of emergency parcels, they provide a sad record of the growing number of impoverished households in the UK.

Many of the people who go to the food banks have jobs, but their low wages are not enough to pay their bills. Not only have consumer prices risen, but so have taxes, rents and mortgages.

Food bank graphics

Council tax has been on a rollercoaster ride since 2010. First it was frozen, then increased by 5% annually from 2016, before a social care surcharge capped the increase at 3% in 2020 (but overall bills still rose by 5%).

Across all taxes, the overall level is heading for the highest since World War II under current government plans. Mortgage and rent bills have also soared. The latest official figures show that rent inflation is at record levels, while those who need to refinance a mortgage can expect their monthly interest payments to double or triple.

Figures from homeless charity Crisis show that the number of people sleeping on the streets is 61 percent higher today than it was ten years ago and 120 percent higher than when data collection began in 2010.