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GenFKD’s Business Headlines Of The Week 5/26

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Should we love or fear Amazon?

As Jeff Bezos’ empire approaches unimaginable levels of success, should we love or fear Amazon?

The company has succeeded in touching so many facets of American consumer life, and it has democratized extreme convenience like no other company ever before. Amazon revolutionized the modern retail landscape in the process, and now it’s positioning itself for even bigger aspirations.

As Amazon begins to disrupt dissimilar businesses such as movie-making, shipping companies and grocery stores, the m word — monopoly — is now being thrown around. One of the most famous people to label Amazon a monopoly is none other than our president, Donald Trump.  

Technically, Amazon is not a monopoly because the government is typically concerned about protecting customers and insulating them from “unfair price hikes.”

Reversal of net neutrality

The Trump administration is starting to profoundly influence public policy and regulation. The latest major rule change comes out of the FCC, where they have begun to dismantle open internet rules, also known as net neutrality. Net neutrality guaranteed open access to online content, and prevented internet service providers from being allowed to block, impair or establish fast lanes.

Now, with the demise of the open internet rules, critics claim that internet service providers will block or throttle content or favor particular websites. For example, some claim that we could see situations where companies such as AT&T, an internet service provider, would slow down service to Google’s Youtube, but allow quick access to its own video service, DirecTV.

Proponents of dismantling net neutrality say it goes too far in regulating internet service providers. The FCC has not officially undone net neutrality; they are currently taking public comment and will make a decision later this year.

Record household debt

Debt held by American households hit a new record in the first quarter, exceeding pre-recession 2008 levels. The Wall Street Journal points out that this is neither good news nor bad news, it’s just news. But let’s dive a little deeper.

In reality, the good news is that the economy has finally recovered, and people feel more secure about borrowing — and debt is a necessary part of modern life.

The bad news is that this milestone has some observers worried because the last time American households were in this much debt, it proved to be unsustainable.

What’s fascinating about American household debt is how the type of debt we now find ourselves facing is different from what it was nine years ago. Student debt and auto loans have reached scary levels, while mortgage debt is still below pre-recession levels.

To me, the numbers suggest that unlike the last financial crisis that involved mortgages, the next crisis will involve student debt and auto loans. Lending in these sectors is expanding too quickly and will lead to unfortunate consequences for all of us.

Low unemployment

Let’s talk about why you haven’t gotten a raise lately. Unemployment is low, but wages aren’t rising. This article in Bloomberg goes over eight theories as to why the “U.S. economy is behaving mysteriously.” Typically, when the job market is tight, employers have to pay more in order to fill their ranks with the right talent.

But that isn’t the case right now. In fact, wages are barely budging even as some claim we’re approaching what economists call full employment. Some of the theories floating around include the weaker role of unions, globalization, low inflation, or that there is more slack in the labor markets than the statistics suggest.

No room in America’s cities

An article in Bloomberg highlights something we probably already know about — we’re simply running out of room in many of our major cities to build new housing units.

And what little space is left is being bought up by high-end builders, who can easily fetch high prices in such a tight housing market. Zoning laws that prohibit density in areas with great job markets are only making this problem worse.

Of course, we’re seeing home construction on the periphery of our major cities once again, but living more than 30 miles away from downtown can be a commuting nightmare. Unfortunately, many people don’t have a choice, as centralized living appears to be becoming a luxury exclusive to the rich.

The article says that we should expect to hear countless stories about how teachers and other public servants can’t afford to live in the areas where they work.

Have something to add to this story? Comment below or join the discussion on Facebook.

Header Image: Getty Images

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