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Tech Hubs in the US Are Fueling Regional Divides

Source: Brookings Institution

America’s high-tech innovation sector has exacerbated the nation’s regional divides, fueling growth in select metropolitan areas at the expense of other cities in the country. Boston, San Francisco, San Jose, Seattle and San Diego have benefited the most from the tech boom, accounting for “more than 90% of the nation’s innovation-sector growth during the years 2005 to 2017.” 

A recent Brookings Institution report warned that the sector’s geographical concentration was a “grave national problem.” From spiraling home prices in tech hub cities to underdevelopment in regions left behind, “regional divergence is … clearly driving ‘backlash’ political dynamics.”

The report urges the U.S. government to immediately counter the trend by “creating eight to 10 new regional ‘growth centers,’” tying in tax and regulatory benefits to encourage the tech-innovation industry to expand beyond its concentrated hubs. The think tank estimated federal government investment for such an initiative to be $100 billion over 10 years — “substantially less than the 10-year cost of U.S. fossil fuel subsidies.”

Racial Wealth Divide Rises in Housing Market—Especially During COVID-19

Source: Brookings Institute

The U.S. racial wealth gap in housing is larger today than it was in 1934, with COVID-19 exacerbating long-existing household financial insecurity. Even when they have similar incomes, Black and Latino families are less likely to purchase a house than white families, according to the Brookings Institution. At the beginning of 2020, 44% of Black families owned their house, compared to 73.7% of white families. 

Racial discrimination in the housing market was outlawed by the Fair Housing Act of 1968, but it continues to prevent people and families of color from becoming homeowners. Brookings Institute states that current homeownership subsidies are the main driver for this racial divide — particularly in mortgage lending. As of 2019, “the median white family has eight times the wealth of the median Black family.” 

Homeownership remains one of the most common ways families can build their wealth in the U.S., especially for middle-class families. To eliminate racial discrimination in the housing market, the government can support first-time homebuyers by enforcing federal tax policies that are more balanced. The new U.S. administration plans to tackle affordable housing and anti-discrimination policies with a $640 billion, 10-year plan.

Business Owners in Sub-Saharan Africa Lose Livelihoods, Despite Tighter COVID-19 Containment

Source: World Bank

Revenue declined for more than 70% of the households that rely on non-farm family businesses in Gabon, South Sudan, Malawi, Uganda, Zambia, Mali and Madagascar, according to surveys conducted in May and June 2020. Kenya experienced the highest job loss rate at 62%, according to the World Bank. In general, COVID-related job losses in sub-Saharan Africa were higher in urban areas and among female workers.

Although COVID-19 cases were not as high in Africa as in other regions of the world, the pandemic has taken a major economic toll on countries in sub-Saharan Africa. These countries experienced a devastation in livelihoods, food security and human capital due to the loss of global demand and local efforts to contain the disease. Food insecurity tripled in Nigeria, Ethiopia, Uganda and Malawi compared to 2019. 

Countries that were hit the hardest economically had significant domestic outbreaks, numerous oil exporters and were dependent on the travel and tourism industry. Economic activity is predicted to rise by 2.7% in 2021 — predominantly driven by export growth — but this could be jeopardized by limited vaccine distribution.

Demand for Precious Metals Is Expected to Drop As Economy Recovers

Source: World Bank, World Gold Council

The value of gold reached an all-time high of $2,067 per ounce in August 2020. At the beginning of the COVID-19 pandemic, gold “benefited from its status as a safe-haven asset and was buoyed by continued monetary easing by major central banks,” according to the World Bank. However, due to some initial signs of economic recovery, the demand for gold has started to decline, with its value seeing a corresponding drop. 

Other precious metals have seen price fluctuations since the start of the pandemic: The cost of silver reached a seven-year high of $29 per ounce in August 2020, but has since declined. In contrast, the cost of platinum dropped in April 2020, but has recovered slightly due to the rise of global auto sales and its use in that sector. 

Although the costs of precious metals dropped at the end of 2020, they have remained higher compared to 2019. Experts anticipate demand for precious metals continuing to decline in 2021 as the economy pursues its recovery. 

Demand for Coal Remains Resilient in Asian Countries

Source: IEA

Global coal demand fell 5% in 2020 — the biggest decline since World War II. Europe and the U.S. saw significant declines in demand, but demand for coal in Asia remained steady, according to the International Energy Agency. 

Transitioning to renewable energy sources, a major drop in electricity use due to COVID-19 lockdowns and lower natural gas prices all contributed to declining demand for coal in 2020. Whereas demand for coal fell by over 15% in North America and Europe, IEA expects China’s coal use to have declined by less than 1% for 2020. China and other Southeast Asian countries combined account for about 75% of global coal demand. 

Despite the negative impact that coal use has on global climate goals, the IEA expects the industry to rebound in 2021 — depending on electricity demand and industrial output post-pandemic. Driven by China, India and Southeast Asia, coal consumption is expected to rise by 2.6% this year.

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