The holidays are a popular time for animated conversation with friends and family—and often about current events. But if another holiday season dominated by COVID talk makes you want to take a nap, verse yourself on some of the biggest economic headlines we’ve seen this year and take control of the dialogue.
If you’re not yet up-to-speed on SPACs, meme stocks, inflation, and all the other fun gifts from the 2021 financial news media, never fear—we’ve got you covered with easy explainers to help you dominate any cocktail party convo this season.
Story #1: Inflation
Best for: Your Neighbor Who Knows the Price of Evvvverything
The headline: Since April, we’ve seen unusually high rates of inflation, making everything from groceries and gas to toys and appliances more expensive and harder to find.
- What is inflation? Inflation represents the decreasing purchasing power of a currency over time. As governments print money to fund their budgets, currencies lose value. The same happens when companies collectively raise the prices of goods, which we’ve seen a lot of this year due to labor and material shortages. The upshot is that our money doesn’t go as far as it used to.
- How do we know it’s happening? The most well-known metric of US inflation is the consumer price index (CPI), which measures the average price change of select goods, such as fuel and food, over time. As of September, the CPI had increased by 5.4% over the last year—a number we haven’t seen since 1990.
- What’s driving it? Two suspected culprits are government stimulus, which has injected more money into the economy, and supply chain shortages, which means there are fewer goods available. Basically, there’s too much demand and not enough supply, which means holiday shopping is going to be extra fun this year.
Story #2: Meme Stocks
Best for: Your Uncle Who Thinks AMC is Making a Comeback
The headline: Meme stocks became all the rage with a subset of investors this year, fueling big gains for some people, major concerns for regulators, and volatility for everyone involved.
- What is a “meme stock”? Meme stocks are stocks that have gone viral due to their popularity on social media and online forums. In these online communities, individual investors band together and agree to buy a lot of a specific stock, which then drives the price of that stock sky-high. GameStop took the first ride on the meme stock rollercoaster, ascending as high as $483 after trading for less than $4 a share only a few months prior. Companies like AMC and Blackberry followed soon after.
- Why are they doing this? To make money. But also, to troll hedge funders and inspire some A+ tweets. Meme stock investors typically choose dated companies that have been heavily shorted by investment firms (basically, these firms expect the stock’s price to decline, so they’re betting against it). When the meme-stockers do their thing, Wall Street investors can get caught in a short squeeze. Which, as you can imagine, they are not super psyched about.
- Will it last? By nature, meme stocks are unpredictable—as is the lifespan of this movement. Some have argued that meme stocks are dead, while others think they’re now fixtures in the financial space. The ultimate decision may lie with regulators, who’ve been brushing up on their social media scrolling skills to uncover signs of illegal market manipulation.
Story #3: Cryptocurrencies
Best for: Your Boss Who Buys Everything With Binance
The headline: Much like 2017, when Bitcoin first cracked $10,000, cryptos seized investor interest all over the world in 2021. But the future of crypto is still a mystery.
- What are cryptocurrencies? Cryptos are digital currencies that people can use to pay for select goods and services. However, a lot of people treat them as stores of value, choosing to buy, hold, and sell them like investments. And, unlike regular currencies, cryptos are decentralized, meaning they’re not governed by any central bank or other authority. The world’s first cryptocurrency, Bitcoin, was created in 2008. Today, there are more than 7,500 different types of crypto “coins”—over 3,000 of them were launched in 2021 alone.
- What’s their deal? Google searches for “cryptocurrency” hit record highs this past year, as did the value of Bitcoin (a cool $61K per coin at the time this was published). Several crypto companies made splashes this year, too. Coinbase became the first publicly traded cryptocurrency marketplace in the US, while Robinhood made it easy for millions of new investors to get their coin on.
- Where is this going? As both a currency and an investment, crypto is still pretty fringe-y,—but it’s likely here to stay in some form or another. In the meantime, governments are still trying to figure out how to treat it. While China has outright banned cryptocurrencies, the US is still weighing its regulatory options.
Story #4: SPACs
Best for: Your Cousin Whose Employer is Eyeing an Exit
The headline: SPACs helped hundreds of companies go public in 2021, but the government is cracking down on them.
- What is a SPAC? SPAC stands for special purpose acquisition company. Essentially, it’s a shell company that forms for the sole purpose of merging with another business at a later date—with the goal of taking that business public.
- Why is this a thing? The traditional route to becoming a public company, an initial public offering (IPO), is a time-intensive process with loads of paperwork and administrative hoops. SPACs are easier to create, which allows private businesses to sidestep the complicated IPO process and simply merge with a SPAC that’s already public.
- Why so many SPACs? SPACs have been around since the ‘90s, but they definitely hit their stride this past year. In the first quarter of 2021, 317 SPACs went public—that’s more than the amount of SPACs launched in 2017, 2018, and 2019 combined. There are a few reasons for the sudden surge in SPACtivity, but a big one is that private equity firms are increasingly using SPACs to divest themselves of the companies they invest in, so that they can realize a return without the hassle of an IPO.
Story #5: NFTs
Best for: Your Aspiring Artist Niece
The headline: NFTs allow artists to take their crafts online, but concerns about their environmental impact could pose problems.
- What is an NFT? NFT stands for non-fungible token—”non-fungible” meaning unique or irreplaceable. NFTs are a type of crypto asset that represents the “original” version of a digital thing—usually artwork, but also music, videos, memes and yes, even tweets.
- Is this for real? Sure—at least, real money has exchanged hands. An artist named Mike Winkelmann (also known as Beeple) entered elite territory when he sold a digital collage for $69 million. Jack Dorsey, the founder of Twitter, sold an NFT of his first tweet for $2.9 million. And yes, that story you heard about people spending $90 on non-fungible fart tokens is apparently true.
- Can’t I just download that picture/video/tweet? You can, but it would just be a copy of the original. Backed by blockchain technology, NFTs validate ownership. While anyone can make copies of digital assets, they wouldn’t have the token that says they own the original. Which, for some people, is clearly worth a heck of a lot.
Story #6: The Great Resignation
Best for: Your Buddies Who Just Quit Their Jobs
The headline: The pandemic and its aftermath drove many people to make major career moves—including leaving their jobs in record numbers.
- What is the Great Resignation? Americans have been quitting their jobs in droves this past year, while employers and economists are scrambling to figure out how to stop the bleeding. One report shows that 1 in 4 people have said sayonara to their employer since the beginning of this year.
- Why is this happening? The pandemic flipped the labor market upside down, with furloughs, lay-offs, and adjustments to remote work rocking the nation. As the world slowly recovers, many people find they can’t or don’t want to go back to business as usual. And with a record number of job openings now available, workers suddenly hold all the cards.
- Where are they going? Some people retired early, while others have been getting by on savings or stimulus payments. Many are taking advantage of bonuses, perks, and superior cultures being offered by their employers’ competitors.
“Wow, How’d You Get So Smart?”
It’s never fun to be the one secretly googling topics during a conversation. So hopefully these explainers give you something smart to say. And even if not, maybe they’ve piqued your interest in learning more. Who knows—maybe this time next year you’ll be the one explaining the big 2022 stories to everyone else.