The Global Coffee Pot — What Main Factors are Shaping the World Market

By: Isla Hildebrand

Whether your favorite coffee shop is Starbucks, Dunkin, 7 Brew, or my personal favorite, Dutch Bros, we can all agree that there are so many choices on every menu. Each day, I could try something new and still have what feels like a hundred options left to order, and honestly, that can get overwhelming at times.

Much like the average Dutch Bros menu, today's economy feels like countless new ideas are being spoken about or factors are being added to shape the global market. It can be a lot, and to me, it feels like someone added every syrup flavor into my Iced Rebel, when in reality, I just wanted it to be strawberry flavored.

But thankfully, it doesn't need to feel like this. In today's article, we attempt to break down the key components shaping our global markets, whether it's price inflation, growth, and shrinkage, or overall supply and demand, we hope to shed a little bit more light on what makes a diverse economy so enthralling. By the end of this, we hope we've expanded your knowledge on the ins and outs of the marketplace and made digesting global trends more enjoyable. If not, then switch to an energy drink.

That First Sip Feeling

Inflation is quite literally the heat under the coffee pot; it can boil your coffee, AKA raise prices drastically, or leave it motionless and cold, something that has never happened before. But regardless, it's a necessary market component, as you don't want cold coffee, but you also don't want it boiling.

5 years ago marked the beginning of COVID-19, you know her and you love her, and that's one of the first times Gen Z was able to watch inflation grow in real time. Whether it was your Starbucks refresher going from $4 to $8, or your gas going from $2 a gallon to $5 a gallon, we all saw it happen, and nobody was happy.

But that's simply how inflation works. When inflation rises, nobody is spending money, as everyday items become less affordable, and it becomes harder for businesses to make investments, as the market is now unpredictable and shaky. To contradict this, many banks will raise interest rates. Interest rates are basically what an individual pays back for borrowing money.

At the end of the day, inflation is all about balance, and anytime we feel a change in the economy, it's simply the temperature of the coffee pot rising or falling.

The World Runs on Capitalism

The growth and shrinkage of the global market seems to be an unpredictable pattern that economists have been trying to debunk for years. It's like when a seasonal drink drops, you know nothing about the flavor, the appearance, or the popularity of it all. For many, Starbucks needs to bring Pumpkin Coldfoam as a year-round additive, and then for others, the 2018 Witches Brew Frappe should have never graced the face of the earth to begin with.

Economic growth is demonstrated whenever salaries rise, businesses begin to hire, or when more individuals spend money, which inadvertently means more tax revenue is accumulated. When there is growth in the world market, it means there are more investment opportunities and more areas of innovation being introduced. The economy expands, and along with that, so do living standards, GDP per capita, and resources for infrastructure.

Growth can be strenuous, however, and so many businesses are taking a "green approach" to economic gains. There is now a larger focal point on sustainability and solar energy to power the socioeconomic aspects of businesses. Companies, both public and private, have now focused their time and money on making this transition.

Economic shrinkage is demonstrated during times of crisis, war, or pandemics. Many people are laid off, refrain from spending money, and stop investing in the stock market. In a time of shrinkage, it's like everyone is fighting for the last Starbucks Grilled Cheese. Governments around the world then have to make difficult decisions about how to revive the economy, including taxation levels, budgeting, and unemployment rates. Regardless, most governments do their best to provide support through poverty programs, cheaper interest rates, and loans/grants to sectors in need.

Not all shrinkage is bad, however, as in many places, shrinkage can improve overall economic productivity in the long run. Shrinkage allows governments to develop resilience and smooth out inconsistencies previously relevant in the economy. The most important part is controlling the shrinkage levels so that they don't "boil over" or leave a "bitter taste" in one's mouth.

Keeping Supply in Demand

The last play on words is dedicated to Dutch Bros' "Keeping it Weird" slogan, but this time in terms of Supply & Demand. To break down supply and demand in simple terms, supply is simply the Electric Berry Rebel from Dutch Bros, and I'm the demand. Supply equals the product available, and demand equals the amount people want the product, and how much they're willing to do for it.

If supply were to exceed demand, that would mean that something would be preventing customers from attaining a product. Similar to what causes shrinkage; natural disasters, war, and diseases are all usual factors behind this occurrence. When supply outnumbers the demand, it's common that prices drop, and inventory needs to be cleared, so more advertisement is done by a company in order to do so.

If demand were to exceed supply, which is more common, it would mean more people wanted a product than what was available of it. So when Dunkin is always out of their Maple Donuts, demand is exceeding supply. Prices will, in turn, rise because companies and markets recognize that people are willing to do more for a product they desire. That being said, it's important that companies continue to produce the desired product, or else they risk losing customers, as they may go to find a more available version of that product.

This aspect of the market is constantly fluctuating, demonstrating volatility, and forcing global markets to demonstrate their flexibility/adaptability in times of crisis. It's practically the foundation to explain behaviors, patterns, and reactions within the global economy. To understand Supply & Demand is to understand the flavors going into your Rebel drink, and what each of them contributes to the overall first-sip sensation.

The Final Sip

In all aspects of the economy, whether it's supply & demand, growth & shrinkage, or overall inflation, it feels like one of those Starbucks orders where the person wants 8 shots of espresso, 3 different coldfoam flavors, and light ice, and it's all in a grande cup. It can be a lot, and it can upset your stomach, but learning how to digest each area can make the overall picture a lot clearer.

You don't need to know all parts of the economy, just like how you don't need to know everything you put in your body (It's better that way). But the next time you notice the economy either getting hot or cold, just remember you now have enough background knowledge to sit back and watch it unfold.

Everybody's drink order is different; we can't do anything about it, but we can adapt and learn how to live with it. The market is always brewing — Do you know what you're drinking?