Posts Tagged ‘economy’

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Luxury Sites Replace Luxury Stores

Friday, July 16th, 2010

In a struggling economy, online shopping might replace even the highest high-end stores.

  • In the wake of the recession, luxury stores are forced to sell merchandise on the web.
  • Selling clothes online, though less atmospheric than a downtown boutique, allows profits to go directly to the company by cutting out the costs of a store.
  • Technology’s infinite possibilities has increased the number of high-end online stores, allowing boutiques to make their websites seem as impressive and exclusive as their boutique.

Facts & Figures

  • In 2009, when the worldwide luxury-goods industry fell 8%, luxury sales online were forecast to grow 20%

Best Quote

“These brands are finally taking the plunge to establish an online retail presence. The recession forced these manufacturers to realize they needed to look for revenue wherever they could.” – Jeffrey Max, Chief Executive, Venda E-Commerce Sites

Strong Quarter, Weak Economy?

Friday, July 16th, 2010

Although second quarter reports look strong, the economy may start to level out.

  • Fear of an economic slowdown caused the stock markets to dip.
  • Airlines are expected to make their first annual profit since 2007  due to fuller planes and higher fares.
  • Stronger Asian economies are increasing exports, which helps struggling U.S. shipping companies.
  • Despite all this, there has been poor job growth in the U.S in the past few months.

Facts and Figures

  • New home sales fell 33%, and existing home sales fell 2.2%.
  • Air shipments (mostly Asian exports) increased 30% from last year.

Best Quote

“Bottom line is earnings may hold up, but sales growth is slow and companies aren’t going to invest their record cash holdings until it improves.” – Howard Silverblatt, Senior Index Analyst of Standard & Poor

Does An Increase In Donations Mean A Recovering Economy?

Wednesday, July 14th, 2010

In the first quarter of 2010, charitable donations rose sharply, which may indicate an economic recovery.

  • After donations to charity fell in 2009 due to the recession, first quarter reports indicate that 2010 looks much more promising.
  • Many charities are working on new fund-raising approaches in order to make donations seem more personal.
  • Even though things are looking up, it will still take a while for nonprofits to fully recover from the recession.

Facts and Figures

  • The median rate of growth for the 73 charities that The Chronicle of Philanthropy polled was 14%.
  • Donations decreased by about 12% in 2009.
  • The 73 organizations polled raised a total of $564.4 million more in the first quarter of 2010 than in the first quarter of 2009.

Best Quote

“The economy has certainly loosened up a bit, and that has loosened up how our donors feel and how we all feel.” – Joe Kender, Vice President for Advancement at Lehigh University

Spenders Spending, But Quietly

Friday, July 9th, 2010

It seems that Americans will always be enticed by material gloss and glam, but in this economy they don’t want to show it.

  • Despite America’s recent economic despair, the country’s lavish spenders are still alive and well. However, their spending style has shifted from self-advertising to self-discretion. People are still buying away, but in these tough times, it’s not cool to show it.
  • Though Goldman Sachs claimed to skimp on bonuses this year, the total still came to $16 billion. Americans – seemingly frazzled by Wall Street’s demise – still managed to rack up $800 billion in credit card debt in the two years after the crisis.
  • Some people have certainly been forced to reign in their spending. But their reservation comes from necessity, not respectful conservatism. Spenders are still spending; they just might turn their designer labels to the side.

Best Quote

“The notion that people have crawled into a bunker stocked with canned beans is a bit of a myth. Pleasure-seeking has stubbornly continued. Unless you unfortunately lost your job, nobody stopped. People just aren’t as in-your-face about it.” – Mr. Gordinier, Owner of a high-end personal-concierge company

Businesses Hesitate To Hire, Stall Economic Recovery

Tuesday, July 6th, 2010

Concerns about the stalled U.S. economic recovery continue to grow.

  • Last week, state unemployment aid claims increased unexpectedly, which may indicate that the economic recovery is stalling.
  • Although the number of layoffs has decreased in the past year, businesses are hesitant to hire.
  • New jobless claims rose to the highest level since the beginning of March.
  • Obama’s approval ratings have plummeted due to concerns about the economic recovery.

Facts and Figures

  • Claims for state unemployment benefits rose 13,000 last month.
  • Employers announced 39,358 job cuts in June, up 1.4% from May.
  • Private employers added just 13,000 jobs in May.
  • Announced layoffs hit a 4-year low in April.

Best Quote

“It’s looking more and more like the job market is treading water. Layoffs are down from 2009, but hiring hasn’t really picked up and this is disappointing. There is a lot of uncertainty on the hiring side that’s causing things to remain sluggish. In order for the recovery to give people confidence it needs to cut across different sectors of the economy.” – Stephen Bronars, Senior Economist at Welch Consulting

Show Me The Money: Labor Market’s On The Mend!

Friday, June 4th, 2010

May reports indicate the unemployment situation has stabilized for the first month in a long time.

  • More jobs were added in May 2010 than any other month since September 1983.
  • The service sector of the job market increased payrolls for the first time since the start of recession, i.e. in over two years.
  • May marks the fifth consecutive month of jobs gains in the U.S.

Facts & Figures

  • 55,000 private sector jobs and 458,000 public sector jobs were added in May, causing the employment rate to drop a tenth of a percent.
  • It’s estimated that two-thirds of the added jobs were temporary due to the 2010 U.S. Census, but regardless, May holds its record of most jobs added in 27 years.
  • Claims for unemployment benefits dropped by 10,000.

Best Quote

“Because what everyone is stating is it’s a jobless recovery, and I can’t emphasize enough the long decline we’ve had, I don’t want to minimize one month of growth, but I don’t want to get overly optimistic.” – Anthony Nieves, Chairman of the ISM Non-Manufacturing Survey Committee

Reminder: Despite balmy weather, U.S. economy still not okay

Friday, June 4th, 2010

Remember when all those banks were failing in 2009? Well things have only gotten worse in 2010, as you can see. What’s really scary is how much money these struggling banks control (in green).

Check it out, reflect, and then you can get back to stimulating the economy with your reckless summer spending.

Bankss.png

(click on the image to see the full-blown version of the graphic)

David Beckham May Be the King of Retail… In Madrid Anyway

Thursday, November 19th, 2009

Cristiano Ronaldo, soccer’s most expensive athlete, did not trigger a merchandising monster sale on the same scale as David Beckham did when he started playing for Real Madrid.

  • David Beckham, former English soccer team captain and Manchester United star, came to Real Madrid in 2003 with a large contract in hand and with high merchandising expectations. Basically, he sold a lot of jerseys!
  • Cristiano Ronaldo, the Portugese star forward, was the 2008 FIFA world player of the year and also came from Manchester United to Real Madrid.
  • The lack of jersey sales is somewhat being blamed on the economy, but perhaps it also indicates that Ronaldo is just not as popular as Beckham.

Facts & Figures

  • Ronaldo signed a new $133 million contract with Real Madrid in June, which is approximately three times more than Beckham received when he joined the club.
  • When Beckham joined Real Madrid, team income soared 27%. With the addition of Ronaldo in 2010, team income is expected to rise 3.5%.
  • Real Madrid jersey sales are roughly 20% lower now than they were during the Beckham era.

Best Quote

“There was a spike when Cristiano Ronaldo signed in the summer but there’s not such a big demand now. The economic crisis is taking its toll.” – Eugino Martinez, Shop Owner in Madrid, Spain

If we need more money, why can’t the government just print more?

Sunday, October 18th, 2009

That could work, but then again, it might not be so simple.

Until 1971, the U.S. dollar was backed by gold and silver. That means that you could bring your dollar to a bank and redeem it for one dollar worth of gold or silver. Today, the dollar is backed by the strength of the U.S. economy and the size of its GDP. But for explaining purposes, let’s say it’s backed by marbles.

Let’s imagine you have five dollars and those are worth five marbles. To buy a marble, you need one dollar. If you print another five dollars without somehow producing another five marbles, your extra dollars aren’t really backed by anything. Basically, now your ten dollars are only worth five marbles and to buy one marble, you need two dollars. This is called inflation.

Now let’s say you owe your friend five dollars for the five marbles that she gave you last week. Unfortunately, you don’t have five dollars to pay her. If you print five dollars, then you can pay her what you owe but she will end up with dollars that are worth less. However, as long as we are producing more marbles, we can print more money because it has something to back it. In the U.S. we pretty much trust the Government to make sure we have the marbles to back our dollars. So when they print more money, we trust that the GDP will grow to match it.

Printing money may help us pay old debt but in the end, without a strong and growing economy, it does more harm than good by making all of our dollars weaker and forcing prices up.

What do we learn from all this? Printing more money doesn’t help us in the long run unless whatever is backing our money is growing too.

What does it mean to say “the Fed is raising the interest rate?”

Wednesday, September 23rd, 2009

At any given time, there are countless different interest rates for countless different transactions at countless different institutions. The government doesn’t control all of them – how could it? But then how can you say the Fed has raised or lowered interest rates?

The Fed, or the Federal Reserve, is the whole country’s bank. It operates out of 12 different locations and it lands money to commercial banks, which in turn land money to us. The Federal Reserve Board is the agency that controls this bank and its job is to maintain a secure financial system throughout the country. The Fed’s primary concern is to regulate our economy’s rate of growth – if the economy grows too quickly, we get swamped by inflation, and if it grows too slowly, we could enter a recession.

Because the Fed lands money to all other banks, its interest rate affects all other interest rates, which adjust to accommodate the Fed’s behavior. So when the Fed decides the economy is growing too fast, it raises its own interest rate – raising all other interest rates in a kind of domino effect – and slows down spending that way. If the Fed wants to try to increase economic growth, it lowers its interest rate, which usually increases spending. While interest rates can vary from institution to institution, they’re all proportional to the country’s most important interest rate: the Federal Reserve’s.

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