March 29, 2024

U.S. Economy Grew at 1.7% Rate in 2nd Quarter, Faster Than Expected

The gross domestic product grew at an annual rate of 1.7 percent, hardly indicative of an economic boom, let alone enough to bring down elevated levels of unemployment soon. It is also the third quarter in a row in which growth failed to top 2 percent, the average since the recession ended in 2009.

Still, the increase was an acceleration from growth in the first quarter of 2013, which was revised downward to 1.1 percent from an earlier estimate of 1.8 percent by the Bureau of Economic Analysis.

“It was a reasonable performance,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “In the long run, it’s not enough, but I’ll take growth wherever I can get it.”

The economy’s trajectory is being closely watched by the Federal Reserve as it determines whether to ease its huge stimulus efforts. Fed policy makers will conclude a two-day meeting on Wednesday and issue their latest statement on the economy early Wednesday afternoon.

On Wall Street, stocks rose modestly as traders readied for the Fed announcement, watching closely for any change in the language of the statement that might indicate the central bank’s course.

Many economists had anticipated growth of below 1 percent in the second quarter, as automatic spending cuts imposed by Congress and higher taxes that went into effect this year began to bite.

Federal spending did decline by 1.5 percent in the second quarter, but the drop was not as severe as the falloff in government spending in earlier quarters. Exports rose 5.4 percent, reversing a decline in the first quarter.

Most experts predict growth will pick up in the second half of 2013 as the drag from the federal spending cuts and higher taxes begins to fade.

“On balance it was a positive report showing a healthier economy than previously believed,” said Michelle Meyer, senior United States economist at Bank of America Merrill Lynch. “But growth has slowed in the past few quarters, reflecting fiscal tightening in Washington.”

The chairman of the Federal Reserve, Ben S. Bernanke, has hinted the Fed will soon begin winding down part of its extensive bond purchases aimed at stimulating the economy, but the timing is uncertain.

On Wall Street, analysts and traders are speculating that the Fed could start tapering as early as September if the economy enjoys healthier growth and the job situation improves, or it could be delayed to December or beyond on evidence of weakness.

While the Federal Reserve is not expected to announce a change in policy later in the day Wednesday, the economic data in the second quarter paints a more vigorous picture than anticipated and may increase the odds that the Fed will taper sooner rather than later.

Indeed, there were pockets of strength in Wednesday’s data from the Bureau of Economic Analysis. For example, residential fixed investment increased by 13.4 percent, a sign the housing sector continues to recover. Personal consumption rose 1.8 percent, as consumers showed some resiliency, especially given the increase in payroll taxes at the beginning of 2013.

The reason government spending stabilized last quarter, rather than falling sharply, was that military spending flattened out, said Steve Blitz, an economist with ITG.

After falling 21.6 percent in the final quarter of 2012, and another 11.2 percent in the first quarter of 2013, military spending last quarter barely budged, sinking just 0.5 percent. One factor that makes Mr. Blitz more optimistic about growth in 2014 “is the presumption that most of the military wind-down will have been completed.”

Higher inventories, always a volatile component of economic reports, added 0.41 percentage point to overall growth. But analysts cautioned that inventory estimates were often adjusted as more data came in, raising the possibility that second-quarter growth could be revised downward in the future.

More clues about the economy’s performance will come on Friday when the Labor Department reports on monthly job creation and the unemployment rate. Economists estimate the economy created 185,000 jobs in July, according to a Bloomberg survey, a bit below the 195,000 level in June, with the unemployment rate falling to 7.5 percent, from 7.6 percent.

The latest data come as the government performed its first comprehensive revision in how the economy is measured since July 2009.

As a result, the estimated growth in 2012 was actually healthier than originally thought. Last year’s annual rate of growth in economic output was revised upward to 2.8 percent, from 2.2 percent. The government also slightly adjusted the estimate of the severity of the recession from 2007-9, saying that the economy contracted at an annual rate of 2.9 percent, instead of 3.2 percent.

In a separate report on Wednesday, Automatic Data Processing reported that private sector employers added 200,000 jobs in July, a bit stronger than analysts had been expected. While the A.D.P. report doesn’t always align with the broader figures released by the Labor Department, the figure was interpreted as another positive sign.

ADP also increased its original estimate of the number of private sector jobs added in June to 198,000 from 188,000.

One puzzle for economists is why job creation has been healthier than economic growth would indicate. For example, the economy added an average of 183,000 jobs a month last year, a figure more consistent with 2.5 to 3 percent growth. But Maury Harris, chief United States economist at UBS, noted that the 2012 G.D.P. figures were revised upward, helping to explain the higher job creation numbers.

Article source: http://www.nytimes.com/2013/08/01/business/economy/us-economy-grew-by-1-7-in-2nd-quarter-faster-than-expected.html?partner=rss&emc=rss

Economic View: A Sustainable Federal Budget Should Survive Any Storm

“My goal is not to chase a balanced budget just for the sake of balance,” the president told George Stephanopoulos of ABC News. The White House press secretary, Jay Carney, said the president’s goal was instead a “fiscally sustainable path.”

Which raises two questions: What is fiscal sustainability? And how do we know when we have achieved it?

For you and me, the answer is pretty easy. As individuals, we have to balance our budgets over our lifetimes. In other words, in the long run, our spending is constrained by our earnings. If you ever tried to imitate the federal government, by spending more than you earned every year, your creditors would eventually catch on and pull the plug.

The federal government, however, is very different. Having survived now for more than two centuries, it has been granted the presumption of immortality by its creditors. As a result, there is no final day of reckoning on which all debts need to be repaid.

That means that the federal government can run budget deficits year after year, racking up ever-higher debt. And, indeed, that is pretty much what it has done throughout history. With the exception of a few years starting in the late 1990s, when the Internet bubble fueled an economic boom, goosed tax revenue and made President Clinton look like a miracle worker, the federal government has run a budget deficit consistently for the last 40 years. The debt that the federal government owes to the public has risen to about $12 trillion, from $341 billion in 1973.

It may be tempting to look at these facts and to conclude that there’s no limit to what the federal government can borrow. But that would be a mistake. Even though the credit markets give the government more latitude than they give to ordinary individuals, the government still faces limits. It can borrow for a long time, perhaps even forever, but it can’t go nuts about it.

A metric that economists often use to evaluate a government’s fiscal position is the ratio of the government debt to the nation’s gross domestic product. G.D.P. measures the total income in the economy and thus reflects the government’s tax base. The higher the debt-to-G.D.P. ratio, the more a government will struggle to service its outstanding liabilities.

As a nation, the United States was born with a debt-to-G.D.P. ratio of about 42 percent, thanks to loans that were taken out to finance the American Revolution. In fact, throughout the nation’s history, the most common cause of increases in the debt-to-G.D.P. ratio has been the expenses associated with military conflict.

The Civil War increased the ratio from 2 percent in 1860 to 34 percent in 1865. World War I increased it from 3 percent in 1914 to 31 percent in 1919. And World War II increased it from 44 percent in 1941 to 109 percent in 1946, the highest level in history.

The second most common cause of increases in the debt-to-G.D.P. ratio has been deep economic downturns. In 1933, during the Great Depression, the ratio was 44 percent, up from 16 percent in 1929. The recent financial crisis and deep recession have had a similar effect. The debt-to-G.D.P. ratio has increased to 77 percent, from 36 percent in 2007.

SO what does President Obama mean when he talks about fiscal sustainability? He doesn’t mean running a surplus and repaying the debts that have been incurred on his watch, as people who spend more than they earn would have to do. Nor does he mean balancing the budget, as Representative Ryan suggests. Rather, the president seems to mean keeping the debt-to-G.D.P. ratio stable at this new, higher level. That is certainly what the last budget he submitted proposed to do.

Achieving this goal is much easier than balancing the budget. Because G.D.P. grows, the government debt can continue to grow as well, just not too fast. Stabilizing the debt-to-G.D.P. ratio requires that future budget deficits be smaller than they have been over the last few years, but they can still be sizable.

Yet this goal, hard to reach as it might be in the current political environment, is still too modest. The problem is that budget projections are based on forecasts, and such forecasts exclude the extreme events that have historically driven up government debt.

Military and economic catastrophes are, by their nature, unpredictable. While we can’t plan on one, prudence requires that we take their possibility into account. In normal times, when we are lucky enough to enjoy peace and prosperity, the debt-to-G.D.P. ratio shouldn’t just be stable; it should be falling. That has generally been the case throughout our history, and it should become the case again as we look forward.

The bottom line is that President Obama is right that sustainability is a reasonable benchmark for evaluating long-run fiscal policy. But the standard he applies when evaluating it appears too easy. It will leave us too vulnerable when the next catastrophe strikes.

N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser to President George W. Bush.

Article source: http://www.nytimes.com/2013/03/31/business/a-sustainable-federal-budget-should-endure-any-storm.html?partner=rss&emc=rss

Italy Grapples With Polluting by Ilva, a Giant Steel Maker

After he died this year at the age of 64 from violent, sudden-onset lung cancer, his friends put a plaque on the wall of their apartment building: “Here lived the umpteenth death from lung cancer. Taranto, March 8, 2012.”

Today, Ilva, which is among the largest plants in Europe and produces more than 30 percent of Italy’s raw steel, is at the heart of a clash over the future of Italian industry, one that pits economic concerns against environmental ones and the power of the government against the judiciary amid Italy’s struggle to compete in a global economy.

After a court ordered sections of the plant closed and steel from it impounded last month, arguing that it had violated environmental laws and was raising serious health concerns in the area, the government passed an emergency decree that would allow it to continue operating while cleaning up its act, saving 20,000 jobs nationwide. Magistrates said that the new law, which must be approved by Parliament, violated the Constitution by allowing the executive branch to circumvent the judiciary.

In many ways, the Ilva plant is an emblem of the Italian economy that the technocratic government of Prime Minister Mario Monti inherited last year and has been trying to repair before elections expected early next year. It is the product of decades of physical and political neglect, an aging industrial giant that came of age in the economic boom of the late 20th century and is struggling to keep pace in the 21st.

For Italy, though, the plant is too big to fail. It produces about 8 percent of European steel — and the government estimates that stopping production would cost the Italian economy more than $10 billion a year.

But the environmental concerns are real. Dark plumes of smoke billow from stacks dominating the landscape, while dust from the plant stains the white tombstones in the local cemetery a rusty pink. An ordinance forbids children from playing in unpaved lots. In 2008, a local farmer was forced to slaughter 2,000 sheep after they were deemed contaminated with dioxin.

Some studies have found that cancer rates in Taranto, an ancient harbor in the heel of Italy’s boot, are over 30 percent higher than the national average, and far higher for certain cancers, particularly of the lungs, kidneys and liver, as well as melanomas.

Bruno Ferrante, the president of Ilva, said that the Riva Group, which owns the plant, has been spending from $325 million to $400 million a year to upgrade the plant since it bought it in 1995.

Mr. Ferrante added that cancer rates had been falling recently — government-approved studies bear that out — but acknowledged that there was more to be done. “The pink dust is certainly a problem, and we are aware of it,” he said.

Arguments about the plant’s economic importance fall on deaf ears here. “Health comes first,” Ms. Lumino said, sitting in her apartment with photos of her husband, including one on a chain that hung from her neck. He was one of many Ilva workers sent into early retirement in 1998 after the plant found evidence of asbestos contamination. “If you have money but not your health, what good is it?” she asked.

Ms. Lumino remembered a time before the plant was built. “There were farms, clean air, olive and almond trees,” she said. “We would picnic by the coast every Easter Monday.”

Even with the new decree, the conflict is far from over. The decree orders the Riva Group to invest $3.8 billion to reduce its emissions and bring the plant up to code before 2016, the deadline for other European countries to modernize.

If Riva fails to do so, the new law would give the government more powers to intervene. If Riva is unable to raise enough money to modernize, it could ask for European Union subsidies or sell the plant, which could jeopardize Italy’s European standing.

Brazilian companies are already eying Ilva, according to Italian news media reports. Mr. Ferrante said that Riva had no intention of selling and had a “pretty significant” ability to borrow more money and also draw on European Union cofinancing.

Gaia Pianigiani contributed reporting.

Article source: http://www.nytimes.com/2012/12/10/world/europe/italy-grapples-with-giant-polluting-ilva-steel-plant.html?partner=rss&emc=rss

News Analysis: A Simpler Tax Code, for Stronger Growth in the Long Run

But a number of prominent economists cautioned that, while cleaning up the code is a worthy goal, it would do little to stimulate the flagging economy.

The kinds of changes being discussed in the heated back-room negotiations between President Obama and the House speaker, John A. Boehner of Ohio — raising $800 billion to $1.6 trillion in additional tax revenue, along with significant down-the-road spending cuts — would most likely depress growth in the short term.

Longer term, economists said, streamlining the code might improve the allocation of capital enough to raise growth modestly. The overall economy might be 1 to 2.5 percent bigger than it otherwise would be after five or 10 years, translating into perhaps more than one million jobs.

While that growth would certainly be welcome, it falls far short of claims from some tax reform evangelists, who predict that adding certainty and simplicity to the tax code would by itself ignite an economic boom.

“This religious faith that a broader base gives you a better tax system and economy is overly optimistic and simplistic,” said Alan J. Auerbach, the director of the Robert D. Burch Center for Tax Policy and Public Finance at the University of California, Berkeley. “I think the benefits can be overstated.”

Economists from across the political spectrum concur that the nation’s complex tax code most likely hampers growth. Tax rates Americans pay are so uneven that they not only raise fairness issues, but also cause distortions in the economy, inducing financial decisions that individuals might not otherwise make, and might not be the most efficient use of capital.

Tax rates on different kinds of individual income vary by 20 percentage points. More than $1 trillion a year in breaks — as varied as a tiny effort to aid domestic makers of toy arrows and the huge exclusions for state and local taxes — riddle the code.

The cumulative effect of those loopholes, preferential rates and special programs distorts how investors invest, economists said. “You put money in less-productive investments,” said Joel B. Slemrod of the University of Michigan, summarizing the problem.

For instance, analysts say generous tax breaks on home mortgage interest encourage Americans to buy bigger and more expensive houses, with little long-term benefits to innovation and economic growth. They also believe generous tax breaks on employer-provided health care spur higher health costs overall.

The bulk of economists agree in principle in the sensibility of “broadening the base” — or eliminating deductions and exclusions, to make more income taxable and allow for lower rates — to improve the overall investment climate.

Hypothetically, economists said, the growth effects of broad tax reform could be enormous. Huge overhauls, like replacing the income tax with a consumption or value-added tax, could increase economic output in the long run by as much as 9.4 percent.

But a consumption tax has few supporters in Washington because many warn that it would be regressive, shifting too large a portion of the tax burden onto lower- and middle-income Americans. Moreover, few politicians think that Congress could agree on passing such a big reform.

In the scheme of things, economists said, the kinds of changes on the table in Washington are far too small to make much of a difference, meaning in the long run they might inject a meager-to-modest boost to growth.

“Nobody’s talking about reforms that big,” said R. Glenn Hubbard, the dean of the Columbia Graduate School of Business and a top Republican economist. “Limiting deductions to raise revenue? That’s not going to raise growth at all. And raising rates would hurt growth.”

“I’m not even sure that the academic literature on tax rates and growth maps well onto what people are talking about now.”

Several experts cautioned that changes to increase taxes on investment and savings income might hurt long-run growth, even if it improved the progressivity of the code.

Article source: http://www.nytimes.com/2012/12/01/business/a-simpler-tax-code-for-stronger-growth-in-the-long-run.html?partner=rss&emc=rss

Endangered Dragon: Building Boom in China Stirs Fears of Debt Overload

And the Wuhan Metro is only one piece of a $120 billion municipal master plan that includes two new airport terminals, a new financial district, a cultural district and a riverfront promenade with an office tower half again as high as the Empire State Building.

The construction frenzy cloaks Wuhan, China’s ninth-largest city, in a continual dust cloud, despite fleets of water trucks constantly spraying the streets. No wonder the local Communist party secretary, recently promoted from mayor, is known as “Mr. Digging Around the City.”

The plans for Wuhan, a provincial capital about 425 miles west of Shanghai, might seem extravagant. But they are not unusual. Dozens of other Chinese cities are racing to complete infrastructure projects just as expensive and ambitious, or more so, as they play their roles in this nation’s celebrated economic miracle.

In the last few years, cities’ efforts have helped government infrastructure and real estate spending surpass foreign trade as the biggest contributor to China’s growth. Subways and skyscrapers, in other words, are replacing exports of furniture and iPhones as the symbols of this nation’s prowess.

But there are growing signs that China’s long-running economic boom could be undermined by these building binges, which are financed through heavy borrowing by local governments and clever accounting that masks the true size of the debt.

The danger, experts say, is that China’s municipal governments could already be sitting on huge mountains of hidden debt — a lurking liability that threatens to stunt the nation’s economic growth for years or even decades to come. Just last week China’s national auditor, who reports to the cabinet, warned of the perils of local government borrowing. And on Tuesday the Beijing office of Moody’s Investors Service issued a report saying the national auditor might have understated Chinese banks’ actual risks from loans to local governments.

Because Chinese growth has been one of the few steady engines in the global economy in recent years, any significant slowdown in this country would have international repercussions.

As municipal projects play out across China, spending on so-called fixed-asset investment — a crucial measure of building that is heavily weighted toward government and real estate projects — is now equal to nearly 70 percent of the nation’s gross domestic product. It is a ratio that no other large nation has approached in modern times.

Even Japan, at the peak of its building boom in the 1980s, reached only about 35 percent, and the figure has hovered around 20 percent for decades in the United States.

China’s high number helps explain its meteoric material rise. But it could also signal a dangerous dependence on government infrastructure spending.

“If China’s good at anything, it’s infrastructure,” said Pieter P. Bottelier, a China expert at the Johns Hopkins School of Advanced International Studies in Washington. “But right now it seems the investment rate is too high. How much of that is ill-advised and future nonperforming loans, no one knows.”

For the last decade, as economists have sought to explain China’s rise, a popular image has emerged of Beijing technocrats continually and cannily fine-tuning the nation’s communist-capitalist hybrid. But in fact, city governments often work at odds with Beijing’s aims. And some of Beijing’s own goals and policies can be contradictory.

As a result, China’s state capitalism is much messier, and the economy more vulnerable, than it might look to the outside world.

In the case of Wuhan, a close look at its finances reveals that the city has borrowed tens of billions of dollars from state-run banks. But the loans seldom go directly to the local government. Instead, the borrowing is done by special investment corporations set up by the city — business entities whose debt shows up nowhere on Wuhan’s official financial balance sheet.

Adding to the risk, the collateral for many loans is local land valued at lofty prices that could collapse if China’s real estate bubble burst. Wuhan’s land prices have tripled in the last decade.

The biggest of the separate investment companies set up by the municipal government here is an entity known as Wuhan Urban Construction Investment and Development, created to help finance billions of dollars’ worth of projects, including roadways, bridges and sewage treatment plants.

Xu Yan contributed research.

Article source: http://feeds.nytimes.com/click.phdo?i=f67d56cff79d101647487e54c8181c62

You’re the Boss: This Week in Small Business

Dashboard

What’s affecting me, my clients and other small-business owners this week.

TALKING IT OUT A Democrat and a Republican have their most intelligent discussion ever and a budget deal gets closer. The G.O.P. issues a report that urges the government to be more like Canada (PDF) in order to improve the economy. Paul Krugman says “that’s the kind of answer that, in Econ 101, has you suggesting that the student get special tutoring.” The economist Chad Stone also disagrees, saying the report’s use of Canada’s growth in the ’90s is misleading: “What I take from this is if you start with a level of expenditures significantly higher than the United States and then reduce expenditures at a time when your major trading partner is experiencing a strong economic boom (after raising taxes), you, too, can have a boom.”

JON STEWART JUST GIVES UP Our corporate tax is now officially the highest in the world — for those who actually pay it, anyway. G.E., for example, paid no taxes last year. Hearing this, Jon Stewart officially gives up. The Daily Beast lists its 15 top corporate tax dodgers. The Tax Policy Center releases a summary of the tax proposals in President Obama’s 2012 budget. The president, according to  Donald Marron, “is proposing to cut taxes by $2.4 trillion over the next decade, raise them by $700 billion, or raise them by $2.0 trillion. It all depends on your benchmark.”

THE DATA’S STILL, WELL, O.K. Personal income and consumption (PDF) increased in February. Energy prices are taking a toll on consumers. Slate’s Annie Lowrey explains why there are more corporate profits but fewer jobs: “Productivity increased 3.9 percent in 2010 while labor costs fell. To simplify: businesses paid fewer workers to do more. In addition, big corporations found customers overseas.” The United States economy outpaces its rivals. Britain starts up its own start-up initiative. A Chinese economist complains about the dollar’s dominance. The president reschedules his Libya speech to accommodate “Dancing With the Stars.”

MORE JOBS? Governors of the 10 worst states for business try to create jobs. State revenues are up again. Unemployment falls to a two-year low. ADP says the private sector added more than 200,000 jobs. But fewer business owners plan to create jobs going forward.

DOES IT COME WITH A POOL? As home prices keep falling, a study finds that nearly 20 percent of homes in Florida are vacant. Dr. Housing Bubble reports that California home prices are 50 percent off  their March 2007 peak. A Russian billionaire reportedly pays $100 million for a Silicon Valley house. Phoenix leads the misery index.

SOMEONE’S AN OPTIMIST Charles Plosser, chief executive of the Philadelphia Fed, is optimistic in a recent speech: “Consumer spending continues to expand at a reasonably robust pace, and business investment continues to support overall growth. Labor market conditions are improving. Firms are adding to their payrolls. I do not believe that weakness (in the real estate sector) will prevent a broader economic recovery.”

MY CELLPHONE’S TOO SEXY The Atlantic’s Daniel Indiviglio is not sure if American Express’s new e-wallet product will succeed, saying, “it won’t be a cinch to break into a market that has been around for a while.” The Small Business Administration reports that small-business loans are losing market share (PDF).  John Taylor explains why he supports gradually raising interest rates to reduce the Fed’s enormous reserve balances. Time’s Steven Gandel reports that the number of problem banks nears 1,000. The Network for Teaching Entrepreneurship in Philadelphia gets a $10,000 grant. Bankers are finding that the best way to find small-business customers is through their mobile devices. Why is that? A recent survey by RingCentral indicates that most people consider their cellphone “sexier” than their spouse.

OLE! Hispanicize 2011 is this week. The online Social Media Success Summit is coming in May.

A COBRA TWEETS THE TRUTH World markets continue to soar. But a hedge fund gives three reasons why the stock market is in a state of denial, for example: “The so-called strengthening recovery is highly fragile and subject to reversal.” Paul Vigna says the stock market increase is due to the G7 putting a lid on the yen. A deadly Egyptian Cobra went missing from the Bronx Zoo, and tweets the truth about Wall Street.

WHAT LEVEL OF ANGRY BIRDS IS HE ON? President Obama has an iPad. Amazon joins the cloud. A company figures out a way for us to do all of our typing with one hand. I beg Microsoft to save me from my BlackBerry, and I think it may be listening. Malcolm Gladwell says social media aren’t such a big deal. Intuit and Salesforce.com join forces. Google copies Facebook’s “like” feature, selects Kansas City for its ultra-high-speed-Internet project, makes Gmail look like the Wii, and makes plans to rule our e-commerce payment world.

BALONEY RULESSwipe fees” and other items could delay a bill to fund the Small Business Administration. The House begins digging into a patent-reform bill. The Senate considers blocking blocking Environmental Protection Agency regulation. The Wall Street Journal supports the move. A green industry lawyer says it’s baloney. The Department of Energy is making it easier and cheaper for small businesses to license its technology.

DISCOVER GIVES UP TOO An Accountemps survey finds that office managers send sick people home. A Brother International survey finds that small-business owners are more stressed than ever. A MetLife survey finds that more than a third of employees hope to change jobs in the next 12 months. A Microsoft survey finds that 39 percent of small and mid-size businesses expect to pay for one or more cloud services within three years. A survey by Elance, an outsourcer, finds that online hiring ranks as the most essential cloud-based service for start-ups. Discover decides not to do any more surveys.

DYING INDUSTRIES Eric Kuhn explains how he turned his company around when the dot-com bubble burst. The Wall Street Journal publishes a list of the top 10 dying industries (one of which is, uh, well, oh, never mind).

E-MAILS OR DIRECT MESSAGES? Zenhabits’ Leo Babauta says our e-mails are too long: “I’m not a diva, but I also have things to do and can’t get to every long e-mail. And there are many of them, not just yours.” Facebook quietly starts testing its own version of intent-based advertising, delivering real-time ads based on user wall posts and status updates. A public relations guy hates automatic direct messages on Twitter. Somehow, Nike makes even cricket look cool.

SELL LESS, CHARGE MORE M.I.T.’s Jim Schuchart offers four missing steps for pricing, for example: “Quantify your superiority. There is always more than one way to quantify … value, so consider how your customer will think about it, what data you have, and what data you can easily get.” Better yet, just do what the big guys do and sell less product for the same price. Anthony Iannarino says that selling on price is “chasing the bottom” because “at some point, you have to start creating real value and start chasing the top.”

THE SKILLS TO BE A C.E.O. Fortune’s Joel Bomgar says that “more and more, companies are reconsidering the assumption that tech founders lack the skills to take a company to the next level as C.E.O.’s.” Business Insider reports that 33 percent of the C.E.O.’s of SP 500 companies majored in engineering.

THIS WEEK’S AWARDS

BEST REASON FOR C.E.O.’S TO MAJOR IN ACCOUNTING Andrew Liveris, C.E.O. of Dow Chemical, makes a $719,923 mistake on his expense reports.

BEST ADVICE FOR BEING MORE PRODUCTIVE Ali Luke tells how to have a productive month: “Consider a 30-day trial: Is there some big change you’re considering – like getting up at 6 a.m. instead of 8 a.m., or quitting alcohol, exercising daily, or becoming vegetarian? How about giving it a 30-day trial? If you decide the change doesn’t suit you, just stop after the month is over. But if you decide that it’s been worth it, then this month just might have been one of the most important in your life.”

MOST COMFORTING NEWS ABOUT OIL PRICES Donald Luskin does not think rising oil prices will hurt the overall economy: “The U.S. economy is today well-positioned to absorb an oil spike without experiencing it as an oil shock. First, we’re nowhere near peak oil consumption, which we hit in August 2005 at 21.7 million barrels per day. We’re now 9 percent below that, even though consumption has recovered substantially since its worst levels of the Great Recession in September 2008.”

THIS WEEK’S QUESTION Will rising oil prices affect your business? We reimburse our people for car expenses, so we’re affected.

4:26 p.m. | Correction An earlier version of this post identified Paul Vigna as an investor. He is a journalist at Dow Jones Newswires.

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://feeds.nytimes.com/click.phdo?i=6620e7432cc99af55c25550eab036754