The economic recovery from the shock of the financial crisis has never been all that strong, but the Labor Department’s monthly report on jobs and unemployment painted a picture of an economy that may be struggling even to keep growing.
Catherine Rampell, who covers the economy for The Times, says in the new Weekend Business podcast that the number of nonfarm payroll jobs created in the United States in May — just 54,000 — was far lower than nearly all economists had predicted. The unemployment rate moved in the wrong direction, too — upward, to 9.1 percent from 9 percent. And manufacturing jobs declined for the first time in seven months. There was little in this report to cheer about, although it’s possible that some of the problems were temporary, stemming from factors like bad weather and global supply-chain effects persisting from Japan’s earthquake, tsunami and nuclear disaster.
In a separate conversation on the podcast, David Gillen talks to Andrew Martin about one area of the economy that has been nearly recession-proof: the pet business. As Mr. Martin writes on the cover of Sunday Business, pet foods suitable for human palates have been proliferating, and pet “parents,” as the industry calls them, have often lavished treats on their cats and dogs even when they’ve cut back on spending for themselves.
I also talk to Richard Thaler, the University of Chicago behavioral economist, about what he calls “the annuity puzzle” — the unpopularity of annuities despite their economic advantages. Traditional pensions are a form of annuities, but as most working people shift to defined-benefit plans like 401(k)’s, they are faced with a bewildering set of options upon retirement. He writes in the Economic View column in Sunday Business that few of them have been buying annuities even though it might be in their interest to do so. The reasons for this seem to be more psychological in nature than a matter of pure financial calculus.
In a conversation with Phyllis Korkki, I describe another behavioral quandary, which is the focus of my Strategies column in Sunday Business. This is “the trading paradox,” the propensity of many investors to trade frequently, regretting some of those trades yet feeling unable to do anything about it. A new study by Barclays Wealth highlights these internal conflicts. Because frequent trading is associated with market underperformance, curbing this behavior could be of great benefit. Much like overeating or gambling, however, for some people frequent trading isn’t easily corrected.
You can find specific segments of the podcast at these junctures: the economic outlook (29:29); news summary (21:33); the pet business (17:39); annuities (12:53); compulsive trading (6:02); the week ahead (1:56).
As articles discussed in the podcast are published during the weekend, links will be added to this post.
You can download the program by subscribing from The New York Times’s podcast page or directly from iTunes.
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