October 7, 2022

Markets Lower as Fiscal Worries Continue

Wall Street was lower on Friday as investors worried that politicians in Washington might not agree on a budget needed to avoid a shutdown of the government.

In afternoon trading the Standard Poor’s 500-share index fell 0.4 percent. The Dow Jones industrial average was off 0.5 percent and the Nasdaq composite 0.1 percent.

The government will reach its borrowing limit, or debt ceiling, on Tuesday. If Congress doesn’t raise that limit, the government won’t be able to pay all its bills and some 800,000 of the 2.1 million federal employees will not go to work.

The White House and Republican lawmakers still disagree sharply on spending cuts and other key budget issues. The Senate plans to vote Friday on measure to prevent an immediate shutdown next week, but a lasting solution still seems far off.

“Tension will increase on the U.S. fiscal front as we approach the deadline of potential government shutdown and will likely act as a drag on sentiment,” said Gary Yau, analyst at Crédit Agricole CIB.

Britain’s FTSE 100 index dropped 0.8 percent to close at 6,512.66 points while Germany’s DAX ended flat at 8,661.51. France’s CAC 40 also closed unchanged, at 4,186.77.

In economic data, American families spent 0.3 percent more in August than the month before, a reflection of wage gains. Figures this week on unemployment benefits had been upbeat, suggesting the Federal Reserve may begin to “taper” its monetary stimulus in coming months.

In Asia, Hong Kong’s Hang Seng Index rose 0.3 percent to close at 23,207.04 while in mainland China, the Shanghai Composite Index advanced 0.2 percent to 2,160.03.

Markets in China were subdued ahead of the introduction on Sunday of a pilot free-trade zone in Shanghai.

China’s leaders have already loosened restrictions on foreign investment in the 11.2-square-mile zone. Further details are expected when the zone is inaugurated. Analysts say authorities are likely to relax taxes, trade quotas and administrative red tape in the zone.

A weeklong holiday in China that starts Tuesday and follows another three-day holiday just last week also kept some investors on the sidelines.

Japan’s Nikkei 225 dipped 0.3 percent to 14,760.07 after the country’s consumer price inflation rose at the fastest rate in five years in August.

South Korea’s Kospi climbed 0.2 percent while Australia’s S.P./ASX 200 rose 0.2 percent. Benchmarks in New Zealand, Taiwan and Singapore also advanced but India’s dropped.

In currencies, the euro strengthened 0.4 percent to $1.3543 while the dollar slipped 0.7 percent against the Japanese yen, to 98.31 yen. The British pound rose 0.6 percent to $1.6134 after the governor of the Bank of England said he saw no reason to have more monetary stimulus as the economy is improving.

In energy markets, benchmark oil for November delivery rose 53 cents to $103.57 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 37 cents to settle at $103.03 on Thursday.

Article source: http://www.nytimes.com/2013/09/28/business/daily-stock-market-activity.html?partner=rss&emc=rss

It’s the Economy: Our Debt to Society

This is the definition of a deficit, and it illustrates why the government needs to borrow money almost every day to pay its bills. Of course, all that daily borrowing adds up, and we are rapidly approaching what is called the X-Date — the day, somewhere in the next six weeks, when the government, by law, cannot borrow another penny. Congress has imposed a strict limit on how much debt the federal government can accumulate, but for nearly 90 years, it has raised the ceiling well before it was reached. But since a large number of Tea Party-aligned Republicans entered the House of Representatives, in 2011, raising that debt ceiling has become a matter of fierce debate. This summer, House Republicans have promised, in Speaker John Boehner’s words, “a whale of a fight” before they raise the debt ceiling — if they even raise it at all.

If the debt ceiling isn’t lifted again this fall, some serious financial decisions will have to be made. Perhaps the government can skimp on its foreign aid or furlough all of NASA, but eventually the big-ticket items, like Social Security and Medicare, will have to be cut. At some point, the government won’t be able to pay interest on its bonds and will enter what’s known as sovereign default, the ultimate national financial disaster achieved by countries like Zimbabwe, Ecuador and Argentina (and now Greece). In the case of the United States, though, it won’t be an isolated national crisis. If the American government can’t stand behind the dollar, the world’s benchmark currency, then the global financial system will very likely enter a new era in which there is much less trade and much less economic growth. It would be, by most accounts, the largest self-imposed financial disaster in history.

Nearly everyone involved predicts that someone will blink before this disaster occurs. Yet a small number of House Republicans (one political analyst told me it’s no more than 20) appear willing to see what happens if the debt ceiling isn’t raised — at least for a bit. This could be used as leverage to force Democrats to drastically cut government spending and eliminate President Obama’s signature health-care-reform plan. In fact, Representative Tom Price, a Georgia Republican, told me that the whole problem could be avoided if the president agreed to drastically cut spending and lower taxes. Still, it is hard to put this act of game theory into historic context. Plenty of countries — and some cities, like Detroit — have defaulted on their financial obligations, but only because their governments ran out of money to pay their bills. No wealthy country has ever voluntarily decided — in the middle of an economic recovery, no less — to default. And there’s certainly no record of that happening to the country that controls the global reserve currency.

Like many, I assumed a self-imposed U.S. debt crisis might unfold like most involuntary ones. If the debt ceiling isn’t raised by X-Day, I figured, the world’s investors would begin to see America as an unstable investment and rush to sell their Treasury bonds. The U.S. government, desperate to hold on to investment, would then raise interest rates far higher, hurtling up rates on credit cards, student loans, mortgages and corporate borrowing — which would effectively put a clamp on all trade and spending. The U.S. economy would collapse far worse than anything we’ve seen in the past several years.

Instead, Robert Auwaerter, head of bond investing for Vanguard, the world’s largest mutual-fund company, told me that the collapse might be more insidious. “You know what happens when the market gets upset?” he said. “There’s a flight to quality. Investors buy Treasury bonds. It’s a bit perverse.” In other words, if the U.S. comes within shouting distance of a default (which Auwaerter is confident won’t happen), the world’s investors — absent a safer alternative, given the recent fates of the euro and the yen — might actually buy even more Treasury bonds. Indeed, interest rates would fall and the bond markets would soar.

Article source: http://www.nytimes.com/2013/09/15/magazine/our-debt-to-society.html?partner=rss&emc=rss

Economic Slowdown Is Expected, but It’s Seen as Fleeting

New data from the government due out Wednesday is expected to show that the economy came close to stalling during the spring quarter, which ran from April through June. But many experts say the latest slowdown is likely to be temporary. Buoyed by a healthier housing sector, a surging stock market and resilient consumer spending, they say, economic activity should rebound in the second half of 2013 and accelerate into 2014.

“We’ve been saying for some time that second-quarter growth would be the weak spot this year,” said Nariman Behravesh, chief economist at IHS. “This is the spring swoon. But I wouldn’t panic — there is a very specific reason for it, and it will start to wear off.”

“Housing has been sizzling and consumers are spending at a decent pace,” he added. “Businesses have held back so far, but will begin to get on board.”

But haven’t we heard that one before? The latest swoon looks a lot like the previous pauses that have prevented the economy from gaining much momentum since the recession ended in 2009.

Experts estimate that the economy grew at an annual rate of under 1 percent in the second quarter, half the already tepid pace of growth in the first quarter of 2013. Much of that weakness stems from the tax increases and automatic cuts in government spending that went into effect earlier this year, headwinds that should gradually ease in the quarters to come unless Washington makes things worse by cutting spending further or Congress and the White House send markets into a swoon by failing to agree on a painless way to raise the nation’s debt ceiling.

Federal Reserve policy makers, who are set to meet on Tuesday and Wednesday, will be closely analyzing these crosscurrents. The central bank has been purchasing $85 billion a month in Treasury bonds and government-backed mortgages — a program which the Fed’s chairman, Ben S. Bernanke, has hinted will be slowly wound down later this year if the economy proves strong enough.

The Fed is not expected to signal a change in direction when it issues its latest statement early Wednesday afternoon. The data on economic growth due out Wednesday morning, however, as well as the latest figures on employment that will be released by the Labor Department on Friday, could help determine whether the Fed begins tapering back as early as September or instead waits until December or even longer.

“The Fed will have a lot of information,” said Michelle Meyer, senior United States economist at Bank of America Merrill Lynch. “Our baseline scenario is that December is marginally more likely than September, but it is a very close call.”

Wall Street is intensely focused on when the Fed will begin easing back, and traders will be paying close attention to any change in the language of the Fed’s statement. In May and June, stocks fell after Mr. Bernanke seemed to suggest the tapering could begin soon.

Since then, though, Wall Street has bounced back and Mr. Bernanke emphasized in testimony before Congress earlier this month that the central bank was committed to bolstering the economy, easing fears of an abrupt tapering. In fact, he highlighted the risk that “tight federal fiscal policy will restrain economic growth over the next few quarters by more than we currently expect.”

Other questions are looming, too. Besides the issue of whether businesses will start investing at a faster pace, the recent rise in mortgage rates has some observers worried that the housing market could cool. The National Association of Realtors reported on Monday that its index for pending home sales dropped 0.4 percent in June, a sign buyers may be getting more cautious as borrowing costs increase.

More clues about the health of the housing sector will come on Tuesday, with the release of the latest figures in the S. P./Case-Shiller index for home prices. Economists are expecting the index for May to post a 12.3 percent gain over the same month a year earlier, a reflection of what has been a strengthening housing market in many parts of the country. The Conference Board is also scheduled to report its latest reading on consumer confidence on Tuesday.

Experts who are fairly optimistic in the long-term, like Ian Shepherdson, chief economist at Pantheon Macroeconomics, caution that Wednesday’s numbers on overall economic performance could look rather bleak.

“The second quarter was horrible, no matter how you slice it,” he said. “The crunch in government spending is holding back growth and it doesn’t just appear in the government component. It feeds pretty much into everything.”

Mr. Shepherdson is actually a bit more pessimistic about the current situation than many of his peers — he says he believes the economy grew at only 0.5 to 0.6 percent in the second quarter — but he emphasized that Wednesday’s report on gross domestic product was something of a wild card.

Inventory changes are hard to predict, as is the full impact of the cutbacks in Washington.

“We could be anywhere from minus 0.5 percent to plus 1.5 percent,” he said. “I wouldn’t be surprised if we saw a negative number.”

Even as economists on Wall Street, at the Federal Reserve and elsewhere study the data for the second quarter, government statisticians at the Commerce Department’s Bureau of Economic Analysis will also be undertaking a comprehensive revision of how they measure the economy itself.

The bureau will now count expenditures on research and development as akin to more traditional business investment, as well as make adjustments for the value of artistic property like movies and books. Pension plans will also be measured differently. It is the first revision of its kind since July 2009.

All together, these changes will affect reports of economic activity going back decades and are expected to increase the estimated size of the American economy by roughly $400 billion. That may be less than 3 percent of the nation’s $16 trillion in annual output, but it’s larger than the entire economy of dozens of countries.

And while no one will notice the difference in their own lives, in the world of economics, the bureau’s revision is a major event. “For numbers geeks like myself,” Mr. Behravesh said, “these changes are anticipated with great interest.”

Article source: http://www.nytimes.com/2013/07/30/business/economy/economic-slowdown-is-expected-but-its-seen-as-fleeting.html?partner=rss&emc=rss

Fed Chief Reaffirms Fervor for Stimulus

Mr. Bernanke said he still expected to reach that point in the coming months but, in what may have been his final appearance before the House Financial Services Committee, he cautioned that Congress itself posed the greatest risk to growth.

“The risks remain that tight federal fiscal policy will restrain economic growth over the next few quarters by more than we currently expect, or that the debate concerning other fiscal policy issues, such as the status of the debt ceiling, will evolve in a way that could hamper the recovery,” he told the committee.

The sluggish economy has been a constant background for Mr. Bernanke’s biannual testimony. Unemployment, at 7.6 percent, remains stubbornly above the Fed’s goals. Inflation has sagged to the lowest pace on record. Growth continues at a “modest to moderate pace,” the Fed said Wednesday in its monthly beige book survey of economic conditions across the country, released separately from Mr. Bernanke’s testimony.

Mr. Bernanke’s message on Wednesday was that the Fed would cut back on its monthly asset purchases — $85 billion of mortgage-backed securities and Treasury securities — only if conditions were improving. If unemployment instead stays high and growth rates do not improve, the Fed will keep buying bonds. If inflation stays low, the Fed will keep buying bonds. If longer- term interest rates go up, the Fed will keep buying bonds.

Mr. Bernanke revived a talking point from earlier this year, insisting the Fed was willing to buy more than $85 billion a month. “Because our asset purchases depend on economic and financial developments, they are by no means on a preset course,” Mr. Bernanke told the committee.

Even as Mr. Bernanke said that the Fed would keep its options open, he continued to suggest that the Fed would like to start reducing its asset purchases this year and then end them as soon as possible. If the economy needs more stimulus, the Fed would prefer to extend its policy of holding short-term interest rates near zero. Mr. Bernanke, who refers to this shift as “a change in the mix of tools,” has not explained the rationale and was not asked to do so.

The Fed’s course will not be determined by Mr. Bernanke much longer. He is widely expected to step down as Fed chairman at the end of his second term in January. Members of both parties took the opportunity to praise him, although Republicans generally added that they opposed the Fed’s recent efforts. No one paid much attention to the finger Mr. Bernanke had pointed at them.

“You acted boldly and decisively and creatively — very creatively, I might add,” said the committee’s chairman, Jeb Hensarling, Republican from Texas.

“You’ve had a lot of compliments today. In my business it’s called a eulogy,” said Emanuel Cleaver, a Missouri Democrat, who is an ordained minister.

“You have never been boring,” said Carolyn Maloney, a New York Democrat.

Mr. Bernanke then did his best to be boring, sending the message to markets roiled by his comments last month that it was much ado about nothing.

Markets purred. The yield on the benchmark 10-year Treasury bond sank slightly, falling below 2.5 percent, while stock markets posted modest gains.

The announcement last month that the Fed expected to reduce its asset purchases later this year drove up interest rates on mortgages and other loans. Some investors concluded that the Fed was curtailing its ambitions for the recovery, while others saw evidence that the Fed was overly optimistic in its forecasts.

Mr. Bernanke described that response as “unwelcome,” but he said it had probably reduced some “excessively risky or leveraged positions” — easing concerns among some Fed officials that its efforts are pumping up new bubbles.

Article source: http://www.nytimes.com/2013/07/18/business/economy/fed-chairman-points-finger-at-congress.html?partner=rss&emc=rss

Fed Chairman Reaffirms Stimulus and Warns Congress Over Cuts

Mr. Bernanke said that the Fed expected the economy to gain strength in the coming months, potentially allowing the Fed to decelerate its stimulus campaign not because it has changed its goals but because it has begun to achieve them.

But he warned that Congress itself remains the greatest obstacle to faster growth. Federal spending cuts are reducing growth this year by about 1.5 percentage points, he said. While the Fed expects the impact to diminish next year, he said there was a risk Congress would create new problems for the economy.

“The risks remain that tight federal fiscal policy will restrain economic growth over the next few quarters by more than we currently expect, or that the debate concerning other fiscal policy issues, such as the status of the debt ceiling, will evolve in a way that could hamper the recovery,” Mr. Bernanke said during a biannual appearance before the House Financial Services Committee.

Wednesday may have marked the last time that Mr. Bernanke will appear before the committee to report on the Fed’s conduct of monetary policy. He will conclude his second term as chairman at the end of January and is widely expected to step down. Members of both parties took the opportunity to praise him, although Republicans generally added that they opposed the Fed’s recent efforts.

“You acted boldly and decisively and creatively – very creatively, I might add,” said the committee’s chairman, Texas Republican Jeb Hensarling.

“You have never been boring,” said New York Democrat Carolyn Maloney.

Mr. Bernanke then did his very best to be boring, sending the message to markets that had been roiled by his comments last month that it was much ado about nothing.

The shabby condition of the economy has become the constant background for Mr. Bernanke’s public appearances. Unemployment remains stubbornly common, inflation has sagged to the lowest pace on record and growth is tepid.

Mr. Bernanke’s message Wednesday was that the Fed will begin to decelerate only if those problems continue to diminish. If unemployment stays high, the Fed will keep buying bonds. If inflation stays low, the Fed will keep buying bonds. If growth weakens, the Fed will keep buying bonds. Indeed, he revived a talking point from earlier this year in insisting that the Fed was willing to increase the volume of its monthly purchases if it decided that more stimulus was necessary.

“Because our asset purchases depend on economic and financial developments, they are by no means on a preset course,” Mr. Bernanke told the committee.

Mr. Bernanke has adopted a stronger tone in particular on the subject of inflation. Fed officials insisted for much of the year that they were not concerned about the sagging pace of inflation, which has fallen to the lowest pace on record. Prices increased by just 1 percent during the 12 months that ended in May, well below the 2 percent pace that the Fed considers most healthy. In recent weeks, the Fed has shifted its tone, emphasizing that it wants prices to rise more quickly.

On Wednesday Mr. Bernanke put inflation alongside unemployment as the reasons for the Fed’s commitment to its stimulus campaign: “Our intention is to keep monetary policy highly accommodative for the foreseeable future,” he said, “because inflation is below our target and unemployment is quite high.”

The central bank says it plans to hold short-term interest rates near zero at least as long as the unemployment rate remains above 6.5 percent. It also is expanding its holdings of mortgage-backed and Treasury securities by $85 billion a month in an effort to accelerate the pace of employment growth.

Article source: http://www.nytimes.com/2013/07/18/business/economy/fed-chairman-points-finger-at-congress.html?partner=rss&emc=rss

You’re the Boss Blog: This Week in Small Business: 6,297 Chinese Restaurants


A weekly roundup of small-business developments.

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

Must Reads

Mark Suster shares a favorite story about an entrepreneur. Jason Zweig maintains there are five compelling reasons the United States is a hot emerging market.

The Economy: Increased Tonnage

Growth fails to meet expectations. Orders for durable goods plunged 5.7 percent in March and recent factory data is indicating slowing growth. Charles Hugh-Smith laments the decline of small business. New residential home sales (pdf) increased in March, and there has been positive momentum for architecture billings. But existing home sales fell unexpectedly. Trucking tonnage increased again, but vehicle miles driven hit another post-crisis low. The Federal Reserve Bank of Richmond said manufacturing activity pulled back in its district and Kansas City reported the same in its region (pdf). One study said that small-business owners remained mixed on the state of the economy and their growth outlook. Here’s an updated state of the economy.

Washington: Online Sales Tax

The Senate votes for an online sales tax, but eBay says it is unfair to some small businesses — and it may be too late for others. A small but growing number of American corporations, operating in businesses as diverse as private prisons, billboards and casinos, are making an aggressive move to reduce — or even eliminate — their federal tax bills. A survey from Sage finds small businesses struggling with the complexity of tax regulations and code. Republicans advance a bill to prepare for another debt-ceiling fight. The sequestration budget cuts cause air travel delays and the furlough of 89,000 Internal Revenue Service employees (but the Justice Department is fine). A Chinese mother sues the Federal Reserve over her shrinking cash (this infographic explains how the central banking system really works). The economy will get a boost in July when the government recalculates gross domestic product. The president celebrates young inventors at a White House science fair, and a Pew study says American teenagers are doing better on science tests than the public realizes.

Entrepreneurs: Lessons Learned

Brian Cauble shares 50 lessons he’s learned as an entrepreneur, including: “If you don’t figure out your sales, you will fail.” Rosie Percy says self-employment is on the rise. Saint Louis University’s Center for Entrepreneurship names its first “diamond in the rough” student entrepreneur, and the Western Pennsylvania Small Business Administration names its (reluctant) young entrepreneur of the year. The Wharton Business Plan Competition went to a pair of M.B.A. students who created Zenkars, an online used car dealer that aims to connect wholesale buyers with individual customers, and the grand prize winner of the University of California, Berkeley, Start-up Competition was Resido Medical, which has developed a small wearable device for patients with essential tremor.

Management: Profit by Quitting

Joe Taylor Jr. reports on the secrets of century-old businesses. Lisa J. Jackson suggests celebrating when you hit goals and milestones. Greg Digneo argues that quitting may be the most profitable thing you do this year. A UPS Store owner explains how her business works. Jason Fell explains how to be more like Steve Jobs. A new book says nice companies finish first. A Portland rap legend, Cool Nutz, discusses the secrets of his success. A manufacturing chief executive shares the seven skills of a “lean leader.” Here are 10 quotes that inspire business leaders, and these 27 successful people reveal the things they can’t live without.

Finance: Shake It

Greg Kumparak explains what is needed to raise a million bucks. A Kickstarter project aims to raise $155,000 for a cellphone that can be recharged by shaking it, and another company gets $5.9 million to create a “Kickstarter for people.” Investors sink $30 million into a 3-D printing company. Bryan Goldberg feels some chief executives like to raise money just for the sake of it. Milton Berle’s joke files go up for sale. The 15-year fixed mortgage rate hits a low. American Express Open introduces a tool to help small businesses simplify expense tracking. A financing firm announces an $82 million credit line to finance small businesses. Boston Beer expands its microlending and coaching program. Here is why big corporations are supporting the entrepreneurial ecosystem.

People: 6,297 Chinese Restaurants

A National Public Radio report explains how young adults with autism can thrive in high-tech jobs. These are the worst jobs of 2013. Adriana Gardella’s business group debates whether employees can be rehabilitated (even if they bite people?). Martin Zabell reports on the aftermath of Hurricane Sandy on small businesses, and Sarah Green says much has been learned about communicating with employees in an emergency. Miranda Marquit writes about ways to protect yourself when you fire someone. A study finds more than two-thirds of small-business owners support increasing the federal minimum wage, and a Staples survey reveals that the boss is probably not the most trusted person in your company. After a bad quarter, I.B.M.’s chief executive urges employees to act faster. This guy has eaten in 6,297 Chinese restaurants in the United States and Canada.

Going Green: Electric Cars

Earth Day is celebrated, but the government’s investment in electric cars is not doing well — even in the country’s top 10 green car markets. The world’s “greenest commercial building” opens in Seattle. An energy company introduces a program in Ohio that offers electricity and natural gas to small businesses at a fixed rate. Office Depot reports that 20 percent of small and midsize businesses are greener than last year.

Around the Country: Luring Companies

Rick Perry tries to lure companies from Illinois. A national conference aims to help female veterans accelerate the growth of their small businesses and create jobs. Meanwhile, some women are cashing in on the North Dakota oil boom. Las Vegas taxis bilked passengers out of $15 million last year. Many Americans are breathing cleaner air. Catherine Rampell says New York may be more affordable than you think. A guy rides the tallest bike in Los Angeles, and NASA announces its 2012 small-business industry awards.

Around the World: No Triple Dip

World steel output ticked up during March, but Markos Kaminis is alarmed by the economic data from overseas. German private sector output declined for the first time since November but Britain escaped a triple-dip recession. Chinese stocks slumped the most in weeks as manufacturing slowed. This is how much food $5 buys around the world. A provider of language tools reports that business English proficiency scores have increased strikingly. Adam Dawood thinks Pakistan may be the next frontier for entrepreneurs: “The Internet industry in Pakistan is at an extremely exciting point, and the outlook for local entrepreneurs and venture capitalists is strong in the mid- to long run.” These are five global trading tips for small businesses.

Marketing: No Tricks

Kristin Zaslavsky warns that when sending e-mails not to “trick your clients or potential clients.” Brian Carroll lists four steps for sending e-mails that 85 percent of business-to-business businesses probably are not taking. This is how to use webinars as an e-marketing tool. Ben Bland has a few thoughts on how to write good proposals for tendered projects. Doug Kessler reveals four truths about his content-marketing clients, including “too many content-marketing clients don’t understand their own business.” There are eight types of content every business should consider publishing and five branding mistakes that will cripple your business. Vincenzo Ravina shares seven tips for generating leads at a trade show or conference — without attending. Nicole Crozier explains why marketing is your most important system. Shelly Kramer explains how smartphones can maximize sales, and here is what shoppers really want from mobile. This is why baseball is awesome.

Social Media: Quitting Facebook

A hacked Twitter post sinks the stock market, but new supercomputers could generate warnings of future impending crashes. Here are 25 social media influencers who should not be ignored. Publishing the right post at the right time is one of Brian Michaelson’s four tips to help engage Facebook users. Tina Hamilton explains how a small business can find love on Yelp!, and Harrison Ford refuses to answer questions about “Star Wars.” Sarah McLaughlin gives advice for making your blog post interesting regardless of the subject. A couple of Emerson College students use Facebook to raise $500,000 for a Boston Marathon charity. Ronni Ann Hall is trying to free herself from Facebook.

Technology: Kill the Password

These five Android apps will lessen the stress of the daily commute. These 26 mobile apps will improve your business and networking. These eight must-have apps will run your small business anywhere, and these are the top five software programs for a small business. The “Microsoft Princess” will make an appearance at a conference in May. (Will she make the “start” button magically reappear?). A study from Carbonite finds most small-business owners are not taking full advantage of the cloud. Google joins a PayPal-backed effort to kill the password. These are the new features of the Samsung Galaxy S4. A cool magnetic putty can absorb objects, and laser sensors can automatically fertilize the crops that need it most. This photo app will make your wife or husband look gorgeous. Contactually releases a new version of its powerful relationship-building application. And you all know General Petersen from I.T., right?

Tweet of the Week

@DJRotaryRachel30m: I refuse to celebrate Earth Day until Wind Fire are recognized.

The Week’s Best Quotes

David Wessel shares seven lessons for fixing an economy, including: “A financial crisis is about economics, not morality. There’s a temptation to preach after so many people make so many mistakes: Avoid the sins that created the crisis. Punish the perpetrators. Pursue the economic rectitude of thrift. In the long run, that’s surely right. But in the immediate aftermath of a financial mega-shock, if everyone simultaneously reduces debts, the economy will keep contracting. There’s a strong case for encouraging borrowing and spending in the immediate aftermath of a financial crisis and for temporarily putting aside the fear that doing so might lead people to sin more in the future.”

Charles Kane says that the best place to introduce your start-up is either in Silicon Valley or the Boston area: “They remain the hottest centers of entrepreneurship and venture capital, so you’ll be in an inherently supportive ecosystem where entrepreneurship is as natural as drinking water.”

This Week’s Question: Do you think you understand your own business?

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://boss.blogs.nytimes.com/2013/04/29/this-week-in-small-business-6297-chinese-restaurants/?partner=rss&emc=rss

Job Growth Steady, but Unemployment Rises to 7.9%

Despite the chaos and uncertainty hovering over tax rates and government budget cuts at the turn of the year, job growth accelerated at the end of 2012 and was even faster than originally estimated, the Labor Department said on Friday. Job growth also continued at a steady if modest pace in January, with employers adding 157,000 payroll positions, though the unemployment rate ticked up to 7.9 percent.

Better readings on construction spending, manufacturing and consumer sentiment released on Friday also allayed fears that had arisen from a sour report on the nation’s economic growth earlier in the week.

The upward revisions to job growth, in particular, encouraged traders on Wall Street, sending the Dow Jones industrial average over 14,000 for the first time since 2007.

“The economy, sales, employment and the stock market are all higher in spite of the bickering and rancor in Washington,” said Bernard Baumohl, the chief global economist at the Economic Outlook Group. The latest numbers “all point to an economy that is building steam and a private sector that seems almost dismissive to the sequestration and debt ceiling threats from Washington.”

Still, job growth has been modest compared with previous recoveries, and the unemployment rate has been stuck just below 8 percent since September. And Washington is gearing up for yet another showdown over fiscal policy, with severe spending cuts kicking in on March 1 if Congress fails to reach a budget bargain, just as Americans are starting to notice the larger tax bite in their paychecks from higher payroll and income taxes.

“Negotiations over the debt ceiling and the budget resolution and sequestration have the potential to be very messy and very extended,” said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors. Businesses still seem “very vulnerable to surprises. I don’t think we’ve got the solidity and robustness and willingness to look beyond these short-term disturbances yet,” he said.

Within January’s employment report, construction was one of the more encouraging areas, adding jobs in each of the last four months. This was probably the result of rebuilding from Hurricane Sandy, unseasonably warm weather that led to fewer work stoppages and the nascent housing recovery, said Joshua Shapiro, chief United States economist at MFR.

Retailing, health care and the wholesale trade also added positions in January, while the government again shed jobs. Government payrolls shrank in most months over the last four years. The pullback in government spending, especially on the military, led to a slight contraction in fourth-quarter gross domestic product, reported on Wednesday. The decline in military spending was partly caused by uncertainty over the fiscal impasse, which eased temporarily with a compromise in Washington at the start of the year.

Friday’s employment report was “a reminder of the importance of the need for Congress to act to avoid self-inflicted wounds to the economy,” Alan B. Krueger, the chairman of President Obama’s Council of Economic Advisers, said in a statement. Republican leaders countered with attacks on Mr. Obama’s economic track record, with Representative Kevin Brady, the incoming chairman of the Joint Economic Committee, saying that “a run-in-place jobs report and unemployment stuck near 8 percent” is “Obama’s new normal.”

The revisions for the fourth quarter would seem to disprove accusations that the Obama administration inflated job growth ahead of the November election, since the original estimates were recalculated to show there was even more growth. The economy added 335,000 more jobs than originally estimated during all of 2012, including an additional 150,000 in the last quarter of the year. That was on top of the previously reported fourth-quarter job growth of 453,000 and 2012 growth of 1.8 million.

Still, hiring growth has been uninspiring in the last year, trudging along just barely fast enough to keep up with population growth but not nearly quickly enough to put a major dent in unemployment. A backlog of 12.3 million idle workers remains. The average worker who is unemployed has been pounding the pavement for 35 weeks.

“I have been working for 40 years and I have looked for jobs many times in the past, including in bad economies, and I’ve never experienced anything like this,” said Mary Livingston, a human resources professional in Wayland, Mass. She was laid off two years ago on Friday.

She said she believed that employers were reluctant to hire her because of her age — she is 63 — and because she hadn’t held a permanent job in so long. But she said they also seemed unwilling to hire anyone.

Article source: http://www.nytimes.com/2013/02/02/business/economy/us-adds-157000-jobs-unemployment-rate-edges-up-to-7-9.html?partner=rss&emc=rss

Even With Fiscal Agreement, Investors Facing Imminent Obstacles

“We could see an early lift in the markets because of relief the deal went through,” said Gary Thayer, the chief macro strategist at Wells Fargo Advisors. “The response may be muted because the deal left out many long-term issues.”

Market strategists were forecasting that even the deal approved by the Senate early Tuesday and by the House late Tuesday  night would reduce economic growth by as much as 1 percent in the first quarter of 2013. Much of this would come from a rise in payroll taxes on incomes under $113,700 that would affect about 77 percent of American households.

Then there are the fiscal disagreements that Congress did not try to address in its negotiations this week. Spending cuts of $110 billion were delayed for two months, and politicians have not come up with a long-term solution that would allow the government to get past the borrowing limits reached at the end of the year — known as the debt ceiling.

“We keep stumbling from patchwork solution to patchwork solution, without getting us to the longer term solutions we need,” said Michael Gapen, the head of economic research for the United States at Barclays.

Technically, the country went over the so-called fiscal cliff on Tuesday, when markets were closed for the holiday. But the compromise reached later Tuesday should retroactively cancel the tax increases that began.

American stock indexes saw their biggest jump in over a month on Monday in anticipation of a deal moving swiftly through Congress. In early trading on Wednesday, leading indexes rose 2.6 percent in Hong Kong and 1.2 percent in Australia.

“If Congress just comes close to their most modest expectations, investors tend to cheer that,” said Ed Yardeni, the founder of Yardeni Research. “A lot of investors are suffering from battered investor syndrome.”

Many economists say that if politicians are ultimately able to reach a more lasting budget agreement, it could allow the focus to turn to signs of improvement in both the United States and global economies. Asian markets have been propelled higher in recent days by data showing that China’s manufacturing sector was continuing to expand. In the United States, housing prices have been moving higher and unemployment rates lower.

This has led many economists to forecast stronger growth for the second half of 2013 — around 2.5 percent — but only after the weight of the tax increases and budgetary debates are out of the way. In the last few weeks, signs of economic strength have allowed investors to respond with a bit of a shrug to the impasse in Washington. The benchmark Standard Poor’s 500-stock index ended the month of December up, and finished the year 13.4 percent higher.

Many investors are also likely to be happy with the portions of the Congressional agreement that deal with tax rates on dividends, which are now set to rise to 20 percent from 15 percent, less than President Obama had proposed. This could produce some demand for dividend-paying stocks, particularly given then the rates will be put in place permanently.

Congress also surprised some economists by agreeing to extend unemployment benefits for more than 2 million people, and by making changes to the Alternative Minimum Tax that will avert higher tax bills for middle-income households.

But, as expected, Congress decided to allow the payroll tax to rise 6.2 percent from 4.2 percent. That is likely to immediately crimp the spending power of American consumers, and take about $120 billion out of the economy in 2013.

In the longer term, investor uncertainty heading into the new year underscored the degree to which Wall Street has become consumed by a seemingly never ending series of battles in Washington, in which one budget dispute bleeds into another.

The most severe crisis came in the summer of 2011, the last time the government reached its borrowing limit. Congress ultimately came up with a solution that allowed the government to continue taking on more debt, but only by pushing off the hardest decisions to the end of 2012. The Senate and House votes on Tuesday night put off many of those same decisions until March. At that point, the Treasury Department says it will no longer be able to use extraordinary measures to borrow enough money to operate the government.

The compromise this week also delayed $110 billion in cuts to the defense budget and other government programs until March. If there is no further agreement at that point, those cuts will begin to be phased in, amounting to another hit to the economy.

Even if the debt ceiling and budget cuts are resolved in March, politicians could put off again any long-term answer to the ballooning government deficit and debt problems that are most worrisome to many economists.  

“The markets are very quickly going to appreciate that this does not remove this cloud of fiscal uncertainty, it just briefly defers it,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomic Advisors. “I can see no reason that debate should be less divisive than the debate we’ve just had.”


Article source: http://www.nytimes.com/2013/01/02/business/economy/daily-stock-market-activity.html?partner=rss&emc=rss

Rating Agencies Watching Debt Ceiling Limit Again

But officials of the agencies said they were looking toward another looming fiscal deadline — a date sometime in February or early March when the United States government risks running out of cash if Congress cannot find a way to raise its statutory debt ceiling. That date appears to pose more of a threat to the nation’s credit rating than Jan. 1, when a package of onerous tax increases and spending cuts will begin if America goes over what is commonly called the fiscal cliff.

Stock investors appeared on Friday to be more concerned about the economic consequences of raising tax rates than about a downgrade of the nation’s credit.

Stock prices fell around the world after Republican leaders announced Thursday night that they could not summon up enough votes for their own proposal to cut spending and raise taxes for the nation’s most affluent households.

The Standard Poor’s 500-stock index fell 0.94 percent Friday, or 13.54 points, to 1,430.15. The Nasdaq composite index dropped 0.96 percent, or 29.38 points, to 3,021.01, and the Dow Jones industrial average fell 0.91 percent, or 120.88 points, to 13,190.84.

Stocks had largely risen over the last two weeks as President Obama and House Speaker John A. Boehner inched forward with small concessions.

Next week, the Treasury secretary, Timothy F. Geithner, is expected to alert Congress that the government has officially run out of borrowing capacity, currently limited to about $16.4 trillion under law. But Mr. Geithner has a package of extraordinary measures he can take to buy some time, so that lawmakers will not have to raise the nation’s debt limit even as they struggle to agree on how to shrink the budget deficit over the long term. The measures include suspending the issuance of special, nontrading Treasury bills that are used to finance federal employees’ retirement plans.

Fitch Ratings said in a report Wednesday that it was watching both processes and that the time frame was not open-ended.

“If the negotiations on the fiscal cliff and raising the debt ceiling extend into 2013, and appear likely to be prolonged with adverse implications for the economy and fiscal stability, the U.S. sovereign rating could be subject to review, potentially leading to a negative rating,” the agency wrote in its latest six-month report on sovereign debt.

It was a similar chain of events in 2011 that led Standard Poor’s to downgrade the Treasury’s debt by one notch, an unprecedented move that set off wild swings in the stock market and led to downgrades at other highly rated institutions, like insurance companies, that had significant exposure to Treasury securities. Fitch and Moody’s have both maintained their AAA rating for Treasury debt, which has long been considered risk-free.

A credit downgrade normally makes it more expensive for an institution to borrow, but that did not happen after Standard Poor’s action.

Global investors have kept on flocking to Treasuries, and the federal government’s borrowing rate has fallen to 1.77 percent, from above 2.5 percent.

The last time Mr. Geithner told Congress the government had exhausted its borrowing capacity and was resorting to the extraordinary measures was mid-May 2011. The measures gave Congress about two-and-a-half months to authorize a borrowing increase. But lawmakers nearly missed the deadline, and some said they thought a default was preferable to more borrowing.

“We came within 10 hours or so of a major cash-flow problem, which is inconsistent, our analysts felt, with a Triple-A credit,” John Piecuch, a spokesman for Standard Poor’s, said Friday.

Even after the downgrade, Standard Poor’s said its outlook was still negative, meaning that it saw a 1-in-3 chance of another downgrade within two years. It reaffirmed the negative outlook last June, resetting the two-year clock.

This time, fiscal analysts think Congress may have even less time to act on the debt ceiling. The Treasury has not said how long it will take to burn through the additional money, but the Bipartisan Policy Center, a research group, has projected that it will run out sometime in February. The Congressional Budget Office has said the special funding could last until mid-February or early March.

The ratings agencies have made clear that they will be watching to see whether Congress can raise the debt limit more smoothly this time.

“Last-minute agreements to raise the debt ceiling undermine confidence in the sovereign’s willingness to pay, and thus its AAA status,” Fitch said in its report.

“While Fitch believes the threat of default to be incredible, it would review the U.S. sovereign rating in the unlikely event of a repeat of the August 2011 debt-ceiling crisis.”

Nathaniel Popper contributed reporting.

Article source: http://www.nytimes.com/2012/12/22/business/daily-stock-market-activity.html?partner=rss&emc=rss

Little Movement in Stocks

Stocks on Wall Street were trading lower Friday morning after a media report that White House officials were in discussions that could lead to increased flexibility to negotiate on coming government spending cuts. The White House had no comment on the report.

The Standard Poor’s 500-stock index was down 0.4 percent, the Dow Jones industrial average was 0.4 percent lower, and the Nasdaq composite index lost 0.5 percent.

Investors have been concerned that if no deal was reached on the large, automatic budget cuts and tax increases set to begin next year, the economy could slip into recession. The S.P. 500 is down 4.3 percent over the past two weeks.

“I have to believe the government will come to some kind of resolution, but every day that passes without any progress is another day where the path of least resistance will be down,” said Robert Pavlik, chief market strategist at Banyan Partners in New York.

Democrats and Republicans appeared to dig in their heels into opposing positions, echoing last year’s political impasse over raising the debt ceiling.

Jay Carney, President Obama’s press officer, told reporters the president wouldn’t sign, “under any circumstances, an extension of tax cuts for the top 2 percent of American earners,” while Mitch McConnell, the Senate Republican leader, said Republicans won’t raise tax rates. President Obama and Congressional leaders were to meet for budget and tax talks Friday morning.

Concerns over the budget have pressured stocks ever since the Nov. 6 presidential election, and the S.P. 500 was on track to notch a second straight week of losses of more than 1 percent.

Going into Thursday, the S.P. was down 1.9 percent for the week, while the Dow was off 2.1 percent and the Nasdaq down 2.3 percent.

While the S.P. 500 remained up 7.6 percent for the year, what had looked like a stellar 2012 for stocks has turned into merely an average year. Though some investors have become more inclined to protect their gains as 2012 draws to a close, others view the decline as a buying opportunity.

“I think we’re closer to the end of this decline than to the beginning, and valuations are becoming extremely attractive,” Mr. Pavlik said. “If you’re not putting a buying list together, you’re doing yourself a disservice.”

A flare-up in violence in the Middle East added to market unease as Israeli warplanes bombed targets in and around Gaza city for a second day, while two rockets fired from the Gaza Strip targeted Tel Aviv.

In Europe, stocks were generally down, with British stocks off about 0.7 percent and German shares lower by about 0.5 percent.

Article source: http://www.nytimes.com/2012/11/17/business/daily-stock-market-activity.html?partner=rss&emc=rss