June 21, 2018

U.S. Cuts Take Increasing Toll on Job Growth

The Labor Department reported on Friday that the economy continued to add jobs in July and that the unemployment rate fell to 7.4 percent, from 7.6 percent. But the pace of job growth slowed somewhat from the first half of the year and remains modest enough that the economy is years away from a full recovery.

Contributing to the hangover from the worst financial crisis in decades is a wave of cuts in domestic and military spending, known collectively as the sequester, which is causing government furloughs as well as job losses and curtailed hours among federal contractors.

Although the sequester became law on March 1, some of the effects, like the forced leaves, have begun to ramp up only recently. More job losses, rather than shorter workweeks, are predicted if the cuts remain in place into next year.

Congress left on Friday for a summer recess of more than a month, after a week in which Republicans’ divisions with one another and with President Obama suggested a new budget showdown may be coming in the fall. The disagreements leave no clear way to end the spending cuts that continue to slow the economy and could even lead to a more damaging government shutdown in October.

Corporate and academic economists say that Washington’s fiscal fights have produced budget policies that amount to a self-inflicted drag on the economy’s recovery.

Joseph J. Minarik, director of research at the corporate-supported Committee for Economic Development and a former government economist, said he could not remember in postwar times when fiscal policy was so at odds with the needs of the economy.

“The macroeconomic situation is highly unusual,” he said, adding: “We have to be concerned about our debt getting totally out of hand, so we are concerned about the federal budget. But the concern has got to be tempered by the fact that we have got to get some economic growth going as well.”

The effects of the cuts could be found in the details of Friday’s jobs report. Although federal government employment did not decline in July as it had in previous months this year, the number of people who were working part time because they could not get their employers to give them full-time hours rose significantly. This probably reflects decisions by many government agencies to achieve their required budget cuts by forcing employees to take unpaid leave.

At the Department of Defense, for example, 650,000 civilians must take off 11 days without pay — generally once a week — through September, when the current fiscal year ends. The Internal Revenue Service likewise scheduled one furlough day a month from May through August.

On her first day at the Office of Management and Budget, Mr. Obama’s new budget director, Sylvia Mathews Burwell, sought to meet employees and found many desks empty because it was a furlough day. And the new trade representative, Michael Froman, has struggled during his office’s budget cuts to assign government lawyers to various negotiations abroad.

In the private sector, employment at government contractors also appears to be falling as companies that do government research, provide custodial services and retrofit federal properties to be more energy-efficient, among other things, are informed of contract cancellations or delays in bids for new contracts — partly because the federal workers arranging the bidding are being furloughed.

“The disjunction between textbook economics and the choices being made in Washington is larger than any I’ve seen in my lifetime,” said Justin Wolfers, an economics professor at the Gerald R. Ford School of Public Policy at the University of Michigan. “At a time of mass unemployment, it’s clear, the economics textbooks tell us, that this is not the right time for fiscal retrenchment.”

Given that rough consensus in an otherwise quarrelsome profession, he added, “To watch it be ignored like this is exasperating, horrifying, disheartening.”

After the release of the jobs report, the first thought of many business forecasters was of the Federal Reserve, and what the data might suggest for its next move in September, when analysts believe it probably will begin tapering its stimulus measures known as quantitative easing. As the Fed chairman, Ben S. Bernanke, has made clear — including repeatedly to Congress — the Fed has continued its stimulus policies in part to offset the drag from fiscal policy.

Jackie Calmes reported from Washington, and Catherine Rampell from New York.

Article source: http://www.nytimes.com/2013/08/03/business/economy/us-cuts-take-increasing-toll-on-job-growth.html?partner=rss&emc=rss

Media Decoder: Center to Offer Tools for Gauging Impact of Media

LOS ANGELES — What is the difference?

If your question is like that one, more practical than philosophical, the University of Southern California’s Annenberg School for Communication and Journalism may soon have an answer.

With $3.25 million in initial financing from the Bill and Melinda Gates Foundation and the John S. and James L. Knight Foundation, the college’s Norman Lear Center is about to create what it is calling a “global hub” for those who would measure the actual impact of media — journalistic, cinematic, social and otherwise.

“The metrics that have been used for this have been astonishingly primitive,” said Martin Kaplan on a phone call last week.

Mr. Kaplan, the director of the Lear Center, will join its director of research, Johanna Blakley, as a principal “investigator” for the new enterprise. He spoke last week about the futility of counting page-views, “likes,” and retweets when trying to figure out whether an opinion piece, a documentary film or a television show actually moved anyone.

“Those measure how many people saw something,” he said. “That’s not the same as an outcome.”

More than a decade ago, the Lear Center first engaged with measurement issues when it tried to track the impact of an episode of “The Bold and the Beautiful” about a character who was H.I.V. positive. The center monitored H.I.V.-related queries to the Centers for Disease Control immediately after the show. “We saw this huge spike in calls,” Mr. Kaplan said.

The new university program, he said, is meant to be a clearinghouse for information from researchers around the world, and an incubator for new ways to measure what matters.

The idea, he added, is to provide tools on an “open-source” basis, putting socially minded nonprofit groups on a more equal footing with corporate advertisers, who use sophisticated, but expensive, measurements.

Article source: http://www.nytimes.com/2013/04/29/business/media/center-to-offer-tools-for-gauging-impact-of-media.html?partner=rss&emc=rss

Generic Drug Makers Facing Squeeze on Revenue

They call it the patent cliff.

Brand-name drug makers have feared it for years. And now the makers of generic drugs fear it, too.

This year, more than 40 brand-name drugs — valued at $35 billion in annual sales — lost their patent protection, meaning that generic companies were permitted to make their own lower-priced versions of well-known drugs like Plavix, Lexapro and Seroquel — and share in the profits that had exclusively belonged to the brands.

Next year, the value of drugs scheduled to lose their patents and be sold as generics is expected to decline by more than half, to about $17 billion, according to an analysis by Crédit Agricole Securities.“The patent cliff is over,” said Kim Vukhac, an analyst for Crédit Agricole. “That’s great for large pharma, but that also means the opportunities theoretically have dried up for generics.”

In response, many generic drug makers are scrambling to redefine themselves, whether by specializing in hard-to-make drugs, selling branded products or making large acquisitions. The large generics company Watson acquired a European competitor, Actavis, in October, vaulting it from the fifth- to the third-largest generic drug maker worldwide.

“They are certainly saying either I need to get bigger, or I need to get ‘specialer,’ ” said Michael Kleinrock, director of research development at the IMS Institute for Healthcare Informatics, a health industry research group. “They all want to be special.”

As one consequence of the approaching cliff, executives for generic drug companies say, they will no longer be able to rely as much on the lucrative six-month exclusivity periods that follow the patent expirations of many drugs. During those periods, companies that are the first to file an application with the Food and Drug Administration, successfully challenge a patent and show they can make the drug win the right to sell their version exclusively or with limited competition.

The exclusivity windows can give a quick jolt to companies. During the first nine months of 2012, sales of generic drugs increased by 19 percent over the same period in 2011, to $39.1 billion from $32.8 billion, according to Michael Faerm, an analyst for Credit Suisse. Sales of branded drugs, by contrast, fell 4 percent during the same period, to $174.2 billion from $181.3 billion.

But those exclusive periods also make generic drug makers vulnerable to the fickle cycle of patent expiration. “The only issue is it’s a bubble, too,” said Mr. Kleinrock. He said next year, the generic industry would enter a drought that was expected to last about two years.  Of the drugs that are becoming generic, fewer have exclusivity periods dedicated to a single drug maker.

In 2013, for example, the antidepressant Cymbalta, sold by Eli Lilly, is scheduled to be available in generic form. But more than five companies are expected to share in sales during the first six months, according to a report by Ms. Vukhac.

Heather Bresch, the chief executive of Mylan, the second-largest generics company in the United States, said Wall Street analysts were obsessed with the issue. “I can’t go anywhere without being asked about the patent cliff, the patent cliff, the patent cliff,” she said. “The patent cliff is one aspect of a complex, multilayered landscape, and I think each company is going to face it differently.”

Jeremy M. Levin, the chief executive of Teva Pharmaceuticals, the largest global maker of generic drugs, agreed. “The concept of exclusivity — where only one generic player could actually make money out of the unique moment — has diminished,” he said. “In the absence of that, many companies have had to really ask the question, ‘How do I really play in the generics world?’ ”

For Teva, Mr. Levin said, he believes the answer will be both its reach  — it sells 1,400 products, and one in six generic prescriptions in the United States is filled with a Teva product  — and what he says is a reputation for making quality products. That focus will be increasingly important, he said, given recent statements by the F.D.A. that it intends to take a closer look at the quality of generic drugs. Mr. Levin also said he planned to cut costs, announcing last week that he intended to trim from $1.5 to $2 billion in expenses over the next five years.

Article source: http://www.nytimes.com/2012/12/04/business/generic-drug-makers-facing-squeeze-on-revenue.html?partner=rss&emc=rss

U.S. Trade Deficit and Consumer Sentiment Rise

A separate survey released on Friday showed that consumer sentiment hit an eight-month high in early January as Americans grew more optimistic about job prospects.

The Thomson Reuters/University of Michigan preliminary January reading on its overall index of consumer sentiment rose to 74 from 69.9 in December for the fifth month of gains and the highest level since May 2011.

The report topped expectations of 71.5 and contrasted with December’s weaker-than-expected retail sales reported on Thursday.

“This shows even though the retail sales number this week was disappointing, there could be a little more underlying strength,” said Kathy Lien, director of research at GFT Forex in Jersey City. “I’d be wary of looking at this as a shift in long-term confidence, but I’d look at this as good news today.”

Commerce Department data showed that the trade gap was $47.8 billion in November, exceeding analysts’ forecast of a $45 billion deficit.

“The trade balance deteriorated pretty significantly, and it could shave a few tenths of a percent off our expectation for fourth quarter,” said Russell Price, senior economist at Ameriprise Financial.

JPMorgan Chase said gross domestic product growth for the fourth quarter was now tracking closer to 3 percent than the company’s forecast of 3.5 percent.

A wider deficit shows that more goods and services bought by American businesses and consumers were produced outside the country, subtracting from gross domestic product.

“The external outlook does not bode well for U.S. exports, as a deceleration in global growth will coincide with a stronger U.S. dollar due to lingering financial concerns regarding Europe’s sovereign debt turbulences,” wrote Martin Schwerdtfeger, a senior economist at the TD Bank Group, in a note.

A dip in import prices showed that inflation pressures were still muted, giving the Federal Reserve wiggle room as it holds benchmark interest rates at ultralow levels.

Import prices were down 0.1 percent in December after a 0.8 percent gain in November as oil prices fell, in line with economists’ expectations.

Economic growth in the final quarter of 2011 is likely to have accelerated from the third quarter’s 1.8 percent rate, with many economists expecting an annualized rise of around 3 percent.

Consumer spending, once a crucial pillar of the economy, remains lackluster and sensitive to shocks.

Although some Federal Reserve officials have said further steps may be needed to stimulate the economy, no action is expected at the next Fed policy meeting at the end of the month.

Thirty-four percent of consumers polled in the confidence survey said they had heard of recent job gains, a record high in the survey’s history and well above the 21 percent recorded in December.

“The data suggest a stronger consumer spending outlook, rising to about a 2.1 percent gain in 2012,” Richard Curtin, the survey director, said in a statement.

But consumers still lacked confidence in government economic policies, with the majority rating them unfavorably for the sixth consecutive month.

Americans also remained dour on their personal finances, with just 24 percent expecting their finances to improve in January, compared with 25 percent last month.

The survey’s barometer of current economic conditions rose to the highest level since February at 82.6, from 79.6, while its gauge of consumer expectations rose to 68.4 from 63.6.

Article source: http://feeds.nytimes.com/click.phdo?i=b55d071f1562025bae74effb669dce56

Advertising: For Networks and Sponsors, the Sweet DVR Bonusthe economic system

Consider the case of ABC’s “Modern Family,” already television’s biggest hit comedy. Every week when the ratings get reported, “Modern Family” looks to be soaring along, starting with its live broadcast on Wednesday at 9 p.m., with 10 million viewers and a 3.9 rating in the prime ad-buying category of viewers from 18 to 49.

But that does not measure how popular the show really is. When Nielsen delivers final ratings for how many viewers watched the show on DVRs, the numbers grow to more than 18 million viewers and an 8.1 rating in the 18-49 measure.

These figures represent the number of people who watched the show within a week after its telecast. But ABC is able to charge advertisers for only three days worth of that viewing, because of the economic system that measures viewership based on commercials that are watched.

Using that three-day measure, “Modern Family” gets credit for only 13 million of the 18 million viewers who actually watch within a week. The five million extra viewers turn out to be, in essence, a nice bonus for the sponsors.

As Brad Adgate, the director of research for the media-buying firm Horizon Media put it, “For advertisers, DVR viewing is a sweet deal.” He added, that “some day the dam’s going to burst” on this advantage, and networks will press for extra cash for the extra viewers.


But, he said, the disparity is currently mitigated by other factors. Among these are the “lucrative upfront sales” that networks have enjoyed in recent years, referring to the preseason market for commercials. “No one wants to upset that apple cart right now,” Mr. Adgate said.

Another factor is that many advertisers would have good reason to fight being charged for ads that run a week late, because their weekend sales events or movie openings would be long over by then.

In general, the statistics that define success in television have never been so malleable, thanks largely to the ability of viewers to delay viewing, either through DVRs, video-on-demand selections or streaming online.

Shows that appear to be marginal in the traditional ratings can look like pleasant surprises when delayed viewing is counted, and hit network shows can add to their audience totals, sometimes in staggering numbers.

One case pointed to by David F. Poltrack, chief research officer for CBS, is the drama “Hawaii Five-O.” The show, considered a modest success, has a live rating this season of 2.7 and about 10 million viewers. But after seven days of playback, those numbers lift to a 4.3 rating in the 18-49 group and 14.5 million viewers.

Mr. Poltrack said that the DVR results were crucial in how networks viewed their shows now. “Absolutely, they are important,” he said, noting that what seem to be chronic issues with unimpressive ratings for network 10 p.m. series are deceiving because “a lot of people are watching the 9 p.m. shows at 10.” The 10 p.m. shows tend to be watched later in the week, he said.

Mr. Adgate said that the trend toward comedy this season was underscored by how well certain shows, like “New Girl” on Fox and “The Office” on NBC, fared when their delayed viewing was included.

He pointed to one striking example. The new comedy “Up All Night” on NBC looks both weak and older-skewing during its live telecasts. But it improves 47 percent when delayed viewing is included. More remarkable, Mr. Adgate said, is that “the median age for the live viewing audience is 50.2, but when you add in the delayed viewing it drops to 43.2.”


The rate of improvement demonstrated by shows that start with smaller bases of live audience can be spectacular. This is especially true of cable networks with younger viewers. Colleen Fahey Rush, the chief researcher for Viacom’s cable networks, pointed to “Tosh.O” on Comedy Central. Its 18-49 audience grows 142 percent when delayed viewing is included.

The overall amount of delayed viewing has continued to increase as more homes have added DVRs, but Mr. Poltrack said these figures were going to level off. (DVRs are now in 43 percent of homes nationally.) He said that CBS’s research indicated that the people who do not have DVRs now say “I don’t need them” because they are considered too expensive.

These people are depending more and more on streaming and video-on-demand, Mr. Poltrack said. That “is very positive for networks,” Mr. Poltrack said, citing statistics that show network shows are streamed and ordered on demand far more often than cable series.

He agreed that advertisers continued to get a bonus because of DVR playback, with all the added viewers they did not pay for. But he also agreed that commercials in shows a week old often had lost their relevance.

Mr. Poltrack argued that the DVR was a “transitional technology,” one that would be outflanked at some point by streaming and video-on-demand. Both those technologies still allow viewers to program shows on their own schedules, he said, but don’t add a DVR’s extra cost.

The added benefit for show owners like networks is that the commercials can be adjusted long after the live telecast of the episode is viewed. And the fast-forward function is eliminated in these forms of playback, meaning the commercials can not be zipped through.

Article source: http://feeds.nytimes.com/click.phdo?i=18883edff09c09729a74f7ea09af811e

Memo to Exxon: Business With Russia Might Involve Guns and Balaclavas

A day after Exxon, the American oil giant, struck a strategic alliance with Russia’s state-owned oil company, police agents in Moscow staged a vivid reminder of what can happen to foreign petroleum partners that get on bad terms with the government.

Commandos armed with assault rifles raided the offices of the British oil company BP on Wednesday, in one of the ritual armed searches of white-collar premises that are common enough here to have a nickname: masky shows (so-called because of the balaclavas the agents often wear, although this time they reportedly burst in bare-faced.)

Whether the Russians intended to send a signal or not, the episode seemed to serve notice to Exxon that, when it comes to dealing with the state-run business world of Prime Minister Vladimir V. Putin, Exxon isn’t in Texas anymore.

“That incident, I’m sure, made Exxon very uncomfortable the day after they signed their deal,” Matthew Lasov, director of research at Frontier Strategy Group, a consultancy for companies operating in the developing world, said of the raid.

Exxon, though a spokesman, declined to comment.

BP, during its long involvement in Russia, has had so many police run-ins that its stock price often nudges up or down in response to raids or the arrests of employees. Russian oil and natural gas accounts for about a quarter of BP’s output — about the same portion as from the company’s fields in Alaska and the Gulf of Mexico.

Until now, Exxon’s involvement in Russia has not been as extensive as BP’s. But that could change, based on the joint venture deal Exxon signed Tuesday with the state company Rosneft to explore for oil in the Russian sector of the Arctic Ocean and in the Black Sea. Rosneft, in turn, is to gain access to Exxon operations, including oil fields in Texas and the Gulf of Mexico.

Partner beware was the watchword Wednesday in a note to clients by the Eurasia Group, another risk analysis organization.

“The politics of the Russian energy sector remain treacherous, as the 31st of August raid on BP’s Moscow office demonstrates,” the note said. Exxon, it said, “will now be deeply engaged in those politics for many years.”

Wednesday’s BP raid stemmed from a lawsuit filed by minority shareholders of the company’s Russian joint venture TNK-BP. They contend BP damaged their stock’s value by entering into a deal earlier this year with Rosneft that unraveled after opposition by the main Russian partners in TNK-BP. That debacle was an embarrassment to Prime Minister Putin, who had originally blessed the BP-Rosneft deal.

An arbitration court, a type of Russian civil court, in the Siberian city of Tyumen authorized Wednesday’s search of the Moscow offices, according to both BP and a lawyer for the minority shareholders. The target of the search was apparently documents subpoenaed in the lawsuit, which BP had balked at surrendering, according to Vladimir Buyanov, a BP spokesman.

The agents who raided BP’s offices on the 17th and 18th floors of the Lotte Plaza, a high-rise on Moscow’s Garden Ring, wore commando-style uniforms with yellow shoulder patches saying “Special Forces,” according to BP employees.

The agents were escorting two investigators from the Russian federal bailiff service, who were not armed. The police ushered employees out, and began rifling through papers.

Despite the assault rifles, “there was no great panic,” one BP employee said. “I was able to come up and get my keys” even after the armed men arrived.

The employee, who insisted on anonymity, described the armed police as polite and not overtly intimidating. “They were just a group of comrades with the badges of special forces, in black outfits, with assault rifles — nothing extraordinary.”

One policeman “slightly” pushed an employee with the butt of a rifle, to encourage him to get out of his chair faster, according to two employees who were present.

“We believe that these legal actions are without merit and appear to be part of a pressure campaign against BP’s business in Russia,” Jeremy Huck, the president of BP Russia, said in an interview.

It is not the first time BP has been the star of a masky show.

In 2008, the Federal Security Service, a successor agency to the K.G.B., arrested an employee in the headquarters of the TNK-BP venture, just up Arbat Street from the BP offices, on charges of industrial espionage that were later dropped.

That same year, labor and immigration authorities stripped visas and work permits from BP’s expatriate executives — including Robert Dudley, who was then the director of TNK-BP and is now BP’s chief executive. Mr. Dudley was compelled to leave Russia and run TNK-BP from an undisclosed location.

Whatever the legal issues, and the relative merits, foreign businessmen in Moscow have for years implored the government to refrain from conducting such raids in white-collar cases. Their protests have had little effect.

In February, masked and armed law enforcement agents raided Deutsche Bank’s main office in Moscow, looking for documents related to a commercial mortgage.

In November, masked police officers armed with automatic weapons raided a bank belonging to the billionaire Aleksandr Y. Lebedev, a part owner of the national airline Aeroflot.

“It’s fine to do business there,” Mr. Lasov, the risk consultant, said in a telephone interview from Washington. “But you should do business with those sorts of expectations.”

Article source: http://feeds.nytimes.com/click.phdo?i=b191c0376fcfef64b52f93dce88601cf

Google’s Coup Shifts Mobile Alliances

Those companies have made plenty of money selling millions of devices powered by Android, Google’s mobile operating system. Analysts and industry specialists say the deal could sour relations between Google and its partners, who have helped Google beat Nokia and Apple to win the biggest share of the mobile software market.

“They can’t be too thrilled to find that suddenly, these companies are no longer partnering with Google — they’re competing with Google,” Michael Gartenberg, director of research at Gartner, an information technology research and advisory company, said referring to the telephone makers. “No matter how Google tries to spin it, they’re competing.”

Larry Page, one of the founders of Google who recently became chief executive, provided reassurance in a company blog post, saying that the acquisition would “not change our commitment to run Android as an open platform,” meaning that any manufacturer will continue to be able to use it. He added that Google would run Motorola Mobility as a separate business.

Analysts, however, warned that it is exceedingly difficult for a company to both license its products and compete with those licensees at the same time. They pointed to Apple’s attempt to license its Mac operating system in the mid-’90s, and to Palm’s unsuccessful effort to split itself into separate software and hardware companies.

Google previously tried to enter the hardware business with its Google-branded Nexus One smartphone that it designed and sold through its Web site, rather than stores. But the phones were met with a lukewarm reception as customers were unaccustomed to buying phones without handling them first.

The Motorola deal will help cement Google’s status as a mobile player, not only among competitors but also among consumers, said Gene Munster, an analyst with Piper Jaffray.

“It changes Google from being just the company they turn to for search,” he said referring to consumers. “It makes them the company delivering their mobile experience in a post-PC world.”

The deal will only add to the flux in the market for mobile telephone software, where Android has surged recently. It had a 43.4 percent global share in the second quarter of this year, up from 17.2 percent a year ago, according to Gartner. Apple’s iOS devices captured an 18.2 percent share, up from 14.1 last year, while the former heavyweight Research in Motion, which makes BlackBerry devices, slipped to 11.7 percent from 18.7 percent.

The acquisition may lead some hardware makers to cast their lot with Microsoft, which is pouring resources into becoming a serious mobile competitor. Nokia has already done just that, betting on Microsoft and abandoning its own mobile operating system.

Others may try to strike out on their own and create operating systems, rather than risk becoming dependent on Google. Samsung has dipped a toe in those waters, releasing phones that run on an in-house system called Bada. HTC already had a team of engineers dedicated to customizing the version of Android that it uses on its phones, called HTC Sense.

Meanwhile RIM is struggling to move to a new operating system, QNX, to try to revive its smartphone and tablet offerings.

A statement by Peter Chou, chief executive of HTC, the Taiwanese phone and tablet manufacturer, was typical of the partners’ reactions. “We welcome the news of today’s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem,” he said.

Google stands to gain much from Motorola. Owning a hardware manufacturer could help Google better integrate its software with tablets, where it has struggled to gain footing against the iPad. Google also may be able to better integrate its services — books, music, games — into Android devices.

Analysts say that the move could bolster Google TV, Google’s poorly received attempt to wed the Web with home television sets. Motorola has a strong presence in the set-top box market, which Google could leverage.

Article source: http://feeds.nytimes.com/click.phdo?i=734a16f0f39cf648144a2857adf09b6b