March 29, 2024

Off the Charts: In the Developed World, Economic Growth Contracts

The Organization for Economic Cooperation and Development, a group of 34 countries, said this week that the combined gross domestic product of its members declined at an annual rate of 0.6 percent in the final three months of 2012. It was a sign of just how far the global economy has weakened since 2010, when it appeared that the recovery was gathering strength.

The estimate was preliminary, since not all countries have released figures for the quarter and those that have will be revising them. The United States, which reported a small decline of 0.1 percent in the quarter, is expected to revise that to show a small gain when it reports new figures next Thursday.

It is unusual for downturns to be so widespread that they produce declines in the combined economies of the O.E.C.D. countries, which include all the major developed nations. Since 1962, when the O.E.C.D. statistics were first released, there have been only 13 quarters when that happened. The first three were in 1974 and 1975, during the worldwide recession brought on by the shock of soaring oil prices. There were four more in the early 1980s, during the double-dip American recession, one in 2001 and four in 2008 and 2009, during the credit crisis.

On Friday, the European Commission issued a glum forecast, saying the 27 countries in the European Union would see economic growth this year of just 0.1 percent, while the euro zone economies would shrink by 0.3 percent. If the O.E.C.D. estimates are correct, each of those forecasts would represent an improvement from 2012. During the four quarters of 2012, the O.E.C.D. estimated, the economies of the entire European Union declined by 0.6 percent, while the euro zone economies were down 0.9 percent.

The accompanying charts show the contribution from each of three sectors to the economies of the O.E.C.D. and four major parts of it — the United States, the euro zone, Britain and Japan — since 2006. Those sectors are private consumption, government consumption and gross investment. The charts show movements in each area over 12-month periods ending in the quarter shown.

The recent weakness is unusual in that there has been no countercyclical support from governments in many of the countries when the economy weakened. The euro zone never had a 12-month period when all three sectors shown were negative — until the periods ending in the first three quarters of 2012. (Fourth-quarter numbers are not yet available for the sectors.)

The United States economy has been doing better than many others over the last year, and the charts show why. A major reason is that fixed capital investment is still rising at a decent clip in this country — measured by comparing the fourth quarter of 2012 to the same quarter of the previous year — while it is down in Japan, Britain and the euro zone.

That gain is caused entirely by the private sector, which may have benefited from a banking system that did a better job of recapitalizing in 2010 than banks in Europe did, and thus is able to finance more projects.

Government investment in the United States has been declining for more than two years.

Historically, it has been very unusual for government consumption to decline, but that has become common in many countries, including the United States. During the first decade of this century, there was not a single quarter where such consumption was lower in the United States or the euro zone than it had been a year earlier. But since then, that has become the norm, not the exception, in both regions. In the United States, federal, state and local government budgets have been squeezed, while in Europe, austerity has become the byword in many countries.

Interestingly, while the British government has proclaimed a policy of austerity, government consumption over the last year has grown faster than private consumption while capital investment has fallen.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/02/23/business/in-the-developed-world-economic-growth-contracts.html?partner=rss&emc=rss

You’re the Boss Blog: A Weekly Roundup of Small-Business News

Dashboard

A weekly roundup of small-business developments.

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

First of all, Justin’s fine. Just fine.

The Economy: A New Head Is Named

The president names Alan Krueger the new head of his Council of Economic Advisers. Brian Proffitt says he may be good for small businesses. The American Small Business League writes him an open letter. Jared Bernstein likes him, too (but then again he thinks the stimulus worked). Many expect Mr. Krueger to push for more stimulus.

The Deficit: A National Debt Primer

Brad Plumer say it’s not too late to do nothing. Brad DeLong argues for keeping spending low. John Steele Gordon gives us a short primer on the national debt that concludes: “If the country can experience G.D.P. growth equal to what we had in the 1990s, the debt-to-G.D.P. ratio would drop, in just a decade, to 56.7 percent, about where it was in 2000.” The Economist Mom wants the “super” committee to raise taxes. Ramesh Ponnuru wants to lower them.

The Data: Too Many Buts, Not Enough Jobs

The unemployment rate stays the same as the government reports no new jobs were created. But A.D.P. says 91,000 jobs were added in August. But small-business hiring slowed in August. And employees worked fewer hours and received less money. Consumer spending and income jumped in July. But consumer confidence fell to a two-year low. Home prices continued their double dip. But bank lending increased. Pending home sales slipped in July but are up sharply from a year ago. Texas manufacturing activity was unchanged in August. Ford’s sales rose 11 percent. Hurricane Irene could cost insurers up to $3 billion (and washed up a monster!).

The Economy: A Little Optimism, a Lot of Paper Clips

Brett Arends says American companies are now more leveraged than at any time since the Great Depression — and then gives us 10 reasons to be optimistic. Small businesses may be rebounding, according to one survey. Retail employment rises in two-thirds of metropolitan areas. Brian Wesbury says stocks are undervalued (pdf) by 65 percent. Mark Perry contributes a roundup of positive economic news and reports that three-year inflation is the lowest in 54 years. A study finds small-business bankruptcy numbers are down. The American paper-clip market is huge. And here’s the very best news of all!

Starting Up: Boomers to the Rescue

A new report finds that the No. 1 reason start-ups fail is because they scale prematurely. Baby boomers account for 84 percent of new businesses, and one of them decides to scrap retirement for the start-up life. Start-up activity among unemployed managers and executives in the first half of 2011 fell to its lowest level on record. More than one million self-employed Americans are no longer in business almost four years after the last recession began. Ryan O’Reilly says the start-up visa could help. A start-up automates the process of starting up. Monica Rogati sequences the DNA of a start-up. Microsoft hosts a mega start-up event.

Red Tape Update: Obama’s Ozone

The House majority leader, Eric Cantor, lays out his party’s antitax and antiregulation agenda for the fall. Or was that Barack Obama’s agenda? Representative Sam Graves says the White House regulatory review is “appreciated, but doesn’t go far enough.” Hayden Murray says the E.P.A. chokes business. But not all small businesses believe they are over-regulated and over-taxed. Megan McArdle writes about the death of a D.C. tavern: “Punishing a restaurant owner for a liquor license violation with an open-ended maybe-we’ll-give-you-a-license-maybe-we-won’t delay is equivalent to giving someone the death penalty for a parking violation. Moreover, it punishes the neighbors and the employees right along with the owner.” Scammers are posing as FEMA reps. James W. Lucas reminds us that “the Federal Register for 2010 is over 81,000 pages long, a 19 percent increase in one year.” California legislators take aim at baby sitters. The N.L.R.B. issues a union-friendly regulation. A tax expert offers the best way for the owner of a corporation to claim a home-office tax deduction.

Marketing: E-Mail and Daily Deals Decline

E-mail marketing was down 14.3 percent year-over-year and George Bilbrey reports that spam also declined. The Atlantic reports that people seem to be getting sick of daily deals with traffic slipping for both Groupon and LivingSocial. Facebook and Yelp are dumping their daily deals. Laurie McCabe explains how to maximize our Twitter event hashtags. Rene LeMerle offers seven tips for better Twitter marketing. Evan Carmichael lists 50 top social media blogs. Lewis Howes explains how to convert Web traffic into customers. Here are four mistakes of the search-engine optimization novice. A cool graphic suggests small businesses must optimize or die. Check out this webinar on how to create engaging content to generate leads. In this video, John Jantsch explains how to succeed online. Google announces an effort to help companies do business online. Women click Facebook ads more than men. Eighty percent of consumers report that they have changed their minds about a purchase after reading a thumbs-down report. Scott McKain says that publicity is not the same as marketing.

Management: Why Customer Service Is Important

Inc. releases its list of fast-growing companies. Score shares 10 mistakes that hurt small businesses, including “heavy dependence on just one of anything.” Tony Johnson suggests 10 ways to make money from home. A new service lets 7-Eleven customers pay online bills with cash. Startups.com’s founder will inspire you. Office Depot announces the finalists for its official small business of Nascar contest. Isabelle Mercier Turcotte lists eight rules guaranteed to increase your sales. Infusionsoft’s chief executive says customer service is important to a small business.

Ideas: The $11 Bottle of Water

The world’s seven billionth person is on the way. A pedal-equipped school bus is powered by kids. Future Fords may run on the cloud. Eric Ries says ideas are overrated: “We still believe that entrepreneurial success is about being in the right place at the right time with the right idea. But there’s no empirical evidence that’s true.” An online florist announces a name the bouquet contest. A restaurant offers a menu for bottled water.

Your People: Maybe It Is Rocket Science

An astrophysicist in Illinois figures out how to board an airplane. Doug Davidoff says the most important thing to remember when hiring salespeople is to “stop sounding like every other company that treats salespeople like a commodity.” The Evil HR Lady warns against making someone salaried to avoid overtime payments. A recent survey finds that only 9 percent of corporate travel managers will reimburse for goodies from in-room minibars, (and 4 percent said they reimburse for the costs of in-room movies and other entertainment). Lifehacker’s Alan Henry lists the best credit cards for travel rewards. The “Catch Me If You Can” guy explains how to avoid check fraud.

Around the States: Amazing Business Owners in Joplin

In Wisconsin, there’s a rash of restaurant failures. FEMA’s Dan Stoneking meets some amazing business owners in Joplin, Mo. Gov. Jerry Brown reveals a $1 billion tax relief plan for California businesses. Washington’s Economic Partnership presents its 2011 Small Business Awards.

Around the World: A Dutch Treat

Michael Pettis predicts, “Chinese growth will begin to slow sharply by 2013-14.” Willis Wee reports on the amazing start-up scene in India: “Many of these folks are very technically gifted, showing that there is a reason why Bangalore is called the Silicon Valley of India.” The Dutch National Wheelchair Basketball team shows what perseverance is all about.

Technology: Do QR Codes Work?

Hey fellow geeks: you be the judge. A Pittsburgh Marriott bans phones. Skype introduces a new phone adapter for home offices. Growing numbers of small businesses cut costs with server virtualization. Scott Rankin explains how to tell if tablet computers are right for your business. Dell offers hosted applications for small businesses. Joan Voight wonders if QR codes work for us.

The Week Ahead: Obama’s Speech

After some bickering, President Obama plans a major speech on jobs and the economy. Congress returns from its August recess. Wall Street will be watching the release of the purchasing managers’ Index, weekly unemployment claims, and trade balance data.

This Week’s Bests

Way to Find an Edge: Julien Smith argues that the secret to your success may be to act more like you’re criminally insane: “If you are looking for an edge and you can’t find one, ask yourself what you would do if you were a criminal, or a sociopath, or had delusions of grandeur, didn’t think you could fail, or that there would be no negative consequences.”

Reason to Watch ‘Glee’: James Miller describes the entrepreneurship of “Glee”: “It is a testament to the entrepreneurial spirit of providing a good or service that is in high demand. For those like myself who have a keen interest in pop music, the producers do a phenomenal job bringing out the best in the songs they cover.”

Reason to Keep Things Simple: Joseph Putnam thinks we may be giving our customers too many choices: “Google is the number one visited site on the Internet, yet they’re still able to limit their home page to a single action. … They don’t distract visitors with other options. Once you land on the site, you just have to decide one thing: What am I going to search for today? How’s that for not giving customers too many choices?”

This Week’s Question: Have you tried limiting the choices you offer your customers?

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=06d66f182beb3462fb194838a4f8db19

After Months of Growth, Signs of Weakness in the Manhattan Real Estate Market

After more than a year of slow but steady growth, the Manhattan real estate market saw declines in price and sales volume in the first three months of 2011, raising the question of whether the city may finally be following the rest of the nation into a double dip in housing prices.

Sales reports to be released on Friday by the city’s largest brokerage firms varied in their conclusions, but each report showed some signs of weakness. Reports from Halstead Property and Brown Harris Stevens were the gloomiest, indicating that after six quarters of consistent growth, the average apartment price fell 5 percent, to $1.36 million, and that the number of sales this quarter, 1,769, was down 23 percent from the same time last year.

Data provided by Streeteasy.com mirrored those trends, with average prices down slightly from last year and sales volume dropping by 21 percent. The Corcoran Group showed the number of sales up 6 percent from last year, but the average price down by 4 percent, and Prudential Douglas Elliman showed steady sales volume, but the median sales price at $782,071, down by 9.9 percent from 2010.

Despite these negative signs, brokers and market analysts said it was too soon to declare dark days ahead for Manhattan real estate.

“Some people may think we’re seeing the beginning of a decline, but just as it was too early to call a recovery after one quarter of price increases, it’s too early to call a prolonged pullback after only one weak quarter,” said Gregory J. Heym, the chief economist for Halstead and Brown Harris Stevens. New York City’s economy is doing too well for such pessimism, he said, adding that the finance sector added almost 11,000 jobs in the last year.

Hall F. Willkie, president of Brown Harris Stevens, said that while volume was down, the number of sales last year was inflated because of the federal tax credit for first-time homebuyers. “There was a real scramble to beat the deadline,” he said. “So sales were really explosive last year, and I never would have predicted it, but last year turned out to be our strongest year in history.”

The market reports count deals that have closed in the previous quarter, but for the first time, Elliman’s report includes a price index for sales that are in contract but have not yet closed, which shows a 7.1 percent increase from the same time last year, suggesting that next quarter’s report will show an upswing in prices.

Pamela Liebman, chief executive of the Corcoran Group, said that Corcoran’s signed contracts in March also showed an increase of 23 percent in average sales price, to $1.476 million this March from $1.195 million last year. “That’s a pretty big uptick,” she said.

Ms. Liebman and other brokers also said that the luxury market was continuing to do very well. She said that Corcoran agents had closed nine deals worth more than $10 million so far this year, while there were only four such deals for the same time last year. “That tells me there’s a lot more confidence in the market,” she said.

Jonathan J. Miller, the president of the appraisal firm Miller Samuel and the author of Elliman’s report, offered a reason why prices had come down and said that the mix of what had sold in 2011 suggested that prices were essentially flat. While higher-priced condos accounted for more of the properties sold last year, he said, the number of co-ops sold went up significantly this year, and because co-ops tend to be priced lower than condos, that trend pulled average and median prices down.

“Condo sales were down only because inventory is down, but co-ops showed a burst in activity,” Mr. Miller said. “If you put that all together with the fact that last year’s bump was somewhat artificial, you see that the market today is weak, but essentially stable.”

Diane M. Ramirez, president of Halstead Property, also dismissed the notion of the market’s taking a double dip. “When you’re comparing 2010 to 2011, you have to remember that we had a very unusual volume of business last year,” she said, noting that in addition to the tax credit, there was enormous pent-up demand after a very tentative market in 2009. “And now, we’re kind of back into a healthy and normal cycle.”

She said that Halstead agents were already seeing signs of a typical spring bounce. “Showings are up, open houses are busy and offers are coming in at all price points,” she said.

But Dottie Herman, chief executive of Prudential Douglas Elliman, sounded a cautionary note. The continued difficulty that buyers face when trying to get a mortgage may still hamper the market, she said. “For the market to be really healthy again,” she said, “you have to fix the financing piece, and that’s still up in the air.”

Article source: http://feeds.nytimes.com/click.phdo?i=d247c457c298c74e1ff44d69a68ed8cf