March 31, 2023

Business Spending Lifts Orders for Durable Factory Goods

The Commerce Department said on Thursday that orders for durable goods increased 4.2 percent last month. That followed a 5.2 percent gain in May, which was revised higher.

Most of the gain occurred because aircraft orders, which are volatile month to month, jumped 31.4 percent. Boeing said it received orders for 287 planes in June, up from 232 in May. Excluding autos and airplanes, orders were unchanged.

Orders that signal planned business investment, which exclude volatile transportation and military orders, increased in June for the fourth straight month. The 0.7 percent gain last month was buoyed by more machinery demand. And orders in May were much stronger than previously reported.

Even with the gain, business investment is not likely to help economic growth in the April-June quarter, economists said. That is because the government measures shipments, rather than orders, when calculating business investments’ contribution to growth. Shipments fell in June. But the increase in orders this spring suggests shipments will rise in the July-September quarter and add to growth.

Jonathan Basile, an economist at Credit Suisse, said rising orders were a “recipe for a speedup in manufacturing and business investment” in the third quarter.

Durable goods are items meant to last at least three years, like computers, industrial machinery and appliances.

In other economic news on Thursday, government data showed that more people filed new claims for unemployment insurance benefits last week.

Initial jobless claims rose to 343,000 in the week ended July 20, an increase of 7,000 from the previous week’s revised 336,000 claims, the Labor Department reported.

Last week’s increase in claims, an indicator of the pace of layoffs, was larger than the 340,000 reading expected on average by analysts.

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U.S. Economy Grew at 2.5% Rate in First Quarter

The American economy sped up in the first quarter of this year, with output expanding at an annual pace of 2.5 percent, according to a Commerce Department report released Friday. The number was lower than the 3 percent forecasters had been expecting.

While faster growth of any kind is welcome, much of the acceleration in gross domestic product was probably a result of unusually slow growth at the end of 2012, when the economy grew at an annual pace of just 0.4 percent. Growth in the fourth quarter had been dragged down by reduced restocking of businesses’ inventories, for example, and in the first quarter businesses made up for this by adding much more to their shelves.

Consumer spending was up too, despite fears that the lapse of the temporary payroll tax holiday at the start of the year would hold back how much consumers were willing to spend. It’s unclear whether consumers will continue to spend as freely in the months ahead, once they start to feel the pinch of this effective tax hike, particularly if wages continue to stagnate.

Exports, residential investment (housing, essentially) and business spending on equipment and software also rose.

Economists have expressed concern that the pace of growth may have started out strong in 2013 but slowed by the end of the first quarter, given recent disappointing reports about economic indicators in March. Employment slowed dramatically in March, for example, and orders for durable goods like aircrafts fell more than analysts had expected.

Additionally, across-the-board federal spending cuts, enacted as part of Congress’s so-called sequester, are likely to weigh on growth going forward. In the first quarter of this year, government spending fell at an annual rate of 8.4 percent, after a decrease of 14.8 percent in the fourth quarter of 2012.

“With fiscal tightening weighing on the spring and summer quarters, we expect weaker growth ahead,” Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisers, said in a note to clients said before the report. “We have seen good quarters before, but what counts is sustainability, and on that score we are deeply unconvinced.”

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You’re the Boss Blog: This Week In Small Business: Leave the Building


A weekly roundup of small-business developments.

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

The Big Story: Immigration Reform

A bipartisan group of senators reveals an immigration reform plan, and President Obama backs “start-up visas” for foreign-born tech entrepreneurs. One blogger says it’s a good plan for small businesses. Beth Goodbaum hopes it will boost high-skilled manufacturing. Here are five things economists know about immigration. Ezra Klein says that to fix the economy we need to fix immigration. Kid President gives a pep talk.

The Other Big Story: G.D.P. Contracts

A decline in gross domestic product means the economy shifted into reverse in December. Joe Weisenthal says it’s because of the big drop in military spending. The White House blames lower government spending overall. John Nolte disagrees. This chart sums up the decline. The Federal Reserve continues its stimulus plan, and Evan Schnidman congratulates the Fed on reaching its $3 trillion benchmark. Bob McTeer says “it’s just a number.” Some prominent economists argue that our deficits are not the real problem. Mark Thoma urges an investment in infrastructure as a way to reduce long-term debt.

The Economy: A Five-Year High

Texas manufacturing expands, manufacturer optimism increases, and Gallup says weekly optimism surges to a five-year high. Home prices continue to rise and household debt has fallen by $833 billion since 2008. Personal income increases the most in eight years and consumer spending is up slightly. But the Conference Board’s Consumer Confidence Index is back down to 2011 levels, and some are blaming tax increases. Orders for durable goods increased, but Doug Short is more concerned about core orders. A popular index finds small-business revenue is falling but employment rising. ADP says there were 192,000 private jobs added to payrolls in January but unemployment claims jumped and the unemployment rate remained unchanged. John Elkington and Charmian Love look at the ways capitalism is changing to make a better world. And Volkswagen says everything will be all right.

Your People: Leave the Building

Erin Hatton laments the rise of the permanent temp economy. Fewer small businesses are offering employee benefits. Ken and Scott Blanchard explain how to get your team emotionally engaged. Margaret Heffernan suggests ways to make employees more creative, including: “Leave the building.” Russ Anderson has tips for designing your home workplace. Facebook’s Sheryl Sandberg says employers should ask female employees if they plan to get pregnant. This infographic shows how brilliant women make their businesses bloom. Lebron James tackles a fan who sinks a $75,000 shot. S.N.L. says YOLO, and a surfer may have ridden a 100-foot wave.

Management: Pricing

Steve Woods explains how big businesses are fueling small-business growth. Nadia Goodman suggests four strategies to sharpen your focus. Jim Connolly summarizes what every business owner needs to know about prices and fees: “Your prospective clients don’t care that you need to earn X every month. They care that the value they receive from you is greater than the price.” Ben Yoskovitz lists six things you need in order to pivot successfully. Seth Godin explains why small businesses fail. Intuit grants a small-business owner’s wish. Cats kill billions of creatures every year.

Starting Up: A New Incubator

Donna Harris reports on new start-up communities. A start-up that makes thermostats is worth $800 million. Taylor Soper lists 10 social media tools every start-up should have. The New York Times introduces a start-up incubator. This Web site lets you compare start-up salaries and equity, and this is how two undergraduates went from forever alone to thousands in sales. Get ready: mantyhose (a.k.a. brosiery or guylons) is headed our way.

Marketing: Google Takes Second

Google+ is now the No. 2 social media site for active users, and this tool helps bad spellers. Facebook shows that a mobile strategy is mandatory. Chris Garrett says the secret element of successful marketing is momentum. Rohit Bhargava explains how great brands rethink their expiration dates. Bob Phibbs offers five ideas to market your services and products. Rhonda Campbell has suggestions for marketing a successful business event. Penelope Trunk explains how to ask for help. Successful sales representatives have moderate temperaments.

Retail: Mom And Pop Are Back

After getting crushed by big-box stores during the 1980s and 1990s, mom-and-pop shops are enjoying something of a rebirth. Barnes Noble learns that it pays to be small. Most retailers are not expected to charge extra when customers use their credit cards. Foursquare courts small-business owners with a new mobile app, Intuit announces new technologies small businesses will use to pay their bills, and both Angie’s List and Verizon announce collaborations with mobile payment service Square. Meanwhile, the intrigue continues at Downton Arby’s.

Finance: Save on Expenses

Chase tops $20 billion in 2012 small-business loans, and Bank of America’s chief tells his employees to give customers better service. Carlo Pandian has suggestions for saving on common expenses. Juan M. Sánchez and Emircan Yurdagul explain why corporations are holding so much cash. Scott Wolfe Jr. explains what a mechanics lien is and how it can help construction businesses collect. Here are five principles to follow when buying a business. Acquisitions of private tech companies are up, and Karen Klein looks into what’s driving the spike.

Red Tape Update: Getting Squeezed

James Pethokoukis says not to expect tax reform anytime soon. If you’re filing your W-2s late, you may suffer penalties. Make sure to ask these questions before hiring your new tax preparer. The Internal Revenue Service is hiring new employees faster. Here are five reasons a small business should incorporate. These small businesses are being squeezed by local regulations. A new site helps small businesses track and comment on proposed regulations.

Health Care Update: Good Times

The White House reminds small businesses of the things you need to know about the Affordable Care Act, and the Small Business Administration releases a health care Web site. Paul Christiansen says that to outsmart “Obamacare” you must “go protean.” The Angry Bear sums up the future of your health insurance premiums. Some experts see good times ahead for small businesses under health care reform. The panel charged with helping devise solutions to the nation’s health care workforce crisis is having a workforce crisis of its own. Aaron Carroll believes that being a doctor is still a great gig.

Around The Country: Thank You!

A new competition from Grow America awards $35,000 to innovative small businesses. An entrepreneur introduces a campaign to thank small businesses. A well-known restaurant chain releases an entrepreneurial challenge. Colleges in Texas and Pennsylvania start entrepreneurial programs. Entrepreneurs in the state of Washington are looking to cash in on cannabis, and a small business in Portland, Ore., wants to reinvent the kiln. A company near Philadelphia gets into the slippery business of shipping eels, and a Startup Weekend is planned for Honolulu. A new analysis from Atlas Van Lines finds that for the seventh consecutive year, Washington, D.C., had the highest percentage of inbound moves and Wyoming had the highest percentage of people moving out. A scandal grows in higher education. North Dakota struggles to cope with its oil-boom prosperity. Noah Smith says it’s going to be a whole new world for solar energy. The wind industry has a record year.

Around The World: $217 in the Bank

Iceland teaches a few lessons on how to solve a banking crisis. France’s labor minister says the country is “totally bankrupt.” Zimbabwe has $217 left in the bank. South Korea leads the world in per capita plastic surgery. Charles and Camilla take a ride on the tube. Retail sales in Germany decline. Vladimir Putin hires Boyz II Men to promote Russian fertility. Canada’s G.D.P. increases. David Beckham pledges his salary to charity. These are the top 10 ways to tell if you’ve been hacked by the Chinese.

Technology: Seven Shows For Geeks

These three start-ups are eager for the release of the BlackBerry 10, and this is everything you need to know about the new BlackBerrys. Thorin Klosowski says that you don’t need to give up your smartphone; you just need to change how you use it. Amazon dominates the worldwide Android tablet market. Justin Kownacki explains why “The Avengers” is actually the ultimate explanation of geek culture, and a 29-year-old game developer lists his seven favorite TV shows for geeks and nerds. Microsoft signs a huge deal with the Department of Defense and releases a new cloud-based version of Office. Here are 11 tech women to watch in 2013. Here are five innovative tech solutions for common small-business problems. Here’s a guide to this year’s crop of 3D printers. And in what was just another week in the cloud, Twitter, Amazon and Facebook all suffered outages.

Tweet Of The Week:

@justinwolfers: Underneath the bad GDP report, we see solid growth in consumption and investment. Actually, it looks like private spending was humming along.

The Week’s Bests:

Lewis Edward explains why storytelling is so important in small-business sales: “The best professors that I ever had were ones which engaged the class into the discussion by incorporating real examples into their teaching. By storytelling, my instructors were not only helping me learn and retain the information but also making me enjoy doing so. When explaining how your business can help new clients, engaging them with a good story will prove much more advantageous than simply lecturing them on the benefits.”

Andrea Simon offers six ideas for turning innovation into an actuality, including: “Get out of your office, often, and go explore how people are using your products. PG requires their brand managers to get out of their offices and spend time with customers who are actually using their products. What does this do? Try spending a day in the life of your customer and see what you could learn about their pain points, challenges and opportunities where you could play a role in helping their business grow.”

This Week’s Question: Will immigration reform help your 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.

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You’re the Boss Blog: This Week In Small Business: Frankenstorm!


A weekly roundup of small-business developments.

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

The Big Story: Small Devices

Apple introduces the iPad Mini, and here’s everything you need to know about the new device. Google and Samsung introduce a Chrome laptop and a new Android tablet. Microsoft, its empire under siege, rolls out Windows 8 and the Surface tablet. Nathan Eddy believes that Windows 8 could both assist and confuse small-business owners: “The biggest risk Microsoft is taking with Windows 8 is the redesigned user interface, which has left users confused when trying to learn the new system.” Most companies will not be early adopters of the new operating system. Matt Burns says the Surface “is not a tablet, it’s a PC.”

The Election: An Indicator

Small-business owners in swing states called the third debate a victory for President Obama. But Ryan Higa could be the dark horse. The Federal Reserve plans to keep buying bonds; many believe the election will affect the chairman’s future. Sales of Halloween masks indicate a win for Mr. Obama. A lawyer advises employers to be wary about telling employees how to vote.

Economy: The Bright Spot

Russell Investments updates its state of the economy with all but one indicator within normal range. Orders for durable goods rebound. FedEx forecasts online shoppers will generate a holiday record. Equipment-financing confidence holds steady. The United States is experiencing a renaissance in oil production and is expected to be the world’s largest producer. Goldman Sachs predicts an end to high oil prices. Kate Mackenzie thinks the United States is the bright spot of the world. Still, manufacturing contracts in the Richmond, Va., Fed district and the steel industry continue to decline. DuPont cuts 1,500 jobs, and Dow Chemical plans to close plants and lay off 2,400 workers. Stocks plunged Tuesday on earnings woes. John Mason believes that economic policies continue to weigh on the dollar. Home sales are rising, but Bill McBride isn’t impressed: “Even with a 20 percent-plus increase this year, 2012 will be the third or fourth lowest year since the Census Bureau started tracking new home sales in 1963.” The most recent Sage business index of nearly 11,000 small- and medium-size companies shows a significant fall in local market confidence. Which is scarier: the fiscal cliff or Frankenstorm?

Start-Up: Women Veterans

A new study finds that more than half of women veterans who own businesses say their leadership experience in the military inspired them to start their businesses, and another report finds that growth in businesses owned by women has paralleled increased contributions by women across the economy. Meanwhile, a conference for start-up founders is criticized for its lack of women. Denver has its start-up week. John Patrick Pullen suggests nine cities you wouldn’t think are hubs for tech start-ups. Tanya Prive says these are the venture capitalists every start-up should know. Martha Pierce asks why start-ups fail.

People: Employee Burnout

John O’Farrell gives advice for hiring your next vice president for sales. A study finds that many people like to overestimate the number of hours they work. A report concludes that federal employees earn 8 percent more than their private-sector counterparts. Verne Harnish suggests five ways to find extraordinary employees. Wal-Mart has entered another battle with its employees. Over 30 years, Microsoft employees have raised $1 billion for charities. Christina DesMarais lists five Silicon Valley tech companies everyone wants to work for. Managers who consider hiring ex-military people are sometimes deterred by the possibility that candidates have post-traumatic stress disorder. Employee burnout increases. An impromptu board meeting springs up in a Staples store.

Social Media: Warming to Facebook Ads

Kerry O’Shea Gorgone has a guide to minimizing legal risks in social media. Marcus Sheridan explains why our definition of social media engagement and interaction is wrong. Local businesses are starting to warm up to Facebook ads. Amy Nielson believes that one of the best ways to market your business is to create your own social media network. If you follow this pizza chain on Twitter, it will really follow you back. Twelve feline finalists are announced for this year’s Friskies.

Marketing: Abandoning AdWords?

Greg Sterling does not believe small-business owners are abandoning AdWords. Marty Diamond thinks your landing pages may suffer from a lack of focus. In this commercial, passengers in an elevator are frightened. Jeanmarie Bills and Elena J. Forbes have some tips on how to create a blog for your business. Brad Hanner says you need an online presence.

Red Tape: The Internal Redistribution Service

So far, it appears the Affordable Care Act is not causing small businesses to drop their employees’ coverage. And sorry, men’s club owners, but it seems lap dances are indeed taxable in New York State. A guy lights up his house for Halloween — Gangnam style. Peter Schweizer says the Internal Revenue Service “is morphing into the Internal Redistribution Service.”

Sales: Born to Fail

Here are six reasons to walk away from a deal. Brian Carroll suggests five steps to ensure your lead generation stays on target. Here’s how to turn your iPad into a Square point of sale register, and here’s some good advice on pricing your products. These products were born to fail.

Management: Worst Decisions Ever

Here are the worst business decisions of all time. Mark Zuckerberg, Ben Silbermann and Ben Horowitz talk about lessons learned. Linda Clevenger has some time-management tips for entrepreneurs. George Bradt suggests three steps to a winning attitude for a service business. Andy Birol says you need to answer these questions. Deanne Katz gives advice on avoiding burnout. Ilana Rabinowitz says you should make competition irrelevant. Felix Salmon explains why Apple doesn’t care about its competition. Gwen Moran evaluates the strengths and weaknesses of four leadership styles.

Around the Country: Farmland Prices

While the big businesses in aerospace and defense make headlines, small companies form the backbone of the East Valley in Arizona. Here’s what happens when Seattle becomes empty. The Army Corps of Engineers’ Engineering and Support Center in Huntsville, Ala., will hold a small-business forum on Nov. 9. In New York, a restaurant taps Instagram users to create a visual menu. Farmland prices continue to soar, and the effects of this summer’s historic drought are yet to be known.

Around the World: Sticker Shock

The Bank of Spain sends a warning. The United States is the fourth easiest country in the world (PDF) to do business in. A Korean start-up adjusts to life in London. The cost of living can cause sticker shock, depending on where you do business. Ikea is using wind and sun to be energy independent.

Cash Flow: Surplus Capital

U.S. Bank is offering a new way for customers to pay for online purchases with Visa debit or credit cards. A new version of Google Wallet is coming. Small Business Administration loans to small-business exporters are on the rise, and the agency’s venture capital program grows even as overall venture capital dollars decline. Mark Bell asks if you know what it means to evaluate your spend. Angie Mohr says there are four financial yardsticks for your business. The Principal Financial Well-Being Index finds that 63 percent of small-business owners have surplus capital but that 73 percent of those who have it are not spending it.

Technology: The Worst Password

Bizelo, a cloud software start-up, is creating a collection of small-business applications. Amazon Cloud goes down again. Customer data is hacked at Barnes Noble. Facebook reports better than expected earnings, and Peter Gabriel asks his Facebook fans to recreate “Sledgehammer.” New research promises to increase bandwidth tenfold. Password tops the list of the worst passwords of 2012. Professors develop a real-life “Star Trek” tractor beam. Bob Lefsetz shares some dos and don’ts, like: “Don’t think Apple is forever.” James Bond uses an Android smartphone. If you’re not interested in tech, here’s how to pick up a girl at the gym.

Best Tweets of the Week

The web is your resume and social networks are your mass references. Paper CVs will disappear in 5 years.

I don’t judge a company by the people who travel by corporate jet; I judge a company by the ones who answer the phone and carry your bags.

Bests of the Week

Deborah Brown thinks that entrepreneurs need to have more fun: “Delegate or eliminate. If the day-to-day tasks are weighing you down, find ways around them. Are you asking for help with the chores, or are you doing everything yourself? What can you order online so you don’t have to go to the store? And who can you hire to help with the cleaning, laundry, cooking, etc.? Yes, these things cost money, but do you think that not having fun is costing you more?”

Adrian Swinscoe says to apply the granny test to get closer to your customers: “Take a step back and look at the language that you use in your marketing, sales and customer service, and ask yourself if it is in your customer’s language. Not convinced? Then try this: apply the granny test, i.e., give your marketing materials to your Granny and ask her if she gets what you are talking about. If she does, then she is either an expert in your field or you’re doing a great job. If not, then you know what to do.”

This Week’s Question: Have you tried advertising on Facebook?

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.

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Consumer Spending Jumped 0.6% in September

Consumer spending rose 0.6 percent last month, the Commerce Department said Friday. The gain was driven by a big rise in purchases of durable goods, such as autos.

Consumers earned only 0.1 percent more after their income fell by the same amount in August. And after adjusting for inflation, their after-tax incomes fell 0.1 percent last month — the third straight monthly decline.

As a result, they saved less. The savings rate fell to 3.6 percent, the lowest level since December 2007.

Expectations were high after the government said Thursday that consumer spending helped fuel annual growth of 2.5 percent in the July-September quarter, the best quarterly expansion in a year.

Consumer spending is closely watched because it accounts for 70 percent of economic activity. It grew at an annual rate of 2.4 percent in the third quarter. That’s more than triple the growth in the April-June quarter.

The economy would have to grow at nearly double the third-quarter pace to make a dent in the unemployment rate, which has stayed near 9 percent since the recession officially ended more than two years ago.

Economists doubt consumers can keep spending like they did this summer without earning more. Many are struggling with higher prices for food and gas. For spending gains to be sustained, employers need to step up hiring.

In recent months, job growth has stagnated. Employers have added an average of only 72,000 jobs per month in the past five months. That’s far below the 100,000 per month needed to keep up with population growth. And it’s down from an average of 180,000 in the first four months of this year.

Employers added only 103,000 jobs in September, and the unemployment rate remained 9.1 percent for a third straight month.

The government releases the October employment report on Nov. 4.

And spending could tumble next year if Congress fails to extend a Social Security tax cut, which gave most Americans an extra $1,000 to $2,000 this year, or long-term unemployment benefits. Both expire at the end of the year.

Paul Ashworth, chief U.S. economist for Capital Economics, predicts that overall growth will cool in the fourth quarter and next year. He predicts growth of just 1.5 percent for all of 2012.

Mark Zandi, chief economist at Moody’s Analytics, is more optimistic. He expects roughly the same 2.5 percent growth in the October-December quarter and also in the first three months of next year.

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