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You’re the Boss Blog: Debating the Merits of Hiring Great Recession Graduates

April 12, 2013 by Leave a Comment
The Next Level

Avoiding the pitfalls of fast growth.

Intrigued. Inspired. Insulted. I summoned all three feelings as I glanced through the responses to my last post, “Why I Like to Hire Great Recession Graduates.” In the post, I talked about how many recent graduates — tempered by the tough economy they have experienced — are making excellent employees in fast-growth companies where a hunger to work and a will to win override the need for entitlements, praise and corner offices. In fact, I suggested, these recent graduates have adjusted to the new reality much better than some of their parents.

While my opinion has not changed, I will say this – I could hear my associates cackling and laughing as some of the angry comments came my way. No doubt the commenters said some things that my associates have long thought and always wanted to say, so they did some good for all of us.

Now, before my detractors get too carried away in delight, I want to stress a couple of things. First, I am an entrepreneur who loves a fast-growth culture where no whining is allowed, period. And as you will see below, I will offer in response a solution that can perhaps get us all to a higher level of thinking, which is my goal as a blogger.

I also want to say that while I was not insulted by the zingers that questioned my intellect and even my humanity, I was insulted for a different reason. Many entrepreneurs called and sent e-mails to say that they would have liked to back me up in the comment section — but they feared that predatory lawyers might make life difficult for them in the future. Now, that is an insult – when the people who should be protecting our right to free speech are stifling it. But perhaps that is a post for another day.

As an entrepreneur educator, I was intrigued by the stark difference in the response that came my way on Twitter and in the blog’s comment section. I got my clock cleaned in the comment section, but on Twitter I discovered that the communication gap is even greater than I suggested in my post. While the response to my post, by my informal calculation, was 90 percent negative among Times commenters, it was 80 percent positive on Twitter. What does that tell us?

Millennials are using social media for news, so it is not just social and it is not just business, as I wrote. It is a way of life for recent graduates. I would say that this generational communication divide is the widest it has been since Elvis and rock ‘n’ roll replaced Lawrence Welk and the waltz. With the Great Recession graduates getting their news on Twitter and Facebook feeds, they are very close to putting down print newspapers and magazines for good. The “cool” factor is playing big here.

As I was going down my office elevator last week, a millennial told me, “I read your blog — you rock.” I must confess at the moment I was feeling some trepidation from all of the negative comments on the blog, so I tried to suggest that she express that positive reaction with a comment of her own. She gave me kind of an OMG frown and said, “I will retweet it.” Here is what I learned from that response: a retweet with a one-liner is the new letter to the editor. Just as rock went from Elvis Presley to Alice Cooper, we may be heading for the three-second commercial. I could beg the millennials to read The New York Times on Sunday and tell them how wonderful I think it is, but it would not do any good. The times, they are a-changing.

After my elevator conversation left me feeling more like Lawrence Welk than Elvis, I was soon inspired by Karthik Selvaraj, who lives in India and graduated from Carnegie Mellon last December. Mr. Selvaraj, who had come to my post through social media powerhouse LinkedIn, sent an e-mail to say that he wanted to bring this new breed of entrepreneurship to India. Yes, while I cringed when I read many of the comments, I smiled when I saw the Twitter cheers, and I was overjoyed to see that my intended message was received by many around the world.

My proposed solution is to ask all of us to be more entrepreneurial — at all levels of a company. Yes, I could have been more reverent about the job plight of many who have struggled the last few years, but I don’t see my job as being Mr. Rogers where I tell everyone in the neighborhood how wonderful they are. My goal is to provoke thought on how entrepreneurial companies can get to the next level.

Here is the deal: the old stuff doesn’t work any more. And that’s why I want to hire people who are trying and creating new things. But I want to stress again — I am not the Grinch looking to steal cheap labor. In today’s environment, everyone is measured on our added value to the enterprise. I think the Great Recession graduates will do better than their parents on every economic level over the next 10 years because they are willing to take more risks on the front end. And for that, for being more entrepreneurial, they will be — and should be — rewarded for taking that additional risk, with both raises and equity.

Again, I am talking here about fast-growth enterprises. I’m not talking about small businesses or corporate America. There is always a place for wisdom and knowledge. But there is also a place for fresh ideas — especially when you are trying to get to the next level. Can you imagine if there had been Twitter at Woodstock?

Cliff Oxford is the founder of the Oxford Center for Entrepreneurs. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/04/12/debating-the-merits-of-hiring-great-recession-graduates/?partner=rss&emc=rss

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Workstation: Quitting a Job in a Huff Doesn’t Bring Applause

March 24, 2013 by Leave a Comment

What put-upon worker hasn’t fantasized about saying those words and walking out the door? Wisely, most don’t go that far, at least not then and there.

It’s fairly common to feel a passing urge to quit your job when you’ve hit a rough patch, says Nancy S. Molitor, a clinical psychologist in Wilmette, Ill., and a public education coordinator for the American Psychological Association. But the idea is surfacing in more employees’ minds these days, she said.

Many of her clients have hunkered down at the same company over the last five or six years, just grateful to have a job in an uncertain economy, Dr. Molitor said. Some were promised raises, bonuses or stock once the recession ended, but now that better times have arrived, companies are hanging onto their cash and withholding those promised rewards, she said. One result is employee resentment.

Sometimes an employee wants to quit because of an untenable working situation: an overbearing boss, a difficult co-worker, a crushing workload. Often, the reasons for feeling upset and wanting to quit are legitimate, Dr. Molitor said.

But because resigning has huge consequences, you never want to make that decision while in the grip of intense emotion, she said. Wait at least a week, and in the meantime discuss your feelings with a close friend, family member or therapist. Colleagues are another option — they may have a much better grasp of office politics — but make sure you trust them completely to keep your confidence, she added.

Anytime you cannot concentrate, or find yourself thinking the same thoughts about your job over and over again, “that’s a huge red flag,” she said. You are reacting to pure adrenaline and emotion. So take some time to calm down, and if necessary seek professional help. If you feel you are in danger of quitting suddenly, take a day off to clear your head, she advised.

Sometimes when we feel unhappy or helpless in our personal lives, we project that onto our jobs — and onto the boss, who has power over us, Dr. Molitor said.

Personal problems might be at least part of the reason for job dissatisfaction. Consider the 1977 country hit “Take This Job and Shove It,” in which Johnny Paycheck sings that the boss is a fool who “thinks he’s cool,” but also that his “woman done left” and took away all his reasons for working.

The song’s title still resonates, and for good reason. “I’ve been there. We’ve all been there,” said Robert I. Sutton, a professor and organizational psychologist at Stanford. In his heart, he’s a “take this job and shove it kind of guy,” he said, “but I have people around me who will save me from myself.”

Once you have cleared your head and separated emotion from reality, you may be able to find a way to change your work situation so that it’s no longer intolerable, Dr. Molitor said.

Many employees need to work harder at advocating for themselves, she said. If you felt that you deserved a raise and didn’t get one, try asking for one and you might succeed, she said. When preparing to talk to your boss about your concerns, it’s wise to write down your points in advance, she added: “That forces you to be coherent.”

After careful consideration, you may determine that your only option is to resign, but do so politely, and with plenty of notice. If you quit in a huff and make a dramatic exit, you can probably forget about using your employer as a reference, and word will most likely get out that you left your company in the lurch.

SUZANNE LUCAS, who writes a blog called the Evil HR Lady, says in a column for CBS News that it’s generally a bad idea and “just darn rude” to quit a job on the spot. But she notes exceptions that would justify a quick departure — for example, if staying in a job would put you in some kind of danger (a violent co-worker, say, or a safety violation), or would make you break the law or violate your ethical or religious standards.

In most cases, though, you can give notice. Try to be gracious when resigning, because “how you end things is incredibly important,” Professor Sutton said.

According to the “peak end rule,” as articulated by the psychologist Daniel Kahneman, the final memory that your co-workers have of you is likely to be much more vivid than most others, Professor Sutton said. If possible, you want that memory to be positive. He said that you, too, would feel better about the experience in retrospect if you quit in a graceful way.

“I’m a big fan of quitting,” he said, so long as it’s done for the right reasons and in the right way.

Article source: http://www.nytimes.com/2013/03/24/jobs/quitting-a-job-in-a-huff-doesnt-bring-applause.html?partner=rss&emc=rss

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Housing Starts Rose in February

March 19, 2013 by Leave a Comment

WASHINGTON — American builders started more houses and apartments in February than a month earlier, the Commerce Department reported on Tuesday, pointing to a housing recovery that was gaining strength.

The government said builders broke ground on homes at a seasonally adjusted annual rate of 917,000, an increase from 910,000 starts in January. February’s performance was the second-fastest pace since June 2008, behind December’s pace of 982,000.

Single-family home construction increased to an annual rate of 618,000, the strongest level in four and a half years. Apartment construction also ticked up, to 285,000.

The gains are likely to grow even faster in the coming months. Building permits, a sign of future construction, increased 4.6 percent, to 946,000, last month. That was also the most since June 2008, just a few months into the Great Recession.

The American housing market is recovering after stagnating for roughly five years. Steady job gains and near-record-low mortgage rates have encouraged more people to buy.

Still, the supply of available homes for sale remains low. That has helped push up home prices, which rose nearly 10 percent in January compared with the period a year earlier, according to CoreLogic. The price gain was the biggest increase in nearly seven years.

The number of previously occupied homes for sale has fallen to its lowest level in 13 years. And the pace of foreclosures, while still rising in some states, has slowed sharply on a national basis. That means fewer low-priced foreclosed homes are being dumped on the market.

Those trends, and the likelihood of further price gains, have led builders to step up construction. Last year, builders broke ground on the most homes in four years.

Homebuilders have become much more confident in the last year. But in March, a measure of homebuilder confidence fell for the second consecutive month over concerns that demand for new homes was exceeding supplies of land, building materials and workers. In the short term, that could slow sales.

But the survey noted that the outlook for sales over the next six months rose to its highest level in more than six years.

Though new homes represent only a fraction of the housing market, they have an outsize effect on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the homebuilders.

Article source: http://www.nytimes.com/2013/03/20/business/economy/housing-starts-rose-in-february.html?partner=rss&emc=rss

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Fates of 2 Factories Show Social Schisms in France

March 16, 2013 by Leave a Comment

Legally separate from the Goodyear factory since 2008, the Dunlop plant continues to make high-quality passenger tires for the upper segment of the market. But at Dunlop, the unions agreed to changes in their work schedules while the unions at Goodyear have refused.

The new system preserves the 35-hour week, but it puts workers on a cycle of six-day and four-day weeks, with shifts that can include weekends and nights. It puts new strains on the workers, but it saves the company money and, of course, preserves jobs.

In return for the new labor agreement, said the general manager of Goodyear Dunlop Tires France, Henry Dumortier, the company invested in newer machinery to make higher-value tires, while the Goodyear plant, whose workers rejected the new work rules, is losing about $78 million a year.

Dunlop is producing fewer tires than before, trying to match its output to the general European slowdown in car sales, now at a 20-year low. But its 940 jobs seem safe, for now, since it is producing tires that Mr. Dumortier says fit the needs of the market.

The story of these two factories might have emerged from Ohio in the 1980s. But it is emblematic for a France that today is itself at a kind of crossroads, trying to preserve both its industrial base and its traditional economic and social model — generous social welfare and health benefits and strong job protections — while coping with a stagnant economy, rising competition and an aging population.

The fight over Goodyear also highlights the troubles faced by France’s Socialist president, François Hollande.

In last year’s campaign, he promised to create jobs, restore growth and reduce the budget deficit. But with national unemployment at record levels, the economy near recession and the government faced with finally making spending cuts to try to reduce its budget deficit to 3 percent next year — having failed in its vow to do so this year — Mr. Hollande is facing what Le Monde last week called “the hour of doubt.” The magazine Marianne asked simply: “Has Hollande already failed?”

“Under a government of the left it’s no different,” said Michael Mallet, 35, a 13-year veteran worker at the Goodyear plant and an official of the dominant union CGT, the most militant in France. “They don’t help us more than before, and it’s more complicated. Under the right we felt freer to demonstrate. The riot police are still protecting our bosses.”

Goodyear, he said, just wants to shut the plant and blame it on the unions, a charge the company denies. His colleague, Franck Jurek, 44, has worked at the plant for 18 years. “We’re considered rebellious,” he said. “We’re called ‘the Gaulois village,’ ” resisting the Romans to the end, as in the famous Astérix story.

In a way, said Claude Dimoff, a former union leader, “their struggle is folkloric.” But it is not expected to end well, he said, throwing another 1,200 people out of work in a depressed area, 75 miles north of Paris, that had a small riot last August and has an unemployment rate of 12 percent.

Goodyear announced in January that it would close the 53-year-old plant, arguing that it could no longer make passenger tires at a competitive price and that the refusal of the unions to alter work schedules was making its production of tires for agricultural machines unprofitable as well.

With no union deal to phase out passenger tire production, negotiations to sell the plant to Titan International had fallen apart, and new efforts by the Socialist government to entice Titan to return produced an extraordinary polemic that reflected badly on the image of France.

“How stupid do you think we are?” Maurice M. Taylor Jr., the head of Titan, wrote to Arnaud Montebourg, the minister of industrial renewal.

Maïa de la Baume contributed reporting.

Article source: http://www.nytimes.com/2013/03/17/world/europe/fates-of-2-factories-show-social-schisms-in-france.html?partner=rss&emc=rss

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Today’s Economist: Casey B. Mulligan: Hidden Costs of the Minimum Wage

March 13, 2013 by Leave a Comment

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Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

The current federal minimum wage of $7.25 an hour is increasingly creating economic damage that needs to be considered with the benefits it might offer the poor.

Today’s Economist

Perspectives from expert contributors.

Democrats are now proposing to increase the federal minimum wage to $9 an hour. News organizations have repeatedly noted that economists do not agree on the employment effects of historical minimum-wage changes (the more recent federal changes in 2007, 2008 and 2009 have not yet been studied enough for us to agree or disagree on results specific to those episodes) and do not agree on whether minimum wage increases confer benefits on the poor.

That doesn’t mean that we economists disagree on every aspect of the minimum wage. We agree that minimum wages do some economic damage, although reasonable economists sometimes believe that the damage can be offset and even outweighed by benefits.

More important, we agree that the extent of that damage increases with the gap between the minimum wage and the market wage that would prevail without the minimum. A $10 minimum wage does less damage in an economy in which market wages would have been $9 than it would in an economy in which market wages would have been $2.

Moreover, elevating the wage $2 above the market does more than twice the damage of elevating the wage $1 above the market. (Employers can more easily adjust to the first dollar by asking employees to take more responsibility or taking steps to reduce turnover, steps that get progressively harder.) That’s why economists who favor small minimum wage increases do not call for, say, a $100 minimum wage, because at that point the damage would far outweigh the benefits.

Market wages normally tend to increase over time with inflation and as workers become more productive. As long as the minimum wage is a fixed dollar amount, the tendency for market wages to increase over time means that economic damage from the minimum wage is shrinking. That’s one reason that economists who see benefits of minimum wages would like to see minimum wages indexed to inflation, allowing the minimum wage to increase automatically as the economic damages fell.

But these are not normal times. The least-skilled workers are seeing their wages fall over time, largely because they are out of work and failing to acquire the skills that come with working. Moreover, the new health care regulations going into effect in January are expected to reduce cash wages, as many employers of low-skill workers are hit with per-employee fines of about $3,000 per employee per year, as the law mandates new fringe benefits for other employers and low-skill workers have to compete with others for the part-time jobs that are a popular loophole in the new legislation. (The minimum wage law restricts flexibility on cash wages, by establishing a floor, but makes no rule on fringe benefits.)

To keep constant the damage from the federal minimum wage, the federal minimum wage needs not an increase but an automatic reduction over the next couple of years in order for it to stay in parallel with market wages.

This post has been revised to reflect the following correction:

Correction: March 13, 2013

An earlier version of this post misstated the current federal minimum wage. It is $7.25 an hour, not $7.55.

Article source: http://economix.blogs.nytimes.com/2013/03/13/hidden-costs-of-the-minimum-wage/?partner=rss&emc=rss

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A Fear That Politics Come First at Hungarian Bank

March 1, 2013 by Leave a Comment

FRANKFURT — The change at the top of the Hungarian central bank has raised fears that monetary policy could soon be subverted by politics, with the government resorting to printing money to revive its slumping economy.

The results of looser money, many economists say, could pose risks not just for the country but for Eastern Europe and even the euro zone.

Prime Minister Viktor Orban appointed Gyorgy Matolcsy on Friday to succeed Andras Simor as the governor of the Hungarian central bank. Mr. Matolcsy, who had been seen as the front-runner for the job, is the Hungarian economics minister. He is regarded as a maverick who is close to Mr. Orban and whose statements often cause the forint, the country’s currency, to gyrate on money markets.

The appointment of Mr. Matolcsy consolidates Mr. Orban’s control of one of the nation’s last independent institutions. He is expected to be in step with Mr. Orban and to pursue unorthodox policies designed to jolt the Hungarian economy out of recession in time to help the government win re-election next year.

“There is no doubt that the last institution in Hungary that has been able to withstand Orban’s pressure is the central bank,” said Peter Rona, an economist and senior fellow at Oxford University who is a member of the Hungarian central bank’s supervisory board. With the bank now under Mr. Orban’s control, “the last point of resistance is gone.”

Mr. Matolcsy’s past statements suggest he is willing to throw out the rule book of central banking.

“He is wholly inappropriate for this position, as he has neither the professional background nor the temperament to guide the bank,” Mr. Rona said.

Mr. Matolcsy is expected to try to emulate the quantitative easing used by the U.S. Federal Reserve and the Bank of England — the manipulation of money supply and interest rates to stimulate the economy. But policies designed to stimulate growth in big countries like the United States or Britain could be disastrous when applied to a small country like Hungary that cannot finance itself without foreign capital, economists said.

Dismay about Mr. Orban’s economic policies has already contributed to the flight of capital from the country. Funds equal to 2 percent of gross domestic product — about €4 billion, or $5.2 billion — left Hungary in the third quarter of 2012, according to the European Bank for Reconstruction and Development.

Hungary and Slovenia, which is in the middle of a banking crisis, suffered the worst capital flights of any countries in Eastern Europe.

Since becoming prime minister in 2010, Mr. Orban has used his two-thirds majority in Parliament to expand his control over the judiciary and the media.

That he could do the same to the central bank has raised concerns because it would violate the fundamental principle that monetary policy should not be dictated by politics. “A key prerequisite for a credible monetary policy is the independence of the central bank,” Mario Draghi, the president of the European Central Bank, said in Budapest in December, in a clear expression of his concern about developments there.

But foreign central bankers may have little room to criticize unorthodox policies by the Hungarian central bank when they have themselves stretched the boundaries of monetary policy.

People loyal to Mr. Orban already hold a majority on the central bank committee, which sets monetary policy. They have cut the benchmark interest rate to 5.25 percent from 7 percent last year. That is still well above the E.C.B. benchmark rate of 0.75 percent.

Though wary of criticizing Mr. Matolcsy directly, local bankers have expressed concern.

“Will he stick to the fundamental objectives of the central bank, or will he try to get out of this box to get more in alignment with the government?” asked Heinz Wiedner, head of the Hungarian unit of Raiffeisen Bank, an Austrian lender. “We have to see.”

Mr. Matolcsy, 57, has already created plenty of controversy as economics minister. He helped impose the highest bank levy in Europe and nationalized private pension funds.

Those steps helped push the government deficit below 3 percent of gross domestic product, allowing Hungary to sell $3.25 billion in 5-year and 10-year government bonds this month.

Article source: http://www.nytimes.com/2013/03/02/business/global/selection-of-hungarian-bank-chief-raises-fears.html?partner=rss&emc=rss

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French Leaders Move Away From Budget Deficit Goals

February 18, 2013 by Leave a Comment

“I don’t think our credibility will be damaged if something exceptional intervenes,” France’s finance minister, Pierre Moscovici, said Monday. “If we have a deeper recession, we’ll have an even tougher time hitting our targets. We must not add austerity to the risk of recession.”

The recession in the euro zone “is a collective problem,” he said. “It’s unacceptable that euro zone growth in the last quarter was minus 0.6 percent.”

At the same time, the economic squeeze combined with an already high rate of taxation will make it easier for the government to focus on spending cuts, senior ministry officials said.

Mr. Moscovici is facing pressure for more spending from other government ministers in a period of stagnant growth — zero for 2012, with minus 0.3 percent in the last quarter. But he insisted Monday that public spending must come down.

The government’s main task, he said, is to promote growth and cut unemployment, but also to get public finances under control. The government wants to begin to reduce France’s accumulated debt, around 90 percent of G.D.P., and gradually reduce the government’s share of G.D.P., currently more than 56 percent.

France has committed itself to the European Commission to hit the 3 percent target this year, but Mr. Moscovici emphasized the government’s progress in reducing France’s structural deficit — which is supposed to be unaffected by economic cycles — by two percentage points this year.

That was the key figure, he argued, saying: “Our true commitment was to reduce the structural deficit.” And he pointed to a letter last week from Europe’s commissioner for economic affairs, Ollie Rehn, who suggested that countries might get more time to cut their deficits if they could demonstrate seriousness in structural changes.

France would wait to see European Commission growth forecasts later this week before deciding what to do, Mr. Moscovici said, and then hold talks with European officials in Brussels to come up with a solution. France’s actions will depend on those talks, Mr. Moscovici said.

For the moment, he said, he is holding to the 3 percent goal, but he acknowledged that France’s national auditors, the Cour des Comptes, said last week that given low growth, it would be next to impossible to hit the target without altering current plans. And the auditors again recommended that the government do more to limit spending and not raise taxes further.

On a proposed free-trade agreement between the United States and the European Union, which is intended to promote economic growth, Mr. Moscovici said France was “open but vigilant.”

Mr. Moscovici said that “an opportunity exists,” but that there were “irritants” that would need to be negotiated. He cited issues of concern to France, like agricultural regulations and “the cultural exception” — France subsidizes some of its own cultural products, like films, and promotes local content. Restrictions in the French marketplace are one reason the Obama administration was initially reluctant to get too deeply involved in a free-trade negotiation. As one senior official in Washington put it, “After we negotiate hard for two years, the French will kill it anyway.”

But pressed by Chancellor Angela Merkel of Germany, Mr. Obama supported the idea in his State of the Union address last week.

On the much-discussed effort by President François Hollande of France to temporarily raise the highest tax rate to 75 percent on those earning more than one million euros a year — a law found to be unconstitutional — Mr. Moscovici said that the government was working on a new tax for the wealthy, but refused to commit to a rate of 75 percent. “It’s an exceptional tax for exceptional times on exceptional income for an exceptional duration,” he said.

Article source: http://www.nytimes.com/2013/02/19/world/europe/french-leaders-move-away-from-budget-deficit-goals.html?partner=rss&emc=rss

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Euro Zone Factory Output Falls, May Have Hit Bottom

January 15, 2013 by Leave a Comment

Industrial production in the 17 countries sharing the euro fell 0.3 percent in November from the previous month, continuing its fall since the European summer, the EU’s statistics office Eurostat said.

Factory output, two-thirds of which is generated by Germany, France and Italy, was also down almost 4 percent on an annual basis in the month, highlighting just how few cars, televisions and other goods like fridges Europeans have been buying at a time of record unemployment.

However, production of machinery used to make other goods, an indicator of future business, rose 0.7 percent in November from October, after two months of losses.

If production of those capital goods continues to increase, that could support business surveys and the view of the ECB that the euro zone will recover from recession in 2013 and that the economy hit bottom in the fourth quarter of last year.

Economists polled by Reuters expected a very modest rise in overall factory output in November from October, and a shallower fall on an annual basis.

“The uncertainty, the risk of a euro zone break-up was a major drag on businesses last year, but this year we are beginning to see some stabilisation,” said Ulrike Rondorf, an economist at Commerzbank. “We expect a recovery, especially in Germany, in the spring,” she said.

The euro zone’s debt and banking crisis has driven a vicious cycle of falling business consumer morale, repossessed homes and lengthening job queues that has sucked away demand for factory-made goods. Companies from Ford to airline Iberia have announced thousands of job cuts across the European economy.

But a series of unprecedented steps, including a European Central Bank plan to buy the bonds of governments facing sharply rising borrowing costs, helped to calm a situation that threatened the viability of the common currency.

While households are yet to feel any sense of a recovery -production of durable consumer goods such as televisions fell nearly 8 percent in November compared to a year earlier – economists and policymakers see a turn in sentiment.

“The worst is behind us,” David Mackie, an economist at JP Morgan said in a research note. “We believe that the euro area will exit recession in the first half of this year,” he said.

Still, any recovery will likely be weak. The euro zone’s economy as a whole will grow just 0.1 percent this year, the European Commission – the EU executive – forecasts. Large national economies such as Italy and Spain will not emerge from the downturn until 2014, according to the Commission.

(Reporting by Robin Emmott; editing by Rex Merrifield and Stephen Nisbet)

Article source: http://www.nytimes.com/reuters/2013/01/14/business/14reuters-eurozone-production.html?partner=rss&emc=rss

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Consumer Debt Rises on Cars And Education

January 8, 2013 by Leave a Comment

The Federal Reserve said Tuesday that consumers increased their borrowing in November by $16 billion from October to a seasonally adjusted record of $2.77 trillion.

Borrowing that covers autos and student loans increased $15.2 billion. A category that measures credit card debt rose just $817 million.

The sharp difference in the borrowing gains illustrates a broader trend that began after the recession. Four years ago, Americans carried $1.03 trillion in credit card debt, a high. In November, that figure was 16.5 percent lower.

At the same time, student loan debt has increased significantly. The category that includes auto and student loans is 22.8 percent higher than in July 2008. Many Americans who have lost jobs have gone back to school to get training for new careers.

The November increase also reflected further gains in auto sales, which rose 13.4 percent in 2012 to top 14 million units for the first time in five years. The need to replace vehicles lost to Hurricane Sandy in the Northeast may have also contributed to the gain.

Consumer spending rebounded in November, helped by lower gas prices and job growth that carried over into December. Employers added 155,000 jobs in December and 161,000 in November.

Steady hiring may have encouraged consumers to keep borrowing and spending, despite concerns about the sharp tax increases that were scheduled to occur on Jan. 1, but were averted.

Article source: http://www.nytimes.com/2013/01/09/business/economy/consumer-debt-increases-on-car-and-school-loans.html?partner=rss&emc=rss

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Health Spending Growth Stays Low for Third Straight Year

January 7, 2013 by Leave a Comment

The rate of increase in health spending, 3.9 percent in 2011, was the same as in 2009 and 2010 — the lowest annual rates recorded in the 52 years the government has been collecting such data.

Federal officials could not say for sure whether the low growth in health spending represented the start of a trend or reflected the continuing effects of the recession, which crimped the economy from December 2007 to June 2009. So far, the report said, the 2010 health care law has had “no discernible impact” on overall health spending.

The recession increased unemployment, reduced the number of people with private health insurance, and lowered household income and assets, and therefore tended to slow health spending, said Micah B. Hartman, a statistician at the federal Centers for Medicare and Medicaid Services.

In their annual report, federal officials said that total national spending for prescription drugs and doctors’ services grew faster in 2011 than in the year before, but that the growth in spending for hospital care slowed.

Medicaid spending likewise grew less quickly in 2011, as states struggled with budget problems. Medicare grew more rapidly because of an increase in “the volume and intensity” of doctors’ services and a one-time increase in Medicare payments to skilled nursing homes, said the report, published in the journal Health Affairs.

National health spending grew at roughly the same pace as the overall economy, without adjusting for inflation, so its share of the economy stayed the same, at 17.9 percent in 2011, where it has been since 2009. By contrast, health spending accounted for 13.8 percent of the economy in 2000.

Health spending grew more than 5 percent each year from 1961 to 2007. Sometimes it spurted at double-digit rates, including every year from 1966 to 1984 and from 1988 to 1990.

The report did not forecast the effects of the new health care law on future spending. Some provisions of the law, including subsidized insurance for millions of Americans, could increase spending, officials said. But the law also trims Medicare payments to many health care providers and authorizes experiments to slow the growth of health spending.

“The jury is still out, whether all the innovations we’re testing will have much impact,” said Richard S. Foster, who supervised preparation of the report as chief actuary of the Medicare agency. “I am optimistic. There’s a lot of potential. More and more health care providers understand that the future cannot be like the past, in which health spending almost always grew faster than the gross domestic product.”

Evidence of the new emphasis can be seen in a series of articles published in The Archives of Internal Medicine, now known as JAMA Internal Medicine, under the title “Less Is More.” The series highlights cases in which “the overuse of medical care may result in harm and in which less care is likely to result in better health.”

Total spending for doctors’ services rose 3.6 percent in 2011, to $436 billion, while spending for hospital care increased 4.3 percent, to $850.6 billion.

Spending on prescription drugs at retail stores reached $263 billion in 2011, up 2.9 percent from 2010, when growth was just four-tenths of 1 percent. The latest increase was still well below the average increase of 7.8 percent a year from 2000 to 2010.

Federal officials said the increase in 2011 resulted partly from rapid growth in prices for brand-name drugs.

Prices for specialty drugs, typically prescribed by medical specialists for chronic conditions, have increased at double-digit rates in recent years, the government said. In addition, it said, spending on new brand-name drugs — those brought to market in the prior two years — more than doubled from 2010 to 2011, driven by an increase in the number of new medicines.

Article source: http://www.nytimes.com/2013/01/08/us/health-spending-growth-stays-low-for-third-straight-year.html?partner=rss&emc=rss

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