November 21, 2017

Economix Blog: Positive News Muddles Political Talking Points

Ana Navarro, a Republican strategist and commentator, had a novel thought in response to Friday’s jobs report, which showed 195,000 new jobs created in June:

Not really.

The positive report actually deprived both sides of talking points. Republicans acknowledged that the numbers were good — but not good enough. The White House appeared to tacitly concede that the effects of automatic budget cuts were not as dire as feared. In reaction to recent jobs reports, the Obama administration has called on Congress to replace so-called sequestration with a more deliberate approach to help the economy. But Alan B. Krueger, chairman of the Council of Economic Advisers, did not pick that bone on Friday, for the first time since sequestration went into effect.

“While more work remains to be done, today’s employment report provides further confirmation that the U.S. economy is continuing to recover from the worst downturn since the Great Depression,” Mr. Krueger said in a blog post. He was vague in policy prescriptions going forward, saying that Washington should not “impose self-inflicted wounds on the economy” and that President Obama would continue to push the agenda he outlined in his State of the Union address.

Republicans, on the other hand, did have specific complaints. Just as they praised the uptick but called for stronger growth, Republican leaders called on Mr. Obama to delay the employer mandate beyond the year announced earlier this week.

“Delaying the inevitable for one year will bring no solace,” said Representative Eric Cantor of Virginia, the House majority leader, in a statement. “We must have a permanent delay of Obamacare before we can realize our full job creating potential.” [Read more…]

Article source: http://economix.blogs.nytimes.com/2013/07/05/positive-news-muddles-political-talking-points/?partner=rss&emc=rss

Employment in U.S. Lags Where It Was in 2007

Indeed, contrary to the widespread view that the United States is an island of relative prosperity in a global sea of economic torpor, employment in several other nations has bounced back more quickly, according to a new analysis by the Bureau of Labor Statistics.

The government reported Friday that the nation added 175,000 jobs in May, continuing a 32-month run of job gains. The unemployment rate moved up slightly to 7.6 percent, from 7.5 percent in April.

But overall employment in the United States remained 2.1 percent below where it was at the end of 2007, according to the statistics bureau. By comparison, over the same period, between December 2007 and March 2013, the number of jobs was up 8.1 percent in Australia; Germany, the biggest economy in the troubled euro zone, has managed a 5.8 percent gain in employment.

“The United States is way below where it should be,” said Lawrence F. Katz, a professor of economics at Harvard. “We had a massive downturn and a tepid recovery.”

Still, Friday’s jobs report appeared to be just what Wall Street was hoping for. Major stock market indexes jumped by 1.3 percent as traders bet that the modest employment gains and the uptick in joblessness meant that the Federal Reserve would be forced to keep pumping money into the economy in a bid to stimulate greater growth.

The Fed’s push to keep short-term interest rates near zero and flood the economy with trillions of dollars since the onset of the recession has been credited with staving off a far deeper downturn. It also has helped stabilize the housing market and given Wall Street a major lift since the dark days of early 2009, when the Dow Jones industrial average was below 7,000. On Friday, the Dow closed at 15,248.12, more than double the recession low.

The United States economy is performing relatively well by some yardsticks — a steady increase in economic output, a surge in corporate profits and new stock market highs — but the robust job market that is a key focus now of Ben S. Bernanke, the chairman of the Federal Reserve, and other Fed policy makers remains out of reach.

While several European countries have fared worse, Canada, Sweden and even Britain, which is trapped in yet another recession, have enjoyed healthier job gains than the United States. In fact, of the nine countries surveyed by the Bureau of Labor Statistics, only perennially-troubled Italy and Japan performed worse.

A big part of the problem, economists say, is just how big a hole the American economy fell into in the first place. Not only did the global economic downturn begin here, it also enveloped the housing market and the banking system, sectors that were largely spared in many other countries.

“Canada didn’t really have much of a housing bust,” Mr. Katz said.

A new paper by two economists from the University of British Columbia, Florian Hoffmann and Thomas Lemieux, concludes that over half of the recent variation in employment trends between the United States on the one hand, and Canada and Germany on the other, can be attributed to the construction sector.

Although the construction field gained 69,000 jobs in the first five months of 2013, with 5.8 million jobs in May, that was still nearly two million fewer jobs than in 2007, according to the Labor Department.

Other countries have generated jobs on the basis of strong exports. Germany’s economy, for example, was powered until recently by shipments of machinery, cars and other products of its high-end manufacturing industries. Australia emerged largely unscathed from the downturn, thanks to booming Chinese demand for raw materials.

The German government also went to great lengths to discourage outright layoffs, instead encouraging employers to keep workers in a part-time capacity. At the same time, letting workers go in Europe is a much more costly proposition for big employers than it is in the United States.

Another challenge in the United States, Mr. Katz said, is the fiscal squeeze in the public sector, as the government continues to shed jobs at a rapid rate.

Reporting was contributed by Catherine Rampell, Annie Lowrey and Binyamin Appelbaum.

Article source: http://www.nytimes.com/2013/06/08/business/employment-in-us-lags-where-it-was-in-2007.html?partner=rss&emc=rss

Middling Jobs Gain Signals a Long Path to Healthy Payrolls

Economists were relieved that the numbers weren’t worse, given a string of other disappointing data in recent weeks, but noted that recent job trends are nowhere close to bringing the country back to full employment. At the current pace of job and population growth, it would take nearly five years to get the economy back to the low unemployment rate it enjoyed when the recession officially began in December 2007.

“I feel hopeless, and that just makes it hard,” said Sherry Lockhart, 53, of Enumclaw, Wash. She was laid off by the state’s liquor control board a year ago, when voters privatized liquor sales, and her jobless benefits are about to be slashed as a result of federal spending cuts. “I just feel I’ve done my best over the years, and I feel like I haven’t failed the system. The system has failed me, and millions more.”

Still, the cause behind the uptick in the unemployment rate, at least, was mildly encouraging: more people joined the labor force, perhaps indicating that Americans who have been sitting on the sidelines feel that they finally have a chance at finding a job.

“It’s a decent report, but it’s not by any means robust,” said Conrad DeQuadros, senior economist at RDQ Economics, a research firm. “It’s certainly not strong enough to get the Fed to make any significant changes at its meeting in June,” he said, referring to speculation that the Federal Reserve might consider tapering its stimulus measures if the jobs numbers came in strong.

The major stock market indexes — the Dow Jones industrial average and the broader Standard Poor’s 500 — were up in midday trading by about 1 percent.

Consumers have also been relatively upbeat recently. A New York Times/CBS News poll conducted May 31 to June 4 found that 39 percent of respondents believe the condition of the economy is very or fairly good, the highest share saying this both since President Obama took office and even since the recession began.

Despite signs of optimism from consumers and investors, other indicators of the health of the economy and the job market have been mixed. Average weekly hours and average hourly earnings, for example, have shown little improvement in recent months, according to the Labor Department. Wages are up just 2 percent from a year earlier, which bodes poorly for consumer spending.

“The wage gains are very disconcerting, and particularly strange when you see these surveys of employers who say they have positions they can’t fill,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “That means they should be bidding up wages.”

Wage growth may be held back by the composition of new jobs being created, he said, as there are a lot of jobs being added in low-paying sectors like retail. Restaurants and bars, for example, have added 337,000 jobs over the last year, and that category now makes up about 7.6 percent of all payroll jobs, its largest share on record.

The other big industry to add jobs in May was professional and business services, particularly temporary help services. Temp services employment has been growing for six straight months now, and as of May, about 2 percent of all American jobs were in the sector.

The federal government, on the other hand, lost 14,000 jobs in May, presumably a result of the across-the-board federal spending cuts, known as the sequester, implemented by Congress in March.

“With the recovery gaining traction, now is not the time for Washington to impose self-inflicted wounds on the economy,” said Alan B. Krueger, President Obama’s chairman of the Council of Economic Advisers, in a statement. “The administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to create middle-class jobs, such as by rebuilding our roads and bridges and promoting American manufacturing.”

Over the last three months, the federal government has shed 45,000 jobs, not including the furloughs that many federal employees are being placed on. The Pentagon, for example, has said that it would furlough 680,000 civilian workers starting in early July, with most workers losing about one paid day a week.

Though difficult to measure, the sequester has probably been dragging on the private sector, both because government contractors are laying off workers and because laid off or furloughed public workers have had less money to spend at their local businesses.

“There’s surely some sequester effects in there, but that’s something that will be disentangled in years to come,” said Mr. Shepherdson.

Article source: http://www.nytimes.com/2013/06/08/business/economy/us-added-175000-jobs-in-may-jobless-rate-rises-to-7-6.html?partner=rss&emc=rss

Weak Growth, but Britain Avoids Triple-Dip Recession

Although the data were hardly robust, and were still subject to revision, for now the indication that Britain’s economy eked out growth of three-tenths of one percent in the first quarter relieved some of the pressure on architects of the country’s austerity drive.

A triple-dip recession would have been a psychological jolt to consumers and raised more questions about the government’s strict deficit-reduction program at a time when bad economic news has been piling up in Britain, and while policy makers all around Europe are starting to focus more on the need for growth.

Instead, although the economy has been broadly flat for the past 18 months, Britain’s chancellor of the exchequer, George Osborne, was able to argue on Thursday that there were reasons to be encouraged by the small uptick in the country’s gross domestic product.

The rise in G.D.P. was in comparison to the previous three-month period, when the economy contracted by the same amount, the Office for National Statistics said. Two consecutive quarters of contraction constitute a recession.

The British economy managed some growth despite continued weakness in the construction sector, which shrank by 2.5 percent, and despite cold weather early in the year that some analysts feared would hurt economic activity.

Anemic as the growth might be, they were slightly better than most analysts predicted.

“Today’s figures are an encouraging sign the economy is healing,” Mr. Osborne said in a statement. “Despite a tough economic backdrop, we are making progress.”

Analysts cautioned that estimates of the type published Thursday are often revised, as more data comes available, and so the final figures could be lower.

“While preliminary estimates of G.D.P. growth need to be treated with a degree of caution, the breakdown of this release, if taken at face value, is a welcome surprise,” James Ashley, Senior Economist, RBC Capital Markets wrote in a commentary Thursday.

Although a member of the European Union, Britain uses the pound and not the euro. That gives it the advantage of having a floating currency, which has dropped in value against the euro this year. While that has helped keep its exports relatively more competitive on global markets, Britain is still some way from having a convincing recovery.

The data also highlighted the extent to which the country remained dependent on its large service sector, despite government efforts to rebalance the economy and to promote manufacturing.

Business services and finance together account for around 29 percent of British G.D.P. They contributed 0.1 percent to the 0.6 percent increase from the services sector.

Mining and quarrying, though a smaller part of the overall economy, increased by 3.2 percent.

Construction was down 2.5 percent.

“Doubts about the British economy’s performance over the coming quarters will remain,” said Nawaz Ali, a market analyst covering Britain for Western Union Business Solutions.

“However, the positive figures end the triple-dip threat and will certainly ease pressure on the Bank of England to shift course on quantitative easing, which has been a big worry for currency investors.”

Quantitative easing refers to moves by the central bank to pump more money into the economy, mostly by buying up government debt on the open market. The Bank of England has pursued such a course, even if critics have said the amounts spent have had little stimulative effect.

But the bigger debate across Europe is about the wisdom of tough austerity policies of the sort Mr. Osborne has pursued, and whether they are trapping economies in a cycle of stagnant growth, reduced tax receipts and higher debt. This week, José Manuel Barroso, president of the European Commission, said Europe may have hit the political limit of austerity-driven policies because of growing public opposition.

Last week, the International Monetary Fund raised doubts about the pace of Mr. Osborne’s deficit-reduction strategy and Fitch became the second credit rating agency, after Moody’s, to downgrade Britain from its prized triple-A status.

Employment figures, which had been one of the rare spots of good news for Mr. Osborne, also turned sour, with a jump of 70,000 in joblessness in the three months to the end of February.

Mr. Osborne has already had to slow his deficit reduction plans. But the opposition Labour Party has been calling on the coalition government led by the Conservative prime minister, David Cameron, to go further and change course.

“These lackluster figures show our economy is only just back to where it was six months ago and continue the picture of flat-lining,” Ed Balls, Labour’s finance spokesman, said in a statement. “David Cameron and George Osborne have now given us the slowest recovery for over 100 years.”

Article source: http://www.nytimes.com/2013/04/26/business/global/britain-avoids-triple-dip-recession.html?partner=rss&emc=rss

Union Membership Drops Despite Job Growth

 The total number of union members also took an unusually big drop, by 400,000, to 14.366 million, even though overall employment in the United States rose by 2.4 million nationwide last year, the B.L.S. said.

 The declines came during a period when the nation’s labor unions have been on the defensive. Wisconsin enacted a law in 2011 that curbed the collective bargaining rights of most of the state’s government employees, while Indiana and Michigan passed “right to work” laws last year that are likely to encourage more private-sector workers to drop their union membership so they do not have to pay any union dues or fees.

 The Bureau of Labor Statistics said union membership for private-sector workers dropped to 6.6 last year, from 6.9 percent in 2011 – a drop that has caused some labor leaders to voice fears that unions are steadily fading into irrelevance for many large employers.

The bureau said union membership among public-sector employees fell to 35.9 percent in 2012, from 37.0 percent the previous year, and there were more union members in the public sector — 7.3 million employees – than in the private sector, 7 million.

The number of union members is down from 17.7 million in 1983, when 20.1 percent of the nation’s workers belonged to labor unions.

In recent months, however, there has been an uptick in union activity, as evidenced by labor protests at Walmart stores across the nation in November and one-day strike by fast food workers in New York City last month. In both those job actions, the workers were protesting what they said were low wages and meager benefits. But union officials acknowledge that it is often hard, in the face of intense employer resistance and employee fears of layoffs, to persuade a majority of workers at a big-box store or other workplaces to vote to unionize.

  Richard Trumka, the president of the A.F.L.-C.I.O., the nation’s main union federation, responded to the labor report in a statement, saying, “Working women and men urgently need a voice on the job today, but the sad truth is that it has become more difficult for them to have one, as today’s figures on union membership demonstrate.”

Among individual states, North Carolina had the lowest unionization rate, 2.9 percent, the B.L.S. report said, followed by Arkansas at 3.2 percent and South Carolina at 3.3 percent. New York had the highest unionization rate, 23.2 percent, followed by Alaska at 22.4 percent and Hawaii at  21.6 percent.

Article source: http://www.nytimes.com/2013/01/24/business/union-membership-drops-despite-job-growth.html?partner=rss&emc=rss

Two Families Show an Uneven Rise in Consumer Confidence

But last week, Ms. Sam had already done five rounds of holiday shopping by the time she headed out for Black Friday specials in a suburb of St. Paul.

“The money was not there,” Ms. Sam said of last year. “But this year, I’m very, very confident.”

Americans are feeling better about the economy than they have in four and a half years, data released Tuesday shows. Preliminary consumer confidence results for November by the Conference Board showed an uptick in confidence, with the index rising to a preliminary 73.7, the highest level since February 2008, from 73.1 last month.

Retailers say they are hoping to cash in on that confidence, beginning last weekend with a deluge of discounts and specials meant to draw shoppers into their stores and onto their Web sites.

But while shoppers like Ms. Sam raised hopes that growing confidence might mean increased sales, economists and retail analysts have said many Americans — even some upbeat ones — continue to hold back. Concerns include volatile gasoline prices, the budget deficit and an impasse in Washington over taxation and fiscal policy.

“People are still cautious, and there’s still a lot of uncertainty,” said George R. Cook, professor of business administration at the University of Rochester’s Simon business school.

Recent shopping trips with consumers in regions with particularly high and low consumer confidence suggested some of the challenges retailers are facing. The holiday season is critical to retailers’ profits, and helps increase consumer spending and the overall economy, but while traffic over the Thanksgiving weekend increased, sales in stores fell on that Friday, traditionally the busiest day of the year. And retailers needed to offer steep discounts to draw customers.

While rising confidence seems to move in line with consumption growth, said Amna Asaf, an economist at Capital Economics, “it appears that the small uptick in November’s consumer confidence is unlikely to provide much of a boost to consumer spending. We need to get more certainty about the direction of the fiscal cliff before we can see a marked impact.”

Ms. Sam, the Minnesota shopper, said her economic situation improved significantly over the last year. But things were so tight for Veronica Lynagh, 29, of Columbus, Ohio, that she had put her family on a strict holiday budget. Consumer confidence in the region including Ohio was relatively low, at 62.9 in October, before rising to 76.3 in November.

Ms. Lynagh and her husband, Matt, allotted $700 for the family’s holiday shopping. To help stay focused, Ms. Lynagh created a color-coded spreadsheet to track income and spending. The couple say they will not buy any presents with credit cards, using debit cards only, and will only buy items on special.

“It would be really stupid to pay full price this season when all the stores have such good deals,” Ms. Lynagh said.

For the Lynaghs, the year has required a series of financial trade-offs. Ms. Lynagh quit her marketing job at The Columbus Dispatch to stay home with their baby, born last December. Mr. Lynagh, 30, a distribution manager at an auto-parts supply company, traded in his Dodge Ram for a Mazda S.U.V. to save $250 a month on gas. They have refinanced their home, saving $200 a month, and begun putting whatever they can into savings.

They are worried about the political environment, they said. “Our government is spending money we don’t have,” said Ms. Lynagh, who is starting a job as a marketing consultant.

While Ms. Lynagh minded their daughter after their Thanksgiving meal, Mr. Lynagh drove to a nearby Toys “R” Us, arriving 15 minutes after midnight. He trotted to the nearest uniformed employee and asked where an item on his list, a Fisher-Price animal farm, was located.

The employee guided him to it, but Mr. Lynagh did not bite.

“It’s on the list, but it’s not on sale,” he said. “If it’s not on sale, I’m not buying it.”

Retailers say they are counting on there being more Ms. Sams out shopping in the coming weeks than Mr. Lynaghs — and more places like St. Paul than Columbus. The region including Minneapolis and St. Paul had the highest consumer confidence in the nation last month, at 88.4, which jumped to 93 in the preliminary November figures.

(Consumer confidence is measured on a scale in which 100 represents the 1985 level of consumer confidence; a reading of 90 and higher indicates confidence, and the highest level on record was 144.7 in 2000.)

Ms. Sam, a Ghanaian immigrant, was ready for the holiday season, having paid off her $1,000 Visa bill earlier in the year. An energetic shopper, she hurried through five stores in five hours on the Friday after Thanksgiving. She grabbed a $49 Nook e-reader at Target for her brother in Ghana; a $24.99 Disney Cars bike for her son at Kmart; a $6.88 Disney Cinderella watch for her niece at Walmart; and a $49.99 luggage set from Kohl’s for her mother.

Every time a cashier told her how much she had saved, she squealed with delight.

Ms. Sam said it was all made possible by a grueling work schedule. A nurse’s aide, she took a second full-time job this year, adding an eight-to-12 hour evening shift to her schedule. She now works as many as 100 hours a week, for $13 to $15 an hour. (She took Thursday night off, so she could find some deals.) Her husband has a full-time engineering job.

“Sometimes I get tired,” Ms. Sam said, “and that is to be expected, but I want the best for my son. So I have to work hard for him, just so he doesn’t have to work a double job in order to survive.”

Ms. Sam seemed almost mystified by the extra income this year. “This year there are leftovers,” she said. “We can save money and put some into our son’s account. We still have extra money to spend.”

It was not enough extra that Ms. Sam could indulge after buying presents for relatives: she bought nothing for herself. “I don’t think about me,” she said. “I think about my family. If they’re happy, I’m happy.” She added, “Maybe when I’m done shopping, I’ll give Santa my list.”

Article source: http://www.nytimes.com/2012/11/28/business/two-families-show-an-uneven-rise-in-consumer-confidence.html?partner=rss&emc=rss

Euro Zone Economy Shrinks for a Second Quarter

Gross domestic product in the euro zone fell 0.1 percent in the three months through September compared with the previous quarter, according to Eurostat, the European Union statistics agency. The downturn was slightly less severe than in the second quarter, when growth contracted 0.2 percent. But it was the fourth quarter in a row of zero growth or worse.

Perhaps more worrisome, the data showed that Spain, Portugal and several other countries remain far from the kind of recovery that would bring increased tax receipts and help them overcome their debt problems. European leaders, who have benefited from a tenuous calm on financial markets in recent months, are likely to face additional pressure to ease the government austerity programs that have undercut growth in Southern Europe.

Economists at Nomura warned of “a depressionary environment in a growing share of the region.” In a note to clients, they said, “This negative loop has the potential to threaten the stability of the whole system.”

Some analysts had forecast a bigger decrease in output. But France registered a surprise uptick in growth and the Italian economy shrank less than expected, moderating the pace of decline across the region. Considered along with sagging factory output and business sentiment, though, the numbers Thursday reinforced expectations that the euro area as a whole could remain in recession well into next year.

“An end to the recession in the euro zone is still out of sight,” Christoph Weil, an economist at Commerzbank in Frankfurt, said in a note to clients.

Germany, which has the largest economy in the euro zone, continued to defy the crisis. The country grew 0.2 percent in the third quarter, slowing from a rate of 0.3 percent in the second quarter.

But data on exports, domestic demand and business sentiment indicate that growth in Germany will slow in future quarters because of falling demand from its neighbors.

A recession is often defined as two quarters in a row of falling output, though many economists say it is important to take other data into account. But with unemployment in the euro area at 11.6 percent and nearly 26 million people out of work, few would dispute that the region is in a deep downturn.

“Leading indicators suggest that the euro zone recession will broaden and deepen in the current fourth quarter,” said Martin van Vliet, an economist at ING Bank.

The European Union, which includes the 17 countries in the euro zone plus 10 more countries primarily in Eastern Europe, managed to return to growth in the quarter as several countries, including Latvia and Lithuania, recovered strongly. Growth for the Union as a whole was 0.1 percent compared to the previous quarter, after a decline of 0.2 percent in the second quarter.

But in Western Europe the economic decline spread to Austria and the Netherlands, which had been growing in previous quarters. The Austrian economy contracted 0.1 percent, while the previously healthy Dutch economy plunged 1.1 percent, catching economists off guard.

One reason for the decline was that Dutch consumers cut back purchases of cars, illustrating how the crisis in the European auto industry is having a broader effect. Slower export growth and a decline in construction also had an effect, according to Statistics Netherlands, the official data provider.

France grew more than analysts forecast, at 0.2 percent, because of increased exports and higher consumer spending. The Italian economy shrank 0.2 percent, which was less than expected and a less severe decline than in previous quarters. Foreign demand compensated for a decline in household spending in Italy, economists said.

There had been some signs in recent months that the euro zone, now in its third year of crisis, was beginning to stabilize. The exodus of money from Spain had stopped and borrowing costs for Spain and Italy have dropped out of the danger zone, thanks to a promise by the European Central Bank to intervene in bond markets. Exports from some of the troubled countries have risen, as companies put more emphasis on foreign markets to offset poor demand at home.

Mario Draghi, the E.C.B. president, said last week that although growth would continue to slow through the end of this year, he expected a slow recovery next year. The data Thursday could raise expectations that the E.C.B. will cut its benchmark interest rate, already at a record low of 0.75 percent, when its policy makers meet next month.

But the E.C.B. has already stretched its mandate to fight the crisis, and the burden may now fall primarily on government leaders. Germany could face added pressure to ease its insistence on drastic budget cuts by Spain, Greece, Italy and Portugal, especially after large protests in those countries this week.

Euro zone finance ministers are expected to meet next week to consider whether to release the next installment of aid for Greece, which it needs to avoid defaulting on its debt. Next month, European heads of government will hold a summit meeting to continue working on ways to make the common currency area more resilient, for example by pooling supervision of banks.

“It is essential that the period of relative calm on financial markets is preserved,” said Marie Diron, an economist who advises the consulting firm Ernst Young. “This will necessitate further quick progress on key reforms, including securing Greece’s financing and moving towards a comprehensive banking union.”

But disputes remain on the future shape of the euro zone, and there is a risk that leaders will not move fast enough. Economists said that much of the slowdown in business activity reflected uncertainty among managers, who do not want to invest until they are more confident of a recovery.

“The confidence shock will therefore continue to hinder investment and hiring decisions,” Mathilde Lemoine, an economist at HSBC, said in a note.

Article source: http://www.nytimes.com/2012/11/16/business/global/daily-euro-zone-watch.html?partner=rss&emc=rss

Netflix Regains 600,000 U.S. Subscribers

SAN FRANCISCO (AP) — Netflix has regained most of the U.S. customers it had lost following an unpopular price increase, signaling that the video subscription service is healing from its self-inflected wounds.

Fourth-quarter figures released Wednesday show Netflix Inc. ended December with 24.4 million subscribers in the U.S. That was up 600,000 from 23.8 million at the end of September. That means Netflix regained about three-quarters of the 800,000 it lost last summer after raising its U.S. prices by as much as 60 percent.

The subscriber uptick is a positive sign for Netflix after several months of upheaval that battered its stock.

The fallout contributed to a 14 percent decrease in Netflix’s fourth-quarter earnings.

Netflix made $40.7 million, or 73 cents per share, in the final three months of last year. That compares with income of $47.1 million, or 87 cents per share, a year earlier.

Investors had been bracing for a bigger drop-off. The company’s performance easily exceeded the average earnings estimate of 54 cents per share among analysts surveyed by FactSet.

Fourth-quarter revenue climbed 47 percent from the previous year to $876 million — $19 million above analyst projections.

Netflix’s stock soared $12.97, or more than 13 percent, to $108.01 in extended trading. During the regular session, it increased $2.37, up 2.6 percent.

The stock still has a long way to go to return to its peak of nearly $305, which was reached in July, about the same time that Netflix announced the price increase that outraged customers.

But the fourth-quarter results should help bolster confidence in Netflix CEO Reed Hastings, who had been skewered in Internet forums and analyst notes for miscalculating how subscribers would react to higher prices.

A contrite Hastings had promised that Netflix would work to lure back customers, and it managed to do so better than he had forecast.

Netflix expects its comeback to gather more momentum in the current quarter.

The company, which is based in Los Gatos, Calif., forecast that it will add 1.7 million U.S. subscribers to a service that streams video over high-speed Internet connections. That would be in line with how many streaming subscribers signed up in last year’s first quarter.

Netflix ended 2011 with 21.7 million streaming subscribers in the U.S. and another 1.9 million in Canada and Latin America. This month, Netflix introduced streaming plans in the United Kingdom and Ireland, too.

Most of the streaming gains will be offset by cancellations of DVD-by-mail rental plans, which Netflix is gradually phasing out. Hastings believes discs are becoming increasingly antiquated as technology advances. Netflix predicted its DVD subscriptions will fall from 11.2 million in December to 9.7 million in March. The company lost 2.8 million DVD subscribers in the fourth quarter.

While Netflix sees its emphasis on streaming as a smart long-term strategy, the DVD attrition will hurt the company’s financial performance this year. That’s because Netflix’s recent price increases made delivering discs through the mail more profitable, at least for now. Part of the reason is because Netflix is paying higher fees to obtain the streaming rights to exclusive programming, as well as video already available in other outlets and formats.

Netflix expects those factors to produce an annual loss this year, the first time that has happened in a decade. The company gave the first inkling at how big the setback will be with its first-quarter projections. The company predicted a loss of 16 cents to 49 cents per share.

The average analyst estimate called for a first-quarter loss of 29 cents per share.

Netflix projected first-quarter revenue of $842 million to $877 million. Analysts expect revenue of $849 million.

Article source: http://feeds.nytimes.com/click.phdo?i=ea2db8a2f9c4e2ee0314a6566c0aa384

Economix Blog: Weekend Business Podcast: Job Creation, Cantor Fitzgerald and Keynes

The government’s report on hiring, which showed no gain in jobs in August, provided fresh evidence that the recovery has fizzled without ever gaining momentum.

The report increases the pressure on President Obama as he prepares to deliver an address next week about job creation, on Republicans who have a starkly different approach to economic revival, and on the Federal Reserve, whose policy makers have been divided over what to do next, Shaila Dewan says in a conversation in the new Weekend Business podcast.

While the new data was worse than expected, several economists said the problem is not that companies have been laying off their employees, though there was an uptick in announced layoffs, but that they have delayed investing in new workers.

The 10-year anniversary of the Sept. 11 attacks on New York and Washington is approaching, and perhaps more than any other company, the brokerage firm Cantor Fitzgerald came to symbolize the horrors of that tragedy. Almost one-fourth of the people killed in New York City that morning worked for the firm. In a podcast conversation, Susanne Craig talks about the strategy of Howard W. Lutnick, who ran Cantor then and still does today. Mr. Lutnick has defied those who said that he and Cantor were finished, and he has rebuilt his firm.

In another podcast conversation and in the Economic View column in Sunday Business, Robert J. Shiller contends that the surge of stock market volatility over the last month cannot be explained by conventional means. He turns to the work of John Maynard Keynes, who once compared the stock market to a beauty contest. Keynes described a newspaper contest in which 100 photographs of faces were displayed, and readers were asked to choose the six prettiest. The winner would be the reader whose list of six came closest to the most popular of the combined lists of all readers. The best strategy, Keynes said, is to select those faces that you think others will think prettiest. Better yet, he said, move to the “third degree” — by picking the faces you think that others think that still others think are prettiest. Translated into the current market, investors appear to be trying to outguess one another.

 You can find specific segments of the podcast at these junctures: Shaila Dewan on the jobs report (23:36); news summary (19:23); Susanne Craig on Cantor Fitzgerald (17:23); Robert Shiller (8:05); the week ahead (1:05).

As articles discussed in the podcast are published during the weekend, links will be added to this post.

You can download the program by subscribing from The New York Times’s podcast page or directly from iTunes.

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Sides in Verizon Strike Trade More Accusations

Verizon said on Monday that there had been 143 acts of sabotage to telephone facilities since 45,000 of its workers went on strike Aug. 7.

Verizon officials did not offer definite proof that any particular act was sabotage. But they said it was suspicious that there had been three times the number of incidents in the last eight days as in the previous six months.

“It just isn’t feasible that there is not a connection because there’s been such an uptick since the calling of the strike,” Mike Mason, Verizon’s chief security officer, said. “Whoever is doing it, I consider it un-American and unpatriotic to attack critical infrastructure.”

Verizon officials said phone lines had been deliberately cut in Washington, D.C., Maryland, New Jersey, New York and other places. Washington’s police chief has urged residents to keep an eye out for such acts of sabotage.

Among the places affected were a nursing home and two police departments.

Verizon officials said the huge storms on the East Coast last weekend also caused some damage and failures, without specifying where or how many, but they said the company was fully focused on repairs.

Union officials said they opposed all sabotage and had repeatedly told their members not to engage in such acts. They also said that Verizon was exaggerating the number of incidents.

At the same time, the unions have their own complaints about Verizon, saying that several strikers have been struck by managers’ cars.

Candice Johnson, a spokeswoman for the Communications Workers of America, said Verizon was highlighting the sabotage to turn the public against the strikers, who are members of the C.W.A. and the International Brotherhood of Electrical Workers.

“This really does take away from what is the big issue in this strike: that Verizon is refusing to bargain and instead is demanding $1 billion in concessions from workers who earn middle-class wages,” she said.

Verizon is pushing the unions to accept far-reaching concessions, including a pension freeze, fewer sick days and having workers contribute far more toward their health coverage.

With the negotiations barely inching forward, the sides have accused each other of refusing to bargain in good faith. Verizon’s top spokesman, Peter Thonis, said the union’s $1 billion figure for concessions was exaggerated.

The communications workers union said a picketer in Massapequa, N.Y., had been hit by a private security guard leaving a Verizon facility, and another striker had been hit in the head by the side mirror of a manager’s van in Howell, N.J.

Mr. Mason said he had never asserted that the unions were responsible for the sabotage, suggesting that individual strikers may have acted on their own. “What’s important is the impact isn’t to a faceless company,” he said. “The impact is to the customers we serve, to government facilities, to individuals.”

Michael Ward, special agent in charge of F.B.I.’s Newark office, said the agency was “looking at this matter” because “critical infrastructure has been affected.” He said the F.B.I. was not taking sides in the strike.

David Zielenziger, whose 88-year-old mother lives in the assisted living facility at the Hebrew Home for the Aged in the Riverdale section of the Bronx, said he was unable to reach his mother on Friday. Employees there later told him that sabotage had cut off service to many residents, although one suggested it may have been tree- cutters gone awry. Verizon officials later said it had been sabotage, providing photos of a neatly sliced three-inch-thick cable nearby.

“There was no service Friday, Saturday or Sunday morning,” Mr. Zielenziger said, “It was really annoying.”

Robert Varettoni, a Verizon spokesman, said the company had obtained court injunctions in New York, New Jersey, Delaware and Pennsylvania that set rules for picketing to make it easier and safer for managers and other workers to enter and leave Verizon facilities.

Mr. Mason said Verizon had repeatedly told its managers and other employees to respect the strikers and certainly not to hurt them. He said many picketers had banged on employees’ car hoods as they approached Verizon facilities and that some picketers then pretended the vehicles had hit them.

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