Category Archives: Economy

Freakonomics Author Levitt Says Not to Worry About Sluggish Global Economy

Economy, , , , ,

Steven Levitt, professor of economics at the University of Chicago and renowned author of the provocative and sometimes startling bestseller Freakonomics, told attendees at an economics leadership forum in India that there is no cause for alarm over the poor image of the global economy.

No Fear

There is no reason to fear, Levitt explained, “It doesn’t feel like ‘The End’.”

“The US economy is even growing a little,” Levitt noted, referring to a two percent expansion in the last quarter.

As a matter of fact, “economies around the world have grown so much since World War Two, — unless there’s something horrific on the horizon which I don’t see — people will look back on these days as nothing more than a blip,” Levitt said.

Levitt added that, “We’re certainly not looking at something like the Great Depression.” Levitt also wrote an acclaimed sequel to Freakonomics, called SuperFreakonomics.

Rogue Economist

Proud of his nickname “rogue economist,” Levitt loves to challenge and question prevailing attitudes and assumptions about everyday life. For instance, he believes people are much too worried about terrorism.

Levitt decried the fact that governments spend enormous amounts of money combating terrorism when it is a “minor problem in the larger scheme of things.”

Car Accidents Worse Than Terror Attacks

“We can’t ignore the fact that many more people die in car crashes each year — in fact it really puts to shame (the casualty toll from) terrorist attacks.

“It is only our reaction to terrorism that is so extreme that it makes the problem look bigger than it actually is,” said Levitt.

Levitt was the recipient of the John Bates Clark Medal in 2003, an award given to the most influential economist in America under the age of 40.

First Visit to India

This was Levitt’s first visit to India and mentioned that the chaos he observed truly startled him.

“It’s amazing the country functions at all.”

“But it must be doing something right — the economy is growing like crazy,” he said, referring to the 7.5 percent forecast growth rate for the year.

Stock Market Ends Week with Best Gains in Almost Three Years

Economy, , ,

Bringing cheer to investors and businessmen, the stock market finished its best week in almost three years last week closing with a 7.4% gain in the Standard and Poor’s 500 Index.

Good News for Investors

This was the markets biggest gain since March 2009, fueled by good news about the US unemployment rate drop, which was a surprise to most economists.

The Dow Jones Industrial average ended the week up by 7%, the largest weekly gain since July 2009.

Unemployment Down

Before the market opened on Friday the Labor Department reported that the unemployment rate dropped down to 8.6%, its lowest number in 2 ½ years. Economists were expecting the unemployment rate to remain at 9%, but the drop is misleading; the real reason that unemployment dropped is not because more people are working, but because over 300,000 people without jobs have stopped looking for jobs. If they are no longer looking for work, then they are not counted as unemployed.

Peter Cardillo, chief market economist at Rockwell Global Capital offered an explanation for the improved behavior of the stock market:

“This market has been gripped with fear for a long time,” he said. “And I think some of these fear factors are beginning to dissipate.”

President Obama Takes Daughters Shopping to Promote Small Business

Economy, , , , ,

In order to give small businesses in America a boost, President Obama and his two daughters Malia and Sasha (ages 13 and 10 respectively) went on a shopping trip last Saturday.

Malia, Sasha and Barak Obama

Supporting Small Businesses

The day was promoted as “Small Business Saturday,” and was the second event this year designed to stimulate sales among small businesses.

The Obamas visited the upscale but diverse Du Pont Circle Center in downtown Washington, DC, spending time in the popular book store, Kramer’s.

“This is Small Business Saturday so we’re out here supporting small businesses,” said Obama.

Backbone and Promise

Kicking off what is for many sellers in the US the most important shopping season of the year, Obama signed a letter of support last Wednesday, emphasizing the fact that small businesses are, “are the backbone of our economy and the cornerstones of our nation’s promise.”

Re-election Hopes

The shopping trip comes at a time when Obama’s approval ratings have been wavering. The statistics for unemployment have been stuck at 9%, creating uneasiness about Obama’s chances of re-election in the coming presidential race which is now less than one year off. Obama’s hopes for re-election balance on two legs; one, getting the unemployment figures down, and the other, stimulating the country’s vulnerable economic recovery.

The Obamas bought eight books at Kramer’s on Saturday. Among them were: “Diary of a Wimpy Kid: Cabin Fever” by Jeff Kinney; “Descent into Chaos” by Ahmed Rashid; “The Invention of Hugo Cabret” by Brian Selznick, and the Pulitzer-Prize winning “The Brief Wondrous Life of Oscar Wao” by Junot Diaz.

Photo credit:Reuters/Yuri Gripas

Chinese Industry Is Slowing Down

Economy, Emerging Markets, , , , , ,

In November, the Chinese factory sector shrank more than in any month during the last two and a half years. This decline was caused by china’s domestic economic weakness according to a PMI Survey. The survey determines the HSBC purchasing managers index which showed a rapid decline from 51 in October to 48 in November. The PMI measures China’s industrial output which was the lowest it has been since March 2009. A score of 50 divides between the industrial sectors expansion and contraction.

Beijing has already publicized steps to help small businesses. Meanwhile, in china business is feeling the stress. Many businesses are trying to get new markets and to modernize their production processes so that they will be able to compete.

“Time is pressing. We have to invest more in technology and innovation to make our goods more competitive in the global market,” said Zhou Haichang, president of the Guoguang Electric Co Ltd. “This is the only way out, for Guoguang and most exporters.”

Zhou Jianqun, the general manager of Guoguang Electric, said, “Because of currency appreciation, nobody wants to make and accept long-term orders. I know some small industrial players have died out, as they were incapable of innovation, and many others are very anxious.”

Wang Hu, an economist at the Guotai Junan Securities in Shanghai, believes that by January there could well be decline in the Chinese bank reserve requirements, as Chin’s economy weakens.

For many Chinese companies it will be sink or swim. Companies that can improve, innovate and grow have a chance to succeed. Those that can’t will probably fall by the wayside. In the end, China will be stronger.

 

Black Friday Bargains and Extended Hours Boost Sales for Retailers

Economy, Lifestyle, , , , , ,

The day after Thanksgiving is known to retailers and consumers as Black Friday. On this day smart shoppers take to the malls in droves, gearing up for the Christmas giving season with slashed prices only available on this special day.

Consumers can expect highly reduced prices on everything from toys, clothing, electronics, and much more.

According to BlackFriday2011.com, a type of WikiLeaks for serious Black Friday shoppers who want to see advertisements before they get published, there is expected to be 220 million people bargain hunting this coming Friday, up from 212 million last year.

Black Friday is incredibly important to retailers. SpendingPulse, a market analysis outlet, estimates that Black Friday business is worth as much as $20 billion in sales, with many of the largest shopping outlets opening earlier with extended hours.

Toys R Us is planning on opening at 10pm on Thursday night, just enough time to barely digest the Thanksgiving Turkey. Sears will be open on Thursday morning, interfering with consumers’ ability to watch the annual Macy’s Thanksgiving Day Parade; and Walmarts is not taking any closing time at all.

“They’re all trying to take market share away from each other,” Cynthia Groves, head of global retail consulting at Newmarket Knight Frank in Washington.

The longer hours for the shops has many people complaining, and is not seen universally as a good thing:

“It’s a national holiday, not a national shopping day,” wrote one signer or a petition to not open Target at midnight on Friday morning. “Encouraging people to shop in the middle of the night is bizarre,” added another petitioner.