For extra credit. Summarize an article out of USAToday and add in how it relates to our readings. Be sure to say which page(s) the article applies to the readings in Mankiw.
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Economics for the School of Journalism 
http://www.usatoday.com/money/media/story/2012-04-22/college-newspapers/54630566/1
Katherine Clow
kecbp7
14133008
In the journalism world today, many news papers are seeing their funds cut, and are saying they may eventually see the end to printing their papers, and solely having them online. But now, this is also applying to college newspapers.
The decline in revenue is due to the lack of advertisements in the printed newspapers, and also the internet difficulties in making a profit. Many universities, including University of Illinois, University of Georgia, University of California-Berkeley, and the University of Connecticut are trying to keep their printed newspapers alive, but it just does not seem like it will be in the cards. There is still quality journalism written in these papers, it is just read and absorbs a different way than it used to be.
This article relates to productive efficiency, and how for newspapers, the productive efficiency has gone way down over the years. The newspapers used to get as much output as they could for a little input, but now they are losing resources and money, and have to reconstruct their ways. By switching over to the internet, the productive efficiency may go back up, but with the uneven profits of the Web, no one can know for sure.
“First Take: What’s driving commodities’ drop?” looks at different possible reasons for and results of the dropping price in commodities such as gold, copper, and oil. Gold prices are at a 2-year low and seem to be continuing their downward path, the price of silver has fallen 9% in the past week, and oil is at its lowest price in 4 months.
The article claims that these falling prices cite weak worldwide demand. For example, China’s GDP rose 7.7%, which is considered to be low; expectations were above 8%. It also points out that since Europe is in a recession, the responsibility to “pick up the slack” will fall on the shoulders of Americans, who will most likely be unable to do so.
This being said, prices will most likely continue to fall. The downside of low prices is deflation. In an attempt to fight deflation, the Federal Reserve has extremely low interest rates. This relates to our discussion of interest rates and inflation in the text. The lowering prices will cause the economy to stay weak, causing interest rates to stay low, and deflation to set in. Deflation also increases true return from lending and increase true cost of borrowing.
So with falling prices, people are less likely to borrow because of the higher cost of borrowing. Demand is low, which keeps the status of commodity prices at its current level. The economy will remain weak if prices keep falling, but if there is a demand for the gold, silver, or oil, there is a chance that they will increase again and prices will increase to their normal levels.
Link: http://www.usatoday.com/story/money/business/2013/04/15/first-take-deflation/2083733/
Michael Sojka
Student No. 14162957
PawPrint: mjs67d
“New Jobless Claims Climb Unexpectedly to a 4-Month High” highlighted the increase of people filing for unemployment for the first time. Economists had predicted that the initial claims for state unemployment would be 350,000, but the Labor Department said that the number had increased 28,000 to an unexpected high of 385,000. The national unemployment rate is still at 7.7%, but some are attributing the increase in unemployment claims to the sequester or even Easter.
We learned in our textbook that unemployment is measured from the labor force and not from the entire population, so it is possible that the labor force has increased and that people are actively (yet unsuccessfully) trying to get a job. However, the sharp increase in the numbers is more likely due to the government sequester or the holiday.
Speaking of the sequester, it is the cause of an $85 billion cut in spending, which decreased payroll and most likely contributed to these unemployment numbers.
We also talked about the difficulties of measuring different aspects through the unemployment rate, and it was noted that spring breaks made it difficult to accurately see what the true numbers were, but seasonal adjustments were claimed to have been made.
Link: http://www.nytimes.com/2013/04/05/business/economy/claims-for-us-jobless-benefits-rise.html?ref=economy
Michael Sojka
Student No. 14162957
PawPrint: mjs67d
In the USA Today Article, “Caterpillar profit shrinks; cuts outlook,” Caterpillar’s falling profits are discussed. The fall of profits has come from a slow down in the mining industry. Because mining companies do not need mining equipment from Caterpillar, the demand curve in the mining equipment industry will shift to the left. This will cause the equilibrium price and quantity of mining goods to decrease, and thus, for the total revenue to decrease because you are multiplying a lower price at a lower quantity.
In order to raise profits again, Caterpillar is attempting to lower costs. They are doing this by laying off workers and cutting costs on larger factory items. The decrease in cost will lower the average total cost curve to a point where the marginal revenue curve will be above it. At this point, the firm will once again be making profits because the total costs will be below total revenue. Profit is found by taking total revenue minus total cost.
Furthermore, the workers that have been laid off will suffer from a short period of frictional unemployment. This is the process in which workers are temporarily unemployed as they enter the job search process. This process is used to match up workers with jobs that best suit their skill set.
Also mentioned is how the firm’s revenue in China was increasing. This represents the importance of a global market, as they were able to lose less money because they continued to make money in other countries. This is a benefit of being a large business, as they are able to take advantage of the nationalization of their firm, unlike firms in small business that must rely solely on their own revenue to make profit.
http://www.usatoday.com/story/money/business/2013/04/22/caterpillar-earnings/2102717/
PawPrint: JED275
USA Today: “How Much Longer Can the Fed prop up stocks?”
http://www.usatoday.com/story/money/markets/2013/05/02/can-fed-keep-propping-up-stocks/2129787/
Maiya Putman
mjp5f5
14157198
The debate in this article is about whether the economy stimulating activities by the Fed can continue for much longer. The Fed has been the most efficient in stimulating the economy and keeping the debt and borrowing costs at a record low. The Fed’s most effective strategy was making the interest rate 0%. People are afraid that the Fed’s aid will end when companies fall short in their expected earnings. In Chapter 25 we talked about how the Fed manages the money supply. The article referred to the method of open market operations, which is the buying and selling of Treasury securities by the Federal Reserve in order to control the money supply. The Fed used these methods to stimulate the money supply by 136% according to the article. This article shows us that the Fed is much more powerful than we thought.
According to Richard Suttmeier, a chief market strategist, the Fed’s policies are “a mirage.. and will end”. He hints that the policies aren’t healing our economy fast enough.
Can Hooters Survive Middle Age?
http://www.usatoday.com/videos/money/business/2013/04/27/2116489/
Jazmin Burrell
JMB998
16068527
This video talks to the management of the Hooters establishment about their projection of their future in the restaurant business.Over thirty years in the business and the controversy surrounding their logo and workers, and Hooter’s has been considering making some changes.
They will probably change their uniforms to something a LITTLE less revealing. They also want to be known for having overall good food and not just wings. They plan on making some of their meals fresh from the kitchen instead of from frozen imports.
Even though they want to change some aspects of the brand, they plan on keeping the same logo and company name. They also will not change their hiring bias of attractive, young, slim women in revealing clothes. They want to slightly change the uniform but not to the point where they would be wearing turtlenecks.
This makeover that Hooter’s plans to undergo falls under the economic concept of brand management. Although Hooters has been in a lot of controversy for aspects of their company’s image, in the long run, it’s proven to be successful. They are still a popular restaurant. That controversy has made them iconic. Hooters has successfully defended their brand name. They have successfully differentiated their product from the competition and made themselves a different type of restaurant chain that almost everyone knows exists.
If they were to change their name, logo and employees, they jeopardize their differentiation from the market.
page. 445-446
The article, “Mortgage rates fall, 15-year fixed at record” in the USA Today, talked about the average rate of mortgages and how they fell this past week. The average rate went down 3.4% and is close to the record low from late November. This was the average for a 30-year-fixed mortgage.
The average for a 15- year fixed-rate mortgage was also at its lowest of 2.61%. These numbers are really good for the housing market. The low mortgage rates are increasing the housing market, which has been in decline over the past couple years.
Many aspect of the housing industry have increased recently, such as existing home sales, new sales, and the U.S. house price index, but this is still not enough. The housing industry is sill 13.6% below where it was in April 2007 before the financial crisis hit.
We talked about the financial crisis of 2007-2009 in chapter 25, which relates directly to this article. In 2007, housing prices fell because of the shadow bank system and people who had loaned money from the bank defaulted on their mortgages. The default of mortgages caused investors to suffer heavy losses and investment banks had to sell their securities. After the crisis hit in 2007, the Federal Government worked to stop the financial crisis and recent strides in the housing industry has shown that things have been improving. This article has evidence that the financial crisis is almost over and the economy is in a period of expansion.
Link: http://www.usatoday.com/story/money/business/2013/04/25/15-year-mortgage-rate-record-low/2112351/
Abby Kass
ajkd9f
14156065
In the article, “Sprint Nextel 1Q net loss shrinks on lower expenses” from the USA Today talks about how Sprint Nextel did economically in the first quarter. Even though Sprint is a target of acquisition by Softbank and Dish Network, the company did better this quarter than last
The net loss of the company was $643 million and earlier last year it was $863 million. The company is trying to revamp their business and attract new customers as they compete with other cell phone companies. They have added 4G LTE to their phones along will offering better smart phones.
These changes are helping Sprint a little, but the company is still experiencing a loss. Many of their customers are leaving to switch to other companies. Even knowing this fact, the CEO believes that this is only the beginning and that the company will continue to work this year to minimize their net loss.
Net loss is the amount by which total cost exceeds total revenue. We talked about this in Chapter 11. In that chapter we discussed the idea that a firm should always try to maximize their profit. The profit-maximizing rule says that if marginal revenue is less than marginal cost, than the company should decrease production. The firm wants to produce a quantity where marginal revenue equals marginal cost. Where Sprint is right now, they are not following this principal. Last year they lost a lot of money and are trying to find ways to revamp their business in order to make more money. This quarter they have loss less than before, but it is still not enough. According to what we learned, Sprint should decrease production and focus on maximizing their profits.
Link: http://www.usatoday.com/story/tech/2013/04/24/sprint-1q-earnings/2108941/
Abby Kass
14156065
ajkd9f
According to the story “A gust of wind from D.C. helps the Economy,” Tim Mullaney writes about how a surge in wind energy products is helping to boost the economy. In fact, the government estimated that the fourth-quarter economy has increased by .3%. The main reason, according to the story, was due partly to scrambling by developers to get projects complete before a tax credit expired at the end of the year. It ended up working.
According to the story, the wind industry invested about $25 billion in new facilities last year, which in turn increased employment (75,000 people). These companies are continuing to work and more and more developments are in the works as construction this year will start to begin because of a one-year extension of the credit.
This article relates to our readings because the wind-powered efficiency is helping out the economy through GDP. A tax credit’s one-year renewal could keep surge going in 2013, improving the potential GDP in the long run. See, GDP is increasing because the developers hustled to get the projects completed by the end of the year, which would count after the initial GDP estimates were released.
The Commerce Department said investment in commercial structures rose about 16.7% in the fourth quarter, which is more than the last report (5.8%). Developers, according to the article, added over 8000 megawatts of wind-related electricity, which brought the US total to 60,000 megawatts. This helps power 14.7 million homes. Helping the GDP, providing jobs and giving our county’s homes electricity—who wouldn’t want more wind?
JEN8T2
http://www.usatoday.com/story/money/business/2013/03/28/wind-energy-gdp/2028229/
THIS IS MY FOURTH ARTICLE: 2ND USA TODAY ARTICLE
Is it time to ride the stock market like a money-making machine? According to the article, “What to watch: is stock’s 2013 success a sign to sell?,” it might be a wise choice. For the first time in over 30 years, the first four months of the year were all winners for stocks. The stock market was up in January. It was up in February, and March and April, as well.
This relates to the topics we discussed in the textbook about the stock market. We learned it is an important part of our economy. We learned it is a tough game to play, and a tough game to win. It’s hard to tell what will happen.
The senior technical strategist at Schaeffer’s Investment Research, Ryan Detrick, said that a hot start to a year normally means high profits are in the future. But his findings didn’t necessarily mean May will be an “up” month, too. Shell summed it up at the end of his article perfectly: “Momentum’s hard to kill in a bull market.”
JEN8T2
http://www.usatoday.com/story/money/markets/2013/05/02/stocks-good-year-so-far/2130877/
The Food and Drug Administration may have to reduce inspections due to budget cuts. The FDA is trying to “absorb” the cuts without having to put people’s health at risk by cutting inspections. These cuts will be made as quickly as September 30th..
Commissioner Margaret Hamburg told USA TODAY that they might be forced to cut 2,100 inspections, which is about 18% of the annual total. Since the FDA oversees food safety, they are trying to reduce these cuts to the best of their ability. They believe that with the some reorganizing of cutting funds, they will be able to keep the inspections.
The FDA is trying to use the budget cuts by taking out funding in other areas such as traveling and training. Receiving $40 million towards the Food Safety Modernization Act also helped them. The government and other organizations realize the importance of the matter and hope to find new ways of helping the FDA.
This article relates to our text because we have discussed in the past how businesses have to change to keep running when things like budget cuts are made or when the price of a product goes up. This also relates to our text because this is a good example of how businesses being affected can affect us. With the FDA receiving budget cuts, we as a public might not have safe enough food to eat.
Link: http://www.usatoday.com/story/news/nation/2013/05/03/budget-cuts-food-safety-fda-usda-sequester/2129597/
Ashlan Fiester
Student Number: 14138108
Pawprint: amfr56
Microsoft has made the switch from Hotmail to Outlook. They now have more than 400 million accounts. The switch has provided Microsoft with a more modern look and has provided them with the ability to upgrade with the rest of the world.
They have new features, such as an updated calendar and app that can be used on phones. With the new change, they are making sure to listen to what their customers like and dislike in order to keep their customers happy.
Users that have Hotmail accounts are still able to keep their Hotmail accounts. If they choose to, Hotmail users will be able to change their current account to an outlook one. They believe Hotmail to be dead and are working with their customers to keep updated and making them happy.
This article relates to our text because it talks about a company changing part of the market to meet the consumers needs. This also talks about change in technology causing businesses to upgrade constantly to be able to compete with other businesses. Microsoft is changing their ways to get more consumers using their product and to be able to compete with other businesses by updating their content.
Link: http://www.usatoday.com/story/tech/personal/2013/05/03/microsoft-hotmail-outlook/2132073/
Ashlan Fiester
pawprint: amfr56
student number: 14138108
http://www.usatoday.com/story/money/business/2013/05/03/april-jobs-investors-analysis/2131135/
Panqian Yang
14174164
pytx5
According to a May 3 article in USA Today, the nation added 165,000 jobs in April, well above economists’ consensus estimate of 148,000, which is good news for stocks and bad news for bonds. Both the Dow Jones industrial average of 30 stocks and the broad S&P 500-stock index were trading in record territory after Friday’s jobs report.
The article explains that more people employed means more consumer demand — and, ultimately, greater consumer confidence. However, it is bad news for bonds. Bonds are IOUs, and as the economy improves, demand for loans increases, and interest rates rise. Rising rates, in turn, drive down the price of bonds.
Many of the terms in the article are quite familiar, such as stock, bonds and unemployment rate. One thing I didn’t think of is that the employment situation may affect monetary policy. Everything in economy is inter-related. A figure change seems to be irrelevant to our life, but its impact may affect us in other forms.
http://www.usatoday.com/story/money/markets/2013/05/01/treasury-yields-at-new-2013-lows/2127279/
This article explained how the bellwether 10-year Treasury note dipped to a 2013 low of 1.62% because of deflation. The reports show evidence of a weakening economy. Fixed income traders will accept lower yields in falling prices periods. Crude oil prices dipper to 90$ a barrel Wednesday and gold prices also fell more than 20$.
This relates to the book on page 663 because it defines deflations as the rare occasions when the price level falls, exactly like it is doing now. Also on page 851 it references that the mony supply is growing at a slower rate than the real GDP.
Dominique Chutich
dmc279
14128922
usatoday.com/article/news/2131167
This USA Today article talks about how unemployment rates have fallen in 90% of large U.S cities in March, but it mostly happen because people stopped looking for work instead of actually finding jobs. it fell to 7.6% from 7.7% in February. But, hiring slowed and employers added only 88,000 jobs in March, when usually its 188,000 per month. There is no signs of long-term improvement.
This relates to the book on page 643. The reason this rate fell was because people stopped looking for jobs. Technically those people would be called “discouraged workers” because they aren’t actively looking for work, so they are not in the labor force. This could be due to being retired, home-makers, full-time students, and people on active military service, in prison or in mental hospitals. But it also includes people that have given up and thats what the case in these findings is.
Dominique Chutich
dmc279
14128922
http://www.usatoday.com/story/money/markets/2013/05/02/can-fed-keep-propping-up-stocks/2129787/
Maya Garnaat
meg266
18050333
“How much longer can the Fed prop up stocks?” discusses our nation’s central bank and its recent actions and effect on the economy. The Federal Reserve has been boosting the stock market since 2009 with its policies. The article cites programs like QE (of quantitative easing) and “ZIRP,” the zero percent interest rate policy, as driving forces behind the market’s recent growth from both this year alone and the last four years. According to the article, these policies have caused costs and interest rates to go down, which in turn encourages consumers to act on their finances. The stock market is also seeing low interest rates and high dividends.
It appears that the Fed will be continuing its easy-money policies and might even do more to stimulate the economy in the future. This seems like very positive news, but investment strategist Nicholas Sargen warns that this is more of an illusion and will result in disappointment.
The article relates to the chapter in our book on the Federal Reserve System. It gives an example of how the Fed functions. The book states that the Fed is responsible for managing the country’s money supply and does so by manipulating open market operations, the discount policy, and reserve requirements (841-843). The zero percent interest rate policy mentioned exemplifies the discount policy tool that the Fed uses to control the market. Also included in the article is quantitative easing. This is not included in the book, but was on one of the powerpoints in class. It is another monetary policy the Fed uses when the other three are not effective enough. The article is an example of how these policies work together in real life.
The page numbers come from the old edition (green cover) text book.
http://www.usatoday.com/story/money/business/2013/05/05/shoppers-face-hurdles-finding-ethical-clothing/2124659/
Maya Garnaat
meg266
18050333
This article exposes the reality of working conditions in overseas factories which provide many of us consumers with clothing. A recent disaster in a Bangladesh clothing factory which killed hundreds of workers as well as a previous fire in another factory in the country have brought light to the hazardous conditions of clothing factories in poor countries where we get most of our clothes. Consumers have done little in response because most of them where unaware of the situation. There is only a very small fraction of clothing companies that ensure that their products are made safely and ethically. Some companies such as Wal-Mar and The Gap Inc are taking measures to avoid unethical producers, but no national legal solution has been agreed upon. The organization Fair Trade USA marks products that were made overseas and meet their criteria for fair wages and safe conditions for their workers. This still only accounts for a very small portion of clothing sold in the US.
The article applies to the topic of globalization covered in the textbook. Globalization is the process of countries becoming more open to foreign trade and investment. Buying clothes or products to make clothes (such as cloth) is an example of this. Globalization can help countries grow their economies. For the United States it means that we can import goods at a much cheeper cost than producing them here. Unfortunately, in the situation illustrated by the article, the act of globalization has come at a cost and we have unknowingly supported companies that employ poor people in unsafe and unfair conditions. The manufacturers in struggling countries like Bangladesh seek to maximize their labor productivity, but in doing so violate ethical standards that the United States is unable to enforce overseas.
Pages 729-730
Can Hooters Survice Middle Age?
http://www.usatoday.com/videos/money/business/2013/04/27/can-hooters-survive-middle-age/2116489/
Katherine Garrett
KEGZB8
14137171
For 30 years Hooters has been serving hot wings, by hot girls. However, due to upcoming ‘breastaurants’ Hooters is now considering changing it up a bit in order to stay in the loop.
This video discusses the minute changes Hooters is considering changing in order to reinvent itself. Such changes include a slight change in the uniform as well as getting back to ‘the roots’ of its recipes.
Managers hope to have people want to come in for the food, and not just the attractive women serving it. With much controversy around the name they believe a slight change will be in the restaurants best interest in order to draw in a larger crowd of people.
Despite the possible changes in the uniform and food, Hooters will definitely not be changing its name and logo. The name is well known and is guaranteed to attract a crowd. Hooters has strived to maintain their brand and the differentiation of their product over their competition. The iconic uniforms and classic name help to do so. Should they change their name, uniform, or logo too much they jeopardize losing what makes them stand out.
Page 446- brand management
Student ID: 14152154
PawPrint: KPK535
This particular April 2 USA Today article points out the growth in large automobile makers like General Motors, Ford Motors, and Chrysler. It is an indicator of the growing economy–more people will buy cars if they are making more money. Much like how Netflix has bounced back, it appears as if the auto industry is too bouncing back, slowly but surely.
Due to the higher DEMAND for cars, the price has increased. Though a simple economic concept, it is a vital one. The increase in the sale of cars will surely impact the US economy positively. More money is being spent.
As discussed in chapter 19, economic expansion is taking place after a rough, multi-year recession. Demand for automobiles simply was not there. When faced with tough economic situations, people found ways to be “thrifty” in terms of transportation. This helped the individual, but greatly hurt the automobile industry. No matter how much these companies marketed new products, nothing worked due to the dire system. Now, hope has made itself present, and automobile sales are ever-increasing.
Decreasing employment rates equip consumers with the necessary resources to purchase automobiles. The growing trust in the economy has also enabled consumers to purchase automobiles.
General Motors, a focal point of the news for the last few years (in a bad way), finally can embrace a higher rate of consumption for automobiles. The same can be said for the other big two companies. Though Detroit is still struggling, there is hope for these companies and the economy on the whole.
Student ID: 14152154
PawPrint: KPK535
This particular April 2 USA Today article points out the growth in large automobile makers like General Motors, Ford Motors, and Chrysler. It is an indicator of the growing economy–more people will buy cars if they are making more money. Much like how Netflix has bounced back, it appears as if the auto industry is too bouncing back, slowly but surely.
Due to the higher DEMAND for cars, the price has increased. Though a simple economic concept, it is a vital one. The increase in the sale of cars will surely impact the US economy positively. More money is being spent.
As discussed in chapter 19, economic expansion is taking place after a rough, multi-year recession. Demand for automobiles simply was not there. When faced with tough economic situations, people found ways to be “thrifty” in terms of transportation. This helped the individual, but greatly hurt the automobile industry. No matter how much these companies marketed new products, nothing worked due to the dire system. Now, hope has made itself present, and automobile sales are ever-increasing.
Decreasing employment rates equip consumers with the necessary resources to purchase automobiles. The growing trust in the economy has also enabled consumers to purchase automobiles.
General Motors, a focal point of the news for the last few years (in a bad way), finally can embrace a higher rate of consumption for automobiles. The same can be said for the other big two companies. Though Detroit is still struggling, there is hope for these companies and the economy on the whole.
http://www.usatoday.com/story/money/cars/2013/04/02/march-2013-auto-sales-general-motors-ford-chrysler/2046985/
In the article “Barnes & Noble, Microsoft team up in Nook reader”, the two companies hope to team up to create the e-book for college textbook businesses. Both companies are hoping to launch the Nook software on the iPhones and Windows phones as well. With the e-book sales booming, Barnes and Noble is estimated to account for about 25% of the U.S. e-book market. This joint in producing Nooks is an example of merging vertically. According to the text, a vertical merger is a merger between firms of different stages of production of a good. In this case, Microsoft is making the computer program that will be used on the Nook. While Barnes and Noble will work with Microsoft produce the Nooks and distribute them. According to William Lynch, CEO of Barnes & Noble, he says that “the relationship with Microsoft is an important part of our strategy to capitalize on the rapid growth of the Nook business”. Microsoft gains an advantage with 18% invested in the sales of the Nook. Microsoft had a failed attempt at creating an e-book in 2008, however with their team effort with the popular bookstore, they will seek great sales and profits. They will also benefit because they can launch their Windows 8 software onto the Nook. With so many other e-books out in the market, the Nook will be placed in a monopolistic competition market structure which there are low barriers to entry and many firms compete by selling similar but not identical products.
Erica Tello
Student Number: 14120955
etqk7@mail.missouri.edu
Link: http://www.usatoday.com/money/media/story/2012-04-30/barnes-and-noble-microsoft-nook-college/54637902/1
http://www.usatoday.com/money/economy/story/2012-04-27/first-quarter-gross-domestic-product/54574828/1
Katherine Kreider
18048185
klkfk2@mail.missouri.edu
In the USA Today article “Economy Slowed to 2.2% Growth Rate in Q1,” reporter Tim Mullaney discusses how and why the GDP increased in the first quarter of 2012. In Chapter 19, the equation for GDP is described as Y= Consumer spending + Investment + Government spending + Net exports. In the first quarter of 2012, we saw a 2.9% increased in consumer spending. Economists saw this increase as the most important part of the GDP increase, for they believe that this shows that the economy can support the creation of new jobs. They also believe that this will help encourage businesses and investment spending will rise, which will help increase the growth of GDP as well. During this quarter, investment spending rose by 1.7% and government spending dropped by 3%, but if the growth in consumer spending continues, these components of GDP should increase as well.
http://www.usatoday.com/story/money/business/2013/04/07/medical-marijuana-industry-growing-billion-dollar-business/2018759/
Chelsea Surmanek
Student ID: 14156163
PawPrint: cms28b
This USA Today article talked about the growing market of legal marijuana dispensaries. With the recent legislation making medical marijuana legal in 18 states and Washington DC, a large market for medical marijuana has been introduced into the American economy. The estimated legal market gross was $1.5 billion 2011, and is expected to quadruple to $6 billion in 2015.
This article touches on many economic terms we have discussed in class. First, it discusses the topic of markets. The market for legal marijuana could be considered either a perfectly competitive market (p. 369) or a monopolistically competitive market (p. 402). It could be a perfectly competitive market because all grown marijuana is the same, and because there are so many sellers, one dispensary closing wouldn’t really affect the other. This market could also be considered perfectly competitive because the barriers to entry are low.
On the other hand, the medical marijuana market could be considered monopolistic competition. Each dispensary could claim to have different, “better” marijuana than it’s competitors, and each dispensary can charge slightly higher than the others because of its slightly different product.
This article also talks about the economic idea of types of firms in a market (p. 238). The article discusses several examples of single people (sole proprietorships, p. 238) and groups of people (partnerships p. 238) who are interested in starting a medical marijuana business. Those going into the business alone will have the greatest (financial) risk, but will also get all the control over every aspect of the business. Groups of people who want to go into this business have less liability, but also have to confer with the owners to make business decisions.
This article had some interesting points. The legalization of marijuana in some states (and more states to come in the future) will create an entire new market in the American economy.
This article for the USA Today is outdated (12/02/11) but I wanted to find an article about the financial structure of the Green Bay Packers (Actually, the Green Bay Packers, Inc.). The Green Bay Packers, Inc has been a publicly owned corporation since 1923.
I am a sports person so my mind is always connect things I encounter in everyday life with the sports world. When we discussed stocks in class, I couldn’t help but think about how interesting the Green Bay Packers are. Green Bay is the only organization in the NFL with multiple owners. At the time this article was written, there were 112,205 shareholders of the Green Bay Packers. They held another sale shortly after the article so there are more shareholders now.
As mentioned in Chapter 8 of the text, the shareholder elect a Board of Directors to represent their interests as well as a CEO. The Green Bay Packers, Inc also elect an executive committee. There is a definite Separation of Ownership from Control with this corporation but annual shareholder meetings are held to ensure that the voice of ownership is being heard.
Many people don’t realize that professional sports are business just like any other firm. They are rational, respond to economic incentives, and make optimal decisions at the margin just like any individual consumer. When sport organizations have to make decisions and the opportunity cost is high, it may enrage fans, but what fans have to understand is that, at the end of the day, they aren’t the ones who are impacted financially by their beloved team’s decisions. That is, unless they are a shareholder of the Green Bay Packers, Inc.
http://usatoday30.usatoday.com/money/perfi/stocks/story/2011-12-02/green-bay-packers-stock-sale/51587896/1
http://www.usatoday.com/story/money/business/2013/03/29/feb-state-unemployment-rates/2034439/
Chelsea Surmanek
Student ID: 14156163
PawPrint: cms28b
This USA Today article talked about the unemployment rates in America as a whole, and in certain states. The article talked about how the unemployment rate fell in 22 states, and number of jobs rose in 42 states.
This article focuses on the economic topic of unemployment (p. 640) and the business cycle. Because of the recession in 2008-2009, America faced high unemployment, high inflation, and experienced the recession side of the business cycle (p. 614). Although now the economy is in the expansion part of the cycle, America has had a long, slow comeback from the recession five years ago.
Similarly, as we discussed in lecture, the demand for jobs has been much greater than the supply (p. 79). This article talked about how some states have seen increases in jobs, which leads to a decrease in unemployment.
This article focuses on the macroeconomics topic of unemployment. Although the economic recession occurred almost 5 years ago, the American economy has seen slow progress into the expansion side of the business cycle.
Bmsd45
14140853
http://www.usatoday.com/story/money/markets/2013/03/07/stocks-thursday-3-7/1969957/
The USA Today article “Dow closes at record high for third straight day,” reports that the Dow Jones industrial average jumped again on Thursday, March 8, 2013. The Dow closed on a record high for the third-straight day. Specifically, the index finished up 33.25 points to 14,329.49. There is also positive news that the number of people seeking unemployment benefits last week dropped to its lowest level. This low number of received unemployment benefits helped push the Dow higher. Michael Farr says he does not believe it is normal, and investors are getting ahead of themselves. The U.S. Central Bank began buying bonds in January 2009 and is still buying $85 billion each month in Treasury bonds and mortgage-backed securities. This has kept the interest rates near historic lows, the article states, reducing borrowing costs. These reduced costs serve as an encouragement to investors to move money out of conservative investments like bonds into stocks.
This article relates to what we’re learning in class over the stock market. As mentioned in Chapter 8, bonds are financial securities that represent a promise to repay a fixed amount of funds(243). A stock is a financial security that represents partial ownership of a firm(245). The incentive to buy stock is higher now because investors are weighing the costs and benefits, siding with taking a risk. Another big factor of the Dow’s news, is when the February employment record is released.
Name: Rivu Dasgupta
Pawprint: rdwv9
Article: http://www.usatoday.com/story/money/business/2013/03/11/more-work-nap-rooms/1977603/
The headline of the USA today article notes the recent increase in employers supplying “nap rooms” for their employees. At first glance, one might question the validity of such a gesture in terms of overall productivity – one might mark off the recent increase in permissible sleeping on the job as a mere humanitarian gesture, but in reality, the move happens to be relatively profitable when one takes a glance at the concepts of trade offs, marginal decisions, and opportunity costs.
Economics is based on the principle of scarce resources; because of said scarcity, trade offs between various resources exist. In effect, when companies permit their workers to nap on the job, they’re making a marginal decision regarding the trade off between time and productivity. Contrary to many popular colloquial idioms, time in and of itself is not money; monetary profit is better gauged using a productivity to time ratio. In essence, then, what firms who implement such nap rooms are doing is sacrificing time for better work. In this case, time would be the opportunity cost, the marginal decision would be choosing productivity over time (as well as how much sleep to permit), and the trade off is between productivity and time, as well.
The benefits stemming from such a practice are noted in the article, as well as some additional advice to get a proper nights sleep (a means to achieve the desirable end of productivity). Apart from any personal gains and benefits the individual garners, as well as general employee satisfaction (which in turn, could theoretically attract workers), the increase in business productivity conducted by the employees after only a 20 minute scheduled nap is both palpable and significant. Noted in the article, “it’s like hitting the restart button.”
In a world of scarce resources, time can often be considered a contemporary rarity. Needless to say, sacrificing an already rare resource for productivity can be seen as a bold move; however, in terms of profits and general philanthropy, the practice seems to have paid off.
Name: Rivu Dasgupta
Pawprint: rdwv9
Article: http://www.usatoday.com/story/money/columnist/krantz/2013/03/10/jcpenney-dell-starbucks-restructuring/1963153/
The USA Today article covers the financial standings of various companies. The companies briefly mentioned are JC Penny, Dell, Starbucks, and Apple. As it turns out, the former 3 companies all have something in common; they suffered staggering financial losses in the last 6 or 7 years, and as a reaction to said losses, the companies hired a notable, visionary individual as their Chief Executive Officer, or CEO. The overbearing theme of the article involves how these changes in management affects the decisions of investors; notably, how long the investors should hold on to the stocks for their respective companies, and when they should “face the music” and cut their losses.
JC Penny hired Ron Johnson to reverse the companies misfortunes – Ron Johnson being a notable figure in the incredible success story that is the Apple retail store, a facet of Apple’s structural design that certainly contributes to the companies overwhelming monetary success. Naturally, with such a “mastermind” spearheading JC Penny, investors threw their money towards the company and bought shares hoping to be recompensed for their investments. However, notably, JC Penny did not improve; in fact, it swam even farther down the metaphorical economic trench. Unfortunately, investors are now faced with a relatively difficult decision – to wait and see if the brilliant Ron Johnson manages to turn the company around, or whether to leave and accept the loss. This involves a marginal decision; to risk potential gain or to incur losses that in theory, could increase. The company Dell was noted to be in a similar situation. The article masks this economic decision using terms such as patience.
The article noted a success story as well; Starbucks. The company rehired visionary Howard Schulz, who brought the company back from it’s relatively dismal financial standing to record all time highs. Investors, in this case, were rewarded in their gamble, and must perform a much more pleasant marginal analysis; whether to risk minimal losses, or whether to incur continued potential gain.
The article plays with the marginal analysis that investors must perform. The article certainly incites a unique feeling in the reader; marginal analysis is seen as a very risky and often failing endeavor, even when investing in those who have noticeable success in their previous endeavors.
Ashley Holt
aahyt3
LInk: http://www.usatoday.com/story/money/markets/2013/03/06/dow-record-wall-street-workers/1966509/
This article revolves around the record-breaking numbers of the Dow Jones industrial average from last Tuesday (3/5). The Dow Jones rose 125.95 points, closing at 14,253.77, which broke the previous record from October 2007 by almost 90 points.
News outlets whet crazy suggesting that this was a sign that the economy was being revived from the “worst recession since the 1930s”. However, Wall Street workers were less than impressed. In fact, some were confused as to why it was such a big deal. In one way or another they all suggested that this was not a complete representation of the economy as a whole. That, just because the numbers look promising, it doesn’t mean that things are guaranteed to be back to normal any time soon.
When the economic crisis hit, a lot of money was lost, especially on Wall Street, and the “deep financial scars” are still very much so prevalent. Some are still being left to dig themselves out of the financial hole that the crisis put them in. Some record-breaking numbers aren’t promising anyone that they are going to get their money back on their investments, let alone make a huge profit.
This relates to our Chapter 8 lesson on the stock market. We learned that those who invest in stocks have little security, and are not promised a return. They are risking their money and investing their money in a business based on constantly changing information and predictions. The melancholy nature of Wall Street is a result of learning the hard way that there is absolutely no way to predict the future on Wall Street, and good news one day is just as influential as no news for an entire week.
In fact, America’s economic recovery has been a slow one and unemployment is also slowing decreasing. So unless the Dow Jones can predict where the market is headed, it can provide jobs (the opposite is currently taking place), or it can return the losses from the failed investments acquired during America’s economic crisis, there are few reasons why these numbers should indicate any form of celebration or suggest a quicker recovery.
Name: Rivu Dasgupta
Pawprint: rdwv9
Article: http://www.usatoday.com/story/money/business/2013/03/06/health-changes-retail-tenants/1948991/
There are three overbearing principles regarding the whole of economics; people are rational, people respond to economic incentives, and optimal decisions are made at the margin. The above article happens to focus on the principle of economic incentives, and how they shape not only our economy, but our culture and standards of living as well.
The article primarily covers the increase in various health outlets in shopping strips; whether they be health centers such as yoga studios or healthier eateries. Indeed, the prevalence of places with names such as “Sweet Leaf” and “Energy Kitchen” are on the rise in response to the notorious epidemic of obesity the U.S faces; consumers are starting to stray away from the notably unhealthy fast food options in favor of healthier alternatives. The incentive, in this case, is cheap, healthy fast food in favor of cheap, unhealthy fast food. In a bit of a comedic twist, one can argue for a trade off in taste and health; many people cite healthier foods as less appealing to the taste buds, but they still find themselves indulging to stay healthier.
Such a shift isn’t widespread, however. In the article, it is noted that such increases in healthy eateries are occurring primarily in shopping strips; areas that appeal to a higher income demographic. In fact, in the article, the words “posh” and “disposable income” are used to describe the demographics involved. Therefore, one can safely assume that such a cultural trend is reflected only in an elevated portion of the population, and while certainly still on a macroeconomic scale, it is noticeably less so in terms of grandeur.
Appealing to economic incentive is a prime point for firms. Taking advantage of various cultural trends and appealing to particular demographics, especially in a convenient sense, can easily be seen as an understandable and potentially profitable endeavor.
Ashley Holt
aahyt3
http://www.usatoday.com/story/money/business/2013/03/13/hostess-twinkies-new-buyers/1984507/
This article is about the strong competition investment firms are having with the buying of Twinkies and Hostess snack cakes. Apollo Global Management and Metropoulos have made a joint effort to purchase Twinkies, Ding Dongs, Ho Hos for $410 million. The worry from Hostess was that were no other competing bids.
After initially going bankrupt, Hostess had to close down all of its plants. The investors now in place are promising to have the desserts in back in stores. Hostess is still, however, having issues putting their bread products, including Wonder back into stores due to a lack of bids.
This news poses a threat to McKee Foods who is the maker of Little Debbie cakes. Ironically, before the Apollo/Metropoulous offer, McKee was going to win the bid for Hostess. This directly relates to Chapter 12.
Chapter 12 talks about the four different types of businesses. In this article it speaks of oligopolies making an effort become the monopoly of the store-bought pastry business. Apollo Global Management and Metropoulous have purchased Hostess snacks, calling them ‘America’s favorite snack’ while McKee also made an effort to buy Hostess trying to monopolize the market. The two are currently considered oligopolies because they are two of very few companies with similar products.
Hailey Yeakle
HMYHX5
In an article titled “What to watch: Dow winning streak nears record 9 days in a row” appearing in USA Today, Mike Krantz discusses how the recent rise in the Dow Jones industrial average is worth notice as it will be the ninth day in a row for this increase to occur. The Dow Jones Industrial Average is an “index of the stock prices of 30 large U.S. Corporations” (Hubbard, O’Brien 247). There are other notable indexes to watch for, such as Standard and Poor’s 500 and NASDAQ. By watching these indexes, one can measure the performance of the U.S. stock market.
The fact that the Dow has been on the rise is newsworthy because, while an increase over the span of eight days is “not unheard of,” this will be the first time in nearly a decade that the Dow has experienced this kind of a rise (Krantz). While the reason for this increase is not completely known or understood, it is mentioned in Krantz’ article that some believe that this increase is due to the Federal Reserve’s stimulus.
Interestingly enough, while the Dow is rising, other indexes are not. Krantz mentions that the Wilshire 5000 Total Market index fell recently and Standard and Poor’s 500 also did not see any significant growth. The fact that only the Dow appears to be moving is in Krantz’ terms “unusual.”
As mentioned in our textbook, we should see our economy mirrored in the stock markets. With this in mind, should one believe that the economy is improving? In his article, Krantz mentions that: “Investors are puzzling over whether this potential record streak is a sign stocks are at sustainable levels, or if the market is set to fall.” As to how this interesting development will impact our economy or if it will not make a difference at all, we will have to stay updated on the story and see how it progresses.
Works Cited:
Krantz, Matt. “What to watch: Dow winning streak nears record 9 days in a row.” USA Today 13 March 2013: 4B. Print.
Hubbard, Glenn R. and Anthony Patrick O’Brien. Economics. New Jersey: Pearson Education, Inc. 2013. Print.
http://www.usatoday.com/story/money/business/2013/03/17/march-madness-ad-revenue-super-bowl-advertisers/1991379/
name: Megan Brillos
student number: 18085554
article title: March Madness ad haul spirals larger than any other sport
link: http://www.usatoday.com/story/money/business/2013/03/17/march-madness-ad-revenue-super-bowl-advertisers/1991379/
This article appears in the business section of USA Today and covers one of the hottest topics of March every year- March Madness. The story talks about how well March Madness is doing with sales in comparison to other sports, especially events like the BCS Championship. While basketball is not exactly nicknamed “the American Passtime,” this year it had record-breaking ad sales. And by record-breaking ad sales, I mean that the event surpassed one billion dollars in ad revenue making the event pricier more popular than any post-season sporting event including baseball, hockey, and even the Superbowl (reports Kantar Media, a research media specialist). No other sport- college or professional has ever surpassed this billion-dollar plateau.
This topic is easily relatable to our textbook for many different economic reasons. One, as we can draw from recent chapters that the products being advertised through March Madness airtime commercials are not products from a competitive fair market. We can conclude this because products from a competitive fair market are not differentiated and all are sold at the same price. Therefore, these products do not need advertising to make them stand out, which would in fact hurt them because they would being spending money that is set at a specific limit, while other competitors would not be spending that same money- neither would have increased profits.
We can conclude that the products being advertised are also not from a monopolistic market where there would be basically one industry that rules the entire market- like tap water or a first class mail service. These products do not need to use the advertising spaces in between March Madness because they would be competing with themselves and wasting money. Therefore, these products being advertised come from either monopolistic competitive markets or an oligopoly. A monopolistic competitive market is one in which many firms compete with differentiated products and there are few barriers to entry. An oligopoly is where only a few firms compete in the industry with differentiated products but there are barriers to entry. This advertising space would be appealing to these industries because their products are differentiated and they have competitors, and for the most part could afford the space. March Madness is appealing because so many people watch the sport because of its unpredictability, and the teams come from all over the country.
pawprint mnb8bd
article link: http://www.usatoday.com/story/opinion/2013/03/17/medical-suppliers-seek-to-pull-plug-on-program-our-view/1995411/
article title: Medicare bidding competition in danger: our view (opinion piece)
name: Megan Brillos
student number: 18085554
pawprint: mnb8bd
This opinion piece goes over the ongoing issue of Medicare and highlights the opinions of some who believe that the program costing the American public more than it is helping the majority of the American public. The article points out that in 2010, the Medicare program spent fourteen billion dollars on medical equipment and supplies that its patients use at home.
The article claims that many people, especially taxpayers, feel that the paying needs to be cut down. Congress put into effect a “bidding system” where savings on medical equipment for Medicare patients can add up to seventy percent. Businesses, however complain that this is hurting their profits and is extremely unfair to their companies, if not “un-American.”
We can relate this debate to our economics class in many different ways. First, we can trace back to the early chapters of the book and discuss capitalism. With capitalism, companies sell their products at a break-even point between consumer demand and supply. This equilibrium sets the standard for all sales and determines how firms decide to sell their products. However, in a more realistic version of a competitive monopolistic setting, the government is allowed to set tariffs, patents, etc as they see fit. This would be a situation in which government intervention messes with the true equilibrium of the transaction between medical equipment suppliers and buyers. Therefore, in this situation there is more likely an economic surplus and the medical equipment suppliers are not producing at their most efficient possible output.
With the passing of Obama’s Patient Protection and Affordable Health Care Act, students in Econ 1051 should not be surprised to see actions, such as this inefficiency of sales with suppliers and the Medicare program, occurring. Many people have complained of how costly the Medicare program is, especially in comparison to the beneficiaries’ worth in our society. As we learned in Econ 1051, the Affordable Health Care Act imposed a regulatory board to watch over the spending of the Medicare program and cut overall costs given to the program, in turn cutting some taxes of citizens that goes towards the program.
Ashley Campbell
amcgz4
article link: http://www.usatoday.com/story/money/business/2013/03/18/jan-state-unemployment/1996189/
Chapter 20 of the Hubbard and O’Brian text focuses on unemployment and inflation. These topics are extremely prevalent the everyday lives of many Americans, and an article written in USA Today on March 18, 2013 makes that connection.
This past Monday, the government reported an overall decrease in our national unemployment rate, which is now being listed at 7.9 percent. However, 25 states and the District of Columbia saw increases in unemployment rates during the month of January. North Dakota has continuously seen the nation’s lowest unemployment rates, and the state is currently reporting that just 3.3 percent of its residents are jobless. California and Rhode Island are the worst off, each listed at 9.8 percent and Nevada sits right below at 9.7 percent. Despite the economic woes in these states, the nation seems to be headed in the right direction fiscally. 32 states reported “significant increases in employment” within this last year.
According to Chapter 20, government policies can have both positive and negative impact on levels of unemployment on both frictional and structural levels. Following the 2007-2009 recession, the government extended the amount of time that unemployed workers could receive unemployment insurance payments. Some economists believe that this increased the opportunity cost of continuing to search for a job. Minimum wage law is another topic discussed in this chapter that affects the levels of unemployment. In places where there is a higher minimum wage, the quantity of labor supply exceeds the quantity of labor demand and therefor increases unemployment.
Unemployment is a complex issue, which is contributed to a diverse collection of policies and actions. Measuring true levels of unemployment can be tricky and reports cannot be completely accurate. However, we can assume the article written in USA Today reflects the nation’s rates of unemployment in a fairly accurate way. Although economists disagree on the levels of impact certain government policies have had on our economic recovery, the only way to continue improving our economic vitality is through studying such terms, policies, and correlations.
Ashley Campbell
amcgz4
Link to article: http://www.usatoday.com/story/money/markets/2013/03/14/stock-market-march-madness/1988673/
Chapter 8 of the Hubbard and O’Brian text talks, in part, about the stock market. Markets like NASDAQ and Dow Jones produce stock price averages, which are meant to show movements in price. Many people associate the health of the US Stock Market with the overall vitality of our economy.
In an article written in USA Today on March 14, 2013, Wallstreet’s recent high closings were discussed. At the time of this article, the Dow Jones industrial average had closed at an eight-consecutive record high. The Standard and Poor’s 500 stock index was just two points shy of its own all time high. Economists credit individual investors with creating this boom, but say those same Main Street investors have become worried by the sudden rises and may fear backlash. Those concerns resulted in an increased number of stockholders removing their money from the stock market over these past two weeks.
Consumer confidence is everything when it comes to whether the stock market soars or fails. When that confidence is shaken, it can sometimes affect just one part of Wallstreet. That idea of variations among indexes is discussed in Chapter 8 on page 247. This part of the chapter demonstrates that concept using the example of the “dot-com crash.” In the late 1990s, many investors bought in to online companies. However, they overestimated how profitable the industry would be, and in 2000 consumer doubts crashed the market. The NASDAQ index is more heavily composed of technology stocks than are Dow Jones or S&P. Because of that variance in stocks, the NASDAQ made the economy look worse-off than it really was, and stockholders saw a different picture with other stock indexes. That variance can, in turn, have a circular effect on consumer confidence in other areas as well.
Ashley Campbell
amcgz4
Link to article: http://www.usatoday.com/story/news/nation/2013/01/22/insurance-plan-pits-hospitals-employers/1857219/
Chapter 7 of the Hubbard and O’Brian text is entitled “The Economics of Health Care.” With recent national health reform policies causing so much turbulence, this topic is an especially important one to understand.
In an article written in USA Today on Jan. 22, 2013, the author describes how employers and hospitals in Cincinnati have been pitted against one another because of recent health care reforms. TrueCost, a program that employers buy into to provide health care to their employees, is sparking a lot of debate. Medical rates, which have traditionally been set by individual doctors, are now being determined by TrueCost’s assessment of Medicare rates. Some local employers say this program will allow them to lower the costs of providing health insurance to their employees. However, many of the local hospitals have taken a stance against TrueCost and say that they will continue billing patients for the full amount of their treatment. Doctors say Medicare rates are too low and do not cover the real expense it takes to treat patients.
Chapter 7 cites a 25 percent increase in health care premium costs in 2011(page 205). Many small business owners just can’t afford these hikes in health care rates. The Patient Protection and Affordable Care Act, which will be phased in through 2014, includes provisions that set up health insurance exchanges. According to the chapter, these exchanges will pool both healthy and sick state residents into one collection, thereby reducing insurance premiums. Health insurance companies can combat the adverse effects this provision will have on their industry by imposing deductibles and coinsurance policies, which act to negate the effects of adverse selection and moral hazard.
No matter what side of this debate you find yourself standing on, the more people who have better health care insurance there are, the healthier our society will be. A healthier society is a more productive society, and that is good for everyone. The interests of employers will naturally conflict with the interests of health care providers, but new policies hope to ease this tension.
Article Link: http://www.usatoday.com/story/money/business/2013/03/18/cigarettes-mayor-michael-bloomberg-soda-ban/1997503/
Matt Cressionnie
mlchg5
Article Link: http://www.usatoday.com/story/money/business/2013/03/18/cigarettes-mayor-michael-bloomberg-soda-ban/1997503/
Matt Cressionnie
mlchg5
14137845
In this article, Mayor of New York Michael Bloomberg wants to oust cigarettes from New York City. This is happening just days after a judge rejected Bloomberg’s appeal to ban sale of big soda drinks in NYC. Bloomberg is on a mission to try and make the city of New York a healthier place to live. Bloomberg estimates that almost 7,000 New Yorkers die a year due to tobacco related causes. Under this proposal, all cigarettes and other tobacco products will be out of sight and out of mind.
This story has to do with the economic quality that we have discussed of a centrally planned economy where the government has an impact on what economic resources will be allocated, or in this case, not allocated. Bloomberg certainly has the power to get this ban on tobacco products to the table, it is only a matter of if it will be passed or not.
Article Link: http://www.usatoday.com/story/money/business/2013/03/17/homes-selling-faster/1988379/
Matt Cressionnie
mlchg5
14137845
In this article, it is shown that the housing crisis is slowly but surely coming to an end. Houses are selling at a noticeably faster rate and some are even selling for more than they are worth at market value. Most of the examples that are given for this article are in California, which was at the center of the housing crisis a few years ago.
In economics terms, this can be defined as quantity demanded which is the amount of a good or service that a consumer is willing and able to purchase at any given price. The key word in this definition is at any given price for this article. The fact that houses have been selling at a fast rate for more than market price signifies that the housing crisis is coming to an end which is a very positive sign for the U.S. economy as a whole.
Ashley Holt
aahyt3
14155192
http://www.usatoday.com/story/money/business/2013/03/28/wind-energy-gdp/2028229/
The article “A gust of wind from D.C. helps the economy” explains how the current fourth quarter estimate has been revised and shows to have positive consequences. The government’s previous estimate suggested only 0.1% growth, and the revised shows a 0.4% growth of America’s GDP. The unaccounted for aspect was the government’s spending on wind farms.
The wind industry invested $25 billion in new facilities, with its suppliers and employed 75,000 people. The tax credit this provides is 2.2 cents per kilowatt hour once the plants are up and running. The tax credit’s one-year renewal is expected to keep the good fortune going, which will continue to help America’s GDP.
This relates to what we’ve been learning in Chapter 19 about GDP. The spending on wind energy qualifies for the portion that is accounted for in the GDP of the U.S as an investment, and a very large one at that. The current investing of companies on alternate energy resources is a business fixed investment because the money is being put towards new facilities.
According to The Commerce Department investments in ‘commercial structures’ rose at an annual rate of 16.7% in the fourth quarter, which is a larger increase from the one reported before these investments were accounted for. This investment will continue to give to American’s economy in a variety of ways. More projects are being advertised by companies that wish to begin construction this year as well. This creates jobs, and stimulates the businesses that provide the parts, and the construction workers.
Name: Ramon Gayles
Student Number: 14168744
http://www.usatoday.com/story/news/nation/2013/02/11/makers-mark-bourbon/1910773/
This article is from USA Today and discusses a major change in the formula that will be used for an alcoholic beverage known as Maker’s Mark. This bourbon is a well-known whiskey which was purchased by Deerfield, Ill.-based Beam Inc. in 2005 and has experienced a substantial growth in the past few years. Because of this growth, the firm has had to take necessary steps, including the dilution of their most famous product in order to meet this growing demand.
The reason this firm decided to make the change was because of a change in available resources. Because the bourbon-whiskey must be distilled for a minimum period of five years and nine months, they do not have enough supply for the growing demand. Thus, they have decided to dilute the product, as to increase supply. Though this will lower demand, as there is less demand for weaker alcohols, the demand will still be higher than the supply, so profits will increase.
This is related to several chapters. One chapter that it really reminds me of is Chapter 11. It reminds me of the part of the chapter where long-run versus short run is discussed. It is much more beneficial for this change in the recipe for the long-run of this firm. Though they may sell less now, they will be able to continue selling their product by using this new recipe.
The reason this is considered in the long-run is the same reason this firm decided to make this change. Because there will be a time long enough for the inputs to change, it is categorized as in the long-run. The alcohol they will distill, along with the growing size of the plant this will take place in are a couple inputs that contribute to their long-run decision. In the end this will increase profits.
Name: Ramon Gayles
Student Number: 14168744
http://www.usatoday.com/story/money/cars/2013/04/02/march-2013-auto-sales-general-motors-ford-chrysler/2046985/
This article discusses the growth in several automakers during the month of March. General Motors, Ford Motor and Chrysler Group all sustained substantial growth during that month. The assumption is that this is due to growing credit, tax refunds and a growing economy. With this increase in demand for cars, the price of the cars has subsequently increased as well.
The economic recession that hit the United States crippled the auto industry. Detroit, with General Motors, Ford Motor and Chrysler Group as it’s three major producers, especially felt that pain. These companies saw a huge decrease in the demand for cars, as they had no means to buy a new car, especially SUVs and trucks, as these were even less cost effective when gas was considered by the consumers.
However, the economy is going through a period of expansion, as discussed in Chapters 19-20. This, by lowering the unemployment rate and enabling consumers to get loans easier, has given consumers the means once again to purchase new cars. With growing demand and a consumer base with more money to spend, the biggest increase has been in SUVs and trucks, as people aren’t as concerned about gas.
Another reason for the drastic growth over the past few months in the auto industry would be consumer confidence. When consumer confidence in the economy grows, consumers are more likely to make investments, such as a new car. There is also the growing trend of new vehicles being more gas-efficient, making the idea of buying a new car more appealing to the American consumer.
Paige Sturley
PESZRC
http://www.usatoday.com/story/news/nation/2013/03/12/access-to-nutrition-index/1979581/
In the USA today article, the Global Alliance for Improved Nutrition developed the global Access to Nutrition Index that ranks the 25 largest food and beverage manufactures by how nutritious the products they produce are. Obesity is obviously a large problem in the United States and the Index is a call to businesses to start producing healthier products. This change requires companies to make adjustments to their business strategy, but it also has the possibility to help the economy as well as the consumer.
The executive director of the Access to Nutrition Index, Inge Kuaer, says that the Index, “is not only good for public health; it is a business imperative and key to their long-term sustainability.” In a world where the desire to be healthy is growing rapidly, unhealthy products are less in demand and nutritious products are more in demand. Since there is a demand, there needs to be a supply. In the future, companies are not going to make as much profit off of their original unhealthy product. Therefore, in order for companies to maintain profits they will have to produce nutritious. As demand changes, supply must change with it.
As a result of the increased demand, competition arises, which is favorable not only for the consumer’s wallet but also their health. Manufactures obviously want to have the best prices, but they also want to make the healthiest option in order to attract consumers. That means there will be a greater amount of nutritious food and beverage items available since many manufactures will be producing them. The items will also be relatively cheaper since the companies want offer lower prices than their competitors in order to attract consumers. In this case competition is not just beneficial for a healthy economy but a healthy population.
Also, this Index creates another way companies can differentiate their products from competitors. All of these manufactures produce a wide variety of food and drink. Some products are already differentiated, but some are not. The products that are not can now differ in nutritional value. For example, adding less sugar to the common lemonade beverage. Multiple companies sell lemonade, but they can now make a healthier option in order to attract consumers.
Paige Sturley
PESZRC
http://www.usatoday.com/story/money/business/2013/03/13/whole-foods-health-resort-canyon-ranch-pritikin/1985281/
The natural foods grocery store, Whole Foods, now has plans to expand its company outside the food business and open an high-end health resort. It would not only offer a nice place to stay, but also opportunities to learn about a healthier lifestyle.
Whole Food is already a very large and successful company. Even though it took a large hit in the beginning of the recession it is now coming back stronger than ever.
The company plans to use its brand name, Whole Foods, in the naming of the resort. Brand expert, Robert Passikoff, says that, “Whole Foods ranks first in brand recognition in the natural foods category.” Therefore, because of brand recognition, it is in the best interest of the company to use its brand name. Consumers are more prone to give their business to a well-known company.
The healthily lifestyle market is in high demand. Whole Foods is just supplying that demand in traditional and now creative ways. By not only supplying healthy foods but also a health resort, the company is expanding its profit-earning platform.
Currently, the company is in the process of finding a hotel chain to run the resort. The merging of these two companies, since they are involved in different stages of production, is vertical. The resort will educate consumers about a healthier lifestyle while the store will supply the correct food for that lifestyle. The guests at the resort, after learning what healthy foods they should be consuming, turn into shoppers at the grocery store.
Paige Sturley
PESZRC
http://www.usatoday.com/story/travel/destinations/2013/03/30/wisconsin-cheese-101-old-craft-spurs-state/2036183/
Wisconsin is well known for many things, but the most popular by far is their cheese production. In fact it is the top cheese producer in America, and it producers some of the finest cheeses in the world.
With a lot of cheese comes with a lot of cheese producers. And with all of the cheese producers comes competition. They must compete with each other in order to set the lowest prices and have the best products.
One way to gain profit is to differentiate their products by producing a wide variety of cheeses. If a producer can supply a widespread range of flavors of cheese they can satisfy the demand of several customers.
With this information it would seem like the Wisconsin Cheese industry has a monopolistic competition market structure. It has many cheese producers, or firms, the cheeses are differentiated, and the ease of entry is low.
However, in 1916 the Wisconsin government passed a law requiring a license in order to make cheese. This government-imposed barrier made the ease of entry became lower. It no longer fits the requirements for a monopolistic competition market structure.
No matter what market structure the industry has, it is still very successful. The cheese demand is high and the supply for it is being fulfilled.
http://www.usatoday.com/story/money/business/2013/04/08/job-market-barometers/2049323/
According to the article “Job market barometers point to weaker growth” by Tim Mullaney of USA Today, despite recent growth in the job market, recent data shows that fewer jobs are being created, seen by everyone from small businesses to job seekers. Job seekers are more active than in recent months, shown by increased traffic on job-hunting websites. In the article, Dennis Jacobe, chief economist at Gallup, points out “You get a distorted picture from the unemployment numbers.” Despite the inaccurate numbers, individual outlooks on the job market are bleak. The weaker job market has, however, led the federal government to issue more bonds in an effort to pump money into the economy.
This relates to the reading because on page 651 of the Hubbard and O’Brien text, the book explains that the U.S. economy creates and destroys millions of jobs, and the Bureau of Labor Statistics announces the net figures each month of the employed and unemployed. The article explains that there has been recent growth in the job market. Additionally, on page 645, problems with measuring the unemployment rate are discussed, whether it is understated by not counting discouraged workers or it is overstated by not counting those involved in the underground economy. This relates to the article because it seems that even if the unemployment rate seems to be decreasing, job seekers still do not have a bright outlook.
Megan Schaff
mes994
http://www.usatoday.com/story/money/business/2013/04/05/march-employment-report/2052529/
“Jobless rate falls to 7.6%, just 88k new jobs”
This article by USA today talks about the growing unemployment rate, despite the success of the stock market and the period of business expansion that we are currently in. Hiring over the past year and a half has steadily increased, and March’s numbers were the lowest in nine months, especially after 268,000 jobs were added in February.
This confirms economists’ predictions that there could be an economic hiring slowdown coming that could last for several months. The second half of this story reports that the unemployment rate fell from 7.7% to 7.6% in March because 500,000 Americans stopped looking for work, leaving the labor force. The percentage of Americans in the labor force is the lowest since it has been since 1979, party because of early retirement and discouraged workers.
This article relates to several topics we have touched in the book and in class, such as the types of unemployment, discouraged workers, and how to increase employment. This unemployment rate of 7.6% includes frictional unemployment (short term unemployment that occurs from matching up job seekers and job hirers), structural unemployment (unemployment that occurs because of a mismatch of skills between workers and job requirements), and cyclical unemployment (unemployment caused by a recession). Although we are no longer in a period of recession, the effects are obviously still being felt because the unemployment rate is still well above the natural rate of unemployment — 5%.
Half a million Americans left the labor force in March and the labor force is currently the lowest it has been since 1979. This is largely because of discouraged workers in the US. Job seekers do not believe there are any attainable jobs, so they stop looking for positions. Likewise, those who are in jobs often times think they are overqualified, so they leave their jobs and the labor force. This can be improved in several ways. The government or individual companies can work to make open positions known to the unemployed as well as offer employee training programs. Ideas such as these will not totally diminish unemployment, but it will help restore the unemployment rate to its natural level.
Megan Schaff
mes994
http://www.usatoday.com/story/money/personalfinance/2013/04/06/healthcare-enrollment-communication/2056819/
“Health care law’s big task: explaining it to consumers”
This article by USA Today explains the mandatory health care law that is gradually going into effect across the country. Many economists and health care professionals are worried that there will not be enough time or resources to educate Americans on what this law means for them and their families.
President Obama’s bill is the biggest expansion of health care coverage, reaching 27 million Americans, since President Johnson signed Medicare into law in the 1960s. However, even though the “Obamacare” law was signed into effect over three years ago, polls show widespread ignorance about the plan and its provisions.
There is a concern about the time and the amount of funding needed to educate Americans. Some experts have predicted that only $40 to $50 million in federal grants will be available to nonprofit organizations to work directly with consumers and explain what the health care laws mean. The biggest concern is the 33 states with federally run medical exchanges, in which consumers can shop for health care online. Time is running out since these markets automatically begin Oct. 1.
This article directly relates to the section about health care coverage in the book. Our text outlines the provisions of Obama’s plan — an individual health mandate, an employer mandate, state health exchanges, regulation, medicare and medicaid expansion, and tax increases. There are also many negative effects of health care that the text discussed, including distorted economic incentives, cost disease, unnecessary and rapid increases in health care spending, significant negative externalities such as obesity, and the problem of moral hazard. Time will tell whether this new government system will improve the health of Americans, but for now, all we can do is become educated.
Ashley Holt
aahyt3
http://www.usatoday.com/story/money/business/2013/04/11/unemployment-claims-weekly/2073379/
The article, “Unemployment claims take a big drop” by Ray Goldbacher, is about the current drop in unemployment claims. The article states that the first-time claims for unemployment benefits fell by 42,000 to a total of 346,000. The estimated amount for this particular week was 388,000.
A spokesman for the Labor Department thinks that this is due in part to the Easter holiday, claiming that the holiday “makes it difficult to adjust for temporary layoffs”. The most recently publish monthly employment report stated that employers only had 88,000 jobs in March after average 220,000 new jobs the previous four months.
In addition, the article states hat the drop in unemployment benefits may suggest hiring could pick back up in April.
This topic relates to our Chapter 20 lesson on unemployment. Specifically, section 20.3 explains government policies and the unemployment rate. The section first defines unemployment insurance: the opportunity cost of continuing to search for a job is the salary you are giving up at the job you could have taken.
The section also identifies that there is government financial aid for the unemployed that allows for that allows for them to seek out a re-education. This is specifically to address structural unemployment. Structural unemployment results from a persistent mismatch between the skills of workers and the requirements for jobs.
Just as the article stated, the low amount of claims could be good news. The reduced need for this financial aid program amongst others suggests that people in the labor force are becoming able to find jobs. Obviously, lessoning their need for assistance from the government.
Darby Klos – DCKY9F
http://www.usatoday.com/story/money/business/2013/04/11/employer-based-health-insurance-keeps-dropping/2070731/
On April 11, 2013 Kelly Kennedy wrote the article “Rate of employer-based health insurance keeps dropping.”
This article discusses the availability of employer-based health insurance and how it has fallen about 10% through the last 10 years. As a result, the number of American’s without health insurance has dramatically increased. Some argue that this has been caused by President Obama’s 2010 health care law.
If employers choose not to provide health insurance to their employees, then they are required to pay a fee. Unfortunately, in some cases it is cheaper to pay the fine than provide the insurance. If employees work less than 30 hours a week, then they are not required to provide them with health insurance or pay the fee.
Employers that do offer health insurance have decided to do so because they use it as an incentive, preventative checks. Health insurance will make sure that employees are healthy. Healthy employees are more likely to work more efficiently, be happier, and take less time off than unhealthy employees.
This article directly relates to Chapter 7 in our books. Health care is defined on page 206 as the goods and services, such as prescription drugs and consultations with a doctor, that are intended to maintain or improve a person’s health. Health insurance is defined on page 209 as a contract under which a buyer agrees to make payments, or premiums, in exchange for the provider’s agreeing to pay some or all the buyer’s medical bills.
The Patient Protection and Affordable Care Act is mentioned in this article and in Chapter 7 of our book. This is defined on page 224 as a health care reform legislation passed by Congress and signed by President Barack Obama. The main previsions of the act include individual mandate, state health exchanges, employer mandate, regulation of health insurance, Medicare and Medicaid, and taxes.
Darby Klos – DCKY9F
http://www.usatoday.com/story/money/columnist/abrams/2013/03/15/small-business-mortgage-rules/1989407/
On March 15, 2013, Rhonda Abrams wrote the article “Strategies: Entrepreneurs may suffer with mortgage rules” for USA Today.
This article discusses how getting a mortgage or a loan will become much harder for entrepreneurs due to the new lending rules that went into effect in January. These rules are to help ensure that money is lent out to only those who lenders feel will repay them. Lenders look at the borrower’s debt-to-income and the debt must stay below 43% of their income.
Assuming that the business is a sole proprietorship or a limited liability company, receiving loans will be harder. The new rules were designed for people who receive a paycheck, rather than those who run businesses. The provisions include verified income, income, debt-to-ratio income, and sufficient assets.
This article is related to Chapter 8 in our books. On page 238, sole proprietorship is defined as a firm owned by a single individual and not organized as a corporation. On the same page limited liability is also defined as the legal provision that shields owners of a corporation from losing more than they have invested in the firm. In Chapter 2, page 56, entrepreneur is defined as someone who operates a business, bringing together the factor of production – labor, capital, and natural resources – to produce goods and services.
Hannah Saulic
hksfhc
14154944
Article link: http://www.usatoday.com/story/money/business/2013/04/12/starbucks-bagged-coffee-price/2076819/
The article “Starbucks cuts the price of its bagged coffee” explains that the beloved chain is lowering the price of its packaged coffee in order to compete with other firms. The company has decided to decrease the cost of its 12 ounce whole and ground coffee by one dollar. Despite this change, consumers may not reap the benefits. Starbucks claims the new list price is a suggestion, so retailers can charge whatever they want.
What does this mean? There is a possibility that only retailers will pay a lower price for Starbucks bagged coffee. While the article notes that the move will not affect prices of coffee in Starbucks cafes, it comes as a smart adjustment as the company hopes to increase its revenue from its packaged goods business. The article closes by letting the readers know that Starbucks will implement a new feature on its loyalty program. Customers will now be able to gain points by buying their packaged coffee.
This USA Today article relates to the material covered by Chapter 13 in the book. Starbucks is a firm in a monopolistically competitive market, and therefore it must increase the value of its product in order to make economic profits in the long run. This value can take the form of a lower cost or product differentiation. In this particular case, Starbucks has increased the value of its product by lowering the cost of its bagged coffee. This change will hold off competitors in the long run as long as the company continues to find new ways of doing decreasing price.
Similarly, the end of the article points out a way that the firm has differentiated its product. By allowing packaged coffee purchases to count for points on their loyalty program, Starbucks is postponing the time when they will no longer be able to earn economic profits.
Hayden Lewis
hrl2pd
14157177
The article “Mexico’s president tries to loosen country’s monopolies” by David Agren was published on April 11 in USA Today. Bearing a compelling lead, the article initially focuses on Jesús Briseño, a young Mexican entrepreneur who is unable to sell his craft beers in his home country.
The reason for this, the article explains, is that many of Mexico’s major industries—telecommunications, broadcasting, cement, and beer—are monopolies. Also, the Mexican government allows for the issuing of exclusivity contracts, wherein retailers can agree to only sell one company’s product, in exchange for financial incentives such as free refrigerators and low interest loans.
The article goes on to talk about how Enrique Peña Nieto, Mexico’s newly elected president, plans to weaken these monopolies and grow the economy by increasing competition. Currently, there is a proposed measure in the Senate which would open up the telecommunications sector to competition — a sector which includes Mexico’s cellphone industry, interestingly dominated by the wealthiest man in the world, Carlos Slim.
This article directly relates to Chapters 13 in dealing with market structures, particularly monopolies. We did not cover monopolies in great deal besides the fact that they are markets wherein there is one firm selling a unique product with entry to the market blocked, which is visualized in Table 12.1 on page 396. Additionally, monopolies are defined on page G-5 on the glossary as firms that are the only sellers of a good or service that does not have a close substitute.
Clearly, a monopoly is the structure of Mexico’s beer market since smaller brewers, such as Jesús Briseño, find their entry to the market blocked, and there is only one firm selling a unique product.
Whoops, I forgot to link the article. Here is is: http://www.usatoday.com/story/news/world/2013/04/11/mexico-monopolies/2066877/
Sorry for the inconvenience!
Hayden Lewis
hrl2pd
14157177
http://www.usatoday.com/story/news/politics/2013/04/10/obama-budget-release/2069217/
The article “Amid criticism, Obama begins sales pitch on budget plan” by Aamer Madhani and Susan Davis was published on April 10, 2013 in USA Today. Overall, the article provides a relatively comprehensive analysis of President Obama’s 2014 budget proposal, highlighting and simplifying significant changes in spending and revenue and citing the reactions of other political leaders. Additionally, there is a nifty graphic at the top of the article comparing Obama’s budget proposal to those of the House of Representatives and the Senate.
A few key statistics to take away from the article are that the president’s 2014 budget plans to cut the national deficit by $1.8 trillion over the next decade, $400 billion of which coming from savings and $580 billion coming from new revenues by reducing tax benefits for top earners. According to the article, the president’s plan also aims to save $230 billion by reforming cost-of-living adjustments for Social Security recipients.
Madhani and Davis go on to explain how deficit is projected to fall to 2.8% of GDP by 2016 if the plan is fully enacted, which would reduce the federal deficit accordingly to 1.7% of gross domestic product by 2023. However, Madhani and Davis point out, the budget proposal faces criticism from both sides of the aisle in Washington. House Republicans, though able to find agreement on some parts of the bill, rejected the notion of any new revenues; while Senate Democrats and more left-leaning advocacy groups are unhappy about the president’s proposal to enact a new measure of inflation called “chained-CPI”, which would be used to calculate cost-of-living adjustments for Social Security beneficiaries.
This article directly relates to Chapters 19 and 20 in dealing with GDP, CPI and the inflation rate. On page 617, GDP is defined as “the market value of all final goods and services produced in a country during a period of time,” and this pertains to the foregoing article because the president’s budget aims to reduce the national deficit to 2.8% of GDP by 2016.
On page 657, CPI is defined as “an average of the prices of goods and services purchased by the typical urban family of four,” and the inflation rate is defined as “the percentage increase in the price level from one year to the next.” These terms relate to the USA Today article because the president’s budget includes a new method of measuring inflation called “chained-CPI”, which would take into account cost-of-living adjustments for Social Security, essentially reflecting consumers’ willingness to buy cheaper substitutes in response to rising prices of certain goods.
JPCKF
14159005
http://www.usatoday.com/story/money/business/2013/04/16/chick-fil-a-healthier-menu-premium-salads-wraps/2078835/
In this article, Tesco, Britain’s largest retailer, will pull of the U.S. and selling its Fresh& Easy supermarket chain. It couldn’t get success in the western states of Arizona, California, and Nevada mainly because it opened right before the big recession of 2007. Tesco has done well with similar stores in the U.K., stores that were convenient to shoppers to grab ready to eat food from work to home. This concept was not that popular to most shoppers in the west coast in America. Tesco has been focusing too much with Fresh & Easy and didn’t respond to the changes in the U.K. Now Tesco is answering to customers in the UK and what they want to have a positive shopping experience.
This article exemplified many economic principles we studied in class. One is consumer tastes and demands (72-74) Tastes and population and demographics and income are among the variables that shift market demand. First, the tastes of the U.K. people were in favor of stores like Fresh & Easy, so the demand for those stores shifted to the right and had a lot of success. But the tastes of the west side people in American differed greatly from those of the U.K. Therefore, the tastes of the people in U.S. made the demand for Fresh & Easy shift to the left. Population and demographics also had a factor in this, as well, as it seems that different population and demographics that make up the two different places have different tastes. Also income had a huge factor in the lack of sales in the U.S, where people had fewer income to spend during the recession, just when Fresh & Easy opened.
Also, the article talked about how Tesco is trying to accomadate its UK stores to meet customer’s demands and tastes. This relates to the monopolistic competition idea(Chapter 13) and marketing. Tesco’s stores are in monopolistic competitive market, so in order to avoid zero economic profit, they must find new ways of differentiating its product or finding ways to lower the cost of production. So Tesco is differentiating its retail stores to appeal to consumers. They will have more attentive staff, sit down spaces for customers, coffee or family-friendly restaurants, and better stocked shelves.
One last topic is the business cycle. The recession that made many people not want to spend money in Fresh & Easy made Tesco lose profit. As in the business cycle in the book (pg. 696 and 697), during the recession, spending decreases, which causes sales of firms to drop.
This is interesting to see if someone buys Fresh & Easy and how they will change the market to appeal to the customers’ tastes.
Rachel Jelinek
14154931
rejhgb
http://www.usatoday.com/story/money/personalfinance/2013/04/16/small-business–social-media-facebook/2075123/
In chapter 8 we discussed the importance of small businesses in the U.S. economy. However, we learned that unfortunately, small businesses have many difficulties locating funds to start up. Because many people do not have faith in small businesses, it is difficult for owners to receive loans from friends, families, and even banks.
According to the USA Today article entitled, “Social media a bust for small businesses,” they are having even more problems then we’ve learned about. Many small businesses have spent a great deal of their time using social media websites to promote their businesses. However, many have learned that it has been a waste of time and resources.
Yet in our Internet run world today, one would think social media sites would be an effective way for small businesses to promote themselves. Yet as it shows in the article, “about 61% of small businesses don’t see any return on investment on their social-media activities. “
Even though the owners of the small businesses are convinced launching social media sites has actually hurt them, Pam Springer, CEO of Manga, says that they are wrong. She believes that they either do not know how to successfully campaign their businesses over the Internet, or that they are unable to recognize the success they have had campaigning. Yet despite what Springer has said, many small business owners have become discouraged from engaging with social media activities and are trying to stay away from them.
Matty Raymond
14157777
April 20, 2013
The article, “Can Entitlement Changes Lure GOP Into Talks”, written by Susan Davis and Aamer Madhani, the budget deficit for the United States is the highest it has ever been. Although the article speaks mostly about the politics that the government is trying to implement; we can relate it to Chapter 21 in our book. The budget deficit is defined as “When the government spends more than it collects in tax revenues (Page 689).”
When there is a deficit, public saving is negative. Public saving is the amount of tax revenue the government retains after the government pays its purchases and makes transfer payments to households. Negative public saving is also called dissaving. In our case, the U.S. Department of Treasury sells treasury bonds to get the money that is needed to fill in the deficit. The government is subtracting the total amount of saving available to be borrowed for investment spending. This causes households to borrow more than they save, this creates less saving, which then creates lower investment levels. Which is horrible for our economy because we know firms need investors to create and stimulate our economy. During budget deficits there is a lower level of investment rates; but during times of a balanced budget or a surplus budget there are high investment rates; this stimulates the economy and GDP grows.
President Obama want’s to close the deficit by taxing the wealthy and limiting wasted spending in government backed institutions. The richest 1%, own a majority of the countries wealth and the President wants to force them to give back. However, he is having a hard time uniting the government and making any compromises. By ending the wars in the Middle East we will save billions of dollars.
Michael Sojka
14162957
mjs67d@mail.missouri.edu
Job growth in March slowed, however unemployment rates fell in 26 states. It increased in seven states, and remained unchanged in the remaining. The article also said “Rates fell largely because many of those out of work stopped looking for jobs and were no longer counted as unemployed.” We learned this in class, these workers are called discouraged workers, and can sometimes lead to inaccuracies in the true number of unemployed workers in the working-age population.
The article also mentioned that employers cut jobs in 26 states, up from February’s count of 8 states cutting jobs. The increase might be due to the government sequester, but it is still too early to tell the long-term effects. It is interesting to read articles regarding unemployment because the different aspects of how unemployment is measured come into play. Workers can become discouraged, taking them out of the labor force. People with part-time jobs also distort the true employment rate because they do no have a full-time job.
The data is never exact due to all the misrepresentations and situations in which people are and are not employed. The rates are close to the real amounts however, and these over/under amounts are always acknowledged and accounted for in statistical findings.
http://www.usatoday.com/story/money/business/2013/04/19/unemployment-states-march/2096749/
Tanzi Propst
14156577
tapcn2@mail.missouri.edu
The article titled “Unemployment Rates Fell in 26 States” talks about just that – the unemployment rate falling in more than half the states throughout America. It talks about how unemployment rates fell in the month of March this year (2013) due to people who have just stopped looking for jobs. People have ceased their search for new jobs because a significantly lower number of jobs have been opened recently in the states. This is highly discouraging to the workforce and so those people who count as “unemployed” that are searching for a job drop off the “unemployed” list when they decide to stop searching for work.
Across the country, hiring slowed and 26 states reported a decrease in the unemployment rate. Unemployment rates rose in a few states and remained unchanged in 17. This article relates to Chapter 20’s section regarding “Government Policies & the Unemployment Rate.” Many people that are unemployed are probably searching for a job. This type of unemployment is known as structural unemployment. Structural unemployment arises from a persistent mismatch between the job skills or attributes of workers and the requirements of jobs. The people described in this article are discouraged workers that have given up looking for a job because they believe that no jobs are available for them.
The job market, in the case of this article, has significantly decreased and so it has become harder for people to find work. In the article, it states that “[e]mployers added only 88,000 jobs, down from an average of 220,000 November through February. The national unemployment rate fell to 7.6%, but only because more people quit looking for work.” This decrease not only makes it harder for people to find work, but it also discourages people from trying to find work if there is such a drastic fall in job openings. This is a main reason as to why the unemployment rates fell. Also, companies probably had a better retention rate which explains the drop in job openings – they wouldn’t need to open more job slots unless they were laying-off lots of people.
forgot the link!!!
http://www.usatoday.com/story/money/business/2013/04/19/unemployment-states-march/2096749/
Bridget Brady
bkb99d@mail.missouri.edu
14153547
“Businesses say budget tightening isn’t hurting” compares the success of businesses from Q1 in 2013 to Q4 in 2012, as well as Q1 in 2012; that is, January through March of this fiscal year compared to years prior. The article explains that, while the federal government has been tightening the discretional fiscal policy (p. 906) by increasing taxes and lowering government spending, businesses have not been greatly affected.
Overall, conditions from Q1 in 2013 are better than Q4 in 2012. According to a NABE survey, increased sales, profit margins, and wages/salaries in Q1 have all been reported as being greater than the past quarter. However, they are lower than the rates of Q1 in 2012.
Possibilities for this are that the businesses planned for these spending cuts and increased taxes, so their business strategies reflected the changes expected for 2013. One interesting conclusion in the survey is that there is a general agreement that more jobs have not been created in Q1; the labor force is not growing, nor is unemployment declining (p. 670).
Optimism among businesses is widespread in the United States for the continuing expansion of the economy. According to the article, 65 percent of the participants in the NABE survey reported that they believe the U.S. economy will grow upwards of 2 percent in the next year. Major concerns for the future of the U.S. economy, however, are present. These concerns are chiefly directed toward the economic conditions globally, the possibility of further spending cuts and the possibility of more regulations on business. Such regulations could be in the form of tariffs, voluntary export restraints, and quotas (p. 303), and are an issue of concern primarily to the service industry.
Overall, the economy seems to be improving from last quarter but is not as strong as a year prior. Businesses continue to be optimistic about the remaining quarters of this fiscal year.
Sazanka Idris
pawprint: psi3m4
http://www.usatoday.com/story/money/2013/04/20/gas-prices-continue-to-fall-330-a-gallon-by-memorial-day/2097393/
The article on USA Today talks about the recent decline of the gas prices nationwide. This is shocking and unexpected for the whole nation because it is very rare for gas prices to decrease. It is also confusing because the decline is happening in late spring and early summer, when demands are usually increasing the most.
A senior energy analyst attributes the fall of gas prices to the change in demand based on income and prices on related goods. He stated that more fuel-efficient vehicles are used, meaning a compliment of gas, a car, has changed the habit of people purchasing gas. Changes in lifestyle and an economic slowdown are also mentioned, which shows that a change in income has also affected the demand. Changes in lifestyle can mean that people have lower income in an economy that is slowing down, therefore decreasing their transportation usage, increasing carpool, or using a different, cheaper method of transportation.
The supply, on the other hand, is experiencing a surplus because the demand is declining. The government reports that oil inventories are 4% higher right now than last year at the same time. To reduce this surplus, oil companies are decreasing their selling price per-barrel, therefore declining gas prices at gas stations.
If we visualize this situation on a graph, the demand curve will be shifting to the left, creating a gap between the quantities demanded (which is the quantity that will be bought) and the quantities supplied. This marks the surplus caused by the decrease in demand. The market equilibrium price will also be lower, explaining the decrease in gas prices.
Relates to pages: 70,78
Hailey Yeakle
pawprint: HMYHX5
http://www.usatoday.com/story/money/business/2013/04/03/ism-non-manufacturing-index/2048963/
In the article “Service Businesses slow expansion, orders fall” appearing in USA Today, Christopher Rugaber discusses how the service companies in the US grew at a slower pace during March due to smaller growth in new orders and less hiring. Rugaber notes this decline in the service sector’s growth still nearly mirrored the 12-month average and that what made March different is that during the month companies continued to add jobs, but not at the same rate they had before. He noted that the gauge of hiring moved down to 53.3 which was the lowest point since November of 2012.
In Rugaber’s article he mentions that the Institution for Supply Management announced “its index of non-manufacturing activity fell to 54.4 last month from 56 in February.” It should be of note that if the number is below fifty it signals an expansion in the market. Some are still positive about the outlook even though there is uncertainty. However, according to Rugaber, people are still spending and in fact spending by consumers rose significantly in February – the most in five months.
In our textbook, Economics by R. Glen Hubbard and Anthony Patrick O’Brien, it is noted on page 701 that “As services such as medical care or investment advice have become a much larger fraction of GDP, there has been a corresponding relative decline in the production of goods.” This means that overall, Americans appear to be willing to spend more money on services than on material goods. The textbook goes on to say that because goods are typically more expensive than services, people tend to buy less goods than services during a recession. As the economy is now out of the recession and in a period of expansion, Rugaber attributes this slow expansion in the service sector to be due to low growth in orders and weak hiring.
With service goods accounting for a large percentage of the United State’s GDP, as alluded to on page 701 in Economics, it is important that the service sector continues to grow and expand for the good of our overall gross domestic product. As Rugaber says that consumers are still spending and companies are still hiring, granted, at a reduced rate, hopefully we will see an eventual growth in the service business sector.
Works Cited
Hubbard, Glenn R. and Anthony Patrick O’Brien. Economics. New Jersey: Pearson Education, Inc. 2013. Print.
Rugaber, Christopher S. “Service businesses slow expansion, orders fall.” USA Today 24 April 2013. Web.
In an article on USAtoday.com entitled “Retirement and health care: Concerns are off the charts” Rodney Brooks discusses how hard it is to try to save money for health care in retirement. In our health care chapter we discussed the ridiculous premiums that people have to pay to get health insurance. We talked about how Obamacare will possibly make things a little more affordable, but still health insurance is hard. This article also talks about how even with medicare people will still be expected to pay 40% our of pocket.
The article talks about how nervous people are that are around fifty years old in how much they should be saving for health care in their retirement. It is a very tricky question, you cannot exactly expect to be in the hospital for most of your old age, but you also want to have enough money saved in case something does happen to you or your partner.
The article says that “people pay as much as $5,000 to $15,000 a month for their medical care in retirement”. It continues in its numbers estimate stating “the average 65-year-old couple in retirement should expect to pay $163,000 in out-of-pocket expenses for health care, excluding long-term care.” Does this mean we should all save half a million dollars for health care expenses in our retirement just to be certain? Brooks says there are a few ways to help people plan better. First they should be aware that health care is an important expense to save for in retirement.. They should next look at their current health issues and their families history of health issues to estimate the future cost. They should then think about when they want to retires and how long they will live.
It is important to consider health insurance plans and if long term care is something you may need in the future. However the costs for long term care insurance is truly astronomical. There is also the option of a health savings account which is a slightly more affordable option. The main focus is how long you will be retired before qualifying for medicaid and how much medicaid will help. It is important to keep in mind how much you will still have to pay our of pocket once medicaid kicks in.
http://www.usatoday.com/story/money/columnist/brooks/2013/04/22/retirement-health-insurance-401k/2096807/
Pawprint: ECRGZD
In the article “Why is Facebook Stock Languishing in 2013” Matt Krantz is talking about how things have softened since last year and things aren’t springy to life like they were.
Shares of the No. 1 social networking site are down 2% this year, a far cry from the 11% gain by the broader and less risky Standard & Poor’s 500 index. This part is related to chapter 8 when talking about stocks and the different ways to measure those stocks.
Facebook hasn’t given investors any incentives to invest any further into he company. Throughout the article Krantz talks about how investors want to see hard evidence of growth.
The whole article is relates to stocks and that the stock holders involved with Facebook are a little iffy . “The performance of the U.S. stock market is often measured using stock market indexes.”(247) The Dow Jones Industrial Average, The NASDAQ and the S&P 500 are all examples of tools used to measured these stocks. Stockholders can tell how a stock is doing for example Facebook. If stockholders are nervous stocks will take a big dip and lose money, sometimes it is a safe bet to get out before that happens. Also management may also want to shrink the firms operations or just try and better themselves, they do not want to lose the interest of an investor. “The larger a firms profits are, the higher its stock price will be.”(247)
Since shares are down as Krantz state investors are becoming less interested due to the poor performance of the stock, the investment could be a loss of money if Facebook doesn’t bounce back. May 1 Facebook should report its first quarter earnings. So this could be the chance to change things around and catch someones eye who would like to invest in the corp.
Chelsea Burgard
cebp86
14143133
http://www.usatoday.com/story/money/columnist/krantz/2013/04/24/facebook-stock-2013-lag/2078929/
In the article “Starbucks CEO Schultz focuses on digital innovation” Schultz doesn’t come out and exactly say what is going to happen or what the future will look like but he states “technology will pave the way for innovative change at Starbucks.” Well we may be seeing change soon. The article also has a video of Schultz talking about the different ways to improve Starbucks. He wants the people, farmers, and everyone involved with the process that goes into Starbucks that he does care. Page 446 states “An innovative advertising campaign can make even long-estabilshed and familiar products seem more desirable than competing products.”
But Shultz can’t keep still, can’t relax even though his company is rolling in record profits and record sales, with 18,000 stores in 62 countries. Stock price is also at an all time high. Just like in chapter 8 when it states ” An increase in the stock price means that investors are more optimistic about the firm’s profit prospects.”(246)
The store has not been built. There is no working model. And the project doesn’t even have a name. “You’ll know it’s a Starbucks store, but you’ll know that you’ll be walking into a significant evolution,” he says. This almost relates to defending a brand name in chapter 13. “Once a firm has established a successful brand name, it has a strong incentive to defend it.”(446) He clearly says if there is a store, you will know it to be a Starbucks. Brand Management right there. Brand management is maintaining that differentiation over time compared to other coffee shops. “But the key to success is to remain true to the brand,” he says, “and not abuse the trust people have by going off and doing things not consistent with the heritage of coffee.”
Also If you have the means and resources and the output it is always good to keep advancing and coming up with more ideas and things that can be unique to the brand. That is exactly what Starbucks is doing so. Innovation is key.
“We are witnessing a seismic change in consumer behavior,” he says. “That change is being brought about by technology and the access people have to information.” In this day in age technology has upped its speed and people are wanting information by the seconds. A technological change can be good for a company, in the way it can make or produce things faster or a way to spread information faster too. He even mentions that regulars may not have to order up at the bar that they can do it from an app, but he is still going to keep that one on one comfort.
The future is looking very bright for Starbucks, I am even excited to check out the new things they will bring to the table.The only way to keep up in the marketing of selling goods or a service is too always keep advancing, always coming up with new ideas. Things change constantly one thing may be in one day the next out! With technology always advancing, it is also a good idea to keep up to date with the technology and how you can get information about you brand, product or company out there.
http://www.usatoday.com/story/money/business/2013/04/24/starbucks-howard-schultz-innovators/2047655/
Chelsea Burgard
Cebp86
14143133
Beatriz Costa-Lima
pawprint: brc3nc
While some may say all coffee is the same, Starbucks has proved to be one of the most profitable coffee shops in the world with 18,000 stores in 62 countries. How does Starbucks do it? As this article in USA Today shows, Starbucks maintains their success by differentiating their product as much as possible.
In the article, Starbucks CEO Howard Shultz discuses vaguely how he plans to innovate his product to keep up with competition. When thinking of how to improve their company, Shultz said that they think, “If we were competing with Starbucks, what would we do?”
Although Schultz remained secretive about what exactly Starbucks’ next innovation will be he did tell USA TODAY that most of the’ innovation will be technology-focused.
The article discusses how the new technology could have something to do with mobile payments. Starbucks is producing more than 3 million mobile payments per week, which exceeds the combined mobile payments of the next 10 companies closest to Starbucks, according to Schultz.
In the future, customers may not even have to go to the bar to order their drink at Starbucks. Instead, a feature on their mobile phone app would allow Starbucks to “recognize” that the customer was in the store and baristas would make their regular drink without having to go up and order.
Shultz said that in order to stay successful, they must always work to innovate. As we learned from our textbook, a firm’s ability to differentiate its product and to produce it at a lower average cost than competing firms creates value for it’s customers. The market for coffee shops is in monopolistic competition because all the firms, the different coffee shops such as Starbucks, Caribou Coffee, or Kaldis, sell similar but not identical products. In order for a firm to be successful in monopolistic competition, the firm needs to differentiate its product. That is what Starbucks does by offering drive-thru in some stores, different holiday flavors, a rewards program and continuing to innovate. The new push for technological innovation from Starbucks will give the company a competitive edge over the other firms in the coffee market.
Tess Yocom
tay25c
14130816
http://www.usatoday.com/story/money/business/2013/04/26/first-quarter-gdp/2113863/
This USA Today article stated that the U.S. economy grew at a rate of 2.5% this past quarter. Although it sounds hopeful, the growth rate was actually lower than economists hoped for, which was 3%.
The article states that consumer spending increased by 3.2%, which was the quickest growth rate in two years, due to the fact that consumers are saving less. One of the reasons consumers are deciding to spend more is due to the fact that congress didn’t renew a set of payroll taxes, meaning that consumers decided to spend their extra money. This can be linked back to the circular flow, meaning that when consumers spend money as opposed to saving it, there’s an increase in the GDP.
However, government spending decreased by 4.1% due to an $85 million cut in government purchases. This shows that when the government decides to spend less money, it can causes growth to decrease.
Although there was growth, the economy only added 88,000 jobs in March, as opposed to 208,000 in January and February. There was also a decrease in spending on durable goods, such as airplane tickets and appliances. These results can directly be linked to the fact that when consumers are unemployed, there are less likely to purchase durable goods.
Tess Yocom
tay25c
14130816
http://www.usatoday.com/story/money/business/2013/04/25/starbucks-quarterly-profit/2113441/
This article stated that Starbucks’s profits have increased by 25.9% over the past quarter. The company’s stock increased 12.8% a share due to its growth. Therefore, Starbucks is a prime example of the fact that when companies’ profits grow, consumers are more likely to purchase stock.
The article goes on to explain that Starbuck’s profits in the United States grew by 7%, which can be linked back to a 2.5% growth in the economy, and more specifically, 3.2% growth in consumer spending. Since Congress decided not to expand payroll taxes, consumers spent the extra money in their pockets. One of the things they could have spent it on was Starbucks, meaning that government decisions can be linked to business growth.
Starbuck’s success can also be due to the fact that they’re expanding their business overseas. The article states that growth in stores at least one-year-old stores in the Asia-Pacific region have increased by at least 8%. Starbucks can be used as an example of expanding a successful U.S. business overseas.
Although Starbucks competes with other companies in monopolistic competition, they were still able to gain profits due to new specialty drinks and an enhanced loyalty program. Therefore, Starbucks realized that they were competing in a competitive single-coffee-cup market and differentiated their product to stand out and attract consumers.
Tess Yocom
tay25c
14130816
http://www.usatoday.com/story/money/personalfinance/2013/04/21/avoiding-college-avoiding-debt/1987309/
This USA Today article explains that an increasing number of high school grads are not attending college. Instead, they have decided to invest in their own business. In one instance, a college dropout created his own college business and now makes $150-an-hour.
The article explains that the unemployment rate for workers with a bachelor’s degree is at 12.6%, as opposed to 7.7% in 2007. This proves that when the unemployment rate rises, consumers are less likely to spend on durable items. This cut could also be due to decreases in federal grant programs.
Another reasons students are deciding to forego attending college is because a degree can no longer set them apart in the job market. While a degree used to be unique, too many citizens have attended college, meaning that it’s now the norm. This can be compared to iPhone apps in a perfectly competitive market. While entrepreneurs used to be able to earn a profit on an app, the market has become easy to enter, meaning they are not worth as much.
However, it’s important for young entrepreneurs to understand the risk involved in starting their own business. Since most small business created are sole proprietorships, owners are liable for all funds. Therefore, if they becomes financially unstable, they will lose their earnings as well as not have a college degress.
Tess Yocom
tay25c
14130816
http://www.usatoday.com/story/tech/2013/04/26/idc-smartphone-shipments/2115173/
This USA Today article explains that smartphones are now selling more than basic feature phones.
It states that 51.6% of phones shipped this year were smartphones, while the shipments grew 42% worldwide. It’s predicted that by 2016, more than 205 million Americans will own a smartphone.
One of the reasons for the increase in smartphone sales is due to a decrease in costs. Because they are more popular, companies have likely invested in technology to produce them at a lower cost. They are then able to sell them to consumers at a lower price, meaning that sales increase. This links back to the principles of supply and demand, because as technology increases, prices fall.
Now that smartphones are outselling basic phones, it’s important for phone companies to do what they can to outsell their competition. The article explains that Samsung sold the most phones, followed by Apple and LG. As we learned in class, smartphone companies are oligopolies. Therefore, in order to succeed, they must create better phones, such as bigger screens or longer battery life, to make a profit.
Joyce Peng
JPCKF
14159005
http://www.usatoday.com/story/money/cars/2013/04/19/volkswagen-iphone-beetle-shanghai-gforce/2094491/
In the USA Today article, “iBeetle integrates Apple iPhone; coming next year”, it talks about Volkswagen unveiling its new iBeetle, which highlights its integration with iPhone 5 to appeal to a younger generation of buyers.
The iBeetle will have a dock where you can put your iPhone in it, and it will incorporate and integrate and add the smart phone, its apps, and its capabilities with the car specific apps. You can use “essentially all iPhone functions” inside the car, according to the article. The dock and the integration functions wirelessly but the iPhone 5 dock might not work for iPhone 6. Such functions include Spotify, allowing you to listen to music and share songs to friends, a Beetle car data app that shows you time, coolant temperatures, g-forces in corners, and compass, and an app that reads iPhone and Facebook messages to you. Nothing has been said about offering a similar iBeetle to Android and Windows phone users.
This article relates to Chapter 13 in the economics book on monopolistic competition, specifically on page 445. It talks about marketing by differentiating one’s products, and Volkswagen is doing just that. It is making its new iBeetle unique in that it incorporates iPhone 5 into the car system. Not many cars nowadays can offer that. Also on page 444, it talks about how consumers benefit from monopolistic competition. Although the automobile industry is more of an oligopoly, it still has high competition, and consumers pay a price greater than normal because they get something that suits their needs and tastes, such as a 20-something year old buying an iBeetle because he uses an iPhone 5 and enjoys to have some convenience of using his iPhone while driving his car.
This also relates to Chapter 3 on the law of demand and the variables that shift the demand curve. One variable is the taste of the consumer. If the product matches the taste of the consumer, there will be more sales, and it will shift the demand curve to the right, which will increases product quantity and profit. So Volkswagen is hoping that the iBeeetle will appeal to the consumer’s tastes, which will help them generate profits.
Warren Buffet is the richest man in America. How did he become so rich? Stocks. The article entitled “Warren Buffet checks in on his Coke investment” by USA Today, shares how some of his wisdom has led to his great success. As we learned in class, a stock is a financial security that represents partial ownership of a firm. In class we discussed how buyers and sellers of stocks and bonds together make up the stock and bond markets.
Buffet recently spoke with Coca-Cola’s CEO Muhtar Kent at a meeting on April 24 about the secrets to staying successful. He gave him advice and suggested that his company strive to stay ahead of the competition. He said, “I like to study failure. We want to see what has caused businesses to go bad, and the biggest thing that kills them is complacency.”
Coca-Cola has succeeded in staying ahead of competition as their stock has experienced a worldwide growth of 4%. Additionally, shares of the company have risen 16.8% year-to-date and has grown more than 57% in the last three years.
Buffet has made his fortune by investing in companies he believes in. For example, the article discusses that Buffet’s company currently has 400 million shares of Coca-Cola, which exceeds the amount of shares he owns of IBM or American Express.
http://www.usatoday.com/story/money/business/2013/04/27/wall-st-cheat-sheet-warren-buffett-coca-cola-ceo/2116309/
Katie Link-14128200
kjlzpd
Mary Lorenzo
MMLPQF
14152748
http://www.usatoday.com/story/money/business/2013/04/25/15-year-mortgage-rate-record-low/2112351/
This article focuses on how the housing market is currently doing much better than previously before, especially when compared to the recession. This is something we’ve been discussing in class lately. As a result of the problems in the housing market, the recession only worsened, and we’re now starting to improve these conditions.
For example, the article cites that the 30-year fixed mortgage just fell to 3.4% and the 15-year mortgage is 2.61%. These are lower than ever before, according to the article. It doesn’t mention whether or not these were mortgage backed securities or not, but if they are, money is being circulated even more. These bundled mortgages (represented as bonds) have higher interest rates that are then sold to investors, so more money can be made off of these packages. But regardless, these statistics reveal that the housing market has made a comeback since the recession.
In class and in our textbook, we’ve been learning that several problems arose during the recession because of the housing market. In 2007, firms in the shadow banking system were exceedingly vulnerable as the housing prices fell. As a result, borrowers began defaulting on mortgages. Then mortgage-backed securities lost value and investors suffered heavy losses. But with these new statistics on the housing market, the recession is far in the past.
With these low mortgage rates, people are much more likely to buy in the market. And when people buy, money is being circulated more, which creates a healthier economy. The article says that home sales averaged 4.9 million during the first three months of 2013, which has been increasing over the past year. With this kind of growth in the market, the economy is definitely improving greatly and should continue to do so.
Pawprint: tapcn2
Student Number: 14156577
Link: http://www.usatoday.com/story/money/business/2013/04/24/durable-good-march-big-decline/2108929/
“Orders for long-lasting U.S. factory goods fell sharply” in March of 2013. Orders for durable goods has dropped 5.7% in March after a 4.3% gain in February. These durable goods were expected to last at least 3 years, with a few fluctuations. The first massive decline in March was due to a fall in the commercial aircraft orders. Even excluding that value, orders still dropped 1.4% during the second decline. A positive edge to the report was the “core capital goods” which increased 0.2%.
The article states that “[e]conomists pay close attention to these orders because they strip out defense and aircraft orders and are a good measure of companies’ expansion plans.” While the core capital goods had increased slightly, they took a sudden decline in February. Despite these facts, economists expect economic growth in the January-March quarter. The spending power of the American’s take-home pay has been reduced by the Social Security taxes this year. Another factor that will affect growth and manufacturing will be “across-the-board government spending cuts” that will begin on the 1st of March.
Some other reports discuss how manufacturing has already started to weaken, regardless of showing signs of strength during the winter. “Strong auto production hasn’t been enough to offset broader slowdowns in other industries.” According to the Federal Reserve, factory output declined throughout the month of March. The expansion rates are also much slower than they used to be in previous months, according to surveys. Both orders and production have declined sharply in recent months.
This article relates to Chapter 21 of the textbook that refers to the business cycle. This issue is found underneath the section titled “Will the U.S. Economy Return to Stability?” The article itself is talking about how the economy has taken a downturn and it poses the question of whether or not it will ever grow again. The government and the Federal Reserve have to work in order to stabilize the economy after it takes a sharp decline. When the U.S. Economy experienced a period of relative stability between 1950-2007, it was because of the increasing importance of services and the declining importance of goods, the establishment of unemployment and other government transfer programs that provided funds to the unemployed, active federal government policies to stabilize the economy and the increased stability of the financial system. Each fallback in the economy, however, proves to have great growth afterwards – so each little setback isn’t such a bad thing in the long-run. The government and the Federal Reserve just need to find good programs that will help the economy grow to its fullest potential after it takes a downturn.
Mary Lorenzo
MMLPQF
14152748
http://www.usatoday.com/story/tech/2013/04/29/tech-stocks-facebook/2120459/
Facebook stocks are actually up 1.5% as they’re about to release the first quarter earnings for the year. Part of this increase is due just to anticipation of the release, but a large part of it has to do with the technology Facebook has recently designed.
Facebook Home was just launched on several Android phones. This new technology allows you to access parts of your Facebook, such as messaging or your news feed, without even opening the application. We talked in class about how technology can change output in the long-run, and this is definitely an instance in which that applies. Because Facebook is constantly implementing new technology and re-designing applications, consumers are more likely to purchase phones with this compatibility. Therefore, sales increase largely and thereby improve the economy’s health.
For example, the article says that Blackberry shares are also rising. Some of the Blackberry models are compatible with the recently launched Facebook Home, which makes Blackberry a complement good. With this much hype over a product, sales across the board are rising, making the market healthier, and increasing investors’ willingness to buy stock.
This article relates back to what we’ve talked about in class because technology has been highly emphasized. There are some key factors that can change output of a product, thereby determining how successful the market will be. Technology has been emphasized as a key item on that list, so when new technology is produced, the market usually improves, as it is with Facebook.
Name: Amber Smith
Student Number: 18074047
Pawprint: ars7d8
http://www.usatoday.com/story/money/personalfinance/2013/04/27/the-value-of-bonds/2110619/
This article gives advice about bonds and lets people know if they are an economically smart investment. This article is set up in a question and answer format and covers many of the same topics that we recently discussed in relation to bonds.
One question was “if interest rates are close to zero, are bonds still a good investment?”. As we learned in class, bonds work opposite of interest rates so because the value of a bond will increase as the interest rates drop closer to zero. She then goes on to explain why that is not the only information you need to know when making decisions about bonds. One needs to look at a bonds duration and credit quality to be able to assess how risky the investment is.
The interest rates have been low for a long time and people expect them to rise sometime in the near future. With this in mind, many bond investors have shortened the term of their bond holdings to reduce the risk of being hurt by a sudden upward movement in interest rates.
Spain’s Unemployment 27.2 percent, tops 6 million
LINK: http://www.usatoday.com/story/money/business/2013/04/25/spain-jobless/2111765/
As of April 25, unemployment in Spain has skyrocketed. Over 27 percent and 6 million people living in the country of Spain are without a job. According to the article in USA Today, this is the highest the unemployment rate has ever been in Spain. The article describes Spain as a “recession-wracked country”.
Of the 6 million people unemployed, over half of those people have been without a job for over a year. According to our textbook, this is called cyclical unemployment. The definition of cyclical unemployment is unemployment caused by a business cycle recession. Spain is most definitely in a recession right now. The article states that Spain has been in a recession for almost four years and that the country’s economy was booming a decade ago.
Oscar Lopez, of the Socialist party, thinks Spain’s government needs to withdraw the labor reform and change its economic policy. Also, according to the article, a primary reason for the recession is because the country is struggling from many macroeconomic imbalances.
This article relates to Chapter 20 (page 641) in our textbook. The entire chapter deals with the problems of unemployment and inflation. According to the textbook, in September 2009 the unemployment rate in the United States was 9.1 percent. This is a third of Spain’s unemployment rate. That is absolutely crazy to me. According to our book, the unemployment rate in the United States differs by ethnic group and educational level.
Aubrey Leiter
PawPrint: arlm9c
Home builder confidence takes a hit in April
LINK: http://www.usatoday.com/story/money/business/2013/04/15/home-builder-sentiment-april/2083955/
This article, published April 15th in USA Today, is about the house building industry and how the people in the industry are losing confidence. The article states that the main reason for the lack of confidence is the increasing costs of materials and rising concern about the supply of lots and labor.
The USA Today article states that there is a rising demand for new homes because of difficulties in obtaining construction credit, construction costs and overly restrictive mortgage lending rules. The work is available but there are many challenges holding back new building creation, which translates to lack of jobs. The article states that builders need to have patience and wait for supply chains of building materials, developed lots and skilled workers to re-establish themselves. The industry is expected to get back to normal, but builders are going to have to wait out this time.
This article relates to the Chapter 3 (page 79) in our textbook. The idea of supply and demand is impacting the home builders market today. As the demand for home builders is decreasing, the supply of lots and labor is increasing. The home builders cannot do anything about the increasing costs of supplies, which is hurting their profession.
This article relates to the concept of supply and demand in many ways. There is an excess supply of home builders needing work, but there isn’t the demand of work for them to do. The business is currently struggling but will hopefully be able to get back to normal. The amount of supply and demand needs to start to even out so that the industry can be fixed.
Aubrey Leiter
PawPrint: arlm9c
Income, consumer spending up .2 percent in March
LINK: http://www.usatoday.com/story/money/business/2013/04/29/personal-income-consumer-spending-march/2120301/
On April 29, USA Today published an article about how income and consumer spending both increased in March, according to the Commerce Department. According to the Bureau of Economic Analysis, personal consumption increased 21.0 billion dollars.
One main reason that personal consumption was higher this past March was because Americans had to pay more to heat their homes due to a cold March. March typically isn’t as cold as it was this year in 2013. The article also states that consumers aren’t spending as much money at retail stores or restaurants because they are starting to feel the impact of the payroll tax increase.
This article relate to the consumer price index on page 657 in our textbook. The consumer price index (CPI) is an average of the prices of the goods and services purchased by the typical urban family of four.
CPI relates to this article because the article is about personal consumption of the United States. Therefore, the country’s CPI increased this past march. This applies to this article in many ways because it goes into detail about why certain people spent more or less during this past month.
Aubrey Leiter
PawPrint: arlm9c
Aubrey Leiter
Student Number: 14128863
Sorry I forgot to include it in my previous 3 posts.
Tanzi Propst
Pawprint: tapcn2
Student Number: 14156577
Link: http://www.usatoday.com/story/money/personalfinance/2013/04/27/the-value-of-bonds/2110619/
“If interest rates are close to zero are bonds still a good investment?” You have to know the facts and review the basics of bond funds. Even in limited circumstances, bonds can still be a good investment. Bond values often times move in the opposite direction of interest rates. The important things to know before you invest in buying a bond are its duration and credit quality. From that information, you can determine how risky the fund will be.
“If you buy individual bonds and hold them to maturity, you will not lose principal because interest rates rose.” Bond funds may try to protect themselves by shifting to shorter durations when the interest rates start to rise. If the rates are at the highest point, then buying long-term bonds at discounted prices becomes the more popular decision. “Interest rates have been low for more than three years. During that time, investment-grade bonds have returned nearly 20% since then…”
The tip is to use low-cost bond mutual funds that have durations of about 2-4 years. In recent times, retail investors have shortened the term of their bond holdings in order to reduce the risk of being hurt by a sharp increase in interest rates. It is unlikely that there will be a mass panic out of bonds due to the older investors that are still afraid of a panic. We’ve only had low interest rates for about 7 of the last 10 years in the United States. Long-term bonds are still risky, however, in case inflation was to return and higher interest rates were to happen.
This relates to Chapter 21 when the book talks about saving, investment and the financial system. In financial markets, like the bond market in this case, firms are able to raise more funds by selling financial securities directly to savers. When interest rates rise, no one will want to buy bonds because it’s more risky to do so and it’s more expensive. People aren’t going to want to spend more money than they should have to.
Tanzi Propst
Pawprint: tapcn2
Student Number: 14156577
Link: http://www.usatoday.com/story/money/business/2013/04/29/personal-income-consumer-spending-march/2120301/
Personal income and spending both increased 0.2% this past March. Incomes were expected to increase by 0.4% from February into March this year. This increase was caused by an increase on spending for various services. This was mainly caused by Americans paying more to hear their homes during the month of March, which turned out to be unreasonably cold. This durable good became a necessity for all Americans during the month of March and due to the increase in personal income, more people were able to pay for this service.
This alone doesn’t prove that there is consumer confidence for the purchasing of these goods. Some reports suggest that consumers will feel the impact from this event from their payroll tax increase. The 2% tax increase “has reduced tax-home pay for nearly all Americans.” Americans earning more money will have a little less to spend this year whereas Americans who have a smaller income will have a significantly lower amount to spend.
This relates to Chapter 21 where they talk about consumer spending and durable goods. “Increased spending by households on consumer durables and by businesses on capital goods will finally bring the recession to an end and begin the next expansion.” Durable goods usually decrease during a recession, so consumer spending decreases as well. If they can lower prices enough that people will start spending their household incomes on goods again, both values will increase. This will help to bring the economy out of a recession – slowly, but surely…and not entirely based on this factor.
http://www.usatoday.com/story/money/personalfinance/2013/04/30/money-quick-tips-affordable-care-act/2121729/
Kendyl Kearly
khkkv5
The article in USA Today entitled “Quick Tips: the cost of the health care law” by Regina Lewis gives a breakdown of the Affordable Care Act because certain provisions will go into effect January 2014.
Businesses with more than fifty full-time employees will have to provide health insurance or pay a fine. The textbook explained this provision. This might cause some firms to cut insurance to part-time workers, forcing them to work full time.
The book did not explain that employers can increase the incentives they give the workers who take part in wellness programs. According to the article, this means those who don’t participate in these programs pay more for insurance.
The article argues that pumping money into making employees happy isn’t worth it and only increases a firm’s costs.
http://www.usatoday.com/story/money/business/2013/02/10/usa-today-first-quarter-economic-survey/1902217/
The article that I read talked about how the job market was increasing towards the middle of 2013, after a sluggish start in the beginning of the New Year. According to the article, economists say that the economy will be growing at the fastest rate in three years. They also, “Expect average monthly job gains of 171,000.” They say that the beginning of the year doesn’t have as much growth due to government spending cuts and payroll tax.
The article went on to talk about how the housing market is also rebounding. Although there seems to be improvement towards the end of the year, economists do not expect consumers to go back to their freely spending ways.
This article goes along with our discussion of a falling/rising economy. Chapter 21 went on to elaborate about the previously discussed business cycle. A business cycle is defined as alternating periods of economic expansion and recession. Our book goes on to mention that a business cycle is not always the same, meaning that the time periods of recessions or expansions are not always the same length of time.
Also, every expansion is followed by a recession and every recession is followed by an expansion. There is no way of knowing how long we have until we hit the next recession. All we do know is that a recession is inevitable.
Samantha Healey srhm93
Sara Naatz
sknyrd
http://www.usatoday.com/story/money/markets/2013/04/29/stocks-hit-fresh-record-high/2121937/
This article highlights the facts that stock prices continue to rise despite the poor state of the economy. It says that these stock prices are a sign of the fact that investors are starting to take more risks, but this worked mostly for “bull market sectors” which include things like technology and energy. According to the article, these types of businesses have been seeing larger “price pops” than other industries which often see more success.
This seems to be at a three-year high. Investors also were encouraged by the support markets have started to receive from central banks around the world, again, despite the poor economies not only in the U.S., but in many other countries. These central banks include the U.S. Federal Reserve and the European Central Bank. The one downside to all these high stock prices is that the worst season for owning stocks is almost upon us, according to the article.
This article relates to our textbook because this story clearly talks about what the meaning of these high stock prices may mean — at this point, experts are confused as to why they would be this high in such a poor economy. But in reading the textbook, we know that stocks provide both capital and information. In terms of supplying capital, stocks represent partial ownership of a firm, so the firm is increasing its financial capital by adding more owners.
Stocks also provide crucial information about the market to experts and investors. Increases in stock prices signify that investors are more optimistic about a fir’s prospects, so when many stocks go up, it may mean investors are feeling more optimistic about the market in general. In this case, investors seem to be feeling positive about the future of firms in the market for technology and energy. Thus, if these stock prices continue to stay high, it is possible that the economy may slowly improve.
Sara Naatz
sknyrd
http://www.usatoday.com/story/money/business/2013/05/02/trade-deficit-march/2128791/
This article discusses the shrinking deficit for the United States, as the trade deficit with China is at a three-year low and as imports on goods such as crude oil have continued to drop. Despite this contraction in the deficit with China, it is still far above the deficit with any other country. The article focuses on the fact that if exports continue to increase and imports continue to decrease, the trade gap will lessen and the United States economy would theoretically improve.
Despite these encouraging numbers, the index of U.S. manufacturing activity expanded at a slower pace in April, according to the Institute for Supply Management. This may mean growth will continue to lag more and more this spring. The article also reports that though the U.S. economy grew at an annual rate of 2.5% in the January-March quarter, it wasn’t as quick of a growth as economists had expected.
In addition to this already mixed news about the national economy, USA Today reports in the same article that tax hikes and spending cuts are also hurting the already bleeding economy. The Federal Reserve back this idea that these government policies and the sequester are hurting the economy, but it maintained its support for its own plan to invigorate the economy.
This aligns with our readings and class notes in our knowledge of the budget and the budget deficit, as well as how the government achieves a balanced budget. First of all, a balanced budget is achieved when the government spends the same amount of money it makes in taxes. This means the tax hikes mentioned in the article are aimed to balance out the budget by increasing federal income; however, taxes also impede spending. This can be found on page 689 in our textbook.
Matthew Zuzolo
Mjz445/14136969
http://www.usatoday.com/story/money/cars/2013/05/02/ford-f150-transit-truck-boom-jobs/2128131/
This article is about Ford adding 2,000 new jobs to a truck plant in Kansas City. The plant, which is located in Claycomo, MO, produces Ford F-150 pickup trucks. According to Joe Hinrichs, Ford Motor executive vice president and president of The Americas, the sales of Full Size Trucks such as the Ford F-150 are growing rapidly at three times the industry rate. Additionally, about half of the people to be hired will be recalled from lay-offs and about half will be new hires.
Additionally, Ford promised the United Auto Workers union 12,000 hourly jobs by 2015. The new additions in Kansas City hit the 9000 jobs mark.
This relates to the lecture because it demonstrates the economy’s recovery and growth. During the recession, the auto industry was one of the hardest industries to work in and many people were laid off. As a result, structural unemployment was a major problem. By rehiring laid off workers, Ford is helping to alleviate some of the structural unemployment in Kansas City job market. (pg. 653)This recovery also shows the newfound consumer confidence as people buy new cars and begin to spend more money. As the economy continues to recover, confidence will rebound and businesses will grow to meet the increased demand.
http://www.usatoday.com/story/money/business/2013/05/01/april-jobs-report-preview/2126397/
In this article from USA Today, the main purpose is to explain the forecast of a weak job increase. The three main reasons for this are outlined in the article as Federal spending cuts, a payroll tax hike and the health care law. We discussed in class the factors that will contribute to an increased unemployment rate. It is also important to realize the U.S. economy creates and destroys thousands of jobs every year. In order for unemployment to fall it is essential to watch the rate of job destruction compared to job creation. This article examines these and other causes that have resulted in unfortunate unemployment rates.
Outlined very clearly are three reasons for the slow down of employment rates. The new health care reform law is discouraging small-businesses to hire new employees. The failure by the White House and Congress to renew a payroll tax cut is having a negative effect on consumer spending. Lastly, federal spending cuts totaling $85 billion have started to take a toll on the economy. Zandi (a chief economists) estimates it could trim job growth in April by about 10,000. All of this seems truly disheartening to anyone on the hunt for a job, and even people who are currently employed.
The Affordable Care Act however may help a lot of employees. This requires businesses with at least 50 full-time employees to offer health insurance to their employees who work at least 30 hours a week. It won’t come into effect until January of next year. However, businesses must track their 2013 payrolls to determine whether employees work enough hours to receive these benefits. This most definitely has forced businesses with more than 50 employees to reduce their staff, and others with fewer than 50 to hold off on hiring. Yet again, not helping the job market at all.
We’ve discussed in class how the recession has had huge impact on our economy and the loss of jobs. It is not hard to lose hope when analyzing the future of the job market. In the article, Zandi predicts e federal spending cuts will get worse throughout the next few months and the health care law will stop small-businesses from hiring new workers this year. He expects monthly job growth to slow to an average 125,000 before picking up to 175,000 by the fourth quarter. The job market’s future is looking bleak at the moment.
Ashley Page
pawprint: ampgf3
Matthew Zuzolo
Mjz445/14136969
http://www.usatoday.com/story/money/business/2013/04/03/ism-non-manufacturing-index/2048963/
This article discusses the slowed growth in the service industry this past March. The writer cites the fall of the index of non-manufacturing activity as a measure of the slowed growth, but also notes that expansion is still occurring. This index measures growth in industries that employ 90% of the work force, such as health care, construction and financial services.
This news represents a fall in the rate at which jobs are added, not a job loss. In other words, the pace has slowed, but it is still expanding. Additionally, despite this drop, the index matched a 12-month average. Also, as the economy recovers, consumers are becoming more confident and jobs are still being added, even if the rate temporarily slowed. The article discusses that participants in the survey, which measured job growth, are feeling more positive about business conditions, but the remnants of the recession are still present.
Ultimately, this article is about the recovery and expansion of the post-recession economy. Despite the bad news that job growth slowed, it is still growing. As shown in chapter 20, the addition and loss of jobs in an economy is not a constant value, Different variables change the situation and as a result, gains or losses are sometimes growing faster or slower. However, because the economy is expanding after the recession, employment should always be growing, even if the rate fluctuates month to month.
http://www.usatoday.com/story/money/business/2013/05/01/fed-maintains-stimulus/2126381/
Vivien Tran
PawPrint: vtr25
This article talks about how the Federal Reserve are going to stimulate the country. The Federal Reserve plans to continue to hold down interest rates and stimulate growth by purchasing government bonds. The Fed will continue to do this until the job market improves. The purchases of the bonds will increase assets and lower interest rates by decreasing yields.
In class, we discuss the monetary and fiscal policy. The monetary policy is the actions that the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomics policy objectives. Fiscal policy is the changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives. These two policies are in effect, according to this article, because the Federal Reserve is trying to achieve the macroeconomic objective of stimulating the economy.
Even though the Federal Reserve are making strong efforts to obtain the macroeconomic objective, it depends on the outlook of job market and inflation. The meager rises in wages and prices reflect on how weak the economy is even though until recently, the economic growth has been strong. In the May statement, it has been said that the economy is continuing to expand, yet the deficit-cutting is “restraining the growth”.
The strong efforts made by the Federal Reserve gives the economy hope for eventually getting out of this deficit rut. The process is slowly progressing, but the results will soon to be revealed if the efforts are going strong as it is. This is what I believe will happen as the article only provides facts that I can use for my own predications.
http://www.usatoday.com/story/money/markets/2013/05/01/treasury-yields-at-new-2013-lows/2127279/
Vivien Tran (:
PawPrint: vtr25
This article ties in with the previous article that I have posted. In the previous article, I talked about the Federal Reserve’s efforts to stimulate the economy by purchasing government bonds and holding down interest rates. Even though the Reserve is making strong efforts, it really depends on the outlook of the job market and inflation. In this article, it talks about the deflation of the economy, not the inflation.
This article shows reports of how the economy is weakening due to a hiring pullback, a drop in construction spending, slow manufacturing growth, etc. The stocks are accepting lower yields which affects the price of commodity. In class, we talked about money commodity. Money commodity is independent of its use as money, the value of commodity money, such as gold, depends on its purity. Referring back to the article, there is a paragraph discussing how the fears of Fed’s stimulus policies and a recovering economy were rising, which occurred in gold being traded to $1,800 per ounce. This is shocking because of the inflation barometer tumbling to $20-$1,451 and it reaching to $1,800 less than 6 months ago.
In the previous article of the Federal Reserve purchasing bonds, this article questions if fixed-income securities are a good investment. If consumers and businesses are convinced that prices are falling, they are less inclined to spend. Spending is the huge factor of stimulating the economy. If there is no money circulating around, the economy is less stimulated. The Federal Reserve fear that this recession will soon spiral down to the like the Great Depression, where it took the government many years to rebuild the economy. The Federal Reserve are purchasing government bonds in hopes of having consumers and businesses following its lead.
Erin Mikel
EEMY32
http://www.usatoday.com/story/money/markets/2013/05/02/stocks-good-year-so-far/2130877/
The Stock market has been on the up for the past for months. What does this mean? Will the market continue to go up or will there be a big crash? This is the first time in 30 years the stock market has been up the first four months of the years. As scary as this seems all we can do is make predictions.
According to the USA Today article and Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, the market should go up over all for the year but it may go down in may. Once you get momentum in a bull market it is hard to kill. The government has been working hard to get the market on the raise again.
This relate to our reading by the stock market on pages 245. A stock is a financial security that represents partial ownership of a firm. The stock market is the market on which the stocks are trade and sold. On page 252 it talks about the financial crisis of 2007-2009. The reading discusses the mortgage and bank crisis and how that affected the stock market.
Also on 248-289, 253-255 it talks about how the market fluctuation and how that effects people. Weather the market moves up or down it scares people and stocks are bought and sold everyday based on those facts. The reading also talks about on those predictions do CEO’s act in favorite of the stockholder or of them selves? We CEO’s are invested into the company there attentions isn’t on the price of stocks but other aspects of the company which can hurt shareholders.
Emelia Oh
EJOD32/14155299
Kids Skip College – Not Worth the Money
http://www.usatoday.com/story/money/personalfinance/2013/04/21/avoiding-college-avoiding-debt/1987309/
With unemployment rates remaining high for recent bachelor’s degree recipients, many high school graduates are reconsidering the value of a college education. Instead of heading off to university, some students are starting their own businesses, working for free at companies to gain experience, and flying out to conferences to network – activities they believe are far more valuable additions to a résumé in today’s economy than a college degree.
This notion stems from a pattern of high unemployment for recent college graduates, which was still up to 12.6% as late as 2011, the most recent year available from the Bureau of Labor Statistics. According to the article, if the post-grad unemployment rate does not improve, America could see a large regression in the number of students who attend college.
This article demonstrates the key economic foundations discussed in chapter one of our textbook. Because we live in a world of scarcity and there is a limited amount of money, each person must decide the most beneficial way to use his or her resources. Exemplified by this article is the concept of trade off – the idea that because resources are scarce, people often have to give up one thing in pursuit of another. In this case, students are choosing to give up a college degree in order to pursue more valuable credentials. A college degree then, becomes an opportunity cost or the highest valued alternative that must be given up to engage in an activity.
Katelyn Winker
14162057
This article is discussing the unemployment rate falling in nearly 90% of large United States cities this past March. The article relates to Chapter 20 on Unemployment and it discusses terms we have used such as unemployment rate, labor force, and discouraged workers. The Labor Department says unemployment rates fell in 333 of the 372 largest metro areas.
Each month the US Bureau of the Census conducts the Current Population Survey, which is often referred to as the household survey. This survey collects data needed to compute the unemployment rate. The rate has dropped because fewer people have said they are unemployed because they have stopped searching for jobs. People are considered discouraged if they are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them, which means they are not counted in the labor force. The labor force is the unemployed and employed rate. The government only counts people who are looking for work as unemployed.
People are considered employed if they worked during the week before the survey or if they were temporarily away from their jobs because they were ill, on vacation, on strike, or for other reasons. People are considered unemployed if they did not work in the previous week but were available for work and had actively looked for a job at some time during the previous week.
In the article it says the unemployment rate dibbed to 7.6% in March from 7.7% in February. Hiring also slowed sharply because employers added only 88,000 hobs in March, which is a large drop from the average gains of 188,000 a month in the last six months. The change in the number of personas employed is equal to the total number of jobs created minus the number of jobs eliminated. There are still signs of long-term improvements says the article in the metro unemployment data. Nearly 160 metro areas had unemployment rates of 7% or below, up from 113 a year earlier. Also, while 44 cities have unemployment rates of 10% or higher, that’s down from 63 a year earlier.
This article also shows an example of seasonal unemployment. Seasonal unemployment refers to the unemployment due to factors such as weather, variations in tourism, and other calendar-related events. The article explains that the metro unemployment data isn’t seasonally adjusted for trends like the hiring of extra retail employees over the winter holidays. This can be more volatile than the national data. Because seasonal unemployment can make the unemployment rate seem artificially high during some months and artificially low during other months the BLS reports two unemployment rates each month, one that is seasonally adjusted and one that is not.
Katelyn Winker
14162057
sorry forgot to place the link in my last post for this article:
http://www.usatoday.com/story/money/business/2013/05/01/unemployment-cities/2127293/
This article is discussing the unemployment rate falling in nearly 90% of large United States cities this past March. The article relates to Chapter 20 on Unemployment and it discusses terms we have used such as unemployment rate, labor force, and discouraged workers. The Labor Department says unemployment rates fell in 333 of the 372 largest metro areas.
Each month the US Bureau of the Census conducts the Current Population Survey, which is often referred to as the household survey. This survey collects data needed to compute the unemployment rate. The rate has dropped because fewer people have said they are unemployed because they have stopped searching for jobs. People are considered discouraged if they are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them, which means they are not counted in the labor force. The labor force is the unemployed and employed rate. The government only counts people who are looking for work as unemployed.
People are considered employed if they worked during the week before the survey or if they were temporarily away from their jobs because they were ill, on vacation, on strike, or for other reasons. People are considered unemployed if they did not work in the previous week but were available for work and had actively looked for a job at some time during the previous week.
In the article it says the unemployment rate dibbed to 7.6% in March from 7.7% in February. Hiring also slowed sharply because employers added only 88,000 hobs in March, which is a large drop from the average gains of 188,000 a month in the last six months. The change in the number of personas employed is equal to the total number of jobs created minus the number of jobs eliminated. There are still signs of long-term improvements says the article in the metro unemployment data. Nearly 160 metro areas had unemployment rates of 7% or below, up from 113 a year earlier. Also, while 44 cities have unemployment rates of 10% or higher, that’s down from 63 a year earlier.
This article also shows an example of seasonal unemployment. Seasonal unemployment refers to the unemployment due to factors such as weather, variations in tourism, and other calendar-related events. The article explains that the metro unemployment data isn’t seasonally adjusted for trends like the hiring of extra retail employees over the winter holidays. This can be more volatile than the national data. Because seasonal unemployment can make the unemployment rate seem artificially high during some months and artificially low during other months the BLS reports two unemployment rates each month, one that is seasonally adjusted and one that is not.
Joyce Peng
JPCKF
14159005
http://www.usatoday.com/story/money/markets/2013/05/01/treasury-yields-at-new-2013-lows/2127279/
In the USA Today article, it discussed traders not worrying about inflation, but about deflation. There is evidence that the economy is weakening in the US due to less hiring, and slowing in construction spending and manufacturing growth. The fixed-income traders will accept lower yields when prices are falling, which might be happening because of falling government bond yields.
It also mentioned that the Fed, when its job is to maintain economic stability and to prevent inflation, must have to prevent deflation. The Fed is still trying to stimulate the economy by buying long-term securities, particularly mortgage-backed securities. This way the long-term interest rates will remain low, which will allow borrowers to invest in stocks rather than low-yielding savings deposits. Thus, as stock prices keep rising, individuals feel wealthier and want to spend more. But they might not spend a lot if the prices are low, they are wanting for the prices to get even lower. This might hurt the market and economy.
This relates to our readings in the book. In pg. 665 and 666, it discusses that falling prices, known as deflation, is bad as well. It mentioned that in the past, during deflation, consumers save up more money to wait for prices to go even lower. This might not stimulate the economy has much as it was predicted, since deflation means the purchasing power is high and customers can spend more on goods and services as they become less expensive. This is happening here, as an anticipated deflation encourages consumers to save and wait to buy. This is one bad thing that deflation brings. The Fed must do something to stop deflation, just like it does things to stop inflation.
Also it relates to another topic to our readings in the book. In pg. 846 and 847, it discussed ways that the Fed manages the money supply. One way is to buy and sell U.S. Treasury securities. When it is buying them, it increases reserves in banks to rise, thus increasing the money supply and help stimulate the economy. This is what the Fed is doing right now, despite the deflationary trend that traders are seeing.
Katelyn Winker
14162057
http://www.usatoday.com/story/money/markets/2013/05/01/stocks-wednesday-5-1/2125895/
This article talks about how the April jobs reports has good news for stocks and bad news for bonds. This article relates to Chapter 8 in our textbook about stocks and bonds. Stocks are financial securities that represent partial ownership of a firm. Bonds are financial securities that represent a promise to repay a fixed amount of funds.
The article discusses that the nation add 165,000 jobs in April which is well above the economist’ consensus estimate of 148,00. This was a surprising increase considering the March and February job figures. The unemployment rate falling is good for workers but better for the stock market because they rise during economic expanding such as job expansion and fall during times of recession. The stock prices fluctuate because the value of a stock market index is set equal to 100 in the base year. The performance of the US stock market is often measured by market indexes, which are averages of stock prices.
More people employed means consumers demand more, which shows greater consumer confidence. For example, you don’t buy a car if you don’t have a secure job to make the payments for it. This is moving our economy is a positive direction. Although it is a positive think it is bad for bonds.
Bonds are IOUs says the article and as the economy improves, the demand for loans increases which allows the interest rates to rise. Interests rates are the cost of borrowing funds, usually expressed as a percentage of the amount borrowed. Rising rates drive down bonds. This also means that the Federal Reserve may not increase its program of purchasing bonds to stimulate the economy.
Putri Sazanka Idris
psi3m4
14172832
http://www.usatoday.com/story/money/business/2013/05/03/april-jobs-investors-analysis/2131135/
This article mainly talks about the decrease of the unemployment rate caused by the addition of 165,000 jobs in the nation. This is a positive outlook as economists estimated an amount about 20,000 below that. This shows the positive growth of the economy and that the U.S. economy is in expansion. Now the employment rate is 7.5%, a decrease from its previous rate of 7.6% in March.
The decrease of unemployment rate affects a lot of things in the economy, including the stock market. Because more people have jobs, they are more likely to spend more than before. This increases more consumer demand, which eventually result to the increase in stock prices. However, bonds aren’t looking as well as stocks. This is because as the economy is in expansion, interest rates begin to increase again, which decreases the price of bonds. In affect, even the Fed is not increasing its program of purchasing stocks to stimulate the economy.
The content of the article touches a lot of topics we’ve covered in class and in the economics textbook. First of all, unemployment rate consists of those in the labor force who did not work in the previous week but are actually able to and/or are looking for a job. Therefore, the percentage in the article reflects the decrease of those kinds of people who are unemployed.
Stocks and bonds are also mentioned in articles, and they react differently to the decrease in unemployment rate because they are two different things in the market. Stocks are financial securities that represent partial ownership of a firm, while bonds are financial securities that represent a promise to repay a fixed amount of funds. As demands are increasing, the worth of stocks increases, which attracts buyers more than buying a bond.
Relates to pages: 245, 243, 642
Jasmine Dell
jad5y2
http://www.usatoday.com/story/money/columnist/waggoner/2013/05/02/investing-japan-draws-fund-managers/2130627/
Diversified fund managers think Japan isn’t worth even looking at as far as investing in due to their poor funds. Current account, the part of the balance of payments that records a country’s net exports, net income on investments, and net transfers. Japan has created some inflation, they did this by lowering already low interest rates and purchasing longer-term bonds with newly minted yen. A good investment for Japan would be Daiwa Securities. A poor investment would beToyota and Honda.
Nominal exchange rate, the value of one country’s currency in terms of another country’s currency. United State’s nominal exchange rate is higher than Japan’s. MSCI’s Japan index has risen 19.6% and up to 34.7% this past year compared to 13% for the Dow. The yen has become weaker to the dollar, Japanese products are cheaper to the US.
Japan’s quality of their corporate structure is very poorly structured.The yen’s decrease has been intentional. “The Japanese government sees a weak yen as an advantage to its manufacturers, who are primarily exporters.” The weak yen also exemplifies the Japanese government continuously fighting persistent deflation. Currency depreciation, a decrease in the market value of one currency relative to another currency.
Balance of payments, the record of a country’s trade with other countries in goods, services, and assets. China’s middle class has wanted Japan’s products.”Japanese goods are in big demand in China, Hennessy says.”
http://www.usatoday.com/story/tech/2013/04/21/infor-oracle-sap-enterprise-software-charles-phillips/2074225/
This USAToday article by Jon Swartz discusses the software company Infor, as it introduces its new social business program used to help with business communication.
The program, called Ming.le, is used to present information graphs showing data and workflow in a sleek innovated manner. The article describes it as a Twitter-like design, with clearly labeled sections for each chunk of data, and a visual appealing site. It is formatted for Web, iPad, and iPhone, making the program extremely accessible in a businessman’s technology saturated life. It was developed for Generation Y, which is accustomed to the social media design of Facebook and Twitter.
This new technology is ensuring profits for Infor in the long run. The CEO of Infor, Charles Phillips, boasts the company has a two-year start on competitors with their design. Phillips was once the CEO of Oracle, another technology company and one of Infor’s main competitors.
In the software market, these different and innovative technologies create a monopolistically competitive market. As CEO with a personal grudge against competitors, Phillips and other executives at Infor, who also used to work at Oracle, are doing everything they can to meet their competition.
Infor is smaller the top two software companies, Oracle and SAP, but has the potential to “scoop” up all the smaller companies business rather than the big firms Oracle and SAP are after. Phillips plans to continue expanding the reach of customers Infor sells to, adding hospitals and schools to the pool.
tmektb
14152529
Devin McCallum
djmq57
14163046
http://www.usatoday.com/story/money/business/2013/05/02/mortgage-rates-week/2128877/
15 year mortgages are at a record low as of last week and 30 year fixed loan rates have also declined. This is a good thing for our economic recovery because cheaper mortgages encourage more people to buy homes causing more stimulation in the housing market.
According to economists the average mortgage rate on homes has slipped to 2.56%, which happens to be the lowest its been since 1991. The rate on 30 year loans is down to 3.35%, a new record since 1971.
These new decreases will continue to stimulate the housing market and support the housing market recovery that began to occur last year. If houses continue to sell than it will also create more construction which will create more jobs also stimulating the economy and bolstering more recovery.
This drop in housing mortgage rate resulting in more buying of houses is discussed on page 814 of the book. The previous rise of the price of houses and halt in the market is referred to as the housing bubble during which the pricing of houses sky rocketed. People attempted to “flip houses” in locations such as California and Florida where the real estate business is always booming, thinking that they could buy a house before the prices rose and then sell it for more money. However, as the Federal reserve began attempts to lower mortgage rates, the bubble soon ended and construction rose. These all time lows on mortgage rates show obvious progress in the Fed’s attempts.
Devin McCallum
djmq57
14163046
http://www.usatoday.com/story/money/business/2013/05/03/pepsico-ending-ties-with-lil-wayne/2134071/
PepsiCo has ended its commercial relationship with rapper Lil’ Wayne after he released a song that had offensive references to a civil rights icon. The rapper was originally brought on board to endorse the company’s Mountain Dew soda in a new advertisement. However, they have now pulled the ad and cut ties saying that his behavior and apparent political views are not what the brand wished to portray.
The company also recently ended its endorsement deal with fellow rapper Tyler, the Creator after his recent song and its derogatory views towards women. A similar situation also occurred earlier this week when Rick Ross lost his deal with Reebok after rapping about raping a woman under the influence of drugs.
So the question is, why do companies enter into relationships with these famous singers and celebrities and take the risk of something like this occurring and shedding a negative light on their brand? The book answers this on page 321. The reason is that one of the biggest sellers of a product are the people that use it. What really strengthens an advertisement and brings in money is having athletes, actors, and musicians such as above endorse it. If a customer sees someone they admire drinking a drink or wearing a pair of shoes then they are more likely to want to be like them and by it, making this risk worth it to big companies and also worth the millions they pay them.
http://www.usatoday.com/story/money/cars/2013/05/01/us-auto-industry-april-sales/2126211/
Kamila Jambulatova
Student Number: 141 722 73
PawPrint: kjb7d
This April automobile sales in U.S. significantly increased. Ford reported sales increase of 18%, General Motors and Chrysler – 11%.
Today we are in the expansion phase of a business cycle. In 2007-2009 we were in recession, and since then economy has been recovering. Now in 2013 the economy is much better and this article proves that. More cars have been sold, which means that people are willing to spend money on cars and are not afraid of unstable economy. Article states that in April, consumer confidence rose to 68.1, up from 61.9 in March, according to the Conference Board’s consumer sentiment index.
According to the GM’s head of U.S. operations, Kurt McNeil: “We’re very optimistic, because GM’s market share is growing, the economy continues to move forward, and important car and truck launches are just getting underway.” Article also states that the industry overall expects that last month was the strongest April since 2007. Economy grows and this past month automobile sales is a great proof. Jessica Caldwell, senior analyst for Edmunds.com said. “Sales are almost back to pre-recession levels, so as long as automakers keep reporting their best sales in at least five years, we’ll continue to be in good shape.”
Automobile industry is not the only one that experiences growth. All the other markets are expanding as well. All the markets are related to each other and in order to feel comfortable to buy a new car, consumer needs to feel stable in other areas of their spending’s as well, for example housing market. Article states: “The irrepressible buying behavior of consumers is driving auto sales growth in 2013, as consumer spending remains remarkably stronger than the economy suggests it should be,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “If the current favorable trend in the stock markets and housing continues throughout the year, the automotive market may be poised for a breakthrough performance.” Page -694
Economics Extra Credit Article
Kelsey Rejko
KER365
14152607
The article that I chose was from USAToday was about the recovering housing market. The article discusses how the housing market is currently hitting highs that is has not seen since the housing bust in 2006. Many of the markets that peaked during 2006, before starting to rapidly decline, are still much further below than what they were, but the market is definitely improving. However, the article goes on to discuss the fact that the markets that are seeing these highs were not as sevevely affected by the market crash as many other markets. Ron Croushore, who is a CEO at Prudential Preferred Realty, said, “”We didn’t get invited to the party, so we never had the hangover”. This relates to the fact that because their prices did not drop as far, they did not have nearly as far to come back to reach these high levels in the market.
This directly rates to a couple of topics that were discussed this semester in Economics 1051. First and foremost, this rise of the housing market is the culmination of the financial and housing crisis of 2007-2009. On page 814 in the Glenn Hubbard text book, the author discusses the end of the housing bubble, and how that helped lead to the recession. The prices of houses was rising rapidly, and people were buying houses at low prices and reselling them specificially for profit. Many consumers were less anxious with the value of an asset, and more concerned on the expectancy that the price of the asset would rise. As spending on housing construction fell, so also did the aggregate demand growth.
The recovery of the market shows that our country is past the period of recession and entering into a period of expansion. As housing prices continue to rise, the major benefactor is the unemployment rate going down. As we learned in class, when unemployment goes up, people are not able to afford the more expensive prices, which was part of the reason for the financial and housing crisis of 2007-2009. However, now that the unemployment rate is going down, people are more able to buy houses which helps to stimulate the economy and help the country recover from the recession.
http://www.usatoday.com/story/money/business/2013/05/04/house-price-gain-lifts-markets/2130811/
According to USA Today, the economy (and consumer’s wallets) is pushing restaurants to sell cheaper food. Fast food chains such as Taco Bell and White Castle, as well as sit-down restaurants like Applebee’s, have begun to create menus that offer eat-cheap deals.
I would call Applebee’s “two for twenty” menu a normal good at a good price because people go for that bargain despite the state of the economy. However, I would say that Taco Bell’s new 1-dollar menu is becoming an inferior good.
On this new menu, consumers can buy smaller versions of their regular food items, such as the mini-quesadilla. The menu is catering to people who are on a tight budget and can’t afford to pay the higher price for a combo meal. Because the items on this 1-dollar menu aren’t necessarily what the consumer wants, but is what they can afford in times of economic hardship, it would be considered an inferior good. When the economy turns around, I would venture to say that these cheap menus will begin to disappear as their normal goods regain their popularity.
Sarah Dettmer
sedxw3
14133586
USA Today recently published an article detailing the price cuts made by the drug maker, Merck. Due to competition from generic brands of drugs and medications, the company has had to lower their prices and adjust their profit forecasts to reflect lower numbers.
Merck is suffering from the “substitution effect.” The generic brands of drugs are causing Merck to have to lower their prices in order to remain competitive with their completion or substitutes.
The generic drugs are forcing Merck to lower their prices or face the negative side of the income effect. Consumers can’t afford to pay for higher cost medications, so the demand for Merck has fallen. This all relates back to the economy and how strong the consumer’s purchasing power is.
Though our economy is in an expansion, the country is still facing and dealing with the effects of high unemployment and lower income. Many can only afford the substitutes of their medications which is causing Merck to reevaluate their pricing and profit forecast.
Sarah Dettmer
sedxw3
14133586
Economics Extra Credit Article
Kelsey Rejko
KER365
14152607
This particular article from USA Today discusses the unemployment rate and the unemployment report that just came out for April. The previous report that came out in March indicated that the economy was stalling, and no one could explain what from. However, the new report that came out indicated the market adding 165,000 jobs, which is an increase that is much better than the normal growth rate. However, because of federal austerity programs implemented in 2011, economists predict the economy will slow down around the middle of this year, and the main question right now is how much and how badly it will affect the economy. Additionally, Federal spending is dropping on an average of 8.4% annually, which indicates that there will be more governmental jobs lost coming up soon. So, even though the unemployment rate has been falling steadily within the past year, it is predicted to remain fairly steady, or perhaps even rise.
This relates to the unemployment discussion in 1051 economics, as well as to the unemployment chapter in the Glenn Hubbard textbook. On page 642 of the textbook, the author discusses how after the Great Depression in the 1930’s economists did not think it was possible for the unemployment to get as bad again. There was another period of unemployment and recession in 1982, where the unemployment rate was 10.8%, but it recovered particularly quickly. It was down to 7.2% in 23 months. Therefore, economists were unprepared when the recession of 2007-2009 occurred, because they were all under the assumption that the rate would recovery quickly, like it had in the 1980’s, however that was not the case. In the financial crisis of 2007-2009, the rate peaked at 10.1%, and 23 months later it only improved to 9.1%, which is a much slower recovery than the previous recessions. So, while the market for jobs is getting slowly better, and there was a larger amount of jobs added in April than there had been in a few months, the recovery process is still not going as well as it could, and by mid-year the unemployment rate might halt going down all together because of the government implication of the austerity programs.
http://www.usatoday.com/story/money/business/2013/05/03/first-take-april-jobs-report-economy/2131193/
Jasmine Dell
jad5y2
http://www.usatoday.com/story/money/business/2013/05/02/cheap-restaurant-eats-value-deals/2127883/
Menu costs make some prices sticky, firms base their prices today partly on what they expect future prices to be. If demand for their products is higher or lower than expected, they may want to charge prices differently but changing prices would be costly because of menu costs. Chapter 24 has great examples to this article. The current restaurant industry is lowering prices to meet consumers needs.
“Consumers are giving the restaurant industry no choice but to let them eat cheap.” The article talks about how the restaurant business has no choice but to lower their prices for the consumers. Productive efficiency, the situation in which a good or service is produced at the lowest possible cost.
Some factors influencing this are unemployment, underemployment and high gas prices.Consumer surplus , the difference between the highest price a consumer is willing to pay and the price the consumer actually pays. Another economics term that exemplifies the current state is allocative efficiency, a state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it.
Some examples the article talks about are prime examples of how the restaurant industry are hitting a low in consumer prices. Olive Garden, has a buy one, take one home through Sunday they are giving customers free entrees to bring home when they buy one from a group of five. Another example are the White Castle 25-cent burgers that happened earlier this week.
Jasmine Dell
jad5y2
http://www.usatoday.com/story/money/columnist/abrams/2013/05/03/small-business-mobile-payments/2131029/
Most small business owners have always ran into issues involving cash flow. Now a days small businesses have been becoming more technologically savy. They are accepting credit cards.
Small business owners thought accepting only cash was the easiest way to bring in an income. But now, small businesses are accepting credit cards. Many people buy goods and services with credit cards, yet credit cards are not included in definitions of the money supply.
Without credit cards small business wouldn’t be as successful as they are today. 70-65% of revenue is due to credit cards. Technology has influenced the progression of small business.
Due to the increase in technology for small business using ipads, applications like “square,” iphones, and having receipts directly emailed to consumers if has helped expansion. Along with the social media increase using Twitter and Facebook as social media. Which helps reach out mobile small business need tech
There are multiple textbook examples to show the increase in small business by technological advancements.
First, private benefit, the benefit received by the consumer of a good or service. Second, sole proprietorship, a firm owned by a single individual and not organized as a corporation, usually within small businesses. Third, technology, the processes a firm uses to turn inputs into outputs of goods and services.
Fourth, technological change, a change in the ability of a firm to produce a given level of output with a given quantity of inputs. Fifth, economic growth depends more on technological change than on increases in capital per hour worked. Lastly, technological change, an increase in the quantity of output firms can produce using a given quantity of inputs.
Kassidy McElheney Econ Extra Credit Article #1
http://usatoday30.usatoday.com/money/industries/retail/story/2012-02-26/nike-image-foamposite-one-galaxy-sneaker/53259276/1
The extremely high demand of Nike shoes has thrown the company off. Normally, the company is well prepared for a shoe release and they are able to fully stock their retailers. Due to a sudden increase in the demand for their new shoe, Nike Galaxy, there was a shortage of products. Shortages are caused when the demand for a good or service is greater than the supply.
The product is in high demand so there is a price ceiling set in place. This price ceiling causes there to be a much greater quantity demanded than quantity supplied. The market clearing quantity, or the quantity of equilibrium, is no longer enough to satisfy the high demand. It is called a point of equilibrium because all products available on the market are sold and all consumers in the market are satisfied. Because the equilibrium is no longer met, a shortage occurs. Because so many products are demanded, the company is not able to provide all of the consumers with what they want. Since all of the consumers are willing and able to pay the set price for the product, they must be distributed a different way. Originally, the Nike Company had the customers wait in a line for the shoes on a first-come-first-serve basis but later decided to distribute them in a lottery. The company decided that since they had a shortage of products, this would be a fairer way to distribute the shoes. Nike was actually wrong; this method made their consumers upset because not only were there not enough shoes, but also the customers who had been waiting in line for the longest were not given the product first.
This sudden jolt in the demand for Nike shoes is only temporary and the market will come back to an equilibrium in the long run. The demand curve was moved by the change in tastes and preferences of the Nike consumers who wanted the newest and greatest product.
There is an advantage to having the maximum price for these shoes. The retailers of the Nike products were only allowed to charge the certified Nike price set for the Galaxy shoes at this point in time. The firm chose this price because they believed that it is the most that consumers will be willing and able to pay for the product. If the maximum price was not set, then the retailers would have been able to change the price based on the demand for the shoe in their area.
Of course, with all price adjustments there will be black markets. Black markets will buy the product and resell them for a price below the price ceiling, but above the price of equilibrium. This is one major issue that occurs with market failure. Black markets harm the Nike Company because they are not receiving the full amount of money that they should be getting with each sale of their products. Black markets are more attractive to consumers because they have lower prices and they will usually have a higher supply of the shoes because not as many consumers know about the black markets.
Nike stated that their main solution to avoid this market failure is to have a greater supply of the products on the day that they are being released. Having a greater supply would satisfy a larger number of consumers and keep the issues associated with the market failure to a minimum. The company also believes that another way to prevent these damages is to completely withdraw the product from stores. If there are not enough of the product to satisfy the demand of all of the consumers, then no consumer should be able to have the product.
To summarize, the supply of Nike Galaxy shoes was not able to satisfy the unexpectedly high demand. Because of this, a price ceiling formed, causing a shortage to occur and causing the market to fail. The Nike Company tried to fight the shortage by randomly distributing their products through a lottery. All of the consumers did not receive the product that they wanted, so many of them resorted to the black markets who sold the shoe for a price between the price ceiling and the price of equilibrium. This harmed the company as they did not receive the full compensation they deserved for the sale of their product. Nike realized their main solution to not repeating this market failure was to have a greater supply of their products.
Jasmine Dell
jad5y2
http://www.usatoday.com/story/money/business/2013/05/02/ecb-cuts-interest-rates/2128663/
The European Central Bank has lowered its interest rate by 25 points in a all time low of 0.5% this past Thursday. Recently the euro was $1.32 to the American dollar. The ECB has come under a lot of stress to lower rates.
A big industry that is taking a hit is the auto industry. “On Wednesday, the U.S. Federal Reserve kept interest rates on hold, at record lows, to try to keep the U.S. recovery on track.” Currency depreciation, a decrease in the market value of one currency relative to another currency. The factors that affect the demand and supply for currencies are constantly changing. There is an adjustment to a new equilibrium, whether the exchange rate increases or decreases depends on the direction and size of the shifts in the demand curve and supply curve.
The factors that affect the supply curve for dollars are similar to those that affect the demand curve for dollars.”It also reiterated its pledge to purchase $85 billion a month in Treasury bonds and mortgage-backed securities to hold down long-term interest rates and pump cash into the economy.”
Shifts in the supply of foreign exchange, the bank’s low rates aren’t being passed on to small and medium-size companies in heavily indebted countries that could use such stimulus the most. “Draghi said ECB officials are working with the European Union’s executive commission and the European Investment Bank lending agency about creating a market for securities backed by loans to businesses, a step that could free up more money for lending. Small businesses are key because they provide most of the jobs in the eurozone.He also warned that governments could derail the recovery if they fail to take steps to right their finances and make their economies more business-friendly, such as by cutting excessive regulation on hiring and firing.”
John Howland
14159549
jchbq2
http://www.usatoday.com/story/money/business/2013/05/02/cheap-restaurant-eats-value-deals/2127883/
In the food industry, like most markets, consumers want to spend on the dime. It’s the reason fast food chains give customers a multitude of dollar menu options and more upscale eateries have specials of the day. In this way, a large majority of food services often seem to be an inferior good, as the demand rises when the economy dwindles. While serving cheap food may seem like a no-brainer, there are many factors that go into the decision.
In the USA Today article entitled “Consumers Push Restaurants For Cheaper Food,” these factors are brought to the forefront, as the author discusses a national trend. The piece focuses on current fast food prices, and dives headfirst into the notion that customers shift market demand. Providing relevant examples from fast food chains, the article illustrates how much customers impact price ranges.
The article points out many new developments. Steak and Shake now offers a wide variety of meals for $4. Dairy Queen’s popular $5 lunch deal may now expand to dinner. Little Caesar’s has expanded their menu to include $8 deep dish pizzas. Applebee’s is letting customers get two meals for $20.
Customers impact price ranges, as well as other important decisions – our book clearly points out this notion. This article just provides real-world examples. People want to spend on the dime, and fast-food chains need to meet that demand.
Emily Pawlak Economics Extra Credit Article
EMPRK6
16108805
http://www.usatoday.com/story/money/markets/2013/05/02/can-fed-keep-propping-up-stocks/2129787/
The USA Today article “How much longer can the Fed prop up stocks?” explains how the Federal Reserve is largely responsible for the stock market’s rise after the 2007-2009 recession. The Fed’s zero percent interest rate policy and its bond-buying program are believed to be main reasons for the markets 136 percent rise over the past 4 years. The Fed’s actions have caused interest rates and borrowing costs to lower, increasing risk-taking. Bill Hornbarger said that risk-taking is necessary to build wealth.
The Fed said it believes it can continue to prop up the stock market until the unemployment situation improves and even increase bond purchases. As long as the Fed keeps rates at zero percent and the economy keeps growing, the stock market should continue to push higher. Nicholas Sargen, an investment strategist at Fort Washington Advisors, worries that investors are only buying because of the Fed’s actions. There is the worry that it is just a mirage and the Fed’s policies are not helping enough.
As our book states, the Federal Reserve Act was passed to prevent severe disruptions in business activity (p. 845). The Fed uses open market operations, such as buying bonds and also discount loans, like the zero percent interest rate policy mentioned in the article. The article also relates to the Recession of 2007-2009 (p. 814). The end of the housing bubble led to banks and other financial institutions to suffer heavy losses. The Federal Reserve intervened then and, as this article shows, continues to do so. There was also a decline in consumption spending and investment spending. The Fed’s actions mentioned in this article have caused interest rates and borrowing costs to lower which leads to more investment in the stock market.
John Howland
14159549
jchbq2
http://www.usatoday.com/story/tech/2013/05/01/facebook-google-mobile-ads/2126361/
Companies need to meet consumer demands. If a corporation chooses to not act on a popular trend or fad, it’s easy to lose relevance and become obsolete. Former high-profile products like MySpace and cassette tapes stopped selling because they didn’t meet increasing demands in their markets. Blockbuster has struggled financially because it hasn’t been able to adapt to what the consumers want. Ultimately, it’s pretty simple: customers dictate what companies produce.
In the USA Today article entitled “Analysis: Facebook’s future is getting brighter on smaller screen,” the notion of consumer demand is discussed, pointing out that Facebook is blossoming in a new format. The multi-billion dollar company has put its product on cell phones nationwide, and it’s doing quite well because of it.
According to Facebook’s first quarter analysis, about 30 percent of advertising revenue has come from mobile ads. Additionally, in April, the company teamed with HTC to produce a phone that revolves around the social-network giant. Even for a company as big as Facebook, these kinds of developments are impressive.
But, more than that, they’re a testament to Facebook’s ability to keep with the times. In our text, it’s often said that good corporation’s keep up with their clients, sometimes through surveys and even test groups. The worldwide superpower has done just that. While other companies like MySpace and Blockbuster have failed to keep up with their customers, it seems like Facebook is here to stay.
http://www.usatoday.com/story/money/business/2013/02/03/jobs-gdp-report-economy/1884675/
This article talked about how the economy still isn’t doing very well, but the job market is quickly increasing. According to the job article, “monthly job growth averaged 175,000 in 2011 and 181,000 in 2012. It previously estimated monthly gains of 153,000 each of those years.” The article went con to explain that this isn’t typical for the job market after a recession, and that instead of laying a lot of people off, companies are worked their current workers harder than ever.
We had half of an entire chapter dedicated to unemployment. This article relates with a section in our book called “Making the Connection.” In this portion, the book makes us question whether or not the recession of 2007-2009 was unusual. The portion follows up by saying that economists did not expect any recession to last as long as the Great Depression.
I think that we can also relate this article back to the different types of unemployment: Cyclical, Structural, and Frictional. The type of unemployment that is associated with this article is cyclical unemployment. Cyclical unemployment is when unemployment is causes by a change in the business cycle, or a recession. As the economy has been making it’s way towards an expansion period, the unemployment rate has been shrinking.
Samantha Healey srhm93
Catherine Cojocaru
cacz85
In Paul Davidson’s article “Economy gains 165,000 jobs; jobless rate, 7.5%,” the unemployment rate has dropped to 7.5%, which is the lowest the unemployment rate has been since 2008. In addition, 165,000 jobs have been added to the economy in April, which is also promising for the economy’s outlook. Also, monthly job growth has increased even more in 2013 than it did in 2012. And the number of Americans out of work fell to 4.3 million instead of 4.4 million.
However, these signs alone are not promises that a perfect economy is on the horizon. The underemployment rate has risen, and the average number of hours per workweek fell from 34.6 to 34.4. In past trends, employers typically raise the number of hours per week a worker works just before the employer hires more workers. If we assume that correlation equals causation in this case, one might worry that because the number of workweek hours decreased a bit, employers may not be hiring as much as they used to.
In addition, other economic reports seem to display that the economy is in a springtime slump. Not as many business jobs were added in April as in past months. Manufacturing jobs barely grew, and the construction market has fallen.
This article relates to what we discussed with unemployment. As the economy continues to improve, the number of unemployed Americans should decrease. However, there are some unforeseeable and uncontrollable problems still facing us today. Many factors influence the economy and one positive change does not mean everything will improve, just as one negative change does not necessarily equal doom.
http://www.usatoday.com/story/money/business/2013/05/03/april-employment-report/2131167/
http://www.usatoday.com/story/money/business/2013/05/02/cheap-restaurant-eats-value-deals/2127883/
This article was about how fast food chains are trying to pull in more business with the lure of cheap and easy food. The article says, “The big restaurant chains don’t do value deals because they want to, but because they have to.” This is due to a fall in consumer visitation to chains, which fell for its fourth consecutive time in March. The article then goes on to list other places that are trying to compete with their cheap eats.
This relates back to our discussion on goods. When people have more money they are more likely to stay away from goods that they bought more often when they didn’t have enough money. For example, poor college students were buying more Ramen Noodles, but when they got a job after college they stopped buying this product.
Additionally, this goes along with our discussion on competition. Fast food restaurants are fighting to get more customers in by lowering the price of their product. They are all selling a very similar product, so if they keep their prices higher than a major competitor then they risk losing consumers to other franchises.
Samantha Healey srhm93
According to the May 2 USA Today article, “Consumers push restaurants for cheaper food,” U.S. consumers are forcing restaurants to put more value items on their menus. This is because restaurant customer traffic has been falling for four consecutive months. Big restaurant chains don’t want to do value deals, but they have no other choice if they want to sustain business.
Several restaurants are latching onto this trend, according to the article. Taco Bell recently announced that it would begin to offer a whole menu of $1 items. They will also continue to market their “Happier Hour” program this summer, which offers $1 drink and food items from 2 to 5 p.m. daily.
Olive Garden is trying a different kind of value deal, which has been very successful. When a group of five customers buys one entrée, they receive a free entrée to take home. The deal has received the highest consumer survey ratings of any deal in the company’s history.
This article relates to one of the three key economic ideas in our textbook, which says people respond to economic incentives (p. 5). As restaurants see their consumer traffic continue to fall, they begin to offer more value deals (economic incentives) because these types of promotions can be relied upon to bring in more customers. The article also relates to monopolistic competition (p. 432), a market structure in which many firms compete by selling similar, but not identical products. Since many of these restaurants sell similar items, they must use marketing to promote their value deals and bring in more customers.
Chanelle Koehn
Pawprint: CJK9R3
http://www.usatoday.com/story/money/business/2013/05/02/cheap-restaurant-eats-value-deals/2127883/
Karim Howard – KJHGFC
Is Stocks’ 2013 Success a Sign to Sell
http://www.usatoday.com/story/money/markets/2013/05/02/stocks-good-year-so-far/2130877/
The USA Today article titled “Is Stocks’ 2013 Success a Sign to Sell” discussed the stock market having a strong start at the beginning of 2013, with it being up for four consecutive months. Economic analysts are wondering what May will bring. The article says that a strong start at the beginning of the year usually carries throughout the rest of the year; however, this is not 100% certain.
This article features stocks and dividends which were discussed in chapter 8 on page 245. According to the textbook, a stock is “a financial security that represents partial ownership of a firm.” When investors purchase a stock they are purchasing a stake in a company. They are taking a gamble that the company will be profitable and make them money. When companies make money; investors make money.
The funds that investors receive back from an investment in a company are called dividends. The more a firm’s stock value rises, the more dividends investors earn. For every investor, the goal is to buy a stock for a low price and sell it for a higher price.
If this trend continues, 2013 will be a profitable year, because companies will continue to grow and make money. If stock prices continue to rise, it will be sign that firms and investors are making money, and this will be great news for the economy.
Emelia Oh
EJOD32/14155299
Consumers push restaurants for cheaper food
http://www.usatoday.com/story/money/business/2013/05/02/cheap-restaurant-eats-value-deals/2127883/
Due to falling customer traffic, restaurants are beginning to lower their prices and expand their value menus. Many companies, such as Taco Bell and KFC, are announcing a variety of “cheap eats” promotions in order to bring customers back to their businesses.
This article pertains to a large amount of the material presented in our class this semester. One concept we can find in this article is variables that shift the demand curve. Most likely, many people have stopped eating at restaurants due to decrease in income. Because dining out is not a necessity, this decrease has caused the demand for restaurant services to shift to the left. Another reason people may have stopped visiting restaurants is because of a recent increase in health awareness, therefore causing the taste for the good to shift to the left, as well. (76)
Another concept that can be found in this article is the market structures. Restaurants are an example of monopolistic competition – a market structure in which barriers to entry are low and many firms compete by selling similar, but not identical products. A monopolistically competitive firm, like Taco Bell or KFC, must cut their prices in order to sell more, thus explaining why these restaurants are introducing value menus and lowering prices. (432)
A third concept that this article describes is the concept of incentives. From chapter one of our textbook, we discussed 3 important economic ideas. These are.
1. People are rational
2. People respond to economic incentives
3. Optimal decisions are made at the margin
This article exemplifies these ideas because it demonstrates a business providing an economic incentive for people to purchase their goods. – ex. buy one get one tacos.
Madalyne Bird
14132155
mpbyt7
http://www.usatoday.com/story/money/markets/2013/04/30/apple-17-billion-bond-offer/2124791/
The article, “Cash-rich Apple floats largest-ever corporate bond sale” talks about Apple selling $17 billion in bonds. This is going to be largest bond sale in history. They are doing this because a large amount of Apples fortune is held overseas and bringing the money back to the US would cost them a large amount of money in taxes. The company announced plans to pay investors $100 billion in dividends and buying back stock by the end of 2015.
Apple is already planning on baying $11.5 billion in dividends starting March 2012. Apple’s stock has risen from $12.66 to $442.78. This is a very large increase in shares. Apple is taking advantage of the low dividends while they can.
We talked about bonds on page 243. Bonds are a source of external funds for many corporations and companies. Bonds are financial securities that represent a promise to repay a fixed amount of funds. Apple is selling bonds to raise funds and they are promising to pay the purchaser of the bond an interest payment for the amount of the loan.
Each of those bonds has a face value that the bond will reach at the age of it maturation which could be three or thirty years from the date of purchase. People who buy these bonds could then re-sell them to investors. For Apple, the stock and bond trading occurs at NASDAQ.
Emelia Oh
EJOD32/14155299
First take: Will improving jobs picture last?
http://www.usatoday.com/story/money/business/2013/05/03/first-take-april-jobs-report-economy/2131193/
The Bureau of Labor Statistics’ April report showed the economy adding 165,000 new jobs, causing investors to jump into stocks. Although this is very good news, the government austerity program that began with the 2011 deal to raise the debt ceiling will most likely result in more job losses. According to the article, nearly every economist predicts a growth slowdown at midyear, but no one knows how bad it will be or how long it will last.
This article is interesting because it was published in the midst of a number of articles about how unemployment has been falling in the United States. This is a good example of problems not necessarily with measuring the unemployment rate, but reporting it. On many other news sites, we can find articles with headlines such as: “Unemployment down” and “Creation of 165,000 jobs decreases unemployment rate” but few of them actually discuss the whole story.
Although this does not have much to do with the concepts learned in our class this semester, I think it certainly ties in with problems measuring the unemployment rate. Because many people rely on news outlets for information about the well-being of the economy, it is vital that this information is properly analyzed and explained.
Karim Howard – KJHGFC
Do 0% Credit Card Deals Really Mean Free Money?
http://www.usatoday.com/story/money/columnist/tompor/2013/05/04/credit-cards-zero-percent-deals/2129057/
This article discusses some credit cards companies offering zero percent interest rates in order to lure in customers. Interest rates were discussed in the textbook in chapter 8, on page 243. An interest rate is defined as the amount of money it costs to borrow funds from a lender. The book describes it as, “a percentage of the amount borrowed.”
Since the credit card has a zero percent interest rate for a determined amount of time, lenders are hoping that this will draw in more customers. The article describes this as a sign that the economy is bouncing back, lenders are no longer afraid to lend.
The article also says that a high level of reserves is helping to drive banks to lend. The textbook discussed reserves in chapter 25 on page 838. A bank reserve is the percentage of funds it keeps in cash or with the Federal Reserve.
According to the article, the willingness of lenders offer low interest rates is a good sign. They are trying to lure new customers who can afford to pay a monthly credit card bill and take advantage of no interest payments.
This article discussess the Top Three most profitable products in the United States in 2012. Coming in at number three is Monster energy drink. It raised $1.9 billion in revenue last year and controls 37.2% of the soft drink market. At number two is Marlboro cigarettes. It raised $19 billion in revenue and controlled 42.6% of the tobacco industry last year. And at number one, the iPhone earned about $80.5 billion in revenue and controlled 20.9% of the computer hardware industry, which is pretty impressive seeing as how that is a very competitive market.
With the markets these products are in being oligopolies, the firms are able to differentiate their products and charge slightly different prices then their competitors. For example, Apple is able to charge much more for their iPhone because people recognize the brand name and associate that brand with quality rather than buying a cheap knock-off.
These markets are much different from a perfectly competitive market because perfect competition entails that each product will be very similar and no firm would be able to make profits in the long run. If Monster energy drink or Marlboro cigarettes were in a perfectly competitive market, they would not be on this list.
Being able to differentiate their products and charge different prices than their competitors is what allows these products to excell and become successful in their specific industries. People assume that these brand names is associated with quality and thus buying more of their future products.This allows the firms to keep adding slight variations to future products such as new flavors, less health risks, or a bigger screen to keep attracting the same customers and bring in some new ones.
Mark Claudio- MACMT9/14166845
Ameica’s Most Profitable Products
This article discussess the Top Three most profitable products in the United States in 2012. Coming in at number three is Monster energy drink. It raised $1.9 billion in revenue last year and controls 37.2% of the soft drink market. At number two is Marlboro cigarettes. It raised $19 billion in revenue and controlled 42.6% of the tobacco industry last year. And at number one, the iPhone earned about $80.5 billion in revenue and controlled 20.9% of the computer hardware industry, which is pretty impressive seeing as how that is a very competitive market.
With the markets these products are in being oligopolies, the firms are able to differentiate their products and charge slightly different prices then their competitors. For example, Apple is able to charge much more for their iPhone because people recognize the brand name and associate that brand with quality rather than buying a cheap knock-off.
These markets are much different from a perfectly competitive market because perfect competition entails that each product will be very similar and no firm would be able to make profits in the long run. If Monster energy drink or Marlboro cigarettes were in a perfectly competitive market, they would not be on this list.
Being able to differentiate their products and charge different prices than their competitors is what allows these products to excell and become successful in their specific industries. People assume that these brand names is associated with quality and thus buying more of their future products.This allows the firms to keep adding slight variations to future products such as new flavors, less health risks, or a bigger screen to keep attracting the same customers and bring in some new ones
Mark Claudio- MACMT9/14166845
Jayne Andrews
14162876
JDA3N7
http://www.usatoday.com/story/money/personalfinance/2013/05/05/middle-class-financial-advice/2090441/
The article “Middle Class Struggles to Get Good Financial Advice” focuses on the Manseau family, a middle class family who was trying to hire a financial planner. However, all of the financial advisers charged way more than the Manseaus could afford. It discusses how the middle class was hit the hardest by recession and the middle class should focus on how to save for retirement.
The Manseaus were able to find a program that offers fee-only financial advisers online. There are also websites that provide calculators and simple outlines to aid financial problems. The article helps explain easy ways to solve financial problems for middle class families and why it is so important to do so.
This relates to economics class because we focused a lot of our discussion on the recession and financially hard times. A recession is the period of a business cycle during whit total production and total employment are decreasing. It is a key part of the business cycle as well.
This article discusses the problems average middle class people have to face during a recession. Middle class families during the recession also lost a lot of jobs and that is why they need financial advisers to help them.
In the USA today article “Federal Reserve Keeps Stimulus Going Full Speed” they discuss the the reports on the current economy have been weak and that the fed is taking steps to improve this by continuing to by buying treasury bonds and mortgage backed securities.
On page 842 (in the old book) it talks about the open market operations that the federal reserve preforms. The committee directs the trading desk to buy the US treasury securities, as they are doing in the article. Making their reserves rise. Doing so is helping the job market.
The federal reserve is also considering increasing the pace of buying bonds just incase the rise of inflation doesn’t slow down. This refers back to one of the goals of monetary policy, price stability. Where the Fed strives to maintain a stable price level while inflation raises or declines. Discussed on page 860.
This relates to what we’ve discussed in class because we talked about managing the money supply and the includes price stability. This article also relates to class because we discussed hyperinflation which the fed is preparing for in this article.
http://www.usatoday.com/story/money/business/2013/05/01/fed-maintains-stimulus/2126381/
BJLHN9
16076446
After the government’s surprising report Friday that employers added 635,000 jobs in the past three months, the economy appears to be recovering from recession. However, according to the May 5 USA Today article, “Stocks and profits are up, but wage gains week,” working Americans are still discouraged by increasing inflation.
In April, hourly wages increased by 4 cents to an average of $23.87. This increase follows the 2 percent annual gain that has occurred since economic recovery began in mid-2009. The article notes that this annual inflation is tough on workers who rely on paychecks for their income because they find themselves “running in place” with stagnant wages.
The article also reports that consumer spending won’t return to pre-recession levels until inflation-adjusted wages return to a normal growth rate of 1.5 percent per year. However, economist Dean Baker believes that this will not occur until the U.S. unemployment rate falls below 6 percent. He predicts that this probably won’t happen until 2016.
This article relates to our textbook’s discussion of the inflation rate (p.656), which is the percentage increase in the price level from one year to the next. On page 664, our textbook notes that people generally dislike inflation because it affects the distribution of income. Some people will see their incomes rising faster than the rate of inflation, so their purchasing power will rise. However, the opposite effect—which we see in this article—is that some people are finding their incomes rising more slowly than the rate of inflation, which weakens their purchasing power.
Link: http://www.usatoday.com/story/money/business/2013/05/05/wages-job-growth/2134207/
Chanelle Koehn
Pawprint: CJK9R3
In this article that discusses the legalization of marijuana and its affects on the economy we talk about the markets found for cannabis. If cannabis becomes legal around the country the selling of it from medical marijuana stores would allow the market to become a perfectly competitive one just like we discussed in class. This is because a perfectly competitive market is a market that meets the conditions of many buyers and sellers, all firms selling identical products and no barriers to new firms entering the market. This would allow for these firms to become price takers, because they would be unable to affect the market price.
As of now, we know that the selling and buying of marijuana is not a perfectly competitive market because it is a scarcity here in the United States. Rather it could be viewed more of oligopoly because it is a market structure in which a small number of interdependent firms compete (pg460). Like we learned in class there are not many dispensaries available to the public so the ones that are open, are the only competition that each other face.
Right now the illegal market for selling marijuana makes around 18 billion dollars a year while the legal market makes around 1.5 billion dollars a year. If congress was to pass the legalization the market would expand to 6 billion dollars a year in sales. This illegal sale could be referred to, as we learned in class, the underground economy. Which is the buying and selling of goods and services that is concealed from the government to avoid taxes or regulations or because the goods and services are illegal.
The article also discusses that these small businesses lack the tools needed to carry out any expansion that they wish to happen. They are missing a top management, which are the people that run larger corporations and represent the interests of the shareholders. This is why big business moguls are trying to find their way into this newly found business so that they can play that role for the people.
Investors cut risk in this industry by not buying and selling on their own. They let the people below them because since they want to start up their own business it is considered to be a partnership, which is a firm that is jointly owned but could turn into a corporation with time. When you are partly responsible you have unlimited amounts of liability, so any of your assets or anything of value you own is at risk. Since Cannabis has not been legalized by many states yet they are careful to manage the risks that may come with this industry.
http://www.usatoday.com/story/news/nation/2013/04/29/tech-companies-lobbying-immigration-facebook-family-visas/2121179/
PESZRC
Recently, the United States Senate has been working on an immigration reform bill. What is surprising is who is spending large amounts of money on lobbying for it, tech companies. Seven technology companies and a software association have each spent more than one million dollars on lobbying, totaling 13.8 million.
The goal of the tech companies is to push a proposal that would expand the temporary visas and green cards given to foreign workers in their work field. This would benefit the tech business greatly. Most visas and green cards were not based on employment. More immigrants will want to work in this business because there will be a greater chance to earn citizenship. A large supply of employment will mean that business will have better production and will help their company in general.
It is also a good form of public relations. The companies get their name out in the public without having to pay for actual advertising. Newspapers and magazines write stories about the companies lobbying and activity in Washington, and customers get familiarized with the business name. Also, companies will attract customers that agree with their views.
Also, the passage of this bill would help the economy by not having as many illegal workers. Immigrants will want to work for these companies because they will be on track to get citizenship. Instead of getting a job that is not legal and does not get taxed, they will be working legally and paying taxes to the government. That will help the economy because money will be better circulated.
As a member of Senate said, “”Green cards should be viewed as economic engines for the country.” This bill would help the economy in many ways as well as tech companies.
http://www.usatoday.com/story/money/business/2013/05/05/obama-still-best-gun-salesman-ever/2136201/
This USA Today article covers how President Obama’s push for tighter gun control laws and regulations is causing the sale of firearms to greatly increase throughout the country.
Recently, in late April, Sturm Ruger, the only full-line manufacturer of American-made firearms, released its first-quarter numbers, and there was a significant increase compared to the same time last year. The company’s sales have increased to $155.9 million over the course of the quarter, up from $112.3 million last year, a 39% increase. Stock prices for the company have also more than doubled, increasing from 41 cents this time last year to $1.20 this year. Because of this sudden increase in demands for guns, Sturm Ruger can no longer meet the growing demand, as its backlog during this sales quarter has increased to 2.1 million orders as opposed to the 337,000 orders that were backlogged this quarter last year. This has occurred because this was an unexpected occurrence that the company was not able to see coming.
These numbers come after the President finished making a strong push towards greatly strengthening gun control, which ultimately failed in the Senate. In it, he was trying to require background checks for all gun sales, banning military-style assault weapons, and punishing people who sell guns to people who are not legally allowed to own them. This would make buying a gun much more of a hassle, because so much more would be involved in the process. Because of this, many Americans now say that they are trying to buy a gun before any major legal reforms occur.
This idea of people wanting to try to buy their guns before regulations for firearm purchasing greatly tightened is a real-world example of chapter three’s idea of a demand curve shift. Because the president is trying to make buying a gun a more tedious and difficult process, consumers are more willing to purchase larger quantities of the product ant all price levels, therefore causing the demand curve to shift to the right.
Eric Kelly
elkmr6
http://www.usatoday.com/story/money/personalfinance/2013/04/30/money-quick-tips-affordable-care-act/2121729/
The constant debate on Obama Care..
Stating on January 1, 2014 the Patient Protection and Affordable Care Act (ACA) otherwise known as Obama Care will come into effect. This is enforcing that all U.S. citizens are to have a minimum of health care coverage.
Businesses who have fifty plus full time employees must provide full time workers insurance coverage or have to pay a fine of $2,0000 or more. This is something that will probably make small businesses hold back on hiring so they can go around the rule.
Employers can increase the incentives to employees who take park of a goal oriented wellness program, there will be increase accountability and will end up paying more on health insurance if you don’t participate. According to the Kaiser Family Foundation survey, trying to get people focus on healthier life-style. Incentives correspond with a 14% increase in wellness program participation.
Every dollar spent on health care and wellness programs the health care and absenteeism drops and goes way down. Individuals who do not receive coverage from employers have to purchase it through the health care exchange. Tax penalties start in 2014 if one doesn’t get it.
On page (149-150 of the textbook from last semester) it is a constant debate on if the government should run the Health Care System. A lot of people feel as if they should not have to if they don’t want to but there are also a lot of people in need and less fortunate who absolutely need it, struggling, paying out of pocket and getting further and further into debt. There has been a difference in opinion whether health care is a private good or a public good from many different economists. Since a public good is nonrivalrous and nonexcludeable health care does not technically count as a public good.
Some economists are convinced this is justified and can create incentives because being vaccinated by a certain disease can help the country as a whole from possible epidemics. Health care spending is so large in the U.S. economy, the role of government in the health care system makes it a subject from a intense debate. From this article and my personal opinion I feel like health care is an overall great options in the long run for all people.
Raven Brown
rtbr34
Katie Sprauer
klscq9
Article link: http://www.usatoday.com/story/tech/2013/04/21/infor-oracle-sap-enterprise-software-charles-phillips/2074225/
With Generation-Y users in mind, Infor, an enterprise-software company, has introduced a new software to the market– Infor Ming.le. This software has adapted a social media-like layout, which Generation-Y users are well accustomed to.
The article says that CEO Charles Phillips’ biggest worry is the range of applications the cloud-based companies, such as Workday and SAP, can provide to customers. To that, Phillips remarks that the beautiful and elegant design Infor offers will surpass a complicated applications feature that the competitors have.
Phillips and everyone at Infor have differentiated the market for social business. The modern design of Ming.le will give their iOS friendly application an edge in the market for software. Infor’s competitive edge insures that the market for software is a monopolistically competitive market.
As well as differentiating their product, Infor, the third largest business applications and services provider, has also been ensuring the possibility of earning profits in the long-run. Ming.le’s design has been in the works for two years. Infor plans on “re-emerge” as a serious contender amongst the already established and successful SAP and Oracle firms.
Article link #2: http://www.usatoday.com/story/money/business/2013/05/04/house-price-gain-lifts-markets/2130811/
This article details the current rise of housing markets throughout the United States. 10% of the top markets have hit a new peak and many are estimated to arrive near to the previous peaks that were recorded before the housing bust in 2006.
When the U.S. housing bubble burst in mid ’06, it damaged the economy resulting in a recession. With housing markets on the rise, it shows that the economic downturn and recession is over and, following the Business Cycle, we’re moving into expansion.
The article also includes that the unemployment rate is coming down and that the job growth in many cities is growing. More people employed results in more spending; therefore, helping to stabilize the economy.
Following a recession people spend their money more freely which could be aiding to the increase in the housing market. This doesn’t not mean we’re in a boom. The economy is in an expansion, not a boom, due to the slow increases in the economy and that unemployment is still high, although it’s decreasing.
Hailey Yeakle
HMYHX5
http://www.usatoday.com/story/money/business/2013/05/05/wages-job-growth/2134207/
In the article by Paul Davidson and John Waggoner, “Stocks and profits are up, but wage gains weak,” appearing in USA Today, it is discussed that while stock profits and corporate profits are fairing well the growth of workers’ wages is stagnant. While wages may have increased slightly in the past few months, they have not truly been beneficial due to inflation. Also, standards of living are not increasing and people are still spending in a controlled and careful way that does not assist the economy’s growth.
Standard and Poor 500 as well as Dow Jones industrial average both increased in April. This healthy market is increasing the profits of the rich and allowing them to spend more. But, workers should not expect businesses to give more even though productivity per worker is increasing. Rather, workers should expect businesses to be stingy with raises. One reason for these low wages has to do with supply and demand:
The article says that there is still 7.5% unemployment meaning a significant amount of the working population is out of work. Some of these workers are actively looking while others have become discouraged and given up. With an abundance of workers to choose from, there is little incentive for businesses to give out raises. With so many eager for jobs, the businesses know that if one employee is uncooperative, they can easily replace them with someone else. Because of this large pool of applicants, the businesses can have their say and need not increase the wages of the workers they have. Yet, this can have negative problems as in some cases it can cause the workers to work less efficiently because they are not motivated.
Wages that barely allow the worker to stay afloat do not make for a prosperous economy. While some industries are giving raises to their workers, mainly those in booming fields like technology, other lower-pay jobs are not seeing an increase in their wages. Because of this disparity, the article says that these Americans who are seeing an increase in their wages need to start spending more to make up for what lower-wage workers are not spending.
Yet, the article says that economists expect the outlook to improve once inflation dips. When this happens, it is expected that businesses will have the opposite problem – they will not have enough workers and be willing to give out better wages to attract employees. The article expects this to occur sometime in the year 2016.
Overall worker productivity may be up, but in order to keep this rate of success going strong in these unpredictable times, it would be useful for firms to introduce efficiency wages, or “higher than market wage that a firm pays to increase worker productivity” (Hubbard and O’Brien 656). It is in the firm’s best interest to keep their workers motivated and working hard. While in lower-wage jobs this may not be in the firms best interest as the qualifications are not as stringent and it is easier to find workers, it could be useful in higher-wage jobs that are more selective and need highly skilled workers. For example, in technological firms where highly-skilled workers are the backbone of the corporation, it would be in the firm’s best interest to pay their workers well in order to keep them from working for competitors. This would also help by giving the workers more money to spend freely – which would in turn boost the economy.
One of the “facts of economic life” mentioned in Economics is that prices increase over time; because of this fact, the cost of living rises as well (Hubbard and O’Brien 656). With inflation rising, this means that if workers’ wages do not increase along with inflation, they will not be able to pay for their cost of living. This is problematic as one does not want to live in a country in which it is difficult to not only find a job to make money, but then also difficult to buy what is needed to survive with the money earned. To fight inflation, workers should talk to their bosses about how the rate of inflation is expected to change in the next few years and write up their contracts in response to the changes. Yet, I believe that completing this is difficult in these economic times as, with a large portion of Americans out of work, I think it is highly likely that many workers will take what they are offered rather than try and fight for higher wages as their jobs can be so easily replaced by firms.
Works Cited
Hubbard, Glenn R. and Anthony Patrick O’Brien. Economics. New Jersey: Pearson Education, Inc. 2013. Print.
Davidson, Paul and John Waggoner. “Stocks and profits are up, but wage gains weak.” USA Today 5 May 2013. Web.
Gun control bills and cosumer demand
http://www.usatoday.com/story/money/business/2013/05/05/obama-still-best-gun-salesman-ever/2136201/
After months of heated negotiations, a bipartisan bill aimed at expanding the background check system failed in the Senate, with only six votes in short. President Obama and gun control supporters continue to ban military style assault weapons, to require background check on all gun purchases, and to impose tougher penalties for people selling guns to those who are not eligible.
Gun sales have soared both times when President Obama won the elections, although the Obama administration actually did the same amount of background checks as the Bush administration. The anticipation of stricter gun controls have prompted gun buyers to speed up their purchasing plan. Gun sales also saw a rise after the Newtown tragedy, in which 20 children and six adults were killed in the shooting.
When people anticipate fewer gun supplies in the future, they increase the demand at the current stage. Net sales for the largest publicly traded gun manufacturer, Sturm Ruger, surged 39% to $155.9 million, compared to $112.3 million a year earlier. Also, in the first quarter of 2013, background checks through the National Instant Criminal System jumped 46%, according to Sturm Ruger.
We learned from our ECON class that there’re interactions among supply, demand and price. Higher demands for guns have reported to drive up prices. An article by the State Journal-Register reported that a gun sold at $300 in last year’s Springfield gun show in Illinois is now $1,200. (http://www.sj-r.com/top-stories/x1665864783/High-demand-for-guns-drives-up-cost)
However, with the failure of the background check bill, the demand and price of guns are slowly cooling down.
Ruisha Qian
rq7t8
14142075
Federal Reserve and the stock market
http://www.usatoday.com/story/money/markets/2013/05/02/can-fed-keep-propping-up-stocks/2129787/
It all starts with the Fed’s role in the economy. Through monetary policies, the Fed tries to maintain price stability, high employment, stability of financial markets and institutions, and economic growth. Federal funds rate, or the interest rate banks charge each other for overnight loans, is the most important monetary policy.
This article mentions several measures the Fed has taken to keep the market and economy afloat. First, it makes interest rate nearly zero, boosting borrowing of individuals and firms. Zero interest rate encourages risk taking, so people tend to purchase more and more stocks. Its unprecedented bond buying program, such as the purchase of U.S. Treasury notes and mortgage-backed bonds, are believed to be real engines of market gains.
The articles also discusses how much longer can the Fed prop up stocks. According to the article, the Fed announced Wednesday that it would continue the plan of “buying $85 billion in Treasuries and mortgage-backed bonds each month until the unemployment situation improves substantially.” Therefore, experts estimates that the stock market is likely to edge up as long as the zero-interest-rate keeps up and the economy keeps growing.
However, investors fear that the Fed may be the only reason why they’re buying, not improving business fundamentals. The Fed’s measures will end, and people just don’t know when.
Ruisha Qian
rq7t8
14142075
U.S. service business slowing down
http://www.usatoday.com/story/money/business/2013/04/03/ism-non-manufacturing-index/2048963/
We just learned from our ECON class that U.S. is a country with export surplus in services, and negative exports in goods. This article found that the U.S. service industry continues expanding in March, but at a slower pace, with fewer new orders and weaker hiring. How would this affect the GDP?
First, some statistics. According to this USA Today article, the index of non-manufacturing activity fell to 54.4 in March from 56 in February. This figure is the lowest in seven months. New hiring fell 3.9 points to 53.3, the lowest since November. The report measures growth in industries that employ 90% of the work force, ranging from retail and construction to health care and financial services.
It’s impossible to calculate the GDP based only on the performance of the service industry. The GDP is composed of several parts other than export, including consumer spending, government purchase and investment. Reports show that consumers are still spending, and consumer confidence rose to the highest in March. The housing market is also recovering, with home sales increasing. This adds to the investment component of GDP.
The article didn’t mention why the service industry is slowing down. It would be interesting to know the reasons. One thing is for sure: the U.S. GDP will not shrink because of the slowing down of one sector.
Ruisha Qian
rq7t8
14142075
http://www.usatoday.com/story/news/nation/2013/03/14/college-classes-troops-sequestration/1987031/
Cymonne New: pawprint 446
The title of this USA today article is “Troop tuition program a casualty in military budget cuts” and was written on March 14, 2013.
This article deals with sequestration which is a military budget cut nightmare. This article was particular interesting to me because it dealt with how more than 250,000 troops in the Army and Air Force will be denied paid tuition for their college level courses because of these budget cuts. The marines were also affected but the number of how many was not provided.
The article not only mentions how assistance for these classes will be immeditally cut and suspend as soon as possible but also how 800,000 civilian workers will also be cut one day of work for every work week, thus placing them in unemployment.
This article relates back to our text book because it deals with unemployment as well as government spending. Personally I don’t understand how we could let our military services get in so much debt. I feel the process was over looked and that their should be a change somewhere to handle our money better so cuts as significant as education does not have to happen.
This also relates to unemployment. Although this particular article does not mention it, some civilian workers weren’t as lucky to just get cut for one day, some were laid off. In these instances we have so many workers who are not about of the frictional unemployment. It scares me to know that this could happen, so fast and so suddenly and there is nothing one can do about it. The good thing about frictional unemployment is, it is short term. Hopefully these men and women can find a job quickly that they can be sufficient in.
http://www.usatoday.com/story/money/personalfinance/2013/04/21/avoiding-college-avoiding-debt/1987309/
Cymonne New Pawprint: cnn446
This article I found on USA today was titled: “Kids skip college-not worth the money”
I found this artivle to be extremely interesting. This article spoke about, in detail, why teens are choosing to not go to college and instead find other ways to ensure a job out of fear of unemployment. They listed ideas such as learning from the pros, getting an unpaid (or paid) entrepreneurship, or starting your own business instead of college.
Kids no longer want to go to college because they say college is does not guarantee a successful job anymore to pay for a family or even pay off the loans it took to get you to college. The article stressed the fear of unemployment as the answer. They mentioned how unemployment for recent bachelors were up to 12.65 as of 2011 a much larger percent from the previous 7.7 in 2007.
Linking this back to our class textbook, unemployment is a huge scare. Based on the fact these students were scared of having the skill but no where for the skill to be used, this is called frictional unemployment. I think this can also relate to cyclical unemployment because of the recession we were currently in. As production falls, firms start laying off workers and they were scared they could be laid off.
http://www.usatoday.com/story/money/business/2013/04/03/ism-non-manufacturing-index/2048963/
Service Businesses Slow Expansion, Orders Fall
A lot of U.S. service companies and smaller businesses are going at a much slower rate then usual. They are being plummeted by drastic less growth in new orders and weak hiring. Activity fell from 54.5 in the last month from 56 in February. When there is any reading above 50 that signals signs of expansion.
Growth in these industries employ 90% of the work force. Ranging from retail, construction, health care, financial services, and more. In March companies kept adding jobs but at a slower and smaller pace. Hiring fell from 3.9 pts to 53.5. This suggests that employment is a lot weaker than the past four months when job growth has averaged 200,000.
Fifteen of the eighteen industries covered by ISM survey reported expansion which included construction, transportation, warehousing, retail, finance, and utilities. and consumers are still spending.
This relates back to our text because in chapter 8 we studied about businesses particularly small businesses. Small firms provides an entrepreneur for bringing a new product or process to the market. Small firms have been the source of many new goods and services to available to all different types of consumers. With the way the economy has been, new laws, and health care I am not surprised that these smaller service businesses are not where they used to be. Companies are barely hiring and consumers are not spending as much so there is a lose lose which is causing a decrease in the activity. A lot of small businesses were left behind because they were not able to afford hiring, payroll, paying off debts and more. Most businesses have to go through either indirect or direct finance and these days most consumers are trying to find there way around most things so they would have to spend less which also can cause a decline.
Raven Brown
rtbr34
Katelyn Winker
14162057
kmw6f8
http://www.usatoday.com/story/money/markets/2013/05/02/can-fed-keep-propping-up-stocks/2129787/
The problem in this article is about a big driver in the stock market’s multiyear bull run is the market0-friendly stimulus provided by the nation’s central bank and Wall Street wonders if the Fed can keep propping the market up forever. The issue is whether the economy stimulating activities by the Fed can keep going. This relates to Chapter 25 in our textbook about the Fed managing the money supply.
The Federal Reserve System was established with the intention of putting an end to bank panics and their accompanying recessions, Congress passed the Federal Reserve Act in 1913, setting up the Federal reserve System often referred to as the “the Fed.” The Federal Reserve manages the money supply is through monetary policy tools. Monetary policy are the actions of the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomics policy objectives. The tools are open market operations, discount policy and reserve requirements. Open market operations are the buying and selling of Treasuring securities by the Federal Reserve in order to control the money supply, this was discussed in the article as. The discount policy is the change of the discount rate and the reserve requirements is the change in RR. The Fed used these methods to stimulate the money supply by 136% according to the article. All of these monetary policy tools are aimed at affecting the reserves of banks as a means of changing the volume of checking account deposits.
The Fed’s most efficient way of stimulating the economy was through the Feds zero-percent interest rate policy and QE. The Fed’s policy has driven interest rates and borrowing costs to record lows which has promoted risk taking and allowed consumer to get their finances back on track. The stock market was support by super-low interest rates on cash and bonds as well.
Matt Gannon
mrgxtd
In the USA Today article “Are you a tax cheat if you shop online tax-free?” Stephen Ohlemacher discusses the upcoming bill that the Senate is voting on, that will make it easier for states to collect sales taxes on online purchases.
You see, many who online shop, are used to not needing to pay the tax, because most small business retail stores don’t use it. In our economy, this has given the small businesses a large advantage over the larger corporation retailers (i.e., Walmart). However, with the recent bill change, the playing field will be leveled, and therefore, small businesses are worried that they are going to lose business. Under the current law, sales tax most only be collected if things are purchased within the same state boundaries. Thus, this is why large retailers, like Target and Walmart, who have stores everywhere because they are a national chain, require sales tax. So upon initially looking at this, people who purchase items from small out-of-state retail websites are getting their items tax-free.
But when you look closer at the law, it says that the tax money not paid upon the purchase must be paid to the state in the your state tax return. However, there are states with no state sales tax: Delaware, Montana, New Hampshire, and Oregon. However, the states with sales taxes are not truly getting their funds, which is why this new law is being debated. It will certainly have an impact upon the economy, especially in small business vs big business competition.
In our economics class, we talked about the battle of the businesses and how each one is trying to gain an upper hand. This promotion of a tax break provides a large incentive for more shoppers to stick small.
http://www.usatoday.com/story/money/business/2013/05/05/internet-sales-tax/2137845/
In the this article from USA Today, most of the reason that the stock market’s recent rise is the Federal Reserve’s monetary policy. The Federal Reserve has been using a method known as quantitative easing to stimulate the economy.
Quantitative easing is an unconventional monetary policy used by the federal reserve to stimulate the national economy when standard monetary policy has become ineffective. The Fed buys assets from commercial banks, so they are freeing up banks to lend more money and injecting a predetermined quantity of money into the economy.
The Fed’s quantitative easing has been cited as the major engine behind the market’s 136 percent rise the past four years and its 12% gain in 2013, according to the article.
This monetary policy made interest rates and borrowing costs low, thus allowing consumers to recover from the recession, allowed corporations to keep making profits and has boosted the stock market.
However, the article also raises the question of how long can the Fed continue this policy of quantitative easing? We are now in round three of quantitative easing. Because of recent slowing of the economic recovery, the Fed has discussed not only continuing the strategy, but possibly doing more.
One of the sources in the article notes that the Fed’s efforts boost the stock market even when the economy isn’t doing well. ‘It’s a mirage. It will end. You just don’t know when,” Richard Suttmeier, chief market strategist at ValuEngine.com said in the article.
http://www.usatoday.com/story/money/markets/2013/05/02/can-fed-keep-propping-up-stocks/2129787/
Beatriz Costa-Lima
14165278
brc3nc
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McDonald’s ending relationship with Heinz
Summary and analysis by Emma VanDelinder (eev728)
Nov. 6, 2013
McDonalds decided to part ways with condiment company Heinz after 40 years of business together due to management changes. In June, after the Heinz had been bought by 3G Capital— Brazilian investment firm that also controls Burger King—and Warren Buffett’s Berkshire Hathaway, a former Burger King CEO became head of Heinz.
Because the U.S. only uses Heinz products in their Minneapolis and Pittsburgh locations, the change will only be dramatically noticed in international locations. While this change has been decided, it will not be immediate but will instead transition from Heinz over time. Heinz will not comment on relationships with customers as a policy.
This is relevant to our texts because it is an example of a business strategy; McDonalds has decided to discontinue business with executives who also work for their competitors. Although there might be some implicit costs to changing a distinct complementary good to their burgers (ketchup/mayo/mustard), the company has decided not to do business with companies that sell substitutes to their products.
http://www.usatoday.com/story/money/business/2013/10/25/mcdonalds-ends-relationship-with-heinz/3194309/
First Take: The bubble is getting bigger and bigger
This article in USA Today discussed the potential worth of the 2-year-old photo sharing application by the name of Snapchat. The company employs about a dozen staff members led by a fresh-faced 23-year-old CEO. Recently, Snapchat turned down a 3 billion dollar offer from Facebook in all cash after declining a 1 billion dollar offer last year. Facebook is realizing that a lot of young people aren’t using it anymore and have replaced it with photo sharing applications like Instagram and Snapchat. Which explains why Facebook bought Instagram last year for a billion dollars. The draw of Snapchat is that it allows you to send photos and choose the amount of time someone can see it. This leaves a smaller digital footprint to hide from parents and teachers then on social media sites like Facebook. Snap chat CEO Evan Seigal is sitting on a gold mine after the site zoomed to 350 million members in September.
This relates to our readings because the Snapchat CEO and his team have developed a business strategy. Snapchat has decided to decline a 3 billion dollar offer because it is holding out for a better offer. They are foreseeing long-term profits as even higher than this offer. Facebook is now a publicly traded company and being bought by them would mean complete takeover by Facebook. Snapchat team members have strategized past this and are determining what changes they can make to continue pulling in even more members, further expanding the company on their own. It could be they simply want an offer from a different company, either way they have created a strategy in order to maximize their profit margin.
http://www.usatoday.com/story/tech/columnist/2013/11/13/snapchat-just-says-not-to-facebooks-3-billion-cash-offer/3519187/
KMHQP4
Katie Hogsett
http://www.usatoday.com/story/money/business/2013/11/23/black-friday-retailers-holiday-shopping/3673985/
This USA Today post concerning Black Friday deals on less than ordinary goods and services relates very strongly to our text and what we’ve learned in class. It shows that monopolistically competitive industries, such as that of car washes, dentists, veterinarians, and mortgage lenders, need to think outside the box in order to differentiate themselves and appeal to customers.
Consumers are better off by choosing a good or service from a company that gives them more benefits for choosing their good or service. This is especially applicable during the craziness of Black Friday shopping. This is a notoriously beneficial time for consumers to purchase goods and services, so knowing that more consumers will be out and willing to spend, poses a good opportunity for any and all businesses to act as competitively as possible.
The car washes, dentists, vets, and mortgage lenders doing so are ahead of the game by taking this notorious Black Friday holiday shopping and putting their business in the game. It is proven that no matter what time of year, if there is a sale or benefit, consumers feel they are getting more for their money and will be more inclined to purchase. It just so happens that Black Friday is the perfect way to exercise this new discounted service for these particular vendors.
What we learned in class about monopolistic competitions, with their low barriers to entry and many firms competing to sell similar products, is that they need to do something like this to be “out of the box” and appeal to the customers. This is a great example of this.
Lindsay Keaton
lekd67
Econ 1051 Fall semester 2013
alm4h9
In the USA Today article: Sept. home prices up 13.3% from a year ago, it talks about just that. The rising home prices show the trend of the US recovering from the recession that happened from 2006-2009. 13 of the 20 cities in the Case-Shiller index showed higher year-over-year growth rates in August.
In looking at a month to month basis, Las Vegas and Tampa showed the most weaknesses as their rates fell six percentage points in august. However, Charlotte, North Carolina was the only city to show a decline in prices since 2012. Detroit was the city that grew the most with a 1.5% monthly gain. However, Detroit is the only city to still have prices that are below the January 2000 level. This is according to S&P.
David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices talked about how housing prices are continuing to recover from the financial crisis. He also stated this in the article: “the proportion of homes in foreclosure is declining and consumers’ balance sheets are strengthening. The longer run question is whether household formation continues to recover and if home ownership will return to the peak levels seen in 2004.”
Another topic of the article was building rates. Developers recently received permission to be able to build apartments faster than before. The article states that this could help boost economic growth. The Commerce Department said that buildings were given approval at a rate of 6.2% faster than in previous years. The annual rate for 2013 is 1.034 million.
Despite the upward trend, buying a new home in October was slightly less costly as U.S. mortgage rates interrupted their upward trend according to the article.
We can relate this article to class because we talked a lot about the Great Recession, which we are clearly still recovering from. This article, shows the improvements of the housing market which began the recession and shows how far they have come since that time.
Carolin Lehmann
Pawprint: cldt2
Link: http://www.usatoday.com/story/money/markets/2013/11/26/stocks-tuesday/3730315/
The USA Today article “Nasdaq closes above 4000” discusses how the NASDAQ closed above 4000 for the first time in 13 years. It closed at 4017.75. Apparently consumer confidence has dropped, but stocks have ticked higher. Real estate is also doing better.
The article states that trading is expected to be light this week as traders get a head start on the Thanksgiving weekend. On Monday the Dow rose less than the NASDAQ and the S&P fell. The article also says that in energy markets, the benchmark crude for January delivery was up 46 cents.
The text discusses what the NASDAQ is on page 247. It is a stock index that includes the stock prices of more than 4,000 firms whose shares are traded in the NASDAQ stock market. The text says that the “NASDAQ is an over-the-counter market, meaning that buying and selling on NASDAQ is carried out between dealers who are linked together by computers.”
Stock prices in the NASDAQ declined in 2007, partially leading to The Great Recession. That is why it is exciting that the NASDAQ has closed above 4000. The Great Recession is described on page 814 of the text.
alm4h9
http://www.usatoday.com/story/money/business/2013/11/26/cox-interest-in-time-warner-cable/3760767/
The article “Cox may be interested in Time Warner Cable,” talks about how the privately owned cable service, Cox, is looking to purchase Time Warner Cable either alone or alongside other companies. Cox is the latest company to announce they are looking to purchase Time Warner Cable.
Buy purchasing Time Warner Cable, Cox and other companies hope to gain customers and more pricing powers against content providers and equipment makers. Time Warner Cable is the second largest cable company in the US. However, it has been losing viewers ever since more video streaming options have become available.
Other companies looking to buy Time Warner Cable are Comcast and Charter Communications. Liberty Media has a large stake in Charter and has been trying to complete a deal to purchase Time Warner Cable since earlier this year.
We can relate this article to when we talked about monopolies and oligopolies in class. Time Warner Cable is already one of the biggest cable companies in the world and once they are bought by one of these other companies, it will narrow the field even further. As of now, cable would be an oligopoly.
In the USA Today article, “Orders for long-lasting goods drop 2% in October”, the latest trend in business spending is discussed. In the last month businesses have spent less on machinery, computers, and most other items causing orders for U.S. long-lasting factory goods to decrease. This suggests that most companies are reluctant to invest during the government shutdown. Orders for durable goods dropped two percent in October following a 4.1% increase in September.
Demand for commercial aircraft dropped almost sixteen percent last month, which caused most of the decline. Economists are paying closer attention to core capital goods due to the fact that these orders reflect businesses’ confidence in the economy. This report conflicts with a private sector survey that shows companies shrugged off the shutdown and actually boosted orders. Other reports have also suggested that manufacturing has increased since the spring.
Healthier housing and auto markets have pushed demand for steel and other metals. Factory output has increased for the third straight month being driving primarily by the production of metals and furniture. In addition, demand for many goods overseas has increased.
This article can be related to class through our discussion of durable goods and how they can affect the economy. Durable goods are a good way to measure how firms feel financially and gives a good projection for how healthy the economy is doing. Demand for these goods aids in economic health.
http://www.usatoday.com/story/money/business/2013/11/27/durable-goods-orders/3765255/
Amanda Byler
Pawprint: akbggb
Reema Nimkar
Pawprint: rsn7d8
Student ID #: 14163325
Link: http://www.usatoday.com/story/money/business/2013/10/18/chinas-economic-growth-rebounds-to-78-percent/3007005/
Studying economic growth is important in any country. However, not only is it important to study your own country’s economic growth, it’s also important to study other countries’ economic growth. In this article by USA Today, China’s economic growth predictions are discussed.
China’s rapid economic growth is an economic threat to powerful countries in the international world. The article states that the world’s second largest economy grew by about 7.8% a year earlier. This growth took a lot of pressure off of leaders in China, who are looking to turn the economy a different way.
Leaders in China have a long-term priority of a sustainable growth based off of domestic consumption rather than exports and investment. This is because an abrupt drop in international demand for Chinese goods caused the economy to backtrack. Government officials are also concerned because economic growth depends on spending and as of right now, global demand is weak and Chinese consumers are demanding more than than government officials would like them to.
The IMF is forecasting China’s economic growth to be about 7.6% this, a very weak performance for this country. While this is occurring, factory output rose by 1.1 percentage points, along with retail sales rising from 12.9% to 13.3%. Additionally, the Chinese government created 10 million jobs in the first three quarters of the year.
alm4h9
http://www.usatoday.com/story/news/politics/2013/11/27/shop-website-delay/3768761/
The “Another HealthCare.gov delay announced” talks about the latest delay in the health care issue: a delay for small businesses. The Obama administration announced that small businesses will not be able to enroll in the new health insurance exchanges until November of 2014. Online enrollment was suppose to begin this month but businesses can still sign up through the Small Business Health Options Program through paper applications.
Julie Bataille said that many businesses are served through agents and brokers, and that taxes would be applied when businesses turned in their taxes.
Republicans argued that this announcement showed that the website was still not up to par. Some argued to shut down the site all together. Republican National Committee Chairman Reince Priebus, House Majority Leader Eric Cantor and House Speaker John Boehner all agreed that the site contained multiple glitches. However, Bataille said that: “The website is working already,” she said. “Consumers every day are shopping and enrolling in coverage.” Officials say that by this weekend the site should be able to handle 800,000 people ‘smoothly.’
Small business employees also have to deal with a delay until 2015 to choose from multiple insurance plans. Instead, employers will choose one plan for all employees. The article also says that states offering coverage through state-based exchanges are not affected by this announcement.
We can relate this to when we talked about the changes in health care in class. It is now required that everyone has health care since some claim that less tax dollars would go to hospitals if this were the case. However, the constant struggles with the site are making this difficult to accomplish.
http://www.usatoday.com/story/money/business/2013/11/27/jpmorgan-draft-complaint/3767713/
KMHQP4
14154929
In this article in USA Today, it explains how JPMorgan Chase is being pressed to release a secret legal document that could reveal details on how the nation’s largest bank handled its now-toxic mortgage securities. The Federal Home Loan Bank of Pittsburg is currently suing JPMorgan for damages on more than $1.5 billion in soured mortgage securities. The bank filed a motion in court on Tuesday that attempted to force public disclosure of the document. The document provided detailed facts about JPMorgan’s misconduct that has not yet been made public.
In 2006-2007 the bank bought three mortgage-backed securities from JPMorgan that purportedly contained highly rated mortgages. The bank argued that JPMorgan had misrepresented the riskiness of the underlying loans. The investments are currently not worth more than 60% of their original value. These investments heavily contributed to the financial crisis in 2008.
This article relates to our discussion about the events leading up to the 2008 financial crisis and the effects it had on the economy. More specifically it has to do with securitization of loans. Securitization is the pooling of various types of contractual debt, such as the mortgages discussed in this article, and selling the consolidated debt to investors. Its high risk because the originators of the mortgages have less incentive toward credit quality and greater incentive toward loan volume since they do not bear the long-term risk of the assets they have created and may simply profit from the fees associated with origination and securitization.
Carolin Lehmann
Pawprint: cldt2
Article: http://www.usatoday.com/story/money/markets/2013/11/26/holidays-stocks/3762663/
The USA Today article “Holidays are ‘bah, humbug’ for retail stocks” discusses the fact that retail stocks tend to fare worse than the broader US stock market between Thanksgiving and Christmas. This is predicted to happen, even though retail stocks are up around 40% this year. Since 2000 the Standard & Poor’s 500 stock index’s “retail group” has only averaged gains of 0.8% with positive returns only 54% of the time
According to the article, retail stocks are hot from late summer through Thanksgiving. They don’t fare as well for the rest of the year. On the bright side, internet-related retail stocks have averaged gains of 3.9% with gains 77% of the time.
Standard & Poor Corporation is explained on page 244 of the text. It is a private firm that rates bonds by giving them letter grades that reflect the probability that the firm or government will be able to make the payments on the bond. The text says, “investors can use these ratings in deciding how much risk they are willing to take on when buying a bond.”
Stock market indexes are explained on page 247 of the text. They are “averages of stock prices with the value of the index set equal to 100 in a particular year, the base year.” They are meant to show movements in prices from one year to the next.
Jaime Kedrowski
ID #14153292
Econ 1051 Fall 2013
Article: http://www.usatoday.com/story/tech/2013/11/27/bitcoin-1000-cryptocurrency/3768821/
The article “ ‘Cryptocurrency on the rise’: Bitcoin tops $1K” explains how Bitcoin, a “digital currency and payment method that is not regulated by any government,” is becoming mainstream and slowly, but surely, becoming and asset to exchange in the marketplace. The reasoning for this is due to its low transaction fees.
A statement by Eric Tilenius sums up the article, “Money has two primary purposes: as a medium of exchange, and as a store of value. While many people focus on Bitcoin as a new medium of exchange, I believe it’s real value lies as a store of wealth. Bitcoin is a new asset class.”
Bitcoin is now being accepted by several companies, including, WordPress, Virgin Galactic, and Reddit. Another large accomplishment with Bitcoin is that the University of Nicosia will be accepting tuition payments via Bitcoin.
This article directly relates to our discussions and readings on technological change. As it states in our textbook, on page 743, “technological change is influenced by how individuals and firms respond to economic incentives.” The article on Bitcoin reflects this exact influence. The incentives to using cryptocurrency is lower transaction fees and easy access to money. Individuals and firms are responding to this incentive by allowing Bitcoin to be an acceptable form of payment – helping to circulate money and maintain a profit. If this pattern continues, we will likely see several advances in the process of transactions and acceptable forms of payment due to the technological change Bitcoin has provided for the economy.
Eva Lopez
Pawprint: emlrkb
Article link:
http://www.usatoday.com/story/money/business/2013/11/24/jpmorgan-legal-risk/3677601/
JPMorgan Settlement Could Pose Legal Risk
This USA Today article explained JPMorgan’s settlement with the Department of Justice in regards to the part they played in the nation’s financial crisis of 2005-2007. JPMorgan was one of the banks who packaged risky mortgages into securities and sold them to investors; a practice that helped lead to the nation’s financial crisis of 2005-2007.
The article stated that unidentified employees of the bank received information that some mortgage-backed securities they sold in 2005-2007 did not comply with underwriting guidelines which, as we learned in class, is the process of buying initial issues of stock and bond and reselling them in the secondary market. However, the employees did not disclose this information with securitization investors.
Attorney General Eric Holder stated this practice of buying bundles of residential mortgages and packaging them into securities sold to investors “helped sow the seeds of the mortgage meltdown” that sparked the financial crisis of 2007-2009.
The admissions JPMorgan Chase agreed to under its record $13 billion settlement with the Department of Justice, but JPMorgan said the bank is defending itself against three purported class-action lawsuits involving allegations about their underwriting of mortgage-backed securities.
This article directly relates to our class discussions on the financial crisis of 2007-2009, also known as the Great Recession. In class we learned about securitization, which is the process by which banks originate mortgage loans but instead of keeping them, they resell them to investors. In 2006, house values went down and the property market crashed, causing a series of defaults on mortgage loans. This affected everyone who held those loans as assets. This also led to the Great Recession of 2007-2009 as well as the enactment of new legislation such as the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) which passed during 2010 and intended to reform regulation on the financial situation.
Nicole Kottmann
nmk99d
14151805
Harvard’s deficit soars to $34 million
http://www.usatoday.com/story/money/business/2013/11/09/harvard-deficit-soars-to-34-million-dollars/3484299/
This USA Today article explained how Harvard University’s deficit has increased greatly ($26.1 million, to be specific) from last year to this most recent fiscal year, and how much of it is due to increases in revenue and operating expenses.
According to the article, revenue has jumped 5% this month, greatly due to the school’s increased annual distribution from its $32.7 billion endowment. They’ve also seen a 6% increase in operating expenses, bringing the total to $4.2 billion. Benefits, wages and other compensation expenses are also playing a big role, accounting for about 50% of expenses.
This connects to what we learned in class on 10/29, when we defined a budget deficit as something that happens “When the govt. spends more than it collects in taxes”. This is explained in further detail on page 999 of the text, where the effects of a budget deficit-such as a fall in domestic investment or net foreign investment-are explained. This article isn’t talking about the government, but a firm that has its own deficit that it’s struggling with. In this case, the US Treasury won’t be increasing interest rates to try and tackle the problem because this isn’t a federal issue. Instead, Harvard officials are working to find innovative revenue strategies to combat their soaring deficit.
Just as the federal budget deficit involves foreign markets (if the U.S. Treasury raises interest rates as a possible solution, these rates often attract foreign investors), Harvard has to consider the fluctuating global financial market when coming up with a solution for this problem. Because these markets are always changing, they have to be careful when predicting future distribution that might help them (since they were optimistic after endowment earned an 11.3% gain on investments in the most recent fiscal year) respond to the increased deficit.
In class we talked about how the federal deficit was $300 billion in 1992 but soared to $1.5 trillion in 2010, and how much of this was due to the after effects of the Great Recession. In this case, the recession not only affected Harvard’s deficit but the mind set of the parents who could potentially be paying for one of the nation’s most expensive tuitions. Harvard President Drew Faust noted that the university is aware that a faltering economy has raised questions in the public’s mind about the value of a college education. He followed up by promising that they will adapt wherever circumstances demand it.
Alexa Barton
abbppf
“Small Business Saturday fosters mom-and-pop shopping”
http://www.usatoday.com/story/money/business/2013/11/29/small-business-saturday/3785883/
This article talks about the importance of consumers buying from the small businesses in their area. Between Black Friday and Cyber Monday, many consumers were shopping at large corporations, like Macy’s, instead locally-owned businesses. American Express started Small Business Saturday in 2010 “in part to help small retailers during an economic downturn.” During that first Small Business Saturday, an estimated 70 million consumers spent about $5.5 billion.
The article points out the importance of keeping locally-owned business open, saying that they are responsible for some employment and that most of the money spent at these stores stay in the community. The article included a study conducted in the Chicagoland area that concluded about 2/3 of the money spent at small businesses stayed in the area, while 57 cents of every dollar at chain stores left the area.
Small businesses’ importance to the US economy are discussed in our textbook on page 240.
Nicole Kottmann
nmk99d
14151805
700% return on investment? Venezuelan currency scam pays off
http://www.usatoday.com/story/news/world/2013/10/21/venezuela-flights/3012803/
This USA Today article explains how many Venezuelans are having a hard time finding airplane tickets to the U.S. and other countries since there is a group of scammers who are taking up the seats to exploit a loophole in foreign exchange controls which makes it extremely profitable to exchange their currency (bolivars) overseas.
These so-called “currency tourists” are taking advantage of the drop in value of the bolivar by buying tickets on international flights, which allows them to exchange their bolivars for dollars at the state-set rate of 6.3 bolivars per dollar, which can make them up to $3,000 in U.S. currency. The dollars are credited to travelers’ credit cards and they get cash from a cash advance that they withdraw to sell on the black market for 45 bolivars to the dollar once they’re back in Venezuela.
This article relates directly to our lecture about exchange rates, because we talked about how the exchange rate process works and how other countries are involved in determining the exchange rate of another’s currency. We learned that the nominal exchange rate is the value of one country’s currency in terms of another country’s, and in this case, the article is talking about how Venezuelans are taking advantage of the fact that the value of the US dollar is a lot more than the Venezuelan bolivar.
This type of exchange rate is great, as we learned, for Americans who are going to Venezuela and want to make purchases while they’re there. Their trip will be a lot less costly because one US dollar can buy them more in Venezuela than they would be able to get at home. However, we also learned that this is not good for American producers who want to sell their goods in Venezuela because they will make less of a profit from the business they do there.
What’s interesting about this article is that it doesn’t even involve consumers or producers from overseas, it’s the Venezuelan scammers who have found a sneaky way to profit from their own exchange rate. Because the Venezuelan government has such tight restrictions on currency exchange-they can’t exchange their bolivars for dollars unless under certain circumstances-they’ve created a loophole using the exception to the rule that allows those who need money to spend overseas to exchange their money for dollars. So, the more the dollar appreciates (gains value against another currency) and the bolivar depreciates (loses value against another currency) the more these scammers will earn.
Nicole Kottmann
nmk99d
14151805
Delamaide: Fed official slams banks’ ethics
http://www.usatoday.com/story/money/business/2013/11/12/delamaide-fed-dudley-too-big-to-fail/3505189/
This USA Today article is about how William Dudley, the president of the New York Federal Reserve Bank, recently spoke out against the actions of bank executives and employees at many large American banks, accusing them of taking unethical actions.
“There is evidence of deep-seated cultural and ethical failures at many large financial institutions,” Dudley said.
What the article really strives to get across, and was also stressed in class, is the importance of the New York Federal Reserve Bank. The article calls Dudley the ‘nations second most important central banker’ and this is because he not only serves as the president of arguably the nation’s second most important bank (after the Federal Reserve Bank in Washington, DC) but he is also ex officio vice chairman of the Federal Open Market Committee, which is the Fed’s chief policymaking body.
As we learned in class (and according to page 832 and many others in Chapter 25 explain), the FOMC is a vital part of the Fed’s structure, and they meet about 8 times a year to vote on important monetary policy issues. The NY Fed is different than the other eleven Federal Reserve banks across the U.S. because it is the only permanent voting member of the FOMC. There are many reasons for this, but it’s mainly because of their proximity to Wall Street and because they house the Federal Reserve Trading Desk where the Fed conducts open market operations such as the buying and selling of securities.
The fact that the head of such an important organization called numerous banks across the nation ‘unethical’ is quite a newsworthy topic. The article argues that Dudley’s responsibility to execute all central bank market activity and supervising the activity of the big name banks in NYC makes him more important than the Fed chairman in some regards, and based on what’s been previously mentioned as lessons we learned in class, I can’t help but agree.
Katherine Johns
kmj6f8
14151833
2.2 Million jobless Americans face aid cutoff
http://www.usatoday.com/story/money/business/2013/12/01/emergency-unemployment-compensation-euc-deadline/3773049/
This USA Today article talks about the consequences of a Federal Aid Program being cut if Congress does not renew it. If this program is not renewed approximately 1.3 millions unemployed Americans will lose these extended jobless benefits.
President of the Center on Budget and and Policy Priorities Bob Greenstein said “there’s a view… that it would be too heavy a blow both to the economy and to struggling unemployed families to have both food stamp benefits and unemployment benefits all within two months of each other.”
According to the article, the amount of long term unemployed people getting these benefits has dropped in just a year alone and if the emergency program is completely shut down only 25% of unemployed Americans would be receiving help.
Mark Zandi, the chief Economist of Moody’s Analytics said that renewing the extended benefits program is less likely this year because there’s no directly relevant bill.
There is also discussion that these programs could be added to Medicare legislation. Apparently, the White House has tried to persuade Congress to extend the program.
These benefits are to end December 28 which would quickly call them away from the 1.3 million people they are helping.
This article relates to class because we discussed in depth the consequences and concepts of unemployment and unemployment rates. On page 642 the text book defines unemployment rate as the percentage of the labor force that is unemployed. In the article it states that the unemployment rate fell to 7.3 % last month from a peak of 10% in October 2009. According to the textbook, the unemployment rate is a key macroeconomic statistic. The unemployment rate is different than the labor force which includes retirees and full time students. This article also really focuses on how these federal aid programs have helped since the Great Recession which comes up a lot in lecture. We discussed in class how the Recession not only put more Americans on the unemployed list but it also damaged our economy and we are still recovering.
Katherine Johns
kmj6f8
14151833
United Healthcare Medicare cuts doctors
http://www.usatoday.com/story/money/personalfinance/2013/11/29/unitedhealthcare-reducing-doctors-for-medicare-advantage-programs/3655967/
USA Today published an article about United Healthcare and its recent actions of cutting doctors from its Medicare Advantage program. United Health Care is the largest Medicare Advantage insurer in the country, the article said and has almost three millions members. There is an alternative to regular Medicare, Medicare Advantage plans, which nearly 14 million disabled and older people are enrolled in. This alternative offers medical and sometimes drug coverage but it requires its customers to use the plan’s network of providers, not their own and regular providers.
There is one week left for customers to choose new coverage for next year and most Advantage customers are locked into their plans for a year. Because of the negative effects this can have, some medical associations are try to persuade doctors to appeal the cancellations.
According to the article ” the Affordable Care Act phases in reduction in government payments to Medicare Advantage plans- $156 billion over 10 years- to bring the program into line with the costs of caring for seniors in traditional Medicare.”
Private plans are reviewed each year by Medicare Officials to ensure that they comply with network adequacy and other regulations, however the agency did not approve the newly designed networks that have come from the new provider cancellations. Raymond Thorn, a Spokesman for the agency said “the agency is currently reviewing UHC and other plans’ provider networks and closely monitoring all areas that have experienced disruptions to ensure that beneficiaries have full, transparent and timely information and access to needed care.”
Medicare officials are not releasing just how many provider terminations they are planning for however the Ohio State Medical Association is predicting and estimating that United Health Care has cancelled contracts with hundreds of Ohio doctors that will be effective January 1. The executive director of the Fairfield County Medical Association, Mark Thompson, is continuing to file a Federal lawsuit to stop the cancelations.
This article relates to class because we read a whole chapter,Chapter 7 about health care and spent awhile in class discussing the topic. On page 206 of our textbook is states that the government provides health care indirectly through Medicare and Medicaid. On page 221 the text book says that most people pay for their health care with the help of Medicare, which is an employer provided health insurance care and without this many people will not be able to afford proper health care or even be able to travel to doctors that are under Medicare. On page 223 the textbook says that the “CBO estimates that most of the increase in Federal spending on the Medicare and Medicaid programs will be due to increases in the cost of providing health care, rather than to the aging population.”
Katherine Johns
kmj6f8
14151833
Patent Law changes alter entrepreneur’s planning
http://www.usatoday.com/story/money/columnist/2013/09/15/baverman-entrepreneurs-and-startups/2795063/
A team of researchers has spent multiple year developing a new kind of lithium ion battery that will last 10 times longer, charge faster and will be safer and lighter than the batteries used today. The USA Today article said this battery has the potential to change how TV remote controls, smartphones, and electric vehicles are powered.
Thousands of dollars have been spent in order for this group of researches to get a patent on their new technology and they plan on filing plenty more patents to the U.S. Patent and Trademark Office. However, there have been many changes to the patent law since 2011 that have changed the process involved with securing “intellectual property.”
The most important and significant change to the patent law is is that the patent office “no longer awards patents to the first to invent but to the first to file, putting it in line with patent law in many other countries.” In reaction to this, David Bailey from the Kauth Pomeroy Peck and Bailey firm said that they are “hearing from inventors before they even begin work on a new technology. They want to know how much R & D should be completed before filing for a patent so they can budget their time and financial resources.”
Because of this, most people filing for patents are so filing for a provisional application which allows inventors to “disclose the invention and the problem it will solve, serving as a placeholder while the inventor finishes work.” Tonya Drake who is a principal at Fish and Richardson’s office believes “the first to file law is forcing inventors to be faster and more strategic in their research, a benefit to start ups, which are typically more agile than large corporations.”
People looking for patents are now trying harder to budget intellectual property protections into their initial business plans, Drake said. This shows that companies are really serious about securing their rights to market their invention but, on the negative side, it could delay investments in faster growth of business.
There have been more patents filed in 2013 than in 2012 and lawyers are expecting more companies to take advantage of the potentially accelerated process which could then lead to their product being put in the market faster.
This article relates to class because we talked a lot about how patents work in class. On page 462 of our textbook a patent is defined as the exclusive right to a product for a period of 20 years from the date the patent is filed with the government. The book says that the government utilizes patents in order to encourage firms to carry out research and development of better products. This relates to the change in the patent law, because due to the changes, people may get patents faster which would lead to products being produced faster.
Small Business Saturday shines at bookstores http://www.usatoday.com/story/money/columnist/abrams/2013/11/21/strategies-small-business-saturday-bookstores/3660949/
Rachel Lira
rml3k9
14151740
This USA Today article highlights the impressive popularity of “Small Business Saturdays,” the day after the infamous Black Friday, during which consumers are encouraged to take their business to small independent stores for their holiday shopping. This success is especially apparent at small bookstores this holiday season, as many of them have authors present that day.
Author Sherman Alexie proposed an IndiesFirst campaign in which authors sign up and go to a local independent bookstore to make an appearance and help sell books. One thousand authors signed up in the first two months and more are still signing up. This is a good thing for bookstores, especially independent ones, since many people predicted bookstores would disappear the way record stores have due to ebooks being sold online and Borders closing down.
According to the article, for every $100 spent at a local bookstore, $68 stays in the community vs. $43 for chain stores. Last Small Business Saturday, an estimated $5.5 billion was spent at local stores and restaurants which means a lot of money staying in the community it was spent in.
This relates to our small business reading in chapter 8 on page 240. According to the book, small businesses are valuable because they can introduce new goods and services to the market and they tend to lay off less people during times of recession. They also are a good thing for students right out of college, as graduates often get their first jobs at smaller markets and businesses, so it’s good news for many that Small Business Saturday has gained so much popularity.
Americans Facing Aid Cuts
http://www.usatoday.com/story/money/business/2013/12/01/emergency-unemployment-compensation-euc-deadline/3773049/
Matthew McKeown
mmmkx9
14195367
According to USA Today, millions of unemployed American’s will lose benefits by the end of December. This loss will come from Congress deciding whether or not to renew a program that offered unemployed citizens to receive emergency unemployment benefits. These benefits were set to cover 26 weeks which is the usual amount of coverage provided by the state.
These cuts also come alongside recent decreases in food stamp benefits. Many believe that the cuts in both unemployment benefits and food stamps will drastically hurt the economy. The unemployment benefits will end on December 28th and will force nearly 850 thousand people to no longer receive benefit checks between January and March.
The article relates these cuts to unemployment rates by stating that “the labor market has improved, with unemployment falling to 7.3% last month from a peak of 10% in October 2009.” This doesn’t go undisputed though with statistics stating that long-term employment is now decreasing. Many economists believe that Congress would be making a mistake by initiating these cuts and would cause a reduction of economic growth by taking away unemployment benefits.
This article relates to economic issues we discussed in Chapter 20 regarding unemployment and inflation. The cuts in benefits to unemployed Americans would affect every citizen and change the purchasing power of those who were receiving those benefits. Whether those gaining these benefits are suffering through frictional employment or are facing more long-term unemployment issues, the cut in these benefits will be a major blow to unemployed Americans and for our economy as a whole.
Katherine Johns
kmj6f8
14151833
Small Business Saturday shines at bookstores
http://www.usatoday.com/story/money/columnist/abrams/2013/11/21/strategies-small-business-saturday-bookstores/3660949/
This USA Today article talked about the benefits of shopping locally and at small businesses and focused on bookstores.
This year, authors attended Small Business Saturday at small, independent bookstores in order to show their support for these types of bookstores. Over 1,000 authors signed up to help out an independent bookstore.
These authors are determined to help bookstores because due to a rise in ebooks and predatory pricing by some online bookstores many people are beginning to think that bookstores are destined to disappear like record stores did, however, according to this article, this will not happen.
Oren Teicher, chief executive of the American Booksellers Association said that “one of the ways bookstores thrive is because they are intimately involved in their local communities. The people who work there, live there. They know local tastes, they’re able to put the right book into a customer’s hand.” In addition to this, for every $100 spent at a local store, $68 stays in the community the store is in where as at a chain store, only $43 stays in that community. The article says that “shopping locally means your neighborhood has more money for schools, fire and police departments, roads. You help create jobs. The value of your home rises.”
More than two thirds of Americans know about small business saturday and this year it is estimated that $5.5 billion was spent in independent small business and restaurants on that day last year.
This article relates to class directly because we talked and read a lot about small businesses and how they effect the economy. On page 240 of our textbook it says that small businesses are vital to our economy because starting a small firm provides an entrepreneur the opportunity to bring a new product to the market, however finding the the funding to start a new firm can be difficult. According to the text, small firms raise funds from family, credit cards, or by loans taken out against the value of the founder’s home. Small firms are also less likely to lay workers off during a recession which helps keep our economy’s unemployment rate low. The textbook also states that ” entrepreneurs founding small firms have been the source of many of the most important new goods and services available to consumers.”
Timoshanae Wellmaker- tvwrp6- 14166088
http://www.usatoday.com/story/news/nation/2013/12/01/health-exchange-prices/3797039/
On USA Today’s article by Emily Le Coz, “Two states, different experiences under health care law” the issue of health care is addressed. The story is a part of another ongoing story, “Affordable Care Act.” The story features graphics that allow the viewers to click to see that health care has differences among different counties within the states. The two states referred to are Kentucky and Mississippi. Apparently Mississippi has the lowest health care enrollment rate in the nation. Kentucky has three insurers who offer a multitude os plans through marketplace while Mississippi was able to only attain two carriers which are Humana Health Insurance COmpany and Magnolia Health Pan.
This relates to our discussion on health care. Health care refers to the goods and services, such as prescription drugs and consultations with a doctor, that are intended to maintain or improve a person’s health (206). Health care is provided through markets but it has interesting features that many others goods are services that are provided through markets also do not have.
The article mentions how Henrietta Dean of Kentucky is now putting off having thyroid surgery in order to stop a disease due to the fact that she has no insurance. Policies have changes and are affecting people. Now she was able to sign up for expanded Medicaid coverage, provided by the government through the Affordable Health Care Act in October.
Mississippi seems to suffer even more than Kentucky since they only have two carriers outside of the residents being able to get Medicare or Medicaid, if they do qualify.
Paw Print: JCMXD6
The article is from: http://www.usatoday.com/story/money/business/2013/12/01/emergency-unemployment-compensation-euc-deadline/3773049/
The focus of this article is addressing that out of the 2.2 million unemployed Americans who receive benefits, 1.3 million will soon lose some, if not all, of their unemployment benefits, including food stamps, due to the changes that have been put in place for the structure of the economy. If Congress doesn’t renew the previous program that grants aid to those in need, not only will the income of the people take a blow, but the economy, as well. Various benefit and aid would be cut within two months of each other.
The blurb about the article “2.2 Million Americans Face Aid Cutoff” states:
“Six years after the recession began, a federal aid program for the long-term unemployed could end in December while the unemployment rate remains above 7%”
The fact that over 7% of Americans are still unemployed and are being threatened by the government is ridiculous. The form of unemployment is structural, as opposed to frictional. If the problem was frictional unemployment, it would be less of a blow to the economy and easier to fix. Since the problem lies in the economic laws of the government, nothing will change until the government decides to truly take a stand and help the people with their current state of monetary being.
If people receive the temporary help they need, it is easier for them to gain a stable income quicker on their own. Some people think that government aid is simply throwing out money to anyone who claims to need it, but it is a much more complicated process that is carefully reviewed.
The solution to solve the issue of diminishing benefits and the structural employment that is represented in the article is to give the people what they need in a reasonable way. According to the article, the economy is growing at an overall weak annual rate, so something has got to change.
Correct and additions to my post:
***Last paragraph: Structural unemployment, not employment.
Addition: Stuctural unemployment is discussed on page 653 of the text. Employers need to expand their strict labor requirements of employees alongside the governments actions.
Jillian Mullin
Econ 1051 Fall 2013
#14180647
Pawprint: jamzq7
According to the USA Today article, “The Economy? Who Cares?” since the economy hit rock bottom in March 2009, companies have been rewarding shareholders through buybacks and dividends. Despite halted economic growth, cost cutting has allowed profits to escalate, balance sheets to enlarge and stocks to surge. This has been a major gain in corporate eyes. According to chief market strategist at Morgan Stanley, Adam Parker, this is a rare time when what was good for companies was bad for the economy as a whole, and vice versa. He said this is a time that looks like no other period in history.
This new phenomenon has confused both investors and companies and has caused risky behavior. Investors have allowed money to pile into stock mutual – and exchange – traded funds. On the corporate side, companies have purchased excessive shares in the last four months. At the same time, capital expenditures have been lower than usual and hiring is still stalled.
This combination of behavior has increased the Standard & Poor’s 500 stock market index by 21% this year, despite the fact that economic growth has been subpar and hiring has remained low. Parker described this as, “What’s good for corporate profitability is incongruous with what’s good for the economy.” Companies margins stay high when they don’t spend and policy makers are accommodative when economic growth is stalled. Because of this, rates are not expected to rise in the near future.
On page 245 of the text, we learned about how investors hope that a firm will earn economic profits by using its retained earnings to grow, causing the firm’s share price to price, and providing a capital gain for investors. This is just how the article explains companies reward shareholders. Additionally, on page 687, we learn how mutual funds make investments in stocks and bonds on behalf of savers. Like the article explains, investors have put tons of money into mutual funds, a very risky behavior.
Article link: http://www.usatoday.com/story/money/markets/2013/11/03/cnbc-economy-stock-market/3323911/
In the USA Today article, “2.2 million jobless Americans face aid cutoff”, the affects of the recession on unemployment rates and the benefits the government gives to people is discussed. Because of the recession benefits such as food stamps and unemployment insurance are to be cut, leaving hundreds of thousands of Americans in trouble.
The affected Americans are the jobless Americans and there are 1.3 million of them. By January, many families will be negatively affected and left out to dry because they might be losing their food stamps. Just two-three months later, unemployment insurance will also be lost during this time for even more unemployed Americans.
All of this is taking place because the government implemented a program to help unemployed people by giving them the opportunity to still have an income. While the recession was in full effect the government enhanced this program. Now, the program has run its course and may not be renewed. The unemployment and long-term unemployment rates are still very high so the benefits, that are being cut, are crucial to many Americans. The cutting of benefits would not only hurt these people, but also, keep the economy from progressing. Because the unemployed usually spend what they are paid, “each dollar the government pays out in benefits yields $1.42 in economic output…”.
Unemployment rates and government benefits were discussed in our class, as well as, how the recession has affected our economy. In class we discussed chapter 20, pages 646-648, which dealt with measuring the unemployment rate and the events of the recession.
http://www.usatoday.com/story/money/business/2013/12/01/emergency-unemployment-compensation-euc-deadline/3773049/
pawprint:msw8h3
Gerald Richardson
Pawprint: glrd5d
14158337
Link: http://www.usatoday.com/story/money/personalfinance/2013/11/27/dont-buy-a-tv-on-black-friday/3768903/
In USA Today’s article about Black Friday deals, they discuss how the deals appear great but when you look at the quality of what you are buying it is subpar. Apparently most TV’s sold on Black Friday are flawed in a major way. Whether that is, the brand not being reputable or them selling stripped down models of expensive TVs
The brands that are sold for really cheap on Black Friday are the no-name manufacturers that do not get very high reviews. It is easy to say something is marked down from a price that was way too high in the first place.
Unfortunately, for some people, who think that they are safe because they buy name brand TV’s on Black Friday, they may actually be being ripped off as well. TV manufacturers and stores will partner with each other to sell “derivative models” which are stripped down versions of high quality models. These TVs are made just for Black Friday and are not nearly of the same quality as the models that they are based on.
While it may be a stretch, I think that this article relates to inferior goods. Sure, these products are not in high demand because income is low but they are in demand because people expect to be paying a low price. If it weren’t for the expectation of the low price they might do their research more thoroughly and end up buying a normal good.
Timoshanae Wellmaker- tvwrp6- 14166088
In USA Todays article, “2.2 Million jobless Americans face aid cutoff” by Paul Davidson the recession is addressed. The article focuses on the affects of the recession and how it has effected the economy. The article explains how six years after the recession began the federal aid program for long-term unemployed but now that program could end in December even though the unemployment rate is still fairly high. The unemployment rates is still above 7%.
The unemployment rate is the percentage of the labor force that is unemployed (642). The threat of aid cutoff is a very serious issue in today’s world. There are approximately 1.3 million Americans who are unemployed and may lose their benefits if Congress does not renew the program that was created after the recession. Even further the article states how another 850,000 people would run out of unemployment insurance after their benefits ended. This would be a devastating affect to the economy and the families of the unemployed.
http://www.usatoday.com/story/money/business/2013/12/01/emergency-unemployment-compensation-euc-deadline/3773049/
In the article, “Amazon testing delivery by drone, CEO Bezos says” it is talking about a change in technology. Amazon is testing drones out to deliver packages. They are trying to create the most efficient way of delivering packages. The ultimate goal of using these is to deliver packages in less than 30 minutes.
The article goes on to say that it will take a number of years before this will be developed. They are also waiting on the Federal Aviation Administration to come up with regulations for this type of delivery. Since this is a completely new concept it may take a while but Amazon said that this could be seen in as little as four years. Amazon said, “One day Prime air vehicles will be as normal as seeing mail trucks on the road today.”
The FAA says that it plans to have regulations on drones by 2015. Today, drones are used for things such as police forces and for hobby. They are not allowed to be used in return for money, which would be subject to change if Amazon succeeds in delivering this way. By using this new method it could cause a loss of business to companies like Fed Ex and UPS, which Amazon currently uses to deliver. Although, Fed Ex’s CEO said that they would like to switch to drone delivery as soon as the FAA allows it.
This article relates a lot to what we have discussed in class. It is talking about a change in technology, which will create a shift in supply. Ultimately this will help improve the market, demand will greatly increase for this type of delivery. This will also affect many other businesses, as noted in the article it could affect other delivery companies. Yet, they plan on delivering with drones some day too. This shows competition and how their will still be several companies in the market of drone delivery.
Mandy Corken
alc5fd
http://www.usatoday.com/story/tech/2013/12/01/amazon-bezos-drone-delivery/3799021/
Establish credit for your business in 8 steps http://www.usatoday.com/story/money/columnist/strauss/2013/04/15/steve-strauss-business-credit-profile/2076887/
Rachel Lira
rml3k9
14151740
This USA Today story is an advice column for small businesses built off sole proprietorship about how to improve their credit. It discusses the dangers of getting your business sued if you and your business are one in the same, legally. It stresses the importance of setting up a separate business credit profile, although many don’t know how.
The article states that business credit is rather similar to personal credit and that the step are similar just with with minor differences. It breaks down the process of gaining business credit into 8 steps: Incorporate, obtain an employer identification number, get a DUNS number,open a business savings account, get commercial credit, get a loan, pay on time and repeat.
Sole proprietorship and liability are discussed in chapter 8 on page 238 in the book. This article is relevant to the lesson because the article explains how to maximize the financial safety of a business of sole proprietorship with unlimited liability, which is a very, very dangerous situation if the business get sued.
In the article,”Will holiday sales herald better 2014 economy?”, the question of bigger spending leading to a brighter future for our economy is explored. With many people going to spend their money holiday shopping, sales are expected to increase ensuring a better economy for the upcoming year of 2014.
The rise in sales was predicted because there was a rise in employment this year. More people with jobs entails that more people have the means to put their wages received, back in to economy by shopping and spending.
However, this increase doesn’t look to be very big: “about 204,000 jobs have been added monthly since August, well above the 145,000 jobs a month in the three months before that…the gains in hiring came too late in the year to produce more than a mediocre Christmas for stores…”. It would take the unemployment rate to fall a significant amount for the rise in sales to be more substantial.
Also, because of the little growth of income, there is another problem with the increase of sales being large. People may be able to shop, but not splurge and spend all of their income on Christmas gifts. This means that the stores catered to the workers in our economy, like Walmart, won’t expect a big increase like a BMW dealer would.
In class we often talked about what were the things that could make the economy grow and what could make the economy decline or rise. We talked about how increases in labor and productivity could lead to increases in the economy, in chapter 21.
http://www.usatoday.com/story/money/business/2013/11/29/holiday-sales-economy-2014-outlook/3758587/
pawprint:msw8h3
The USA Today article “Apple shares hit high for 2013 on holiday hope” focuses on the projected success of Apple this holiday season. Just this year, Apple has released two new iPhones, launched the iPad Air, and made renovations to the iPad mini. As a result of the recent success, Apple’s stock recently rose 1.9% to $556.07 per share on Black Friday.
According to Brian Marshall, an analyst at ISI Group, “Apple products should be the holiday gift of choice this year…The company has a great product cycle currently, the stock is cheap and we expect $600 within the next several months”.
As expected, Apple boomed on Black Friday this year. According to the article, “Mobile devices running on [Apple’s] iOS operating system—basically iPads and iPhones—made up more than a quarter of all online traffic to major retail websites on Black Friday…These devices also accounted for 18% of all online sales in the period, according to IBM Digital Analytics Benchmark”.
The company hopes to keep the expansion and success going as there is a growing hope that China Mobile (China’s largest wireless carrier) will begin selling Apple products soon according to Walter Piecyk, an analyst at BTIG.
The article highlights the likely chances that Apple’s stock will continue to increase in the next few quarters.
pawprint: jpd6yb
The article, “2.2 million jobless Americans face aid cutoff” talks about the difficulties with unemployment and the possible cut of government funding to unemployed people. THis article is overviewing the impact of foods stamps, and other government programs that aid the unemployed and how these could be subject to change if congress does not renew the programs by the end of December. This decision could affect over many Americans creating a significant effect on the economy.
On November first of this year the increased benefits of food stamps stopped affecting more than 47 million Americans. Of these people, some were also receiving jobless benefits. During the financial crisis in 2008 the government started providing emergency unemployment aid that could last up to a year which would normally be only 26 weeks. Now unemployed workers can receive between 14 to 47 weeks of aid all depending on their states jobless rate. The benefits of unemployment aid are set to stop on December 28th of this year affecting 1.3 million people.
The article talks about how the labor market has improved. Last month the unemployment rate was 7.3%. However the long term employment is not decreasing as much with 36% of the unemployed out of work for more than 6 months. By ending unemployment aid it would reduce economic growth by .15 percentage points.
This article relates to our class because it is discussing unemployment. Its talking about cyclical unemployment, when people lose their jobs during poor economic times. This article is discussing how the economy is doing better and unemployment rates are lowering. It also relates to our class because it is talking about government programs and how they affect the economy.
Haley Reed
14161712
hprfh3
The USA TODAY article “Thanksgiving shopping becomes social, but spending down” reports and analyzes this year’s Thanksgiving and Black Friday sales and spending patterns. The article discussed that even though there was less buying overall, Thanksgiving and Black Friday shopping are becoming a new family tradition in today’s society due to stores opening earlier and earlier each year. Shoppers now not only wake up early Friday morning to hit the sales, but end Thanksgiving festivities early on Thursday to go to shopping for the 50% off deals as early as 6 p.m. Thanksgiving night. The article states that this extension of hours is what has lead to the more social shopping aspect that Thanksgiving weekend is evolving into as families of all ages go together.
The article stated that overall spending at this years Black Friday shopping was down $59.1 billion from last year. However, online shopping for Thanksgiving and Black Friday remained strong. While shopping in person stores was down 11% compared to last year, the amount of online shoppers was up from 89 to 92 million this year on Black Friday.
Tablets, smart phones and TVs were the main products that were sold on Black Friday, especially in the online sector. Several of the main deals for items such as the iPad mini “went out of stock very quickly” meaning that the demand for these goods during the Thanksgiving sales were great. Other hot items were outerwear and footwear. Specifically deals on Ugg footwear “did extremely well”.
This article relates to many of the topics we have discussed in class throughout the semester. The whole idea of Black Friday and Thanksgiving weekend shopping is society and individuals responding to incentives. The deals that take place in retail stores over Thanksgiving weekend are glorified incentives used as an economic strategy to draw the buyers to the stores. The 50% off and “half-off” deals that are one of the most popular deals on Black Friday are an example of consumers responding to incentives such as the BOJO ad used as an example in class. The shift of shopping from in-person stores to online retail stores is an example of a technological change. Online shopping allows for more people to shop at once compared to a store, creating a larger number of outputs or sales, which fosters economic growth. The article also discusses how smart phones, tablets, TVs, and outerwear are the most sought after and purchased products during Black Friday sales. All of these items are considered durable goods because they are more expensive items that are intended to last for several years. The increase of durable goods sold is a positive indicator for the economy.
http://www.usatoday.com/story/money/business/2013/12/01/black-friday-shopping-results/3795867/
Ebony Holmon
14155462
The USA Today article “United Health care Medicare Advantage cuts doctors” by Susan Jaffe, is an unfortunate article that immediate starts off by explaining how a patient with a terrible disease’s doctor has officially been terminated. Many doctors have been removed from the United Health Care/AARP contract. This means that not only many doctors or at a loss of 1 source of income, but also many patients are now at a loss of health care coverage in all areas.
The UnitedHealthCare Medicare was one of the largest Medicare advantage insurer in the United States. The article explains that over 14 million older, or disabled people use this insurance in order to take care of their health as a way to pay their health care provider. Although many doctors have been cut from the contract, some people are still choosing to stay with their doctors, uninsured.
This article covers several topic that we are familiar with through our text book. The first one that Jumps out at me is health care which can be found on page 206. Health Care is the goods, and services, such as prescriptions drugs and consultations with a doctor, that are intended to maintain or improve a person’s health. The article talks on health care from the very beginning when they start off by explaining how a sick patient is notified of her last appointment with he loyal doctor due to a change in her health insurance contract, which brings me to another topic discussed in our text book.
Health Insurance is a contract under which a buyer agrees to make payments, or premiums in exchange for the provider’s agreeing to pay some or all of the buyer’s medical bills (209). To be even more specific, the type of health insurance the article talks about is one that falls under what the textbook calls Medicare. Medicare is provides offers medical and usually drug coverage to senior citizens, but requires members to use the plan’s network of providers.
http://www.usatoday.com/story/money/personalfinance/2013/11/29/unitedhealthcare-reducing-doctors-for-medicare-advantage-programs/3655967/
Tori Heppermann
TAH6GC
http://www.usatoday.com/story/money/business/2013/12/01/black-friday-shopping-results/3795867/
Black Friday is the biggest shopping day of the year, but this year was a little bit different. After reading “Thanksgiving shopping becomes social, but spending down”, I noticed a big change in the shopping holiday. There was approximately 3 million more shoppers out this year compared to last.
Black Friday started earlier this for majority of businesses. Wal-Mart opened at 6 p.m. followed by Target at 8 p.m. This brought out more shoppers, but the shoppers ended up spending less. They had more time to spread out their shopping. This allowed them more time to think about their purchases and save money for their next destination.
This article reminded me of behavioral economics in Chapter 10. Behavioral economics is the study of situations in which people make choices that do not appear to be economically rational (pg 327). When people go Black Friday shopping, they usually are not making rational decisions. Consumers set out on a goal to get products for cheap. They don’t realize that they are paying cheap prices for cheaply made products. Their actions are inconsistent with their goals.
There are three mistakes that people make when making decisions. They take into account monetary costs, but ignore nonmonetary opportunity costs. They also fail to ignore sunk costs. But most of all, they are unrealistic about their future behavior (pg 327).
Ebony Holmon
14155462
The USA Today article “Food stamp cuts create high demand for food bank supplies” by Marisol Bello is a real eye opener to tough supply, and demand in reality. The article talks about the decrease in the Federal food stamp program. Although over 14million Americans use this program to aid them in supplying their families with food, they will have to find another source to help them starting Friday. A woman the article mentions, Crisp, who is on food stamps, says “she received a little less than $550 a month in food stamps and now will receive $497”.
With the holiday season here, many people are going to be demanding more food than they’re normal intake. However, not only is the supply of food stamps low, but also the supply of food in community food banks. Because many people will not be able to afford to buy their grocers at the store, or market, they are forced to get food from the food bank. With everyone trying to do that at once, as holiday preparation begins, it causes a double demand in food bank food. Nevertheless, there is not an increase in the supply of it in the least.
In the text book we talk about the basic concept of supply and demand. The text book teaches us two separate laws. The first one, Law of Supply (79), is the rule that holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in the price cause decreased in the quantity supplied. The second, Law of Demand (70), says that holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease.
Although in the text book definition, the terms are referred to by the changes in the price of something. But the text book teaches on page 70, and 79, that the concept of supply, and demand can hold true to anything. In the example given in the article, there was a high desire for food because it was the holidays, Not only did people want more food, but they wanted it from the food bank, because they couldn’t afford it at the grocery store since their food stamps were cut back. Although there was a higher demand for food bank food, the supply of it remained constant causing for a scarcity (40) of food.
http://www.usatoday.com/story/news/nation/2013/11/02/food-stamps-cuts-food-banks/3356667/
Staff not up to speed? Expect sales slowdown
http://www.usatoday.com/story/money/columnist/edmunds/2013/11/27/gladys-edmunds/3766281/
Ashley Brophy
18076033
This article talked about the importance of having efficient, good employees. The author told a story about a time when they received poor service at a nail salon. There was a long wait and the employee couldn’t work the new computer system. When trying to get help, every other employee was busy. This article deals with labor productivity and technological growth. Both of these factors affect the business’ reputation and profit.
Labor productivity is the quantity of goods and services that can be produced by one worker or by one hour of work. Labor productivity is low in the salon because there was a wait before their manicure and it took the employee a long time to work the computer system for a new appointment. If the employee wasn’t slow then more people wouldn’t have to wait past their appointment and it wouldn’t take as long to schedule an appointment. Amy ended up not rescheduling at that salon because it took too long. That is costing the company money. Also, they could have a shortage of employees because the article said there was no one there to help the employee that was having trouble.
Technological change is also a factor. Technological change is an increase in the quantity of output firms can produce, using a given quantity of inputs. The new computer system is the reason why the salon lost business. The salon didn’t train their employees well enough to use the system quickly. Maybe the employee was used to using a notebook and not the computer. Having basic computer skills was critical for this job. Not knowing how to work the system could lead to overbooking, accidentally deleting appointments and getting the wrong information in about the customer.
These two factors are major components in economic growth for the salon. The business will lose their good reputation if their employees aren’t trained and keep making small mistakes. The salon could have more employees work at time to train newer employees or they could have training sessions. This way, the owner can be sure everyone is being as efficient as possible.
China chasing U.S. lead in 3-D printing
http://www.usatoday.com/story/money/business/2013/12/01/china-advances-3d-printing-manufacturing/3675057/
Ashley Brophy
18076033
China is working harder and harder to develop 3-D printing. They are trying to increase the quantity of mass production goods like shoes and phone cases. They are still in the early stages but are quickly advancing. This will greatly lower labor costs and help with supply and demand. This will make China even more competitive and make America step up their game. America needs to keep advancing in technology or we could lose our edge.
Lower labor costs can help increase their profit but this will also affect the unemployment rate. Countries like China already have problems with paying workers hardly anything, and safety. With robots taking over jobs, more people will be out of work. More kids will have to work in hopes to make ends meat. On the other hand, the factory could probably use the money. Most are neither clean nor safe for employees to work in. With less people working, their economy as a whole will take a major hit.
This could help with supply and demand. They will be able to have a larger supply (which will keep prices down) and demand to go down. These printers make everyday items that all customers need. Making these products in bulk and keeping them in stock will only cause more people to buy them as long as the prices are low. These products aren’t high quality.
3-D printers will change the way we produce all our products. More products can be produced quicker using all the same machine. The same machine that makes shoes can make phone cases. Labor-intense assembly lines will go away and only machines will be used.
Small Business Saturday fosters mom-and-pop shopping
http://www.usatoday.com/story/money/business/2013/11/29/small-business-saturday/3785883/
Ashley Brophy
18076033
This article claims that Saturday is the big day for small business. This is due the amount of black Friday advertising for larger companies. In 2010, Small Business Saturday started. People need to realize small business play an important role in today’s economy. Most small businesses even give back to the community in some way. Some work with nonprofits or give away to charity to give back. Last year, over 5.5 billion dollars was spent at small business.
Small business helps more people learn entrepreneur skills. Most have no payroll and few employees. Only 6 million out of 28 million firms have a payroll. Having few employees maximizes profits. Also learning how to run a business can help with managing money, people and your lifestyle. Starting a small business could turn into managing a large company. Small business also creates the most new products. A large company wouldn’t risk a new product. They keep making their current products better. Small business takes that risk in hopes of getting larger. Small businesses provide jobs and opportunities.
Black Friday does take away from these businesses because they don’t have enough money to advertise. It isn’t fair to them because they do help the economy. Every little bit helps. Weather its donating to a local shelter or proving a job for someone those us unemployed. Small business deserves Small Business Saturday.
article: “2.2 million jobless Americans face aid cutoff”
pawprint: cau356
http://www.usatoday.com/story/money/business/2013/12/01/emergency-unemployment-compensation-euc-deadline/3773049/
This article is about how a federal aid program for the long-term unemployed could end in December [while the unemployment rate remains above 7%.] Highlighting that 1.3 million jobless workers could lose benefits by Jan. 1 and 850,000 more by March 31.
This Emergency benefits’ expiration would detract from growth elsewhere in economy.
This relates to when the economy reached a relative stability in 1950 because the government established unemployment insurance and other government transfer programs that provide funds to the unemployed.
With no renewal of this program the recession will not come to an end but further prosper. because If the economy is in recession aggregate demand is decreased and there is deflation and higher unemployment. Eventually economy will automatically have SRAS curve shift right (increase) and there will be no more recession as economy returns to equilibrium.
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