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Get Used To a Bipolar Economy
Tweet Share on Facebook October 29, 2009 Comment (6)Just a few months ago, we were gloomy all the time. It was easier that way.
Now we’re enduring frequent mood swings as the economy teases us with recovery, then smacks down our hopes. There was a bout of euphoria when we learned that the economy grew 3.5 percent in the third quarter, the first period in more than a year when GDP didn’t shrink. Growth was greater than expected, even on par with what you’d see in a normal, healthy economy. Yay! Life is good!
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Why More Competition Won’t Fix Healthcare
Tweet Share on Facebook October 29, 2009 Comment (51)Vigorous competition. It's the go-to cure for free-market ailments. When the consumer's getting the shaft, just open up the market, bring in more providers, and watch prices fall.
A lot of the time, it works. Car buyers get terrific deals and great quality because a dozen automakers compete ruthlessly to offer the best value. Electronics consistently get cheaper, while features improve, thanks to the proliferation of low-cost Chinese manufacturers. And the Internet has allowed anybody with an eBay account to compete with the biggest retailers, lowering prices on thousands of products.
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Stuff We Spend More On In A Recession
Tweet Share on Facebook October 26, 2009 CommentFox Business recently invited me onto its noontime Web show to discuss my recent story on 10 products that boomed during the recession. Here's the video:
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9 Signs of America in Decline
Tweet Share on Facebook October 26, 2009 Comment (502)The sky isn't falling, exactly. America isn't on a fast track to irrelevance. Even in a state of total neglect, we could probably shamble along as a disheveled superpower for a few more decades.
But all empires end, and the warning signs of American decline seem to be blinking more consistently. In the latest annual "prosperity index" published by the Legatum Institute, a London-based research firm, the United States ranks as the ninth most prosperous country in the world. That's five notches lower than last year, when America ranked No. 4. The drop might seem inconsequential, especially in the midst of a grueling recession—except that most of the world has endured the same recession, and other countries are bouncing back faster.
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How Gary Vaynerchuk Crushes It
Tweet Share on Facebook October 23, 2009 Comment (4)I had a lively sit-down chat recently with Gary Vaynerchuk, founder of WineLibraryTV.com and author of the new bestseller Crush It: Why Now Is The Time To Cash In On Your Passion. Vaynerchuk is one of the most energetic folks I've ever met, and he has some compelling ideas about how to use the Web to indulge your avocations. Check out this video of the interview on Hulu:
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The Last of the Wall Street Pay Cuts
Tweet Share on Facebook October 22, 2009 Comment (8)The Obama administration is finally getting tough—on corporate invalids.
The government's "pay czar," Kenneth Feinberg, is coming down hard on the seven firms under his jurisdiction, ordering steep pay cuts for about 175 top executives. The brass at AIG, Citigroup, Bank of America, GMAC, General Motors, Chrysler, and Chrysler Financial will have to live without the nine-digit paychecks Wall Street's titans have become accustomed to. Some won't even make eight figures. And the majority of their pay will come in the form of stock that can be cashed in only after the companies have met long-term performance targets. Until that happens, the impoverished execs might have to get by on meager salaries that might not even reach $1 million.
[See 10 gaffes by doomed CEOs.]
So hyperventilate about the government meddling in the private sector, and then consider that every one of these firms would have been vaporized if not for government intervention. American taxpayers effectively own AIG and General Motors, with major stakes in the other firms. Together, all seven firms have devoured nearly $300 billion worth of bailout funds. They've gobbled up the majority of the TARP money in the government's corporate rehab program. None of these firms have said when they will pay back those bailout funds, and some may never pay it back.
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The Healthcare-Reform Hypocrisy Sweepstakes
Tweet Share on Facebook October 21, 2009 Comment (29)Most people with a stake in the U.S. healthcare system agree there are deep problems that must be fixed. As long as somebody else pays for it.
Virtually all of the problems reformers are struggling to solve—relatively poor health outcomes, medical bankruptcies, nearly 50 million uninsured—derive from one überproblem: Healthcare in America costs too much. So as Congress finally gets close to producing actual reform legislation that could become law, just about every interest group with a Washington lobbyist is fighting intensely to make sure it doesn't get stuck with the bill.
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10 Products That Boomed During the Recession
Tweet Share on Facebook October 20, 2009 Comment (66)Behold the damage the recession has wrought on the consumer economy: Retailers and automakers have gone bankrupt, restaurants have closed, and malls have become ghost towns. Most businesses dependent on consumer spending, from clothing to computers to appliances, have felt the pinch.
[Slide Show: 10 Products That Boomed During the Recession.]
But some consumer-product companies have benefited from the recession, usually because they sell the kind of stuff that helps people save money. Other companies have capitalized on timely technology or latched on to powerful trends that defy the recession. To identify some of these recession winners, I analyzed data provided by financial research firm Capital IQ, a unit of Standard & Poor's, to see which consumer-products firms have gained revenue and market share since the recession began near the end of 2007. Then I researched earnings reports and other sources to see which products have fueled each company's growth.
For many of these companies, any increase in revenue over the past two years is a nifty accomplishment, since overall sales of household goods have fallen by more than 30 percent, according to Capital IQ. And sales of supposedly recessionproof "staple" items like food, beverages, and personal products have barely risen. So firms that have significantly outpaced the rest of their industry deserve special attention.
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Why Stocks Are Surging as Jobs Disappear
Tweet Share on Facebook October 15, 2009 Comment (85)Stocks are up. Jobs are down. So if you're an investor you're enjoying a vibrant recovery and if you're a worker it still feels like a grinding recession.
Since bottoming out in March, the stock market has soared by about 65 percent, one of the most awesome rallies in market history. The Dow Jones Industrial Average cracking 10,000 may not be strategically significant, but it's a psychological breakthrough that's worth cheering after the demoralizing crash that preceded it.
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7 Ways to Survive the Jobless Recovery
Tweet Share on Facebook October 15, 2009 Comment (129)Maybe the pessimists are wrong. Maybe the so-called economic recovery will gather steam and turn out to be robust. Maybe prosperity is about to leap from its hiding place and shout, "Hey! I'm back!"
But planning your future around maybes leaves little margin for error, and it looks as if the Great Recession is morphing into the Great Hangover. Even though economists believe the recession is technically over, the unemployment rate is likely to hover near 10 percent or higher well into 2010. Businesses have slashed costs, but with sales still weak, they're in no mood to start hiring. The Congressional Budget Office predicts that the unemployment rate will stay above average until 2014 at least. Allen Sinai, an economist at Decision Economics, foresees a "difficult, probably crisis situation in the U.S. labor market that goes beyond the recession and any fledgling recovery."
