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How Japan's Quake Will Rattle the World Economy
Tweet Share on Facebook March 14, 2011 Comment (5)It's obviously a humanitarian disaster, with thousands dead, many more homeless, whole cities demolished, and Japan reeling after sustaining its worst earthquake ever. It's also a major economic disruption that comes amidst instability in the Middle East, spiking oil prices, fears of global inflation, prolonged damage from the 2008 financial crisis, and deepening worries over whether a fledgling global recovery will continue or stall.
[See 10 industries that will hire the most in 2011.]
Japan's economy will clearly suffer, since the earthquake and subsequent tsunami in northern Japan hit a region that's home to a variety of factories and important ports. And the ongoing battle to prevent catastrophic damage at three nuclear facilities is a high-stakes international cliffhanger. But barring any further disasters, Japan seems poised to withstand the damage, rebuild, and recover. Though it's still early and much could change, here's some handicapping on the likely impact of the earthquake worldwide:
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Why Companies Are Still Very Nervous
Tweet Share on Facebook March 10, 2011 Comment (4)As economic recoveries go, this one's a dud. There are still seven million fewer jobs in the economy than there were at the end of 2007, when the recession began. And although the recession officially ended in the middle of 2009, more than one-third of Americans feel the downturn continues, while nearly half say they're worse off than they were two years ago. One of the biggest problems is that companies are hiring very slowly, even though corporate profits have been remarkably strong.
[See 10 industries that will hire the most in 2011.]
To help gauge what's going on, I spoke recently with Patrick Byrne, CEO of Overstock.com, the online retailer with over $1 billion in annual sales. Here are his thoughts on the durability of the recovery, the outlook for jobs, and what Americans ought to start doing differently:
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How Libya Reflects America's Prosperity Problem
Tweet Share on Facebook March 9, 2011 Comment (1)During the Civil War, the prominent critic James Russell Lowell described President Abraham Lincoln as "so gently guiding public sentiment that he seems to follow it." Then as now, there were firebrands who felt the president was far too timid. But Lowell, an abolitionist who himself wanted harsher action against the southern secessionists, admired Lincoln's reserve. "Perhaps none of our presidents since Washington has stood so firm in the confidence of the people," he wrote, as Carl Sandburg recounted in his classic Lincoln biography. Lincoln's thoughtful restraint made him "the incarnate common-sense of the people."
These days, a deft and subtle leadership style might be appreciated in hindsight, but rarely in real-time. Americans prefer blunt-spoken deciders. Keeping your own counsel went out of fashion when cable news began to demand instant action from politicians. So now we have many critics of President Obama who demand some kind of American intervention in Libya, whose megalomaniacal dictator, Moammar Gadhafi, is locked in a bloody standoff with rebels seeking to end his 41-year reign.
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10 Industries That Will Shed Jobs in 2011
Tweet Share on Facebook March 8, 2011 Comment (2)The recession's over, and the recovery's on—except in a handful of beleaguered industries that may never climb out of the doldrums.
After many fits and starts, the economy is finally creating jobs again, with gains averaging 125,000 new jobs per month since late last year. That pace is likely to intensify throughout 2011, bringing relief to some of America's 14 million unemployed and improving the job security of many others. But the improvements will bypass workers in a variety of industries that are either shrinking for good or likely to be the very last to feel the uplift of a slow recovery.
To determine which industries will continue to shrink in 2011, I used data from research firm IBISWorld to measure projected job growth in 2011 for nearly 700 industries and sub-industries. Unlike government or industry data that measures employment levels in the past, IBISWorld uses revenue forecasts, productivity data, and the expertise of analysts to estimate job changes in the future. That kind of outlook helps job seekers target industries where there are likely to be jobs, while avoiding those where the pickings are slim.
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10 Industries That Will Hire the Most in 2011
Tweet Share on Facebook March 8, 2011 Comment (13)Millions of Americans want to know: Where are the jobs?
Finally, some answers are emerging. There are still about 7.5 million fewer jobs than there were at the end of 2007, when the Great Recession began. That's a big hole, and it could take years before employment returns to "normal" levels of five or six years ago. But we're turning a corner. Over the last few months, employers have added 125,000 jobs per month on average, and the trend is strengthening. That's enough job growth to start lowering the unemployment rate, which has fallen from 9.8 percent last November to 8.9 percent now. Companies need new people, and anxious CEOs are finally becoming optimistic enough to give hiring managers a green light.
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Who Inflation Hurts the Most
Tweet Share on Facebook March 4, 2011 Comment (11)It ought to be a simple question to answer: Is inflation a problem or not?
It's anything but simple, however. Federal Reserve chairman Ben Bernanke says he's not terribly concerned about inflation, even hinting that he wouldn't mind a bit more of it. The Fed's job is to keep the economy healthy, which is why Bernanke et. al. focus on "core" inflation, which excludes energy and food. That might seem senseless to ordinary people who need gas and milk to survive, but focusing on core inflation lets the Fed focus on factors it has some control over, like whether wages are rising too fast, which could destabilize the economy. Energy and food prices tend to be driven by external factors like weather, overseas demand, and turmoil in the Middle East, which the Fed can't do much about.
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Why $4 Gas Need Not Wreck Your Budget
Tweet Share on Facebook March 2, 2011 Comment (20)It's coming.
Gas prices are approaching a nationwide average of $3.50 per gallon, and there's a good chance they'll pass the pivotal $4 mark sometime over the next few months. Upheaval in the Middle East is one obvious factor, since it's boosted oil prices by about $15 over the last month, to about $100 per barrel. Strong economies in China, India, and other fast-growing countries ought to keep demand for oil robust. And gas prices usually rise in the spring and summer anyway, when drivers log more miles, boosting demand.
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12 New Ways To Outsmart Your Bank
Tweet Share on Facebook March 1, 2011 Comment (9)Most people don't read the bank notices that pile up in their mailbox, with their inscrutable legalese and migraine-inducing fine print. But there's been some important news in those envelopes lately.
Banks are undergoing the biggest changes in decades, and the majority of their customers will feel the impact. Many of the reforms are coming from Washington, through new regulations meant to level the playing field for consumers and address some of the problems that led to the 2008 financial crisis. The 2009 CARD Act toughened the rules under which credit-card issuers can raise interest rates and charge a variety of fees. The Dodd-Frank financial reform law passed in 2010 included rules likely to make banking less risky but also less profitable. Another issue under debate in Washington could change the way banks, retailers, and consumers use debit cards. And banks have implemented some reforms of their own, to cope with bad loans, a punishing economy, and the changing needs of consumers.
Rick Newman
The global economy is mysterious, even scary. Chief Business Correspondent Rick Newman connects the dots. In addition to his writing for U.S. News, Rick is the co-author of two books: Firefight: Inside the Battle to Save the Pentagon on 9/11, and Bury Us Upside Down: The Misty Pilots and the Secret Battle for the Ho Chi Minh Trail.
Read Rick's latest blog entries here.
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