The CVS drugstore chain's decision to stop selling tobacco products drew praise as an important public health step. But, we wondered, how many people buy cigarettes at drugstores? Not as many as we thought.
Free checking used to be almost ubiquitous at American banks. But those days are over.
In 2009, more than 80 percent of banks offered free checking. Now, it’s down to around 60 percent, according to economist Michael Moebs, who runs a research firm called Moebs Services. He surveyed almost 2,900 banks about free checking.
"We’ve seen probably the steepest decline that I’ve ever seen, in any major financial service, ever," says Moebs.
Checking accounts are almost never profitable for big banks. And new regulations have driven up costs for the banks.
"The cost to operate a checking account is very expensive. On average, it’s about $380 a year," says Moebs.
The big banks did the math. Moebs says: "They decided to get out of free checking because they couldn’t make any money in it."
Well, it is called free checking.
"Free checking is a bit of a misnomer," says Bob Meara, an analyst with the research firm Celent. He says banks have used free checking as a kind of loss-leader to get customers in the door and sell them other services.
But since the Great Recession, customers haven’t been buying as many services. And new regulations have limited bank profits on things like credit cards and debit cards.
"Banks responded by increasing the per incident fees. So, overdraft fees grew to over $30 an incident," says Meara.
Free-checking still exists. But it helps to be a preferred customer.
"Banks will position lower costs – ostensibly ‘free-checking’ – for consumers who don’t consume the more expensive aspects of service delivery," says Meara. "And charge other consumers a bit more who represent a greater cost."
If you want to avoid some fees, you might try a community bank or a credit union. Their cost structure is lower than the big banks, so they are more likely to offer you free-checking.
Green Mountain Coffee's Keurig machine allows users to make one cup of coffee at a time. A new product from Green Mountain, due out in the next year or so, will do the same for cold beverages — including Coca-Cola, thanks to a new partnership announced this week.
But how eager are we to make our own soda pop? What's in it for us?
Variety and personalization, says Bob Goldin, from the food-industry consulting groupTechnomic. He says that's one of the things that makes Starbucks so successful with coffee. Skim or whole milk? What roast? Half-caff?
"And double-shot, triple-shot, and then you probably have 10 to 15 different kinds of syrups," he says. "So this is higher math, but the number of options is almost mind-boggling."
Coke offers this now with "freestyle" vending machines in some fast-food restaurants. They allow you to dispense yourself a custom cocktail—so, if mixing Mr. Pibb and Mello Yello is your thing, you can knock yourself out. The company says that stores with those machines report higher sales. So, OK, variety.
Gary Hemphill, director of research for Beverage Marketing Corporation, adds convenience to the list. Maybe. Instead of lugging home cases of cans or two-liters from the store, consumers can stock up on pods.
"You get the ability to keep basically an endless supply," he says. "And then you don’t have to worry about recycling the containers."
These don’t sound like compelling reasons for people to buy a soda-making machine to Harry Balzer, who watches consumer behavior—like, the foods and drinks we consume—for NPD.
"This has the feel of 'Why would I want to make this, again? It better save me an awful lot of money,'" says Balzer.
He thinks the main reason people might buy this machine is what motivated people to buy bread machines 20 years ago.
"Which, to me, was: We just have no more gifts to give our parents," he says. "This kind of has the same feel to me. We have no more gifts to give anybody, so: Give 'em a soda maker!"
And in a few years, they can toss it in the attic.
The monthly jobs report comes out tomorrow. So we’ll get a better view of who’s employed, and who’s not.
But some prominent movers and shakers in the finance world, including outgoing PIMCO CEO Mohammed El Erian, are suggesting we ought to give less weight to that employment rate number.
DETHRONING KING INDICATOR?
Why might the long reigning king of economic indicators need to be dethroned?
Well, many people in finance focus on the unemployment rate because of the Federal Reserve. The Fed has said (...in so many words...), "the economy’s got issues, we’re not going to even think about pushing up interest rates in the economy until the unemployment rate gets down to 6.5 percent."
Trouble is, we’re near that threshold.
"But we’re not there for the right reasons," says Kevin Logan, Chief U.S. Economist with HSBC. The unemployment rate is almost down to 6.5%, but the economy has still got problems.
For example, one reason the unemployment rate is going down is because a lot of people are giving up looking for work. Another reason is that a lot of baby boomers are retiring.
"It’s very hard to make a rule that’s good for all time," says Neal Soss, Chief Economist with Credit Suisse. "Mothers can do that, but you can’t do it when you’re managing an economy of 350 million Americans."
As a result, Soss says, the Fed is giving the unemployment rate "much less weight, and I think that means it’s less consequential for financial markets."
He adds that the unemployment rate and other indicators like the labor force participation rate suffer from "statistical problems." The unemployment rate and labor force participation rate are calculated "as if all the people who are in the older, retiring age brackets were still effectively available for work," says Soss. "We really ought to give them less weight as a gauge of economic performance," at least without the proper context.
SO WHAT SHOULD WE BE LOOKING AT?
So what should we be looking at – not just for a glimpse into Fed policy, but for a look at how the economy’s doing?
Well, really, the answer is.... everything else in the jobs report. Because there is a LOT of stuff.
"The unemployment rate might give an unintentionally optimistic view for people who are not paying attention to all of the other statistics produced in these reports," says Gary Burtless, a labor economist with the Brookings Institution.
How many people are involuntarily working short hours? What is the labor participation rate compared to what we would expect at full employment? How much has the employment rate returned to the rate we would predict, given how old the population is?
Total hours worked and data on wages are also included in the jobs report.
"Those are numbers that are very easy to tease out and they give us a complete indication of the health of the job market."
Credit Suisse’s Soss and HSBC’s Logan both agree that fully fleshed out numbers are still useful to the Fed, and to understanding the economy.
Both say the Fed, with the unemployment picture still recovering very slow, may focus on inflation as an important threshold for policy action. However, inflation is a long-term, slow-moving indicator, and not as reflective of instantaneous conditions in the economy.
YEAH, YEAH HOLISTIC VIEW, LOTS OF FACTORS, I GET IT.
NOW WHAT’S THE ONE BEST NUMBER WE SHOULD LOOK FOR?
If you had to pick one number, it’d be the payroll numbers – that’s how many people are employed - full time, part time, all of it.
"The reason for that," says HSBC’s Logan, "is that things are produced when more people work, the economy grows when more people work; payroll won’t grow if the economy is stagnant."
"The report in its entirety will continue to be very important," says Logan. "The payroll data, hours data, wage data, will continue to drive market opinion," as well as Fed policy.
SO WHAT ARE THE JOBS NUMBERS – ALL OF THEM – SAYING?
Well we haven’t seen tomorrow’s jobs report, but right now: "We’re seeing a very weak recovery," says Michael Farr, president and chief investment officer at investment firm Farr Miller & Washington. "We’ve seen a huge surge in part-time jobs versus full-time jobs," he says.
Part time jobs are better than no jobs, but with part time employees, employers don’t have to pay out benefits or pay as much money.
"It’s not as healthy for the economy because those folks don’t earn as much, they don’t have as much money in their hands, they don’t buy things, and so manufacturers don’t have to make as much."
Through November things were looking up, but December fell far below everyone’s expectations. Payroll increased by 74,000 people – analysts were expecting an increase of 200,000.
The big question is whether December’s numbers were just a weird quirk of weather, or statistical sampling, or if they reflect a trend.
Tomorrow’s numbers will give us a clue.
The U.S. needs to start treating the Internet like electricity or railroads, law professor and author Susan Crawford says. "We can't create a level playing field for all Americans or indeed compete on the world stage without having some form of government involvement," she says.
The former head of the Federal Energy Regulatory Commission continues to warn about the security of the nation's power grid. Last spring, shots fired at transformers in San Jose, Calif., and caused extensive damage.
The House speaker said there was a trust deficit between the GOP and President Obama, so immigration reform would be a "difficult" issue to move on this year.
The impact that formed the 100-foot-diameter scar threw Martian rock and soil more than nine miles across the surface.