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McDonald's makes a move on moms

Fri, 2015-07-31 01:56
5 years

That's how long negotiations over the Trans-Pacific Partnership have dragged on, as negotiators have tried to work out the details of various sticking points, like sugar, dairy and state-owned enterprises. What has been called the final round of negotiations will wrap up Friday in Maui, Hawaii.

100

That's how many moms will be selected by McDonald's Japan to tour its facilities. Some of the winners will even receive trips to the U.S. and Thailand. It's part of a larger effort by the company to combat a dramatic drop in business — the hope is to gain some positive PR from the mothers' perspective, which is "watchful, critical and honest at the same time," in the words of CEO Sarah Casanova. As the Wall Street Journal reports, June saw a 23 percent drop in same-store sales from the same month a year earlier.

30 percent

In some cases, that's how much the cost of a Gibson guitar has increased with newer models in recent years. Part of the reason for the cost increase is a self-tuning mechanism — push a button, and your guitar automatically tunes itself. But some instrumentalists argue that it's an unnecessary technology, as smartphone apps allow for precise tuning without the extra gadget.

96 percent

That's the fatality rate of batrachochytrium salamandrivorans, a fungus, among wildfire salamanders. The fungus has decreased populations of frogs, newts and salamanders around the world, and in some cases, is responsible for the wiping out entire species. As UPI reports, scientists in California have now asked for a ban on importing salamanders until a plan is in place to address the spread of the fungus.

$60 million

That's how much the Puerto Rican government is due to repay on Monday to bondholders — it reportedly is preparing statements saying it will not be able to make the payment. One particular difficulty for the economy of the commonwealth is that it lacks an industry outside of tourism.

Silicon Tally: 99 red internet balloons

Fri, 2015-07-31 01:53

It's time for Silicon Tally! How well have you kept up with the week in tech news? 

This week, we're joined by Aaron Harris, a partner at Y Combinator and host of Startup School Radio.

Click the media player above to play along.

The obsession with tech-company growth

Thu, 2015-07-30 13:00

Facebook is out with second quarter earnings, and the company reported steady growth in revenue and its user base. Twitter and Yelp, on the other hand, disappointed investors with growth numbers.

Not to be too dramatic about it, but if you're a tech company, it's pretty much grow or die.

"Growth is actually the most important thing, especially for companies that are small," says Kara Sprague, a partner at McKinsey & Company, and co-author of a paper titled "Grow Fast or Die Slow." 

By small, she means under $4 billion a year in revenue. (Twitter, at less than $2 billion, still counts as small.)

By growth, she means explosive growth.

"If you're a health care company and you're achieving 20 percent growth, everyone would be ecstatic," says Sprague, but if you're a tech company, 20 percent growth could mean it's time to call the undertaker. "That is actually a low number. It means the company won't be around in several years."

If a tech company does manage to survive to corporate adulthood, like 11-year old Facebook, astronomical growth gets harder and harder.

Analysts like Alan Pelz-Sharpe, from 451 Research, says investor focus really should be on other things. "Iit should be on revenue and profit, but it isn't."

Instead, the obsession with a tech company's growth sticks around. It helps convey relevance to investors, which means companies keep throwing money at new users and new markets, worrying less about the bottom line today in order to stay alive tomorrow.

Do you really need a license to do your job?

Thu, 2015-07-30 13:00

Nivea Earl has been doing African-style hair braiding for the past 16 years.

“So it’s just kind of like a love and a passion for me,” she says.

Earl decided to open a hair braiding shop in Jacksonville, Arkansas, three years ago. 

She soon learned that she  first needed to go to school to become a licensed cosmetologist. Trained, not in braiding, but in cutting, dyeing and washing hair. Even though, as a hair braider, she wouldn’t do any of those things.

“I would have had to have gone to cosmetology school, to pay thousands of dollars for something that they do not even teach,” she says.

It’s not just hair braiding. States are requiring licenses for more and more jobs. Florists, security guards — even dog trainers can need licenses.

“In the 1950s, about 5 percent of the workforce were licensed at the state level," says Morris Kleiner, an economist at the University of Minnesota and visiting scholar at the Upjohn Institute for Employment Research. "That number has grown to 25 percent.”

The White House has issued a report that says the increased licensing requirements drive up prices. And it’s harder for workers to move because licensing laws vary from state to state, and states don’t recognize each other’s licenses. Kleiner, who served as a consultant on the White House report, says voluntary certification would work better than mandatory licensing. The certification could be done by states or trade associations. 

But that has its own pitfalls.

“Some of these organizations are really looking at certification programs as a source of revenue for their organization," says Kim Weeden, a professor of sociology at Cornell University.

Weeden says there’s a whole industry devoted to selling certifications, and nobody’s regulating it.

There should be a lane for that

Thu, 2015-07-30 13:00

Science once again validates that which you already knew, namely that people walking down the street with their noses buried in their smartphones are a giant pain in the collective patootie.

Students at the University of Bath over in the U.K. did the research, according to the Huffington Post. 

Here's the deal: It's not that people are paying more attention to their phones than where they're going run into you, it's that they slow down. 

They don't get the heck out of the way of people who do know where they're going, and so gum up the whole sidewalk.

Mea culpa, by the way. And c'mon, you do it too, right?

 

 

'Tis the season to review winter's GDP

Thu, 2015-07-30 13:00

The U.S. economy grew 2.3 percent in the second quarter. But that wasn't the most interesting item in Thursday's quarterly update on the economy from the Commerce Department.

It turns out that America’s gross domestic product grew at 0.6 percent in the first quarter. Previously, Commerce had said the economy shrank 0.2 percent. The difference is basically in how the government made seasonal adjustments to those numbers.

To understand how this works, we start with a guy who sells diamond rings.

Break GDP down, all the way down, and you have regular people buying and selling stuff, like Bob Capace, who owns Worthington Jewelers in central Ohio. He knows something about seasonality.

“Normally we’re gonna do about double in December what we would do in January,” he says.

He doesn’t panic every January when his jewelry business drops by half, because he knows sales peak for the holidays. He adjusts how he views the numbers so he’s comparing apples to apples. Economists do something similar looking at economic activity, which also slows in winter.

“We don’t want to learn from our data that winter just happened, because we already know that,” says Justin Wolfers, senior fellow at the Peterson Institute for International Economics. “We want to know, relative to other winters, how well is the economy doing. That’s what seasonal adjustment does.”

Wolfers and others have recently been asking questions about consistently weak first quarter numbers.

“Over the last several years, we’ve noticed that estimates seemed to be underestimating the first quarter GDP regularly,” says Beth Ann Bovino, U.S. Chief Economist for Standard & Poor's.

This is where it’s important to remember that GDP is not just cold numbers cranked out by machine. Humans tell the computers how to crunch the numbers. One of them is Nicole Mayerhauser, chief of the National Income and Wealth Division at the Commerce Department’s Bureau of Economic Analysis, where the GDP report comes from.

“We wanted to dig into those patterns and start to see if we could find anything,” Mayerhauser says.

It turns out that they did. Exactly how the government economists reacted to what they found is complicated and technical, but a key change is how they account for defense spending. Today’s adjusted GDP numbers are among the highest profile new moves in the maddening quest to answer the question: How is the economy doing?

“It’s a continuation of an approach that we’re constantly pursuing, which is making sure we are seasonally adjusting the data as best we can,” Mayerhauser adds.

Whether you’re selling engagement rings or measuring the whole economy, one needs to look at the data carefully, so it’s clear when it’s time to freak out.

Mark Garrison: Break GDP down, and I mean all the way down, and you have regular people, buying and selling stuff. Bob Capace owns Worthington Jewelers in central Ohio.

Bob Capace: Normally we’re gonna do about double in December what we would do in January.

Of course he doesn’t panic every January when his jewelry business drops, because he knows sales peak for the holidays. He adjusts so he’s comparing apples to apples. Economists do something similar looking at economic activity, which also slows in winter. Peterson Institute senior fellow Justin Wolfers explains.

Justin Wolfers: We want to know, relative to other winters, how well is the economy doing. That’s what seasonal adjustment does.

Wolfers and others have recently been asking questions about consistently weak first quarter numbers. Beth Ann Bovino is U.S. Chief Economist for Standard & Poor's.

Beth Ann Bovino: Over the last several years, we’ve noticed that estimates seemed to be underestimating the first quarter GDP regularly.

This is where it’s important to remember that GDP is not just cold numbers cranked out by machine. Humans tell the computers how to crunch the numbers. One of them is Nicole Mayerhauser at the Commerce Department’s Bureau of Economic Analysis, which puts out the GDP.

Nicole Mayerhauser: We wanted to dig into those patterns and start to see if we could find anything.

They did. How they reacted is complicated, but a key change is how they account for defense spending. Today’s adjusted numbers are among the highest profile new moves in the maddening quest to answer the question: how are we doing?

Nicole Mayerhauser: It’s a continuation of an approach that we’re constantly pursuing, which is making sure we are seasonally adjusting the data as best we can.

Whether you’re selling engagement rings or measuring the whole economy, you need to look at your data carefully, so you know when to freak out. In New York, I'm Mark Garrison, for Marketplace.

Migrants attempt to jump trains from France to Britain

Thu, 2015-07-30 12:46

The European migrant crisis seems to have come to a head in Calais, France. As many as 2,000 people each night are trying to get through the Channel Tunnel to England. The BBC's Zoe Conway talked with some of the migrants and camped out near the Eurotunnel freight terminal. 

Click the media player above to hear her interview with migrants.

 

 

Older workers head for retirement — and don't retire

Thu, 2015-07-30 12:32

Before the recession, economists predicted a massive wave of retirements would begin in the 2010s, as the baby boomer generation (those born between 1946-1964) started hitting 65.

And it is certainly the case that some boomers are retiring. But not in the numbers, or at the pace, that economists earlier predicted. In fact, the labor force participation rate for people 55 and older (at 39.9 percent in June 2015, according to the latest data from the Bureau of Labor Statistics) is near its highest level in several decades, up by approximately one-third since 1990.

A recent report by AARP crunching survey data of older workers finds that nearly half (44 percent) are now planning to work part-time after they reach retirement age, and one-third (33 percent) are delaying the age at which they expect retire. Factors driving these decisions include many older workers’ and retirees’ financial losses during and after the recession, and their financial concerns going forward, especially in light of increasing life-expectancy.

Many older Americans have little choice in the matter and simply need to continue working as long as they can, if they can. The same AARP report finds that nearly half of Americans 50 and over have $25,000 or less saved for retirement. The Economic Policy Institute, which researches labor-force trends, estimates that there are 57,000 men 70 to 74, and 69,000 women 75 and up, who are currently working but would not be in the workforce today if the recession hadn’t hit their savings and earnings so hard.

This generation of would-be retirees is the Woodstock generation, and at 79, attorney Martin Cramer precisely fits the bill. He was at Woodstock; in 1969 he was working as a young associate for the New York law firm that represented the festival promoters and some of the artists who took the stage that legendary weekend.

Courtesy:AARP

“I remember clearly, [New York] Lt. Gov. Malcolm Wilson was in charge, and he wanted to send in the National Guard in uniform,” Cramer remembers. "And I said, 33-year-old me, I said to his chief of staff, 'If he does that, I’ll sue all you guys, and you’ll be responsible for the biggest riot in the state.'”

Cramer was on vacation with his wife, kids and grandkids on a recent July weekend at his country house in upstate New York. It’s a house he built himself but can no longer work on because of arthritis in his hands. He gave up commercial litigation several years ago and no longer goes into court — he found that his hearing loss was compromising his practice.

Still, "vacation" is real for Cramer. He continues to work three to four days a week in New Jersey, handling wills, trusts and estates for a wide clientele that has been with him for decades.

“I realize I do it because I enjoy it,” Cramer says. “I need the intellectual stimulation. I need something to keep me actively occupied.”

Economist Matthew Rutledge at the Boston College Center for Retirement Research says this trend is widespread.

“The labor force participation rate for people 55  and older is basically as high as we’ve seen in a couple generations,” Rutledge says. “People used to work a long time, back when pensions and Social Security were more generous. Then, for a long time, people were retiring in their early 60s. Now it’s more like 64 or 65, especially for men, and women are catching up as well.

“As life expectancy increases, so are retirement ages,” Rutledge continues. “So people are responding to the fact that they’re going to live longer and therefore they have more years to cover. And because they’re now healthier, each one of those years is a little bit easier to work.”

The recession and slow recovery mean many seniors have less to work with than they anticipated. Cramer and his wife lost a bundle in the Bernie Madoff scandal. Others have had more mundane setbacks.

“Social Security benefits aren’t going to be replacing their income at the rates that they used to in previous generations,” Rutledge says. “People’s pensions aren’t as generous as they used to be in all likelihood, people just haven’t saved all that much, housing values have fallen, as we saw during the recession.”

Bill Saphir, 71, of Portland, Oregon, can relate to this. In 2008, he was downsized out of a senior management job in health care. Now, he’s trying to make it as an independent consultant.

“There’s creative juices that I still have to work out, and that means working,” Saphir says. “I had a small cushion, and it is running down. My wife wants me to retire. But I really can’t— we can’t afford it.”

But if Martin Cramer keeps doing wills and estates into his 80s, if Bill Saphir is still a health care consultant well into his 70s, if thousands of other older workers decide to delay retirement, won’t that crowd out younger people coming up in the workforce?

Economist Matthew Rutledge calls this idea the "the lump of labor" fallacy: “There’s only a certain amount of jobs out there, and if an old person’s holding that job that means a young person isn’t.”

Rutledge says economic studies tend to show the opposite is true. “Old people working is good for the economy,” he says. “When old people are working instead of being retired, they have a lot more money to spend.”

Shake Shack's rise from burger stand to billions

Thu, 2015-07-30 12:10

It started as a way to raise money for a public park. When the Madison Square Park Conservancy debuted its first art installation “I ♥ Taxi,” two restaurateurs from Michelin-starred Eleven Madison Park decided to open the hot dog stand that would become Shake Shack. 

Randy Garutti, Shake Shack's CEO, says the food was immediately popular. "All of a sudden, 50 people lined up, 100 people lined up, the hot dog cart became this unbelievable thing in New York," says Garutti. "For three years, we ran that hot dog cart, as the park started to come back to life — all the money we made went to the park — and the city said to us, 'Why don't we create a little kiosk over here, 400 square feet?' And we named it Shake Shack, thinking we'd sell a couple hot dogs."

Garutti and Shake Shack co-founder sold way more than a couple hot dogs, and when Shake Shack introduced its ShackBurger to that first kiosk in 2004, a legend was born. Customers have been known to wait in long, snaking lines for close to an hour waiting for burgers. And Shake Shack has expanded from a hole in the wall into 70 worldwide locations, with outposts in the U.K., Middle East and Russia.

Courtesy:Atlas/Quartz

This growth shows no signs of slowing. This year Shake Shack made its initial public offering on the New York Stock Exchange and was valued at $21 per share. That number has tripled since then, with even higher peaks in the interim. The company says it plans to build only 450 locations, but investors are already predicting bigger expansion. 

Already, a single Shake Shack location is worth $50 million, compared to $10 million for a Chipotle, or $3 million for McDonald's. Shake Shack's high-quality ingredients and fast-casual (Garutti prefers "fine casual") atmosphere put it in line with current trends in dining. 

"It's all about the experience," Garutti says, "every one of us had that roadside burger stand in our home town. What was that about? It was about going there with your mom, with your date, with your buddies ... for every reason you would go to that place, it was the community gathering place. That's what Shake Shack gave the world back, and if you look at what fast food did over 50 years, they actually did the opposite."

Garutti says that it's the Shake Shack team's backgrounds that makes the restaurant so unique. "Our culinary director came from Gramercy Tavern. Some of our ops team are fine dining guys," Garutti says, "and we combine that with people who've worked in much bigger and sometimes public companies ... that tension is what makes Shake Shack what it is."

Transforming from a fundraising project for the park into the valuable franchise that the New York Times dubbed "the anti-chain-chain" wasn't part of the original plan for Garutti and his team, but as Shake Shack's popularity soared, transitioning gracefully into its role as a chain became crucial to the restaurant's success. 

"Chain can sometimes be a four letter word, and the way we've changed that is to say: Why couldn't every link in the chain make the chain actually stronger, and why couldn't every link be a little different, and be thoughtful and be built for that community, not happen to its community," Garutti says. "That's what we've tried to do and that's what makes a chain of us even stronger every time we add one. "

The original Shake Shack in Madison Square Park, New York.

Tobin Low/Marketplace

Garutti says as long as there's demand, Shake Shack will keep opening new locations, but he insists he's capping things at 450, for the sake of his own team. Regardless of how many Shake Shacks there are, it's important to Garutti not to dilute the brand, to continue to be a gathering place known for quality and cool. 

Garutti is known for saying "the bigger we get, the smaller we need to act." That's why Shake Shack uses high-quality ingredients, collaborating with local companies like Mast Brothers ("the coolest, most innovative chocolate makers in Brooklyn," says Garutti) and Kreuz Market in Austin.   

"The next generation of millennials and younger care where their food's coming from. They require more, and they will only be a part of a brand whose ethos we share," Garutti says, "those are the people who are choosing to a place like Shake Shack every day."

"We grew up in Silicon Alley in New York City when Twitter, Facebook, everything was growing and happening, and you think about it now, wherever I go, I want to take out my phone and I want to share where I am, all the time, with everyone in the world.... People are proud to say, 'I'm at Shake Shack today.'"

50 years of Medicare, by the numbers

Thu, 2015-07-30 11:22

President Lyndon B. Johnson signed Medicare and Medicaid into law 50 years ago Thursday, subsidizing health care for millions of seniors, low-income families and people with disabilities. Both programs were highly controversial and have undergone many changes over the past half-century, and today they cover about a third of all Americans, according to the Associated Press. Let's do the numbers:

July 30, 1965

The official signing ceremony in Independence, Missouri, at the Harry S. Truman Presidential Library. The Kaiser Family Foundation notes that Truman, an advocate for expanded health care during his presidency, was the first person to enroll. Coverage would begin about a year later.

55 million

That's about how many people are covered by Medicare, according to the federal government, starting from just over 19 million in 1966.

71.6 million

That's how many Americans are enrolled in Medicaid, including 75 percent of children living under the poverty line and 64 percent of people living in nursing homes.

$505 billion

Total Medicare spending in fiscal year 2014, or about 14 percent of the total federal budget, according to the Congressional Budget Office. After a slowdown this decade, spending is expected to accelerate through 2024, when spending is projected to reach $866 billion.

July 2, 1964

The date Johnson signed the Civil Rights Act into law, a little more than a year before Medicare. NPR points out the administration used one act to help the other: Hospitals that discriminated were in danger of losing federal dollars, and thousands desegregated as a result.

Randy Garutti on Shake Shack's 'accidental' start

Thu, 2015-07-30 09:06

Shake Shack CEO Randy Garutti hops in line with Marketplace's Kai Ryssdal at the restaurant’s original location in Manhattan’s Madison Square Park to talk about how the company evolved from a hot dog cart into a publicly traded international company with more than 70 locations.

Facebook wants to teach you about diversity

Thu, 2015-07-30 03:00

Watching Facebook's hourlong presentation on unconscious bias, it's pretty clear that the company execs believe the best solution is asking employees to monitor their own prejudices and to take responsibility for keeping them in check.

“Managing bias can help us build stronger, more diverse and inclusive companies — and drive better business results,” writes Sheryl Sandberg, chief operating officer at Facebook. In a memo published Tuesday, Sandberg outlines the reasoning behind releasing the company’s bias training videos to the public.

The release of Facebook’s videos is part of a public reckoning and an attempt to show that steps are being taken to improve some of the statistics.

Says Sandberg, “Many people have asked if we’d be willing to share our training outside of Facebook, so today we’re making the presentation part of the course available to anyone.” But as the Wall Street Journal points out, given Facebook’s own challenges with diversity, the company is perhaps not in the best situation to lead by example.

A recent report showed that more than half of the social media network’s staff is white. And as the Guardian writes, of the 1,231 new hires made in 2013, only seven were black. Gender bias also remains an issue — the percentage of male employees actually increased by 1 percent to 68 percent.

It’s part of a larger conversation the tech industry is having about bias in the workplace — a topic that came to a head at this year’s SXSW when Google CEO Eric Schmidt was called out during the audience Q & A for interrupting Megan Smith during their panel on innovation — the audience member who pointed out Schmidt’s unconscious bias was, in fact, Judith Williams, Google's global diversity and talent programs manager.

In one of the training videos, Facebook’s own global director of diversity, Maxine Williams, talks about how a fear of prejudice can result in self-censorship, citing the example of Latina women being stereotyped as hot-headed: “When Sheryl Sandberg teaches this course, she talks about the fact that she cries at work. And she admits that. But she says, ‘You know, if I were Latina, I might not be so prepared to admit that because it’d be playing into the stereotype.’”

Other activities include asking audience members to identify who they would most likely hire based on five short video clips of various people introducing themselves, as well as inviting employee input on how certain biases can be combated in the workplace. Many of the suggestions are on a small scale — divide basic office work duties like note-taking during meetings between men and women, for example.

In her note, Sandberg briefly says that Facebook has a long way to go in terms of diversity, but she concludes, “by helping people recognize and correct for bias, we can take a step towards equality – at work, at home and in everyday life.”

At 50, Medicare spending more on hospice

Thu, 2015-07-30 02:00

50 years into the Medicare program, the federal health insurance program for Americans 65 and older, one feature of the program has been fairly constant: about 25 percent of spending goes to care in the last year of life. 

“This is actually a statistic that has been remarkably stable from year to year. It hasn't changed very much,” says Tricia Neuman, director of the Medicare Policy program at the Kaiser Family Foundation. 

Neuman says a small share of Medicare dollars go to hospice care, where sick people choose to forego major medical interventions, instead getting palliative care from a team of caregivers as they near the end of life. 

But she says spending on hospice is on the rise. Neuman says of all the Medicare beneficiaries who died in 2013, half used hospice services.

“And that is a rate that's doubled since the year 2000,” she says.

The savings from hospice are unclear, according to Mike Plotzke, a health economist with ABT Associates. He and other economists studied hospice use among nursing home residents. Their findings, published in The New England Journal of Medicine, argue that those hospice users actually had higher end of life costs because of lengthy hospice care. 

“These findings give some pause about whether or not hospice is going to save Medicare money or not,” says Plotzke.

Plotzke says given the rapid expansion of the hospice care industry, the costs warrant further study.

Meanwhile, the Centers for Medicare & Medicaid Services are launching a pilot program that would allow Medicare recipients to stay in hospice but still get medical treatments like chemotherapy, which hospice patients otherwise forego.

Angry Birds is back with a vengeance

Thu, 2015-07-30 02:00

Since its release in 2009, the Finnish gaming company Rovio has built an Angry Birds theme park, capitalized on Angry Birds merchandise, and created numerous spin off games like Angry Birds Star Wars, Angry Birds Rio and Angry Birds Space. 

With its bird slingshot and beef with pigs, Angry Birds blew up the mobile gaming structure and expanded into a cultural phenomenon. Farhad Manjoo, tech columnist at the New York Times, explains its success was because "they got the game mechanics, right and it was addictive and it was fun. It hooked you, so you kept playing because every free moment was an opportunity to play.”

It remains to be seen if Angry Birds can continue that excitement in the current mobile market, which Manjoo maintains is not only "a lot more crowded in the game space. But it’s just also more crowded in apps. There’s many, many more apps. There’s more stuff to do on your phone that you can goof off with.”

While Manjoo believes it has a huge marketing advantage because of its cultural influence, there is still uncertainty surrounding the release of Angry Birds 2 due to the nature of sequels — a follow up to a blockbuster film won't necessarily repeat the same success. 

Plus, with Rovio aggressively pushing Angry Birds outside the mobile market in merchandise, movies and Disney-like experiences, the question remains if Angry Birds 2 is an attempt to continue the excitement around the franchise or if it's just trying to kill two pigs with one bird. 

 

 

Facebook earnings have Wall Street optimistic

Thu, 2015-07-30 02:00

Could the stock market be headed for trouble?

New reports suggest just half a dozen companies are fueling much of the gains on the Nasdaq and so far falling stocks outpace rising stocks which has been a precursor to previous downturns.

But while analysts and investors are raising concerns about the larger market, Facebook — one of the few companies driving gains — has them feeling optimistic after this week’s earnings report. The numbers certainly impress Wall Street.

Facebook’s margins are high, people are spending more time hanging out on the site, and boasts 1.4  billion users on average a  month.

RBC analyst Mark Mahaney says that’s jaw-dropping. “For context, there are more people on Facebook on a monthly basis than live in China. It’s a massive platform,” he says.

The future appears bright for a company valued at more than $250 billion dollars, which helps explain why it’s one of Wall Street’s sparkplugs.

Another growth area for the company is advertising. Facebook hauled in $3.8 billion, three-quarters coming from mobile.

Brian Blau is Research Director at Gartner. “Advertisers want to put their ads in front of Facebook users. And I think that we continue to see that as Facebook presses down and attracts more advertisers in local communities,” he says.

Blau says Facebook’s may have maxed out growth here in the U.S. and much of Europe.

One way to keep humming along is to find a way to make more off advertising that doesn’t turn users off.

PODCAST: Revising economic growth

Thu, 2015-07-30 02:00

The news this morning is that the U.S. economy didn't shrink during the winter as statisticians initially told us. More on that. Plus, we'll talk about Egyptian government's efforts to prop up the handicraft manufacturing industry that has been largely taken over by goods made in China.

Facebook earnings have Wallstreet optimistic

Thu, 2015-07-30 02:00

Could the stock market be headed for trouble?

New reports suggest just half a dozen companies are fueling much of the gains on the Nasdaq and so far falling stocks outpace rising stocks which has been a precursor to previous downturns.

But while analysts and investors are raising concerns about the larger market, Facebook — one of the few companies driving gains — has them feeling optimistic after this week’s earnings report. The numbers certainly impress Wall St.

Facebook’s margins are high, people are spending more time hanging out on the site, and boasts 1.4  billion users on average a  month.

RBC analyst Mark Mahaney says that’s jaw-dropping. “For context, there are more people on Facebook on a monthly basis than live in China. It’s a massive platform,” he says.

The future appears bright for a company valued at more than $250 billion dollars, which helps explain why it’s one of Wall St.’s sparkplugs.

Another growth area for the company is advertising. Facebook hauled in $3.8 billion, three-quarters coming from mobile.

Brian Blau is Research Director at Gartner. “Advertisers want to put their ads in front of Facebook users. And I think that we continue to see that as Facebook presses down and attracts more advertisers in local communities,” he says.

Blau says Facebook’s may have maxed out growth here in the U.S. and much of Europe.

One way to keep humming along is to find a way to make more off advertising that doesn’t turn users off.

The housing market is back — except where it's not

Thu, 2015-07-30 02:00

Homes that are underwater — mortgaged for more than they’re worth — represent a much smaller fraction of the housing market than they did a few years ago, according to a new report from RealtyTrac, a real-estate data company. However, some parts of the country are doing much better than others.

The national average, at 13.3 percent, isn’t all the way back to normal, but it would sound awfully good to places like Tampa, Cleveland, Las Vegas — or Chicago, where almost a quarter of mortgages are still underwater.

Ironically, one culprit may be state and local homeowner protections that make it harder for banks to foreclose, according to Daren Blomquist, vice president for Realty Trac.

"You have many properties that are kind of sitting in foreclosure limbo," he says. "And not only are those properties likely underwater, they’re likely dragging down the values of surrounding homes."

In Chicago and elsewhere, underwater homes tend to be in the poorest neighborhoods. 

"What’s happening on the Gold Coast in Chicago — which is very expensive — has very little to do with what’s happening in traditionally disadvantaged areas on the South or the West Side of the city," says Spencer Cowan, senior vice president for research at the Woodstock Institute, a local think-tank focused on economic equity.

Eight ZIP codes on Chicago’s South and West Sides have underwater rates above fifty percent — more than three times the rate for the Gold Coast area.

Egypt bans some "Made in China" souvenirs

Thu, 2015-07-30 02:00

In any place highly dependent on tourism, there’s money to be made in selling souvenirs. But when the tourists stop coming, those businesses and manufacturers are out of luck.

That’s what happened in Egypt following the 2011 revolution. Now that some of those tourists are coming back, the government there is trying to prop up the handicraft manufacturers that remain.

41-year-old Mohamed el-Yamaami’s hands are stained black from decades of polishing intricately cast bronze lamps and grills in the back alleys of Cairo's Khan el-Khalili bazaar. He blames Chinese imports for undercutting the prices of handmade goods like his.

“The majority of them used to be made in workshops [around here]," he says. "It provided the livelihood to many people. Now China makes them, for cheaper.”

Many manufacturers went out of business after the revolution, and those that remained suddenly found their prices undercut by Chinese goods. So, in April, the Egyptian government banned imports of traditional tourist items like miniature pyramids, "papyrus", and special lanterns. The move was welcomed by Egyptians, even those who sell the imports, like shopkeeper Omar Azzouz.

“As long as imports are allowed," he says, "I would never manufacture. Something imported is cheaper. Why would I buy local, more expensive products?” Azzouz says about half of the statues of pharaohs, tea sets, and other knickknacks in his shop are Chinese. Locals estimate suppliers still have enough in stock to keep markets flooded with “Made in China” tourist items for quite some time, but Azzouz says he looks forward to when those run out.

“You would be forced to buy an Egyptian product," he says. "Tourists will buy it, even if it is more expensive.”

Neither the Chinese-Egyptian Chamber of Commerce nor the Chinese Embassy in Cairo were available to comment. But, information from the Chinese Ministry of Commerce shows exports to Egypt decreased 15 percent the month the ban was announced, although there’s no explanation listed for the drop.

Back in his cramped Khan el-Khalili workshop, Mohamed el-Yamaani looks forward to the day his products will only be competing on quality, not massive price differences.

“Our work has a special style," he boasts. "If China makes this, I swear it won’t be sold."

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15 percent

 

That's how much imported goods from China to Egypt dropped in April, the month Egypt announced a ban on imported traditional tourist items. In the wake of the revolution in 2011, many local manufacturers closed down as tourism dwindled. But as visitors returned, imported goods from China filled the need for miniature pyramids and special lanterns.

 

25 percent

 

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60 years

 

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13.3 percent

 

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