New numbers out Thursday show America’s third quarter gross domestic product rose 2.8 percent, well above what economists predicted. The headline number may sound good at first, but it masks signs of ongoing economic weakness deeper in the report.
A bit of digging shows that 0.83 percentage point of the GDP boost came from the change in real private inventories. It may sound like an obscure technicality, but it is not. It’s actually quite simple and simply bad.
“Stores were accumulating a lot of goods to sell, but people weren’t buying them,” says Julia Coronado, chief North American economist at BNP Paribas.
You can see this at Big Fun Toy Store, a Cleveland shop specializing in collectibles. Owner Steve Presser says unexpectedly low third quarter numbers had him feeling as blue as the many Smurf toys lining his shelves.
“What we try to do, of course, is sell through our inventory,” Presser explains. “But if we buy too much in any given month, in this case it was September, I was a little concerned because we were hoping to have a strong summer going into the fall in the final quarter.”
Presser sells My Little Ponies too, but not enough bronies are buying them, an alarming development as his store enters its critical time.
“If I’m a retailer going into the holiday season, I’m very concerned right now,” says Hamilton College economics professor Ann Owen, who is talking about more than just tightwad Pony fans, of course. “Consumer confidence is low. The unemployment rate is still relatively high, and all of that impacts consumers’ decisions about making purchases.”
GDP is more than a single number -- it’s a bit like the Voltron set Presser sells, a big robot made out of several little ones (in that case, with animal heads, which are pretty cool) -- GDP is made of a number of numbers, and in this case, a small one, about inventories, tells us a little more than the big number. It’s an economic warning, but Presser is confident consumer spending will rebound toward the end of the year.
“I’m always a superior optimist and I’m looking for a very, very strong holiday season,” Presser says.
In other words, a seller of heroes and villains is confident good will prevail.
Mark Garrison: Dig a bit into today’s report and you’ll see 8-tenths percent of the boost in GDP came from the change in real private inventories. It may sound like an obscure technicality, but it is not. It’s actually quite simple and simply bad. Julia Coronado is chief economist at BNP Paribas.
Julia Coronado: Stores were accumulating a lot of goods to sell, but people weren’t buying them.
You can see this at Big Fun, a Cleveland toy store specializing in collectibles. Owner Steve Presser says low third quarter numbers had him feeling the color of the many Smurf toys lining the store shelves.
Steve Presser: What we try to do, of course, is sell through our inventory. But if we buy too much in any given month, in this case it was September, I was a little concerned because we were hoping to have a strong summer going into the fall in the final quarter.
Presser sells My Little Ponies too, but not enough bronies are buying them. Hamilton College economist Ann Owen says tightwad Pony fans are an economic nightmare at the worst time.
Ann Owen: If I’m a retailer going into the holiday season, I’m very concerned right now.
Ok, she wasn’t talking specifically about bronies not shopping, but about everybody.
Owen: Consumer confidence is low. The unemployment rate is still relatively high, and all of that impacts consumers’ decisions about making purchases.
GDP is more than a single number. It’s kinda like the Voltron set Presser sells, a big robot made out of several little ones, with animal heads, which I always thought was pretty cool. GDP is made of a number of numbers, and in this case, a small one, about inventories, tells us a little more than the big number. It’s a warning, but Presser’s confident consumer spending’ll rebound toward the end of the year.
Presser: Well, I’m always a superior optimist and I’m looking for a very, very strong holiday season.
In other words, a seller of heroes and villains is confident good will prevail. I'm Mark Garrison, for Marketplace.
The company founded 88 years ago is hurting for cash. Some analysts say RadioShack needs to have a killer holiday shopping season to survive another year. And to get much further, it has to answer a question it's long avoided: Is RadioShack a convenience store for techies, or a brand that inspires customer loyalty?
While RadioShack’s storefront with the red and white awning is familiar, fewer shoppers are venturing inside the store. In downtown San Francisco, Sunday afternoon is peak shopping time. But the RadioShack on Market Street is nearly empty.
There are a couple of creative types like Angel Whitney. She’s here to buy a six volt battery.
“I'm actually making colloidal silver at home. It's silver that you can drink."
Jos Cocquet loves the variety.
"There's all these cool electronic components here, like Arduinos." That's a microcontroller that lets you build your own electronics.
But Cocquet is not here to buy an Arduino, or anything else for that matter. Here's here to do research.
"I'm actually just checking out the floor space because I develop an iPhone case and I want to see what the packaging looks like."
On the other side of the country, in Manhattan, there’s another Radioshack with only one customer. Trish Scanlan just got to America and she’s looking for SIM card to use her international phone. After not finding it at a dozen stores, including RadioShack, she settles on a pre-paid phone.
"They were kind enough to have a very good value phone that I'm buying instead."
From coast to coast, Radioshack is a familiar haven for Do-It-Yourself junkies and last minute shoppers. It’s got something for everyone.
“That’s the problem,” says Michael Pachter, an analyst with Wedbush Securities.
"Radioshack has something like ten thousand different products,” he says, “The stores are cluttered."
Pachter says RadioShack is on its last leg and while its new CEO is a competent man, he doesn’t have enough capital to solve all the company’s problems.
"The CEO is making changes there but it's really a confusing place. It's not a real pleasant experience, and you have to look for the cool stuff."
Pachter says RadioShack does not neatly fit into the well-known tale of 'retail store dies as Internet sales surge.' The company survived as others like Crazy Eddie and The Wiz died.
But now, Radioshack has to build a relationship with a core group of dedicated customers.
“Home Depot has paint matching. You can come in with a chip and they’ll match the paint color. Abercrombie and Fitch has private label merchandise that you want. But RadioShack has neither.”
Last year, RadioShack got a bit of a boost by selling the iPhone. But this past quarter, profit decreased $98.1 million, or 28.8 percent when compared with the same period last year.
RadioShack is now clearing out old merchandise and undertaking minor and major renovations in two thousand stores nationwide.
The company didn't respond to our interview request. Last month on a quarterly earnings call, Chief Financial Officer Holly Etlin curtly dismissed an analyst who asked if the newly remodeled stores are making more money.
"We're not going to engage in commentary on profitability of individual stores. Next question please?"
On that same earnings call, CEO Joseph Magnacca said RadioShack's now going to move on to health gadgets for fitness junkies. But he also wants to win back the Do-It-Yourself crowd Radioshack neglected over the last decade.
"The new RadioShack can be relevant to both audiences by connecting on their shared mindset."
This strategy of casting a wide net, winning back the old customers and recruiting the new -- it just might be what got RadioShack into this predicament in the first place.
Regulators are cracking down on payday loans, leading some companies like Western Sky to shut down their loan operations.
Silicon Valley will soon open up a high-tech water recycling facility, capable of turning treated sewage into crystal clean water. In theory, it should be better than what comes out of kitchen sinks today. The purification is tough, but the hardest challenge is convincing people to drink it, even as freshwater becomes more scarce.
"People who multitask all the time can't filter out irrelevancy. They can't manage a working memory. They're chronically distracted," sociologist Clifford Nass said. The Stanford University professor died earlier this week.
The agency says trans fats, found in partially hydrogenated oils, raise the risk of heart disease. Even though food companies have drastically reduced their use of the oils, you can still find trans fat in microwavable popcorn, Crisco and all kinds of mass-produced baked goods.
Already, there's a vigorous debate about whether the newly re-elected New Jersey governor is the GOP's best chance for regaining the White House. In early-voting states, many conservatives look at Christie with suspicion.
Doctors have long overlooked a tiny band that connects two bones in the knee. Now Belgium surgeons say that's a mistake. The obscure structure is a full-fledged ligament. When it malfunctions, people recovering from anterior cruciate ligament injuries may run into trouble.
This final note today is about a company you may have heard a little about recently.
Twitter priced its shares at $26 -- last night.
The market, this morning, decided they were worth way more than that: The first trade was at $46.
The closing price $44.90.
So, if you think about it, the biggest IPO of the year actually lost ground on its first day of trading.
The Employment Non-Discrimination Act gives workplace protections to workers and applicants who are lesbian, gay, bisexual, or transgender. The bill would apply to any private employer with more than 15 workers, and includes an exemption for religious groups. It faces strong opposition in the House.
Mullah Fazlullah is said to have ordered the attack on Malala Yousafzai, the Pakistani teenager who campaigned for girls' education. Inside Pakistan, Fazlullah rose to prominence several years ago through his fiery religious radio broadcasts, which earned him the nickname "Radio Mullah."
Mayor Rob Ford has now admitted that he smoked crack in a drunken stupor and that he was drunk when he was videotaped threatening to kill someone. He's still saying he won't resign.
Just like people with individual health insurance polices, small businesses are grappling with unexpected changes to their policies and premiums because of the standards set by the Affordable Care Act.
In Arizona, Drs. Courtney and Matthew Dunn own DunnOrthodontics in central Phoenix. It’s a small but profitable practice, which they’ve had for about seven years. They don’t have to offer health insurance, but Matthew Dunn says, they choose to.
"We’ve always offered health insurance. It was easy in the beginning because we only had one employee, now we have 13 full-time employees."
On Tuesday, the Dunns received a letter from their health insurer, Humana. It was labeled, "Important information regarding your coverage." It informed them that they would not be able to continue with their current medical plan in 2014, as it did not meet all of the ACA requirements. The letter included information on a new Humana medical plan did comply with the ACA's standards, but it would raise the Dunns' premiums by 60 percent.
Courtney Dunn says she was shocked.
"I got a text from Matt letting me know, and my heart just stopped."
She thought they had a good plan. Their employees have used their existing plan to cover surgeries, births and emergency room visits. Dunn says she'd figured they could keep their plan, hang onto it for a year and see how the Affordable Care Act played out before jumping into the marketplace.
Now the Dunns have about six weeks to figure out what their plan lacks and what they want to do. In the meantime, they’re meeting with their employees to explain the situation and get input.
Karen Yant is Dunn Orthodontic's receptionist. She has a bad back. She wondered whether, if her employers no longer offered health insurance, employees would get extra money to pay for it themselves.
Courtney Dunn told Yant that was one option they were talking about, but it's still early and they just don't know.
"We still need to weigh what's going to be the best for you guys and what's going to be fair."
Dunn says they're talking to their insurance broker and reaching out to other small businesses owners for advice.
"I wish I could just say, 'It’s going to be OK. It’s all going to work itself out,' but it’s just the unknown at this point. We're still hoping that we can go on the marketplace and find something better, but this is the first time that I’ve been really nervous."
Her husband trying to be open about their situation since they still have limited information.
"I’m trying not to over-react to it," he says. I’m trying to figure out what’s best for us and our employees, but I just don’t know right now."
As the NFL investigates, a player who was with the team in recent years writes that "the most outlandish lie" is that Dolphins coaches didn't know what was happening. If Richie Incognito had been hazing teammate Jonathan Martin it would have been known, writes Lydon Murtha.
In 2003, U.S. forces discovered a trove of Jewish documents in a flooded Baghdad basement. They tell the tale of a once-thriving Jewish community. The painstakingly restored documents will be exhibited in the U.S. before they are returned to Iraq. But some Jewish groups are trying to prevent that.
The FDA is looking to ban trans fats from our food. For you label readers out there, we’re talking partially hydrogenated oils.
Why? They kill us. The FDA says cutting trans fats could prevent as many as 20,000 heart attacks a year.
But what foods have trans fats these days?
I took $4 to the vending machine and tried to buy some trans fat. Jumbo honey bun: no trans fat. Cinnamon roll: no trans fat. Cheez-Its: no trans fat.
I wandered around the office, asking people to study their snacks. I checked out pretzel chips, protein bars, granola bars – no trans fats.
“There’s been tremendous progress in the food industry getting rid of trans fat,” says Michael Jacobson, executive director of the Center for Science in the Public Interest. “I’d estimate that roughly 75 percent of the trans fat is gone."
He says you can still find it at restaurants, especially non-chains. You can also find partially hydrogenated oils in some microwave popcorn, piecrusts, refrigerated biscuits and frostings. A listener pointed out on Twitter that tootsie rolls have trans fats.
UC Davis food science professor Bruce German says, in some cases, companies struggle to find just the right replacement. Other times, it’s about cost.
“The majority of food in the marketplace competes to a very substantial extent on price," he says. And trans fats often cost a little less than replacements.
The most common substitutes are palm and coconut oil.
“The investors in those are smiling,” says German. And, so am I, because now I can eat those Cheez-Its without any partially hydrogenated guilt.
So what food items USED to have trans fat but don't anymore? Some examples below:
photo credit: Scott Olson/Getty Images
Girl Scout cookies
photo credit: John Moore/Getty Images
photo credit: Scott Olson/Getty Images
photo credit: Amy Stephenson/Flickr
photo credit: Roadsidepictures/Flickr
photo credit: Eric Schmuttenmaer/Flickr
Did you hear the pop? Twitter started trading on the Big Board today. It was priced at $26 a share but it closed at $44.90. That “pop,” in part, means investors assume that we’re going to see a lot more people using Twitter. With a bigger audience, Twitter can get advertisers to pay more.
The only problem is that Twitter is having a growth problem. According to a Reuters/Iposos poll, 36 percent of the people who join Twitter, don’t use it. That’s because they don’t get it. But that doesn’t mean Twitter can’t reverse that trend, says Pinar Yildirim, a marketing professor at the Wharton.
She says, you know that notion of “supply and demand,” that is, that consumer demand drives what’s sold. Well, marketers don’t really believe that.
“So essentially we believe in marketing consumers don’t know what they really want,” Yildirim said.
And business history is full examples of companies that have created products and then sold us on the idea that we need them, says David Stewart, who teaches marketing at Loyola Marymount University in Los Angeles
“The microwave oven is a great example of a technology that did not find initial market acceptance,” he says.
When microwaves first came out in 1947, Stewart says people didn’t see the need for them. They were doing fine with their conventional ovens.
“The microwave oven essentially was a product that required people to learn how to cook all over again,” Stewart says. “You couldn’t use your metal pots and pans.”
And people didn’t know what to cook in them. So marketers had to teach them what to do. They did in-store demonstrations and paid for people to have microwave dinner parties. Today, few homes are without a microwave.
Twitter could take a page from history, says Charles Byers is a marketing professor at the Santa Clara University.
“They do need to do some marketing as to why you should be on Twitter, what do you get from Twitter?” he says.
Buyers says most consumers think of Twitter like Facebook, a place to talk to friends and share pictures with family. But when they find out it’s not really like that, they walk. To keep them, Buyers says Twitter needs to promote its TV tie-ins and videos and it’s role as a go-to site for breaking news. And with its share price soaring, that education starts today.
Twitter learned a lot from its users. Now they have to get more of them on board. From #Twitter to $TWTR:
July 2006: Twitter's official public launch day was July 15, 2006. Ahh, the old innocent days of Twitter's birth. Here's co-founder Biz Stone sharing his promo of the service to the world on YouTube.
November 2006: The @ sign was initially used on Twitter just as a shorthand for "at." What peasants we all were. On November 2, 2006 Twitter user Robert Andersen (@rsa) threw this game changer into the world:
@ buzz - you broke your thumb and youre still twittering? that's some serious devotion
— Robert Andersen (@rsa) November 3, 2006
Using the @ sign to reply to another user grew to became the informal standard. Now, it's hard to imagine Twitter without the function.
April 2007: The first documented retweet (used in the way we think of the term today) was on April 17, 2007 by the user @ericrice. Although the move didn't spread like wildfire at first, it eventually gained steam. But the actual shorthand, "RT" didn't come until 2008 when @TDavid put the letters in a tweet about a Las Vegas fire. Now, Twitter lets users automatically retweet with a button (without having to manually type "RT" before the message), which helped content creators count and track how much something was shared. But it also angered many who felt the button restricted the way they could share and add their own commentary to other tweets.
August 2007: The Twitter #hashtag was born. Twitter use Chris Messina was the first to use # in a tweet on August 23rd with the message:
how do you feel about using # (pound) for groups. As in #barcamp [msg]?
— Chris Messina™ (@chrismessina) August 23, 2007
Twitter made hashtags an official feature of their site in July 2009. The rest, as they say, is #history.
June 2009: You know how we still debate about the pronunciation of GIF (here at Marketplace though, it's not a debate at all. It's with a soft 'g.' Sorry Obama). Back in 2009 there was some similar uncertainty around Twitter's words. If you posted a message on the site, did you "tweet it" or did you "twitter it?" And did you go on "Twitter" or "twitter?" In 2009 Twitter's popularity in the common discourse got AP to weigh in. On June 11th, AP added Twitter terms to its AP Stylebook.
October 2013: There was some speculation about what Twitter's ticker symbol would be. Nope, not "TWTRQ". The company revealed on October 3rd, that it would trade under the symbol "TWTR" and on November 7th, Twitter officially started trading on the NYSE.
The Pacific storm Haiyan is expected to make landfall in the Philippines within the next 12 hours, bringing top sustained winds currently measured at more than 190 miles per hour. Classified as a super typhoon, it's the most powerful storm yet of 2013.
The European Central Bank is defying expectations by moving more aggressively than expected to boost its member nations' economies and head off potentially dangerous deflation. "Super Mario" Draghi, the ECB's president, is getting much of the credit.
Gabapentin, a generic drug, appears to reduce alcohol cravings and ease sleeplessness and anxiety associated with withdrawal. But the drug hasn't been approved by the Food and Drug Administration to treat alcohol dependence, and there's no sign it will be anytime soon.