National / International News
Swedish consumer appliance company Electrolux announced its plan to buy GE Appliances for $3.3 billion. GE, parent company of GE Appliance, is probably breathing a great big sigh of relief.
GE is a very large company with subsidiaries in aviation, oil and gas with net profit margins in excess of 15 percent, whereas its appliance division is only making around 5 percent.
“Relatively speaking, it’s been neglected for years and financial performance has been poor,” says Brian Langenberg, principal at Langenberg & Company. “General electric is selling it for at least a third less than what they should be selling it for; they just want out.”
Electrolux, on the other hand, is getting a deal.
“It gets them into the American market, which is a market where they haven’t been much of a factor,” says Erik Gordon, professor of business law at the Ross School of Business at the University of Michigan. “That’s important because the American market is growing at 6, 7, 8 percent, but Electrolux’s main market, Europe, is not growing at all; less than 1 percent.”
Electrolux also gets a 48 percent stake in Mexican appliance company Mabe, extending its reach in North America even further.
First up, a new report that millennials are avoiding credit cards. A study out today by Bankrate.com finds that younger adults--the ones who hit the workforce around the year 2000 and younger--are avoiding credit cards. That's in part because they don't want more debt beyond their student loans. And when members of Congress get back to work in Washington today, Republicans and Democrats expect to pass a continuing resolution to keep the government open. The lack of drama on that score is connected to the election year. Plus, more on the growth in popularity of Latin music among non-hispanic people.
Around dusk on a recent sticky summer night, Mark Gawel and his son took turns taking photos of each other standing in front of the big silver letters marking the entrance to the Revel, Atlantic City’s newest casino.
He wanted to “get a couple shots of it, just in case it doesn’t exist [soon],” he said.
In late August, the city was still hoping a last-minute buyer would swoop in and keep the bankrupt casino open. But the Revel closed in early September and workers took down those silver letters. Three other casinos have already closed or will close this year, leaving roughly 6,000 casino workers unemployed and the city searching for a new path forward.
New Jersey Governor Chris Christie will host a summit on the future of Atlantic City on Monday, with local officials, congressmen, and gambling industry stakeholders all pondering the fate of the faded gambling mecca.
“Reinvent Atlantic City again,” advised Gawel, a housekeeping supervisor at a nearby casino. “It’s a shame. After 35 years of having casinos here, we should have been bigger, more like Vegas.”
He thinks the city needs to capitalize on its ocean location and to better cater to families.
“We’re going through a transitional time,” said John Palmieri, the executive director of the state’s Casino Reinvestment Development Authority. “There are 20 new casino operations within a couple hours' drive now, and five years ago they didn’t exist.”
He agrees that Atlantic City needs to bolster its non-gaming options.
“Our role is to create these other reasons for visitation, mostly driven by tourism, but the convention trades and some of the destination retail and the hotel activities that can survive beyond gaming,” he explained.
Gaming revenue peaked in 2006 at over $5 billion, but it’s been on a steep slide since. A few years ago, Atlantic City started using the slogan “Do Anything. Do Everything. Do AC,” trying to market itself as more than just casinos.
Atlantic City Mayor Don Guardian wants the city to host more events, concerts, and conferences.
“What we’ve lost is the older people who used to come,” he says. “The blue-haired Italian ladies aren’t coming here anymore [to] the casinos. What we have is a young crowd, because the casinos that have nightclubs are doing real well.”
He’s hoping a new campus for a local university will open by 2016, attracting even more young people.
But the city could take another hit if plans move forward to build new casinos in northern New Jersey.
Del Rowley was a regular at one of Atlantic City’s closed casinos. Standing on a street corner in Manhattan, he says if a casino opens closer to New York with similar games and “comps,” he’d switch in a heartbeat.
“Atlantic City’s two and a half hours [away],” he said. “So it’s a lot easier to go someplace closer.”
Moreover, all the press over Atlantic City’s troubles doesn’t help its fight for business.
There’s a famous quote often attributed to Mark Twain: “Reports of my death have been greatly exaggerated.” Atlantic City is hoping to be able to say something similar.
Millennials seem to be avoiding credit cards. A study published on Monday by Bankrate.com says younger adults prefer debit cards because they don’t want to fall into debt — or, in the case of people with student loans, further into debt.
When Bankrate analyst Jeanine Skowronski first looked at the data, she thought she saw naiveté. These younger adults who shun credit cards didn't seem to know they would need a credit history when they wanted to buy a car or a house.
Then she did some interviewing.
"I talked to a lot of millennials that said they were going to get credit cards, but they weren't so thrilled with it," she says. "They were like, 'I know I have to do this because I want to rent an apartment,' or 'I know I have to do this because I’m getting married, and I want to buy a home — but if I didn't have to, I wouldn't.'"
That sounds pretty smart to Marc Fusaro, an economist at Arkansas Tech. Millennials have figured out what economists — and businesses — have known for years: "Hands down, if people are using a credit card, they will spend more money," Fusaro says.
One possible caveat is this recent study from researchers at Carnegie-Mellon University, who expected to confirm the general consensus with a new experiment, but then didn't. They gave consumers an incentive to use credit cards for lunch to see if that led them to buy pricier meals. They identified two kinds of credit-card users in their study group: “Convenience users,” who pay off balances in full every month, spent more; “revolvers,” who carry balances and pay interest and fees, spent less.
In general, though, Fusaro's research shows that some consumers used debit cards to counter the tendency to spend, and to avoid racking up interest.
"A debit card is a check on how much money I can spend," he says.
Millennial spending by the numbers:63 percent
That same figure for adults aged 30 or over — only a little more than a third have no cards. The older set was also far more likely to carry a lot of plastic. Of the consumers with two credit cards, Bankrate found, about two-thirds were over 50.3 to 1
A recent Creditcards.com survey found millennials prefer debit over credit three-to-one, and they don't use cash nearly as often as their elders, especially for small purchases. But young people aren't alone — an April study from the Fed found debit-card use has risen across the board since 2000. And checks? Forget it.$29,400
The average debt for graduating seniors from four-year colleges in 2012, according to Project Student Debts. Entering adulthood with this burden and growing up during the Great Recession could be making millennials very debt-adverse, Bankrate says.40 percent
The number of millennials who pay off their credit card bill each month. Per Bankrate's own study, that's only a portion of a pretty small group, but the idea of paying off purchases on time could be scaring other young adults away from getting a card at all.
A separate survey from BMO Harris points to a possible reason for the slow payment. They say 39 percent of millennials — defined here as 18- to 35-year-olds — erroneously believe keeping a balance on one's card can boost credit scores. In fact, the opposite is true.628
The average millennial's credit score, according to Experian. Regardless of their attitude toward paying on time, waiting to get a credit card can make it harder to build a credit score. Let's look back at the older set, with the George Costanza wallets full of credit cards. Baby Boomers average a credit score of 700, and Generation X averages 653.
CORRECTION: An earlier version of this story stated 63 percent of consumers aged 18 to 24 don't carry a credit card at all. The correct consumer age bracket is 18 to 29. The text has been corrected.