Marketplace - American Public Media
Gas prices have been under $3 dollars in most of the U.S. for six months now. Which put a load of unspent money in drivers’ pockets, available to spend. But that spending economic stimulus has hardly shown up.
Drivers who fill up can now leave gas stations with an extra $20 they didn't have to spend. Where does it go?
“At least a good portion of that has always been spent,” says Dean Maki, economist at Point72 Asset Management. “Consumers aren’t so disciplined they’re unwilling to spend additional income that they get. Typically they do spend at least a significant portion of that additional income."
But that spending hasn’t shown up in the numbers. Retail sales are tepid. One possibility is the splurge just isn’t here yet. Consumers have yet to be convinced low gasolines prices will last.
“Typically, consumers would want to wait for confirmation that low gasoline prices are here to stay,” Greg Daco of Oxford Economics says. “We still have yet to see the full benefit.”
That may come soon, now that the long winter’s over. But not every economist is expecting that.
“These predictions were wrong,” says economist Ed Hirs of the University of Houston and the oil and gas firm Hillhouse Resources. “There is no direct tie between low gas prices and GDP.”
Hirs argues that money not spent on gasoline has gone to pay off debt, and in some cases buy health insurance required by the Affordable Care Act. The Wall Street analysts who predicted a spending boom have a financial interest in such projections, Hirs says.
“They’re cheerleaders for the market,” Hirs says. “They are not going to stand up and say, ‘Hey this is temporary. Just take your 20 bucks and put it under your mattress.’ That doesn’t sell any shares or bonds.”
Make a bad investment choice, and it can feel almost as if you were kicked in the stomach. But then again, some investments can kick you in the gut — literally.
"They can kick, they can bite," says Sheila Rosenblum of her nine horses. Rosenblum is owner of Lady Sheila Stable and the head of the all women's racing syndicate Lady Sheila Stable Two. "I happen to have some very nice horses but some naughtier ones too," she says.
At 8:00 A.M. on a drizzly, muddy weekday morning, Rosenblum is at Belmont Racetrack on Long Island watching the grooms check her horses to make sure they're sound before they’re exercised. But aside from a small handful of women working as exercise riders, or in the stables, Rosenblum is the only non-equine female in sight.
Traditionally horse racing is a male dominated industry. But now, Rosenblum, and women like her, are changing the industry. All of the investors in both of the syndicates Rosenblum oversees are women.
“It's exhilarating, it's challenging," says Rosenblum of working in the mostly-male industry. "It's tough as heck. But I love it.”
According to the National Thoroughbred racing association, the average price of a racehorse is $60,000. But prices can go up into the millions. One of the most expensive horses ever sold, Seattle Dancer, went for $13 million as a yearling in 1985. But at his retirement, he had only netted about $150,000. Prospective owners beware.
“They’re going to have to find somebody to buy their horse. They’re going to have to find someone to train their horses," says Laurie Wolf, co-founder of the all female syndicate – Starladies Racing. "It's not like something you can just look up in the yellow pages," she says.
For newcomers, notes Wolf, horse racing can have a steep learning curve.
“It sort of seems like a secret club," she says. "Unless you're in the business, it seems like it's not an easy business to walk right into."
Last month, La Verdad, a horse owned by Sheila Rosenblum, won a $200,000 race. But Rosenblum acknowledges the business of horses is a risky one. While they may be huge and strong and fast, horses are also fragile. All it takes is one wrong step or a blown tendon.
“This is Wall Street for horses,” she says.
For owners, it can feel like they’re betting on the horses even when they’re not betting on the horses.
80 percent of horses don't earn a profit, says Dan Metzger, president of the thoroughbred owners and breeders association. But a lot of owners, he says, get into racing, not to make money. "Some people buy yachts. Some people join country clubs," he says. And some ... buy horses. Horse owners, says Metzger, are risk takers. "They're looking to hit lighting in a bottle. They're looking to hit the horse that's going to win a major race."
But since the financial crisis, investors have been less willing to take a gamble on a horse, says Alex Waldrop, President and CEO of the National Thoroughbred Racing Association.
"You're seeing people at every level, men and women, who are a little more risk averse, who are being a little more cautious," he says. As a result, more investors are seeking out opportunities to buy, not a horse, but a piece of one, investing in syndicates, like the kind that Sheila Rosenblum and Laurie Wolf run.
More investors, says Waldrop—men and women both—are good for business.
When she first became involved in the business of horses says Rosenblum, she faced pushback for being a woman in man's world. "It was a fact," she says. "I paid my dues. I'm still paying them."
And, she notes, many of the young thoroughbreds in the stable are also preoccupied by thoughts of females. But she says, it's a different breed, they're thinking about, altogether.
That's how much funding was raised by anonymous social networking app Secret. It'll now return some of that money after the company folded this week. Secret failed for some fairly standard reasons – tough competition, users losing interest, losing key employees and so on – but it's unusual because of just how much money they had. Most failed start-ups only raise $1 million or less before they go belly-up.180 episodes
That's how many episodes were made of a little sitcom named Seinfeld. Heard of it? You're about to hear a lot more: it was announced this week that Hulu has bought the streaming rights for all 180 of those episodes. But you already knew that, didn't you? So why not head over to Silicon Tally, our weekly quiz on the week in tech, and prove your news savvy.1/3
That's the portion of one Manhattan restaurant's business that goes to Seamless and Grubhub, the owner says. Those delivery apps dominate New York City and many other markets, but smartphone takeout is fertile territory, and many companies are lining up – and investing tons – to try and take a bite out of their business.$50 million
By some estimates, that's how much could be generated in Nevada via bets placed on the Mayweather—Pacquiao fight taking place on Saturday Night. It's a big weekend for betting, what with the Kentucky Derby taking place that same afternoon. Some betting experts are anticipating it could be a record-breaking weekend for money brought in through bets placed on sporting events.$60,000
Speaking of the Kentucky Derby, $60,000 is the average price of a racehorse. Talk about an investment that could literally kick you in the gut, especially when you consider that 80 percent of horses do not earn money for their owners. But for some, buying a racehorse is a status symbol; more like buying a luxury yacht, or joining a country club. And these days, more women are joining the ranks of horse owners.$7.2 billion
The global box office gross of movies in the Marvel Cinematic Universe, not including "Avengers: Age of Ultron," which opens Friday. The "shared universe" – a collection of film franchises that share characters and storylines – is the new model major studios are taking on. Bloomberg breaks down the business logic behind these connected films, and how studios are scouring their intellectual property – Lego, Transformers, "Star Wars," Ghostbusters, DC Comics, etc. – to try and catch up with Marvel Studios.
One of last year’s Silicon Valley darlings has already reached its demise. The social networking app Secret is shutting down. In its less than 18-month run, the company raised $35 million from investors. And early on, it surpassed 15 million downloads.
“It’s certainly been sort of a moonshot, at the speed of the rocket ship ride that is modern internet virality,” says Max Wolff, chief economist at Manhattan Venture Partners, which researches and values tech companies before they go public.
Secret allowed users to blast an anonymous message or picture to friends and connections, to their delight or dismay. Wolff says it was especially popular among high school and college kids.
“There was everything from, “Everyone be careful, there's a dangerous person who's picking fights,’ to ‘Yeah, I have a crush on him or her,’” he says.
But the app quickly ran into issues — cyberbullies took unseemly advantage of the anonymity it offered. Wolff says a redesign made the app look too much like competitors Whisper and Yik Yak. Interest fizzled. Key employees jumped ship.
David Byttow, Secret's co-founder and chief executive, wrote in a Medium post Wednesday that the company no longer matched his vision and he would shut it down.
“I believe in failing fast in order to go on and make only new and different mistakes,” he wrote.
Byttow added that Secret still has a significant amount of capital, which he will return to investors.
“I believe the right thing to do is to return the money rather than attempt to pivot,” he wrote.
Even if Secret had stayed afloat and tried to change course, it would’ve been hard to renew the initial buzz and investor interest, according to Matthew Wong, research analyst at CB Insights, which tracks private company financing.
“The chances of success aren't as high as they definitely were earlier,” he says.
Manhattan Venture Partners’ Max Wolff says successful turnarounds are rare in this start-up app space. He likens the app economy to the music industry, where you might have a hit single.
“And you put together a really expensive tour, and by the fifth week of the tour, you're playing to no one,” he says. “Do you really need to spend all the money you were advanced by the record company and finish the next 20 cities?”
Kim Peace was a young girl in April 1968, when Baltimore erupted after the death of Martin Luther King, Jr.
“I seen people looting and tearing stores up and stuff,” she says. “I really didn’t understand what was going on, but now I know.”
Fifty years later, Peace lives in the neighborhood where Freddie Gray was arrested, and where the violence broke out this week after Gray’s funeral. Afterward, she and her granddaughter helped the cleanup effort.
Today, Mayor Stephanie Rawlings-Blake promised justice, even as the wait continues for answers about how the young black man died in police custody. Baltimore police have turned their investigation over to prosecutors, who will decide whether to bring charges in the case.
The turmoil in Baltimore has led to comparisons to the much larger riots of 1968. Some of the same neighborhoods in Baltimore were affected, and in many ways those neighborhoods never really recovered.
The ’68 riots were far more widespread than what happened this week, says Michael Higginbotham, a law professor at the University of Baltimore, but the roots are the same.
“We're talking about high unemployment, we're talking about poverty, homelessness, drugs, crime and hopelessness,” he says. “That’s what were the causes in 1968 and they’re the same causes, and the problem is we haven't dealt with that.”
In fact, Higginbotham says, the 1968 riots only made those conditions worse, because some businesses were reluctant to invest.
Patricia Fernandez-Kelly, who wrote “The Hero’s Fight” about West Baltimore, doesn't buy that fear keeps businesses away. She blames generations of neglect.
“It is because we have not invested in those neighborhoods,” she says. “Those are folks who really do not have a loud political voice.”
One teacher in Baltimore is trying to give his students more of a voice. At Mount Royal Elementary and Middle School, Baba Olumiji’s 7th and 8th graders spent this morning writing letters to their City Council members. Many of the students live in neighborhoods where stores were looted and burned this week.
“We wanted the children to actually start to learn how to positively advocate for their needs,” Olumiji says.
When school reopened after the unrest, Olumiji used the legacy of the ‘68 riots to teach non-violence.
“We thought it was important for the children to see that neighborhoods don't always get restored,” he says. “A community has been damaged, perhaps — hopefully not — irreparably.”
Now, the hope is that West Baltimore won’t be forgotten again.
I know I was a bit rough on Microsoft yesterday, saying they didn't do anything cool anymore.
Well, it's amazing what a difference a day can make, huh? They're working on a new facial recognition tool that lets upload a picture of yourself — or anyone else — and it tells you how old it thinks you are.
I tried it with a couple of pictures of me, and let's just say I really really like the results.
Tomorrow China introduces something the U.S. has had since the Great Depression: deposit insurance. You know if a bank goes under, your money stays safe. It’s reassuring.
Except in this case, China’s government is trying to reassure people in order to make them more nervous. Or at least more cautious.
How does that work? Well, many people there don’t need to be reassured.
“Right now, everybody in China already assumes their deposits are 100 percent guaranteed,” says Douglas Elliott, fellow at the Brookings Institution. He says everyone knows, and has observed, that “the government and Communist Party believe strongly in social stability.”
This all-but-written-out guarantee is known as an implicit guarantee, and it’s a problem. Baizhu Chen, professor of clinical finance and business economics at the USC Marshall School of Business, says “the government does not want to have this extra financial burden on them every time the banks have some problems.”
Another problem: laziness. If banks know they’ll get paid back by the government, they won’t care as much about what kinds of loans they’re making.
“When investors think all this stuff is implicitly guaranteed, nobody’s doing credit analysis, nobody’s kicking the tires,” says Jennifer Carpenter, associate professor at NYU's Stern School of Business. This is, it’s worth noting, is not a problem only in China.
But if people are already too reassured that the government will bail banks out, why have deposit insurance to reassure people that banks will get bailed out?
“The role of deposit insurance is actually to tell people what’s not insured,” says Carpenter.
Deposit insurance has limits. Very clear limits. It only covers bank accounts of the equivalent of about $80,000 or less. It only applies to real banks. So deposit insurance is a real thing, not a vague expectation that the government will take care of everything. And it’s part of something much larger taking place in China’s economy.
“The country is moving towards market-based solutions,” Chen says.
Deposit insurance is just part of China’s policy of slowly taking the training wheels off its financial system. One closely-watched step has been to relax control over what interest rates banks can offer to account holders. The Chinese government will most likely relax that control further in the coming years. That means banks will have to compete over the interest rates they offer to account holders, and they will have to make loans to back them up. Some may fail. The introduction of deposit insurance lets that happen with a safety net – just not one that’s too big.
In New York City, a town that loves takeout, apps are replacing the telephone and paper menus as a way to place an order.
The biggest app around is Seamless. That company so dominates online ordering that many restaurants feel they’re forced to do delivery by Seamless’ rules. But that could be changing, as billions of dollars are invested in new online ordering systems.
Seamless, with its partner Grubhub, handles orders for 30,000 restaurants, from Boston to Chicago to Los Angeles. Abby Hunt, a company spokeswoman, said that fact alone shows the services are providing value.
“Grubhub and Seamless together process more than 200,000 orders a day," she says. "So we’re able to connect restaurateurs to people who wouldn’t otherwise know that they exist."
While Seamless really is seamless for customers, restaurants pay a high price for the service through commissions that can go as high as 20 percent on each order.
“The problem is that if it doesn't translate into more actual revenue or profit for us, then there’s no upside to us” said Lukus Hasenstab, a co-owner of Penelope, an American comfort food spot in Midtown. “We’re just working harder for less.”
For every abstainer, though, there’s a restaurant that sees Seamless as indispensable. When Burger Heights launched in Upper Manhattan last year, it quickly listed with Seamless and GrubHub.
Co-founder Mike Vinocur scanned a spreadsheet of orders on a recent Saturday night, and quickly calculated Seamless and GrubHub’s impact.
“Maybe a third of our business could be through their service,” Vinocur said.
Can’t live with it. Can’t live without it. That’s how much power Seamless has over New York restaurants.
But Seamless only looks invincible, according to Steven Jacobs. He writes about e-commerce for the website Street Fight.
“The reality is these markets are changing extremely quickly,” Jacobs says, “and as companies like Yelp and Google look at the home delivery and food delivery market, the status quo for Seamless right now could change in a matter of a few years.”
Rosenheim Advisors reports $2.4 billion in private capital flowed into food tech and media in 2014, a 42 percent increase from 2013.
This year, Yelp bought the online ordering company, Eat24, and started taking orders directly through its website. Google is taking baby steps in this direction as well, by giving better results when you search food and restaurants.
And there are smaller upstarts doing weird and wacky things, Like Push for Pizza, which had a hit with a web video, advertising pizza that could be ordered with the tap of a single button.
In time, Jacobs says, one or more of these companies will get popular, and offer real competition to Seamless and Grubhub. And that, in turn could bring down the hefty commissions that only a dominant player can demand.
“I think it’s in a way anathema to the very culture of the internet,” Jacobs says.
How will Seamless and Grubhub respond? The company is already thinking about it. Part of the answer may be re-positioning the company as a true friend of restaurants.
“We actually have an in-house restaurant in our Chicago office and our New York office as well that helps put our employees in the shoes of the restaurateurs,” says spokeswoman Abby Hunt.
It’s hard to say what app we’ll be using to procure our pizzas and hot-and-sour-soups, even a year from now. But one thing’s pretty clear: with more people ordering takeout online, restaurants will have to get used to working with the tech middlemen that now stand between them and their customers.
Marketplace listener Carol Thompson received a birthday present from her husband Ted – a necklace with the etching “Heaven Has In Store What Thou Hast Lost.” It was a comforting message referring to a daughter who had passed away a few years before. The necklace arrived in the mail just days after her husband died unexpectedly, but receiving the necklace gave Carol a sense of peace.
Wednesday at Rent the Runway’s Secaucus warehouse is its busiest day of the week. The company offers designer clothing as short-term rentals to its customers, at a fraction of the cost it would take to purchase the item. But since most of their customers are renting for events that take place on Saturday, Wednesday becomes the key day when items that have been rented are returned and need to be sent out again for the following weekend.
“You have to turn it around with essentially a zero day turn around time” says Rent the Runway’s co-founder and CEO, Jenn Hyman.
“If you go into any woman’s closet throughout the United States you’ll see that when you open the doors, most of the closet is black. It’s filled with black dresses and black tops. Why is that? Is that because women’s favorite color is black? No, it’s because it’s the most rational option,” explains Hyman. “The whole point of Rent the Runway is to leave some of your common sense at home and actually try something printed or pink or sequined or fun, just because you can.”Tobin Low
And sure enough, printed, pink, and sequined dresses fill the warehouse.
When the pre-stamped envelopes that the company provides to renters for returns begin to filter in to the warehouse, they’re scanned and sorted based on their contents.Tobin Low
If an item inside needs to be sent out that same day, it’s put into one bin; if it’s not needed just yet, it goes into another. The urgent envelopes are opened and the dresses and accessories inside are sent to be cleaned.
This is a huge undertaking. Luckily, Rent the Runway’s warehouse happens to be conveniently located near a dry-cleaner: their own. When Rent the Runway opened this Secaucus warehouse late last year, they became the largest dry cleaner in the United States.Tobin Low
And if a stain or a spot needs to be removed, they have experienced workers like Nick, The Stain Guy, to help out.
Click below to hear Nick, The Stain Guy at work.
The dresses are dry cleaned, and then sent on to a pool of about 50 seamstresses to mend anything that might be amiss. Some dresses are altered to fit the height of the customer who ordered them.
“One of the key insights that we had when we started the business was that women felt like they had to wear a new outfit for every occasion” says Hyman. She explains, “they had been photographed and that photograph was now up on Facebook and they couldn’t repeat their outfit.”
The company also offers a subscription service similar to Netflix. Users pay a flat monthly fee and receive three items at a time from their queue of dresses, accessories, and jewelry.
Many customers order multiple items – a dress in two sizes, and accessories. The company’s software helps keep track of what’s missing from an order and when an order is complete, ready to be packaged and sent out. At the end of the day, at about 8pm, UPS picks up stacks of Rent the Runway boxes, ready to be shipped out.Tobin Low
A large portion of the Secaucus warehouse is vacant but Hyman expects she’ll be expanding in to that area son enough. She has a grand vision for the Rent the Runway’s future.
“I believe that every woman in this country and later every woman in the world should have a subscription to fashion, just like you have a subscription to music or to entertainment and via that subscription, you would be able to just have fun with this amazing industry that we’re in.”
Hadfield spent more than 150 days living in space, the bulk of it during a three-month stint at the International Space Station where six astronauts from countries all over the world live and work.
Hadfield's time in space coincided with a change in social media and communications. During his first space voyages in 1995 and 2001, there was no way for Hadfield to relay information about his experiences while in space. But, by the time he got to the ISS in 2013, improvements in technology and huge leaps in social media interaction made it possible for him to keep in touch: on Twitter, Facebook and YouTube.
Hadfield says when it comes to living in space, there has been significant change. People from 15 different countries left Earth in November of 2000.
"For the last 14 years, we have permanently been living off the planet, and when I say we, I mean humanity," he says. "Once you start permanently settling somewhere, then it really just becomes a new part of human culture."
That culture is still in early development, but it is growing as more stories start coming back from space. The ISS, for instance, is now home to a guitar and an espresso machine. Astronauts are becoming more accustomed to sending videos home, and telling people on Earth about their out-of-this-world lives. Soon space culture will include an album of folk music Hadfield recorded in space.
He compares space exploration to early settlers of undiscovered continents.
"When the first settlers came across the Bering Strait 20,000 years ago from Asia, their culture changed the place and defined the people themselves, and we're just getting into that stage of leaving Earth in space," he says.
So where to next from the ISS?
"It will go eventually from the space station to the moon, over the next few generations, and from the moon eventually to Mars, just as we've spread over the whole surface of the Earth," Hadfield says.
The number of people signing up for unemployment benefits hit a 15 year low in the last week. More on that. Plus, more on the efforts to get aid to Nepal with AmeriCares CEO Michael Nyenhuis. And former Fed Chairman Ben Bernanke is joining PIMCO as an advisor. We look at what this means.
On Thursday, Chi-Town becomes Draft Town — the NFL Draft, that is.
It’s the first time since 1964 the draft has been anywhere other than New York, and Chicago officials are ecstatic to host the three-day “fan festival." The city won its bid to host this year’s NFL draft, and it's going big.
There’ll be football clinics for kids, a replica of an NFL locker room, and Buckingham Fountain will reflect team colors during the draft. Over the top?
“I don’t believe that the term 'over the top' is something that could apply to the NFL, because everything they do is over-the-top,” says Todd Jewell, who teaches finance at Texas State. He adds that the payoff for Chicago is lots of buzz.
But having won the bid, the city will spend $3 to $4 million on this extravaganza. Robert Baade, who teaches economics at Lake Forest College calls it the "winner’s curse.”
He says even though the city promised not to spend public money on this, it will hit taxpayers one way or another. The real winner, he says, is the NFL, especially if cities start bidding for the draft every year.
Former Federal Reserve Chairman Ben Bernanke has scored his second advisory gig in the past month. He recently announced he’d advise hedge Citadel LLC. Now he’ll also offer his economic expertise to money management giant Pacific Investment Management Company, or Pimco.
It manages about $1.6 trillion in assets for public and private retirement plans, among other customers.
Bernanke will advise Pimco following a period of turmoil at the firm. Investors pulled money from Pimco funds after co-founder Bill Gross left last year.
Bernanke is the second high-profile economist the firm has recently hired to burnish its macroeconomic forecasting credentials. And Bernanke’s familiarity with Fed personalities and decision-making could be an added benefit.
"All markets, all security prices, are impacted by what the Fed does, what the Fed may do, and what it’s thinking,” says Jim Paulsen, chief investment strategist at Wells Capital Management, a Pimco competitor.
Paulsen says Bernanke could give Pimco especially pertinent insights into the conditions under which officials would raise interest rates.
“It would be very important information flow for asset managers that are going to lay down bets on what the direction of interest rates is,” Paulsen says.
But Bernanke's advisory role at Pimco makes Russell Campbell uncomfortable. He's the chief executive of Your Second Opinion LLC, which consults with small asset management companies.
“It raises policy implications about who's influencing who and who has direct access,” he says. “He can probably pick up the phone and call the president. There's only so many people that can do that.”
The Securities Exchange Commission, not the Fed, oversees Citadel and Pimco. Bernanke could not be reached for comment about his pay at either appointment.
That's the version of Windows that Microsoft showed off Wednesday, skipping Windows 9 and what tech correspondent Molly Wood called "a bit of a prom king moment." Between the new operating system and HoloLens, the tech giant could finally be delivering on the comeback it's been promising for years, earning back some cool to go along with its resilient pile of cash.$1.6 trillion
That's the worth of assets in public and private retirement plans directed by money management giant Pacific Investment Management Company, or Pimco. And who is advising them on how to manage those assets? Former Federal Reserve Chairman Ben Bernanke.1,265
The number of earnings calls from 2007 to 2014 in which analysts told companies they had a "great quarter, guys," according to an analysis by Bloomberg. Turns out a "great quarter, guys" doesn't always mean things are going all that great. In fact, 66 companies heard they were coming off a "great quarter, guys" at the start of 2008, just a few months before the economy tanked.$50 million
That's how much money Goldman Sachs, along with a Chinese investment firm, is committing to Circle Internet Financial, a start-up focused on the technology behind Bitcoin. As the NY Times reports, it's a significant vote of confidence for the digital currency's potential legitimacy.$21 billion
That's the size of the Swiss watch market, as of last year, and it's a market Apple has to tap into with its new smart watch. While tech coverage has been exhaustive, we've heard relatively little from the other world Apple is straddling with the Watch. The Verge sat down with John Tarantino, head of the mechanical watchmaker Martenero, getting his impressions of the Watch and whether he considers it a threat to his business.$100 million
Once valued at $100 million, anonymous phone app Secret will soon be no more. Founder David Byttow said the app has drifted from his original vision, and so he has decided to call it quits. As reported by BBC Tech, the company will return some of its $35 million in funding to investors.
Growth of the U.S. gross domestic product, a broad measure of the economy, ground almost to a halt in the first three months of the year, growing just 0.2 percent, even lower than expected.
A number of temporary factors, economists and analysts say, account for the first quarter slowdown, including: a West Coast port slowdown that caused a backlog of exports, a slowdown in exports themselves due to a strong dollar, and reduced consumer spending, which might be at least partly accounted for by a second year of bad winter weather.
"Spending on mining, exploration and wells, a.k.a energy, is down 48.7 percent — that is a big number," says Guy Lebas of Janney Montgomery Scott. The reason for that is oil prices. They are down, and so is investment in that sector.
Weather is another big culprit for slowing GDP growth, Jim O'Sullivan of High Frequency Economics says. "The weather was unusually severe this winter, as it was last year, so that's part of what's happening," he says.
Bad weather affected consumer spending, which grew 1.9 percent in the first quarter, compared to the previous quarter's 4.4 percent growth.
But the effects of winter weather, aside from unusually severe weather, are supposed to be accounted for in the GDP numbers, says Justin Wolfers, a senior fellow at the Peterson Institute for International Economics.
"Government statisticians actually seasonally adjust the data," Wolfers says.
Wolfers examined that adjustment of the last 30 years, and found a pattern. "The estimate of GDP growth in the first quarter has consistently been lower than on all the other quarters," he says, adding that could mean the seasonal adjustment is off.
Statisticians haven't significantly changed the seasonal adjustment algorithm (although they've tweaked it) in decades, he says. In fact, Wolfers says there is a lot more consistency in yearly GDP numbers.
"The yearly numbers have been remarkably consistent," he says. "They've suggested that this is an economy that keeps growing."
Jim O'Sullivan says to put the first-quarter GDP numbers in context, he is also watching jobless claims. "Over time, if there is significant slowing in the trend in GDP, invariably you see an uptrend in claims." So far, he says, such an uptrend has not occurred.
Two things: one, the rich really are different. And two, Coca-Cola had its annual shareholder meeting today.
At the meeting, a Coke shareholder named Warren Buffett sang the soda giant's jingle "I'd like to Buy the World a Coke" while playing the ukulele, which you can watch below:
How great is that? Buffett was piped in via video, by the way—he wasn't live.
Buffett's own annual shareholder meeting for his holding company Berkshire Hathaway is this weekend in Omaha.
Get this: 50,000 are expected to show up. Oracle of Omaha, indeed.
Sometimes it takes a few years — or even a few decades — to figure out what you want to do.
But deciding on a career was never really a problem for Richard Stolley, who got his first job as a journalist at the age of 15 and would go on to become a founding editor of People magazine.
During World War II, a friend of Stolley’s joined the Navy. His job — sports editor at the Pekin Daily Times — would be left vacant. So the newly enlisted friend asked if Stolley was interested in the position.
“Of course, not knowing any better, I said I would be very interested,” Stolley says.
Stolley was tasked with filling stories and editing the sports section, but he also got to read news about the war well before most Americans.
“This was during WWII and a lot of unusual things were taking place,” Stolley says.
The day before the invasion of Normandy, the Pekin Daily Times’ teletype received an alert that a major news break was coming.
“I felt very privileged that a 15, 16-year-old could walk over to the teletype and find out things about WWII that almost nobody else in the world knew,” Stolley says. “Pretty heady stuff.”
Stolley remembers the excitement of hearing the presses turn on every afternoon. The roar resonating from the basement of the newspaper offices invigorated him too.
“I had this feeling, well, whatever I wrote is going out to 15,000 readers — can’t call it back now,” Stolley says.
For Stolley, his first job was more than just a paycheck. It set the tone for his entire career.
“I mean, it cemented my life,” Stolley says. “There was no way after working as a professional journalist at the age of 15 that I was ever going to want to do anything else.”
Residents of Baltimore are still cleaning up from Monday’s riots. The unrest came at the start of the tourism and convention season, and just after Baltimore had just launched a new ad campaign earlier in the month, featuring celebrities like baseball Hall of Famer Cal Ripken, Jr.
Now, Visit Baltimore, which handles the city’s tourism and convention marketing, is pulling the new ad campaign. They're working on a different message, reassuring tourists they’ll be safe.
“And the second thing we want is to make sure they understand the city’s in great shape,” says Visit Baltimore CEO Tom Noonan.
But that could be a hard sell. Two conventions scheduled for this week in Baltimore were cancelled, and the city’s 10 p.m. curfew is scheduled to stretch into next week. Restaurants and bars have already taken a hit, and things will just get worse because they'll have to close early this weekend.
“Especially for the waiters and waitresses and bar staff who rely on tips. That’s like having probably two thirds of your income just reduced overnight," says Bernard Lyons, bar manager at Bertha’s, in Baltimore’s touristy Fell’s Point neighborhood.
And the economic damage from a riot can last a long time — just ask Los Angeles. Of course, its 1992 riots dragged on and Baltimore’s only lasted about a day, but still, the city's economy is suffering. And outside aid isn't likely to pour in, like it does when a community is hit by a natural disaster.
“It’s almost as if people are saying you fouled your nest, you fix it,” says Rob Baade, an economics professor at Lake Forest College who co-authored a study that says the losses from LA's riots totaled at least $3.8 billion.
CEO pay is one of those issues that really gets people's blood boiling. That's especially true since the financial crisis. CEOs of big banks take home millions, even though, in several cases, their companies tanked and nearly took our economy with them.
One piece of the Dodd-Frank financial reforms of 2010 was supposed to address that. It said investors should have better information about publicly traded companies and how executive pay relates to corporate performance.
Five years on, the SEC is proposing new rules to actually make that happen.
But publicly traded companies already have to disclose what their top executives make. Peter Crist, chairman of Crist Kolder Associates, says investors can usually work out how a CEO’s pay relates to a company’s performance from information it already sends to shareholders.
The SEC knows this, of course: it just wants companies to preset that information in a uniform way that investors can easily understand.
That might sound simple enough, but Stanford professor David Larcker says standardization can be a headache. Executives are often compensated with stock options that stretch over years, and could vary widely in value over that time. The SEC now wants companies to count that money only once the options vest.
Measuring a company’s performance can also be tricky, says Nora McCord, the managing director of Steven Hall & Partners, an executive compensation consulting firm. She says metrics such as total shareholder returns don't necessarily give a complete picture of how a company is doing.
But the SEC is determined to make these changes happen. It says it hopes these measures will improve transparency and make investors better informed when they vote on executive compensation.
Can you trace the way CEO pay corresponds to performance? We looked at a couple companies to see.
Tony Wagner and Raghu Manavalan/Marketplace