Marketplace - American Public Media

Taking the retail sales number too seriously

Tue, 2014-05-13 12:02

The Commerce Department released monthly sales data for the month of April. The number is $434 billion, which means sales are up one tenth of a percent from March. But what does 0.1 percent really represent?

Marlene Morris Towns, a professor of marketing at the McDonough School of Business at Georgetown University, says the uptick from the previous month's data -- sales for March were about three times as much -- could be explained by spring. Because who wants to shop in bad weather?  

But interpreting a tiny number like the April over March sales increase isn't so easy, or even useful.

“I don’t know that a small trend like that would really say anything major about consumers,” Morris Towns says. “I think it gets tricky when you start looking at small differences from month to month rather than bigger trends.”

Like, year over year. She says comparing monthly numbers can be like finding a picture of Elvis in our toast -- we could be searching for non-existent patterns. And then trying to explain them away with weather, job numbers or holidays. 

"So when you look from month to month," she says "we’re looking for patterns that a lot of times aren’t necessarily patterns, they’re just kind of blips, or small shifts, but don’t really represent a change in consumer attitudes or comfort level with their income or economic status."

Barbara Kahn, director of the Baker Retailing Center at the Wharton School, says that's why many retailers, like JCPenney and Macy's, have stopped reporting their own month-to -month same-store sales.

“It used to be, I don’t know, how many stores reported? Maybe 20 to 30? It’s down to very, very few stores report now, precisely for that reason, because it doesn’t give a clear picture.”

But Kahn notes, the month to month data can be useful. “One of the reasons it’s been looked at so much in the last three, four, five years was to see the signs of the economy. Because retail sales was a very good indicator of whether or not we’re fully out of the recession, and if the economy is rebounding.”

 Kahn says, if you look at April’s sales compared to last year – the numbers are better. The Commerce Department says they're up by 4 percent.

Fannie and Freddie are easing up. Carefully.

Tue, 2014-05-13 11:56

The new head of the government agency that oversees Fannie Mae and Freddie Mac laid out a new game plan Tuesday -- a change in direction, designed to get banks to lend more. The way it works now, Fannie and Freddie buy mortgages from banks and guarantee them. But Fannie and Freddie make banks buy them back if there’s a problem, even if it’s just a minor paperwork glitch. 

Now, Fannie and Freddie will ease up. Carefully.

“Since any stumbles along the way could have ripple effects in the $10 trillion housing finance market, there’s a lot at stake in getting this right," says Mel Watt, the new director of the Federal Housing Finance Agency.

If Watt gets it right, analysts say banks will be more willing to lend to first time or low-income homebuyers. That's because they won’t be so worried about having to buy their loans back. Will Watt’s plan be enough to rev up the housing market, which has been limping along in second gear?

“Well I think it’s going to stop us from going in reverse,” says Tim Rood, a former executive at Fannie Mae, now chairman of the Collingwood Group. 

But if the housing market speeds up too fast, will it overheat? Not a chance, says Guy Cecala, publisher of Inside Mortgage Finance. 

“We’re still nowhere near the speed limit," he says. "If the speed limit is 65, we’re still going along at 45, but it’s better than 30 or wherever we were at before." 

Cecala says, even with Watt’s changes, banks will still be cautious.

In North Dakota, making ribs for roughnecks

Tue, 2014-05-13 11:52

North Dakota's the land of opportunity for people looking for jobs in the oil and gas industry.

The fracking boom has transformed the western part of the state -- often overwhelming the small towns that dot the prairie. Todd Melby's been keeping track of the comings and goings of workers in the oil field.

Recently, he talked to a Razorback who moved there to make ribs for roughnecks, a guy named Oscar Everetts. You can take Oscar out of Arkansas, but you can't take Arkansas out of.... You know how it goes.

Todd Melby's series, "Black Gold Boom," is an initiative of Prairie Public and the Association for Independents in Radio.

Google vs. the 'Right to be Forgotten'

Tue, 2014-05-13 11:49

If you’ve ever Googled yourself and discovered some not-so-flattering photos from, say, the 2001 office Christmas party, or a break-up poem you published in the college online magazine, you’ll likely find this of interest: Today the European Union’s highest court ruled that individuals can ask Google, Bing, Yahoo, or any other major search engine to remove links that come up when their name is searched.

It's the so-called "right to be forgotten."

The European court said because search results have such a major impact on people’s lives, people should have the right to have certain material removed.

"You talked about your credit report, this is your Google report," says Danny Sullivan, founding editor of Search Engine Land. "On a personal basis, that’s a big impact for some people. There are cases where many people would be sympathetic to the idea that there’s something unflattering about them that’s also old or perhaps outdated."

One of the plaintiffs in the EU case is a surgeon, who requested the removal of a 1991 article, about an operation he’d performed that had gone badly. "There are a number of gray areas here that pit the right of the individuals to control his or her reputation against the public’s right to know," says Greg Sterling, an analyst with Opus Research in San Francisco.

What about this country? Can Americans expect to request the removal of bad haircuts and DUIs?

"No, not at all," says Sterling. "In the U.S., the First Amendment would prevent such an outcome. They [the EU] see any data associated with an individual as personal, private information and the view in the U.S. is more skewed toward making that information not the property of an individual, but something that can be utilized by other parties."

Search engine companies would not have to comply with every request, and it's so far unclear how exactly the ruling will play out.

Google told Marketplace that it was disappointed in the decision, but needed time to analyze the implications.

How Sega broke Nintendo's monopoly on video games

Tue, 2014-05-13 10:34

Chances are, if you've ever played a video game in your life, you've heard of Sonic the Hedgehog, Super Mario, or both.

Before they started appearing in video games together, though, their parent companies were a whole lot less friendly, sparking what is now widely known as the "console wars."

In the early '90s, Nintendo was a video game giant, holding 90 percent of the market. Sega, meanwhile, was fighting other companies for the other 10 percent. 

"And they got absolutely whooped," says Blake Harris, author of the book "Console Wars: Sega, Nintendo, and the Battle That Defined a Generation". "Things weren't going well until [then-CEO of Sega] Tom Kalinske* took over, and a certain blue hedgehog began to change their fortunes."

That certain blue hedgehog was part of Sega's strategy to knock Nintendo down a peg or two.

"To take down Nintendo, they really wanted to create a Mario-killer," Harris said. "So they held an internal mascot contest, and the selection that won was this hedgehog that was called Mr. Needlemouse originally."

And, for a few years, it worked. Sega went from holding just five percent of the domestic video game market to 55 percent at one point. Mr. Needlemouse, later rechristened as Sonic the Hedgehog, is still as pervasive as ever. Sega, on the other hand, not so much.

"As much as we remember Sega as successful on this big battle against Nintendo in America, Sega in Japan never surpassed 25 percent," he said. "I think there was enmity, jealousy, and spite at times, which led to Sega cutting off the nose to spite the face. And that spite really led to Sega's downfall."

*CORRECTION: In a previous version of this story, Tom Kalinske's last name was misspelled. The text has been corrected

A week to make you miss manners

Tue, 2014-05-13 09:46

From the Marketplace Datebook, here's a look at what's coming up Wednesday, May 14:

In Washington, the Labor Department releases the Producer Price Index for April.

Macy's is scheduled to report quarterly earnings.

Hold that door, dude. National Etiquette Week continues.

On May 14, 1973, America's first space station was launched into orbit. Skylab was a home away from home for three crews.

And she recently won an Oscar for her work in "Blue Jasmine." Cate Blanchett turns 45.

Do Quora, Jelly and Ask.com answer things correctly?

Tue, 2014-05-13 07:47

There is a TV screen in Kartik Ramakrishnan's office that displays an endless loop of questions. He is the COO of Ask.com, which you may remember from the early '90s as the search engine Ask Jeeves. One question scrolling over his screen reads, “What causes hiccups?”

That, Ramakrishnan says, is a question everyone has either wondered about or been asked. Ask.com is hoping it can be the go-to place for the answer. We'll give you the answer about hiccups later. First though, some history.

In the early days of the web, Google crushed competitors in the search engine market and established itself as the entry point for the internet. Ramakrishnan talks ruefully about scars from Google's thorough lashing. After some soul-searching, Ask.com decided to refocus.

“We are the granddaddy of going to ask the world how to answer questions,” Ramakrishnan says. So the company decided it should re-brand itself as a question-and-answer site. Ask.com may be the granddaddy, but there are plenty of upstarts.

Social networks, search engines, and new apps are trying various strategies to answer your questions. At the same time, all of them have one big question to answer for themselves. If someone wants to know something, why shouldn't they just Google it? Ramakrishnan is quick to point out, “there is not one way in which you can actually come up with answers to peoples' questions.”

Google's search engine framework has limitations that are being exploited by a new wave of companies. For instance, with Google you can't use your phone to pose a question with a picture. You also can't ask for responses from experts or friends.

Venture capitalists think these approaches have the potential to make some money. The website Quora is a good example. It operates kind of like a social network. Users can post questions, write answers, and vote up responses they like. Venture capitalists recently poured an additional $80 million of investment into the site.

Quora has found an essentially free way to generate content. Like Wikipedia, it is all written by users, like Alon Amit. He says, “I can't stand seeing an answer or someone needing an answer that I have and not responding.” Quora encourages users to produce answers by acknowledging top writers and fostering social interactions.

Quora currently has no revenue stream, and it relies on the social network for its content. If that network falls apart, so does the site. Venture capitalist Josh Elman says an investor might take the risk with a company like this because they believe there is a, "fundamental behavior that is happening in the product that someone will pay for.”

Plus, there is a fallback plan. Even if Quora's content, data, or interactions cannot be leveraged somehow in the future, the company could always just put up advertising on the site.

Elman is putting his money where his mouth is—not in Quora, but in the company called Jelly. His firm, Greylock Partners, has invested in the new mobile question-and-answer app.

Jelly allows people to take a picture on their phone and use it to ask a question. Imagine, Elman says, someone has an emergency with a leaky pipe. The person snaps a picture of it, and asks what's wrong. A nearby plumber replies with a solution. Elman believes this kind of connection could one day generate revenue.“I think that there are just so many questions that aren't just easily answered by a three or four word search, because the answer isn't always on a website,” he says, “the answer might be in somebody's head.”

Quora and Jelly are taking two different approaches to answering questions, and in the end, they yield different results. Quora provides opinion and community, while on the other hand, Jelly provides solutions to local problems. While they both deal with questions, their users are seeking fundamentally different results. Ramakrishnan thinks that's the key to this whole business: understanding what users are really asking for. And that's no easy task.

Ramakrishna says over the years we have all become so “Googlized,” that we expect to prod the Internet with a few keywords and get results. He thinks of these keywords as under-formed questions that need to be fleshed out. Does the user want concise information? Opinion and community? Maybe all the person needs is a good local plumber. He says “our angle on this is, 'Lets do a better job at helping the user craft and formulate what those questions themselves might be.'”

Ask.com throws a wide net for answers. They give search results, peer-written responses, even content they pay to produce. But not everyone is pleased.Computer scientist Jerry Feldman is a particularly harsh critic. "The notion that either an automated system or some social networking system will be a reliable source of information about everything you want to know is very unlikely," he says. People aren't even that good at figuring out what other people want, Feldman argues, so it's an extremely difficult task for a computer.

But there is money to be made even without all the answers. Companies just need to figure out what it is their users want, and find some way to reliably deliver it.

By the way, Ask.com can tell you what causes hiccups. It's a lot of things: carbonated beverages, an irritated diaphragm, alcohol.

As for why we get them? Well, some things we still don't have a good answer for.

Is there a better way to find answers than 'Googling'?

Tue, 2014-05-13 07:47

There is a TV screen in Kartik Ramakrishnan's office that displays an endless loop of questions. He is the COO of Ask.com, which you may remember from the early '90s as the search engine Ask Jeeves. One question scrolling over his screen reads, “What causes hiccups?”

That, Ramakrishnan says, is a question everyone has either wondered about or been asked. Ask.com is hoping it can be the go-to place for the answer. We'll give you the answer about hiccups later. First though, some history.

In the early days of the web, Google crushed competitors in the search engine market and established itself as the entry point for the internet. Ramakrishnan talks ruefully about scars from Google's thorough lashing. After some soul-searching, Ask.com decided to refocus.

“We are the granddaddy of going to ask the world how to answer questions,” Ramakrishnan says. So the company decided it should re-brand itself as a question-and-answer site. Ask.com may be the granddaddy, but there are plenty of upstarts.

Social networks, search engines, and new apps are trying various strategies to answer your questions. At the same time, all of them have one big question to answer for themselves. If someone wants to know something, why shouldn't they just Google it? Ramakrishnan is quick to point out, “there is not one way in which you can actually come up with answers to peoples' questions.”

Google's search engine framework has limitations that are being exploited by a new wave of companies. For instance, with Google you can't use your phone to pose a question with a picture. You also can't ask for responses from experts or friends.

Venture capitalists think these approaches have the potential to make some money. The website Quora is a good example. It operates kind of like a social network. Users can post questions, write answers, and vote up responses they like. Venture capitalists recently poured an additional $80 million of investment into the site.

Quora has found an essentially free way to generate content. Like Wikipedia, it is all written by users, like Alon Amit. He says, “I can't stand seeing an answer or someone needing an answer that I have and not responding.” Quora encourages users to produce answers by acknowledging top writers and fostering social interactions.

Quora currently has no revenue stream, and it relies on the social network for its content. If that network falls apart, so does the site. Venture capitalist Josh Elman says an investor might take the risk with a company like this because they believe there is a, "fundamental behavior that is happening in the product that someone will pay for.”

Plus, there is a fallback plan. Even if Quora's content, data, or interactions cannot be leveraged somehow in the future, the company could always just put up advertising on the site.

Elman is putting his money where his mouth is—not in Quora, but in the company called Jelly. His firm, Greylock Partners, has invested in the new mobile question-and-answer app.

Jelly allows people to take a picture on their phone and use it to ask a question. Imagine, Elman says, someone has an emergency with a leaky pipe. The person snaps a picture of it, and asks what's wrong. A nearby plumber replies with a solution. Elman believes this kind of connection could one day generate revenue.“I think that there are just so many questions that aren't just easily answered by a three or four word search, because the answer isn't always on a website,” he says, “the answer might be in somebody's head.”

Quora and Jelly are taking two different approaches to answering questions, and in the end, they yield different results. Quora provides opinion and community, while on the other hand, Jelly provides solutions to local problems. While they both deal with questions, their users are seeking fundamentally different results. Ramakrishnan thinks that's the key to this whole business: understanding what users are really asking for. And that's no easy task.

Ramakrishna says over the years we have all become so “Googlized,” that we expect to prod the Internet with a few keywords and get results. He thinks of these keywords as under-formed questions that need to be fleshed out. Does the user want concise information? Opinion and community? Maybe all the person needs is a good local plumber. He says “our angle on this is, 'Lets do a better job at helping the user craft and formulate what those questions themselves might be.'”

Ask.com throws a wide net for answers. They give search results, peer-written responses, even content they pay to produce. But not everyone is pleased.Computer scientist Jerry Feldman is a particularly harsh critic. "The notion that either an automated system or some social networking system will be a reliable source of information about everything you want to know is very unlikely," he says. People aren't even that good at figuring out what other people want, Feldman argues, so it's an extremely difficult task for a computer.

But there is money to be made even without all the answers. Companies just need to figure out what it is their users want, and find some way to reliably deliver it.

By the way, Ask.com can tell you what causes hiccups. It's a lot of things: carbonated beverages, an irritated diaphragm, alcohol.

As for why we get them? Well, some things we still don't have a good answer for.

PODCAST: The shoppers who never showed

Tue, 2014-05-13 06:50

Forecasters were expecting a spike in retail sales during April. The government said there was nothing of the kind. Retail sales last month rose just a tenth of a percent, with consumers proceeding cautiously, despite warmer weather. Taking out volatile spending on cars, gasoline and food, so-called "core" retail sales fell slightly. Not exactly a boom in the making.

Meanwhile, economic data from China covering April suggested across the board weakness in economic activity there -- from output to investment to consumption -- all missing the expectations of experts. These are leading to renewed calls for Beijing to ease up on its efforts to rein in its bubbly credit markets.  Marketplace regular Christopher Low, the chief economist at FTN Financial in New York is traveling in Hong Kong and joins us to discuss.

Representatives from Vallejo, California are visiting the White House Tuesday to talk about "participatory budgeting," a unique democratic process where residents propose and choose city-funded projects. Residents in this small San Francisco Bay Area city voted-in participatory budgeting after the city went through a bankruptcy in 2008. A small portion of the city's overall budget is allocated to the process, made available through a sales tax. This year, residents have $2.4 million to work with.

 

New book tells of China's modern awakening

Tue, 2014-05-13 04:12

If someone forced you to name the biggest economic and social transformation of the last 35 years, what would you say? The internet, probably.

But what about China, where more than half a billion people have moved up from poverty? Like so much good writing about vast topics, New Yorker writer Evan Osnos tells it from the grassroots.

Osnos' new book, Age of Ambition: Chasing Fortune, Truth and Faith in the New China is out today. Click the above audio player to listen to our discussion.

New books tells of China's modern awakening

Tue, 2014-05-13 04:12

If someone forced you to name the biggest economic and social transformation of the last 35 years, what would you say? The internet, probably.

But what about China, where more than half a billion people have moved up from poverty? Like so much good writing about vast topics, New Yorker writer Evan Osnos tells it from the grassroots.

Osnos' new book, Age of Ambition: Chasing Fortune, Truth and Faith in the New China is out today. Click the above audio player to listen to our discussion.

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