April 2011 - Global Economic Watch

Goolsbee on Slow Growth in First Quarter of 2011

04-29-2011 2:15 PM with no comments

Austan Goolsbee, chair of the White House Council of Economic Advisers, was Hans Nichols's guest on Bloomberg Television's Bottom Line.  He addressed the Commerce Department's report showing that the US economy grew at a rate of 1.8 percent in the first quarter of 2011 (down from 3.1% growth in the fourth quarter of 2010):

Note: We took the embedded video off this page, but you can watch the interview here. 

Posted by Graham Griffith

Housing Prices: Two Visualizations of the Data

04-29-2011 8:57 AM with no comments

The Case-Shiller Home Price Index data released this week showed housing prices closing back in on the lows of April 2009.  Here's a look at how prices have trended since 1988:

From the S&P/ Case-Shiller release:

The chart above depicts the annual returns of the 10-City and the 20-City Composite Home Price Indices. In February 2011, the 10-City and 20-City Composites recorded annual returns of -2.6% and -3.3%, respectively. On a month-over-month basis, the 10- and 20-City Composites were both down 1.1% in February versus January. San Diego, which had posted 15 consecutive months of positive annual rates ended its run with a -1.8% annual rate of change in February 2011. Washington DC has assumed that status, with 15 consecutive months of positive annual growth rates beginning in December 2009 through February 2011. Twelve of the 20 MSAs and both Composites fared worse in terms of annual growth rates in February compared to January. Atlanta, Cleveland, Dallas, Detroit, Phoenix, Portland (OR) and Washington D.C. saw improvements in their annual rates of return in February versus January; New York was unchanged.

For another way to look at housing prices we turn to Catherine Mulbrandon.  At Visualizing Economics, she shares this:

The regional story is an important one here, and these maps provide some key context for viewing the longer term trend in housing prices.  Click here for a larger map and for Mulbrandon's analysis.

Posted by Graham Griffith

Gallup Poll: Most Americans Believe US Still in a Recession

04-29-2011 8:33 AM with no comments

Checking in with Gallup's latest findings, we see that most Americans don't agree with what the Federal Open Market Committee expressed this week--that the economy is in a slow recovery. 

So never mind what the FOMC says, or for that matter, what the NBER says.  And you thought economists were a negative group.  More on the poll here.

Posted by Graham Griffith

Making Sense of the Latest Fed Announcement

04-27-2011 9:36 PM with no comments

The Federal Open Market Committee expressed qualified confidence in the recovery.  And the Federal Reserve will be keeping interest rates low, and will bring about an end of its second round of quantitative easing.  From the FOMC release:

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.  The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.  Increases in the prices of energy and other commodities have pushed up inflation in recent months.  The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations.  The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November.  In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and will complete purchases of $600 billion of longer-term Treasury securities by the end of the current quarter.  The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability.

Read the full press release here.

Following the FOMC meeting, Fed chair Ben Bernanke spoke in a highly anticipated press conference.  And he defended the Fed's decision to end QE2, saying that the policy was "never meant to be a cure-all."  Here is a video excerpt from the Wall Street Journal:

And for some interpretation of Bernanke's presser, we turn to MoneyWatch, where Mark Thoma discussed the Fed's latest announcements with MoneyWatch.com editors Eric Schurenberg, Jill Schlesinger and Jack Otter:

Posted by Graham Griffith

eMarketer Chart: Facebook's Ad Revenue

04-27-2011 9:12 PM with no comments

A couple of years ago, Facebook was trying to make sure it had revenue.  That's not a problem anymore, as advertising has been bringing more and more money in.  Now Facebook is working on expanding revenue streams, and competing with Groupon in the process.  But to get a picture of how big advertising has become, and how much it dominates Fecebook's revenue, take a look at this chart from eMarketer:

Read more from eMarketer here.

Posted by Graham Griffith

Calculated Risk: The Distressing Gap in Home Sales

04-26-2011 9:21 AM with no comments

New homs sales rose 11.1 percent in March according to data released by the Census Bureau yesterday.  But the 300,000 sales were nearly 22 percent lower than the 384,00 new homes sold in March of last year. One key factor to consider while looking at new homes sales in this economic climate is the availability of less expensive existing homes, including foreclosed homes.  Calculated Risk shares the below graph.  Note the growth of the "Distressing Gap"--the difference between existing home sales and new home sales--over the last two years.

Calculated Risk provides more analysis (with graphs) of the new home sales data here and here.

Posted by Graham Griffith

Ben Huh Explains His Cheezburger Fueled Business Model

04-26-2011 8:40 AM with no comments

Ben Huh turned some cute cats and clever phrasing into an early Internet success.  His initial site, I Can Has Cheezburger, grew into the Cheezburger Network.  And Huh continues to tap into creative, quirky ideas, and uses crowd sourcing to fuel a successful online empire of sorts.  He explained how his business works in this Harvard Business Review Idea Cast:

Posted by Graham Griffith

Planet Money Podcast: Tracking the Flight of Millionaires

04-25-2011 9:22 AM with no comments

With the ongoing debates among legislators in New Jersey and several other states over the potential effects of raising taxes on the wealthy, Planet Money's Robert Smith and Chana Joffe-Walt decided to "track the migration patterns of millionaires."  In the most recent Planet Money podcast, Smith and Joffe-Walt examine some research that suggests that increasing taxes on the wealthy has very little impact on whether they choose to stay in a state or not.  Take a listen:

We found the study Planet Money cited on migration patterns in New England particularly interesting.  New England provides an interesting case study, with relatively small states with some rather distinct tax policy differences (the New Hampshire to Vermont, and Massachusetts to New Hampshire comparisons especially).  Click here to read The Impact of Taxes on Migration in New England from Jeffrey Thompson of the Political Economy Research Institute at UMASS Amherst.

Posted by Graham Griffith

A Call for Collaboration on the Social Media Front

04-25-2011 9:11 AM with no comments

At PRBreakfastClub, Keith Trivitt is a bit annoyed at what the "turf wars" that have developed over advertising, marketing and public relations in social media. He says that the digital age era might require a new way of thinking about competition and collaboration within fields, and that fighting over "who owns " social media is counterproductive:

Rather than trying to claim ownership of some inanimate thing, such as social media, why don’t we collaborate with our allied industry peers to increase all of our services’ value to clients? In constantly shifting business and consumer markets, can we really afford to waste our time engaging in debates that clients could care less about?

I don’t mean to degrade these discussions, because there is some merit to them. But we must come to the realization that a concept that once seemed preposterous to many marketers — collaboration with competitors — is fast becoming the norm for modern PR, marketing and advertising initiatives.

And that’s not a bad thing, so long as we continue to innovative and don’t allow ourselves to become complacent knowing that a competing marketer can pick up the slack for us. Competition is indeed a great thing, but so is a collaborative sense that helps build many industry’s overall value to consumers and brands.

Read Stop the Silly Social Media Ownership Battles here.

Posted by Graham Griffith

Market Assumptions and Economic Models Post Crisis

04-25-2011 9:00 AM with no comments

So here's the central question of the last three years: do the economic models of the pre-crisis hold up?  The Carnegie Council outlines the primary points of contention in this Global Ethics Corner:

Get more from the Global Ethics Corner here.

Posted by Graham Griffith

Interactive Map: Tough Oil

04-22-2011 8:05 AM with no comments

The era of Tough Oil is here, according to our friends over at Marketplace.  To mark the 1 year anniversary of the BP oil spill, they put together a terrific interactive map that tells the story of global oil production over the last half century.  We have a snapshot of it below, but you must click here to see the map in full size and full effect.

Posted by Graham Griffith

Magazines Work to Make the Most of iPad Opportunities

04-22-2011 7:44 AM with no comments

We would hazard a highly unscientific guess that no group of people are placing more hope in the growth of the iPad and other tablets as magazine publishers.  Sure, folks ad ad agencies are thrilled about the opportunities the new form gives them, but their whole industry doesn't seem to depend on the continued success of this new delivery tool.  And in all the excitement to win with the new market, publishers may be finding themselves scrambling to keep up with a new type of production schedule.  Paid Content is one of the best places to watch new developments in the industry.  And recently David Kaplan wrote, at Paid Content, about some of the challenges magazines are facing in their app-development frenzy.  Here's what they wrote about Sports Illustrated:

On top of developing apps for each of Sports Illustrated’s weekly editions, the Sports Illustrated Group has done about 20 additional apps this year and two books with “enhanced” for iPad editions. Yet the SI Group hasn’t added much in the way of personnel to handle the additional workload—just two new art department staffers, one for tablets and one for print. Executives say rather than adding more people, the key is getting the production routine down.

The major change was scheduling. For a lot of magazines, the work on the iPad version happens when the print version is completed. “For years at SI, we worked a four-day schedule, long days on weekends,” said Bob Kannell, director of operations for the sports and news group at Time Inc. “We’ve had to move the schedule around and so now we have fewer staffers in on, say, a Thursday.”

It has also tried to economize by not producing apps for every different device and screen standard. It is betting on two standards in particular—the iPad, which has a screen with a 4:3 aspect ratio, and the Galaxy, which is 16:9 aspect ratio—and believes that apps produced for those two formats can be scaled to work with other devices. “Designing for 16:9 and 4:3 will save art departments in the long run. If we have to custom tailor each device it would kill us because there are literally more devices than days of the week,” says Chris Hercik, creative director for SI Group.

Read about other magazines and watch an informative slide show here.

Posted by Graham Griffith

RSS Tutorial from Social Media HQ

04-21-2011 10:55 AM with no comments

Members of the Internet Intelligentsia have been declaring RSS dead for a couple of years now, but it just won't go away.  And as more small business owners and marketers recognize the importance of tracking industry news on the Web and via social media, RSS continues to have a lot of value.  Nick Robinson of Social Media Headquarters remains a believer, and he put together this video to show how useful RSS can be:

Posted by Graham Griffith

Online Ads and the Search for Better Ways of Measuring Impact

04-20-2011 2:29 PM with no comments

2010 was a big year for online advertising.  And we are expecting even faster revenue growth in 2011.  But there are still several key matters to sort out.  And the most important challenge to online ad growth appears to be the difficulty in measuring the success of the ads.  Especially online video.  As eMarketer notes:

To that end, advertisers and agencies rated brand lift and percent of video completed the two most important metrics of online video ROI. Content producers, though, placed significantly less importance on the percent of video completed; instead, nearly half of producers of online video content said they thought clickthrough rate was the most important metric for advertisers. In reality, advertisers said click rate was their least important metric when measuring the effectiveness of online video ads.

The disconnect could cause problems for the expansion of online video advertising, since 93.4% of advertisers and agencies said measurability was a key factor in deciding which properties to place ads on. Measurability came in just after targeting capabilities as very important to the growth of online video advertising.

Here's a look at what marketers say is holding them back from utilizing more online video:

Read Advertisers Look for Better Online Video Metrics, Reach here.

Posted by Graham Griffith

Paul Allen: Idea Man

04-20-2011 8:16 AM with no comments

The other Microsoft founder, Paul Allen's memoir comes out this week.  Allen has been doing a series of interviews about the book,titled Idea Man.  Our favorites so far come from our friends at the public radio program Marketplace, especially this one.  But the 60 Minutes interview is also worth your time.  Here it is:

Posted by Graham Griffith