Week-end in Business

Here are some interesting, thought-provoking business items I ran across this week:
We all know that the job market is looking better with 200,000 jobs added last month. This good news is added to growing consumer confidence, factories stepping up production and small businesses showing signs of life, but did you know that for the first time in many years, manufacturing is a bright spot in the American economy? The Institute for Supply Management reported that its employment index for December was 55.1, the highest reading since June. Any number above 50 indicates that more companies say they are hiring than say they are reducing employment. The United States is particularly strong in machinery, chemicals and transportation equipment, which together make up nearly half of the exports. Exports of computers and electronic products are growing, but are well below their pre-crisis levels. Production of cheaper computers and parts shifted to Asia long ago. Check out the article here.

If you've ever watched It’s Always Sunny in Philadelphia, here’s another take-- It’s Always Sunny in Silicon Valley. In Silicon Valley, Occupy Wall Street isn’t really an issue, since, according to Google Chairman Erin Schmidt, “Their issues are not our daily reality.” In Silicon Valley, restaurants are booked, freeways are packed, and companies are flush with cash. According to this week's Bloomberg Businessweek, Silicon Valley gets 40 percent of the country’s venture capital, up from 31 percent a decade ago, the area’s job market jumped jumping 3.2 percent, triple the national rate, and real estate, a cesspool of despair in the rest of the country, is humming along. The closest Silicon Valley got to “Occupy…” was “Occupy: Cupertino” the line outside Apple stores in October for the iPhone 4S.

Retail news: I’m sure you’ve heard that Barnes and Noble is considering breaking off their profitable Nook business, but did you know that Hansen Natural Corp is changing its name to Monster Beverage Corp? Hansen Natural Corp makes a line of namesake juices as well as Admiral Iced Tea, Blue Sky energy drinks and Junior Juice. Its website features pastoral images of rolling hills and butterflies. Not good enough. Hansen’s also makes the gritty Monster Energy drinks, with its neon-green triple-slash logo. Stockholders agreed Thursday that the company needed to toughen up its image with the new name. Monster Beverage Corp. shares will begin trading under the ticker symbol MNST on Monday.


Since my daughter lives in Scotland, I’ve come to read the business section of The Guardian. In addition to all the articles on American politics, Eurozone unemployment, Australian sports, David Bowie turning 65, and might The Hobbit get a new ending? I found an interesting article on the London Summer Olympics—they’ll be fun, but don’t count on them to fix the British economy. Michael Saunders, of Citigroup, examined the data from ten Olympics held between 1964 and 2008. Growth tends to rise in the run-up to the Olympics, but the effect starts to fall away even before the games begin, and afterwards, growth tends to be weaker. This is to be expected since the jobs created are primarily from construction, which ends long before the opening ceremony. What is worrisome is the less productive workers huddled around television sets, and travel disruption as hundreds of thousands of supporters flock to London.
The London Olympics team claim that tourism would benefit "right across the UK, not just during the games, but for years before and afterwards as well"; but what about the visitors who might have come to the UK anyway, and will just switch the timing of their visit. Australia saw a 16% rise in short-term visitors in September 2000 when the Sydney games were held; but visits then declined for three years afterwards – presumably lots of people who'd always fancied going Down Under chose to time their visit to coincide with the Olympics.
David Cameron cites the "feelgood factor", which he claims will lift the mood of the nation as the sporting jamboree unfolds, it won't necessarily result in a sudden boost to consumer spending. In fact, it's just as likely to depress demand while everyone is glued to their televisions.
Research has consistently shown that unless you've a beautiful-but-neglected city you want to put on the tourist map (Barcelona), or plenty of world-class sporting venues already (Los Angeles), the impact of holding the Games is ambiguous at best.
As Saunders puts it, "In our view, the Olympics are likely to be very entertaining. But the games are not an economic policy."


Have a great weekend...