Sunday, September 13, 2009

Which High School Students Are Most Likely to Graduate From College?

In the September 10, 2009 U.S. News & World Report article "Which High School Students Are Most Likely to Graduate From College?," Kim Clark reports that college success depends on much more than intelligence :
Parents: Stop fretting so much about which high school your youngsters attend or how they score on the SATs. If you want your student to make it to a bachelor's degree, it's far more important for him or her to earn at least B's in high school and reach for the best possible college. Oh, and saving a few thousand bucks by sending your kid to a community college could turn out to be an expensive mistake.

Some of the nation's best-respected educational researchers are likely to reconsider much conventional wisdom today with the release of surprising findings from an analysis of educational records of more than 200,000 freshmen who started at public four-year colleges in 1999.

In the new "Crossing the Finish Line," William Bowen, a former president of Princeton University, argues that so many undergrads are dropping out (44 percent) that the country is in danger of losing its competitive edge to other nations.

He and coauthor Michael McPherson, former president of Macalester College, warn that America is likely to fall even further behind in the educational race because coming crops of high schoolers are filled with the kinds of low-income and minority students who tend to have the least educational success. In fact, despite billions of dollars in financial aid and scores of government and private efforts, the college graduation rate for low-income Americans who are the first in their families to go to college has been falling. "We're not doing as good a job as we should of creating genuine opportunity. We haven't continued to make progress the way other places have," Bowen said in an interview. (Harvard doctoral candidate Matthew Chingos also contributed to the book.)

The new research finds distressing signs that demographic factors such as gender, race, and parental education play large roles in determining a student's fate, no matter how smart or hardworking the particular student is. Those from families with below-average earnings or parents who didn't finish college, as well as African-Americans, Hispanics, and males, are failing college at disproportionate rates, even when compared with students with similar grades and test scores. Wealthy undergrads earn 11 percent more degrees from flagship universities than comparable students from the poorest income quartile, for example. White men are 6 percent more likely to graduate than black men with similar grades and scores. Women earn degrees at much higher rates than men. Failing to open educational opportunities to all students will endanger "the long-term health of our country," the authors warn.

Their findings about the actions that parents, students, and politicians should--and shouldn't--take to fix the problems are already sparking controversy:

High school grades are key: High school grades are the single best gauge of how well a student will do in college, no matter how "easy" or "tough" the high school's grading system is. "High school grades measure a student's ability to 'get it done' in a more powerful way than do SAT scores. . . . They reveal qualities of motivation and perseverance--as well as the presence of good study habits and time management skills--that tell us a great deal about the chances that a student will complete a college program," Bowen writes.

But the nature of the high school doesn't make much difference: The size, location, and racial mix of a student's high school don't appear to influence his or her ability earn a college degree, the study finds. Students who attend wealthier high schools do seem to enjoy a slight edge in enrolling in college. And elite high schools appear to help the very best students succeed at the most selective public universities. Interestingly, an analysis of eighth-grade reading and math test scores in North Carolina found that they were far more significant predictors of college enrollment than most other factors, including high school characteristics and student race. (The authors didn't research the correlation between eighth-grade test scores and college graduation, however.) That doesn't mean students or teachers should cram for eighth-grade tests, though, says coauthor McPherson. "The high scores identify students who study hard, pay attention, and do their best. It's these qualities that parents and teachers should aim to develop. And if they succeed in doing that, then those students are likely to do better in their eighth-grade tests and in later life," McPherson says.

Students shouldn't settle for less in a college: Thousands of bright, qualified students apply only to lower-ranked schools where their grades and tests scores are above those of the average student. But the new study finds that those who attend such "safety" schools are far more likely to drop out than those who get into "reach" schools. "It is counterintuitive," Bowen says. "You might think that if Sally goes to a school where she is top dog, she will have a much easier time graduating. But that's not true. She has a better chance of graduating if she goes to school with other people as talented she is."

Admissions tests don't predict graduation: SAT and ACT test scores are no help in predicting who will graduate from many, if not most, colleges. The widely used tests do help identify those likely to succeed at elite schools, the study found. But for many less selective colleges, students with higher scores were actually more likely to drop out. Representatives for the testing organizations noted that the tests are designed to--and do--predict college freshmen's grades, not college graduation. "We would be the first to acknowledge that the tests are not a perfect prediction," says Jon Erickson, vice president of the organization that runs the ACT. But Erickson argues that standardized test scores are helpful because, for example, they allow college admission officers to account for grade inflation at different high schools.

True achievement tests are useful indicators: Advanced Placement scores tell colleges more about a student's ability to complete college than other tests, the study found. Advanced Placement courses directly match the curriculum for entry-level college courses, and, at many universities, students can earn credit hours for high scores on AP tests.

B minuses aren't good enough: The new research confirms other findings that students who earn at least a 3.0 grade-point average are far more likely to graduate from college than students just under that mark. At less selective colleges, for example, 58 percent of students who entered with a 3.0 to 3.3 GPA graduated, compared with only 47 percent of sub-B students. The gap was even bigger at more selective colleges. "High school grades are tremendously important. It will not do for high school students to believe that 'just getting through' is enough," Bowen says. "You've got to work. You've got to pay your dues. You've got to achieve. If you do, you will succeed."

Today's community colleges are not the best solution: Bright, well-prepared community college students are 36 percent less likely to make it through to a bachelor's than similarly qualified students who start their degrees at four-year schools. Bowen realizes that message is likely to rile politicians and students who are hoping to use community colleges to save money in this economy but notes that his findings confirm those of others: "It is pretty hard to argue with the data . . . . If you want a bachelor's and you can start out at a good four-year institution, that is what you should do."

Why do community college students fall by the educational wayside so often? Other research has shown the influence of motivated and challenging peers, who are not always present in community college classrooms. Many community college students also have complained over the years about the failure of their schools to direct them to classes that will count as transfer credits. In addition, Bowen says many students are probably put off by complicated transfer processes.

Spokesmen for community colleges were distressed by the findings. "Community college officials are acutely aware that they must do more to maximize the number of students who graduate; it's a huge and growing concern," says David Baime, the American Association of Community Colleges' vice president for government relations. But Baime says much of the problem is caused by "the utterly unjustifiable practices of many four-year institutions that prevent would-be community college transfers from enrolling with appropriate credit."

Cash helps but is not a cure-all: More generous scholarships, or lower net tuition prices, can boost graduation rates by 5 to 10 percent. But scholarships and true costs need to be communicated to parents far earlier than the current system's six-month lead, and much more clearly, the authors say. In addition, combining sufficient aid with extra support services for students and parents does even more to shepherd students through to graduation.

Some colleges are doing a much better job than others: Colleges where most students live on campus and schools that create "honors" groups and "learning communities" are far more successful at graduating students than other universities.

There is some hope: The graduation rate success of experiments such as the Posse program, which provides teams of 10 low-income and minority students at elite schools lots of scholarships, mentoring, counseling, and peer support, shows that "graduation rates can be increased substantially if enough resources--and creativity--are put to work," the authors say.

Michael Jordan shows that money and fame do not provide happiness and fulfillment.

In the September 12, 2009 article "Jordan’s night to remember turns petty," Adrian Wojnarowski reports that despite his world fame and general acclaim as the best basketball player in history, Michael Jordan remains an angry, bitter man with personal insecurities. Jordan's speech for his induction into the Basketball Hall of Fame suggests he harbors much anger and resentment, despite his successes. Might this be further evidence that money and fame do not provide happiness and fulfillment in life?
SPRINGFIELD, Mass. – The tears tumbled, flooding his face and Michael Jordan had yet to march to the microphone at Symphony Hall. He had listened to the genuine stories and speeches of a remarkable class. He had watched a “This is Your Life” video compilation of his basketball genius. Everything flashed before him, a legacy that he’s fought with body and soul to never, ever let go into yesterday.

Yes, Michael Jordan was still fighting it on Friday night, and maybe he always will. Mostly, he was crying over the passing of that old Jordan, and it wouldn’t be long until he climbed out of his suit and back into his uniform and shorts, back into an adolescent act that’s turned so tedious.

This wasn’t a Hall of Fame induction speech, but a bully tripping nerds with lunch trays in the school cafeteria. He had a responsibility to his standing in history, to players past and present, and he let everyone down. This was a night to leave behind the petty grievances and past slights – real and imagined. This was a night to be gracious, to be generous with praise and credit.

“M.J. was introduced as the greatest player ever and he’s still standing there trying to settle scores,” one Hall of Famer said privately later.

Jordan didn’t hurt his image with the NBA community as much as he reminded them of it. “That’s who Michael is,” one high-ranking team executive said. “It wasn’t like he was out of character. There’s no one else who could’ve gotten away with what he did tonight. But it was Michael, and everyone just goes along.”

Jordan wandered through an unfocused and uninspired speech at Symphony Hall, disparaging people who had little to do with his career, like Jeff Van Gundy and Bryon Russell. He ignored people who had so much to do with it, like his personal trainer, Tim Grover. This had been a moving and inspirational night for the NBA – one of its best ceremonies ever – and five minutes into Jordan’s speech it began to spiral into something else. Something unworthy of Jordan’s stature, something beneath him.

Jordan spent more time pointlessly admonishing Van Gundy and Russell for crossing him with taunts a dozen years ago than he did singling out his three children. When he finally acknowledged his family, Jordan blurted, in part, to them, “I wouldn’t want to be you guys.”

Well, um, thanks Dad. He meant it, too. If not the NBA, he should’ve thought of his children before he started spraying fire at everyone.

No one ever feels sorry for Isiah Thomas, but Jordan tsk-tsked him and George Gervin and Magic Johnson for the 1985 All-Star game “freeze-out.” Jordan was a rookie, and the older stars decided to isolate him. It was a long time ago, and he obliterated them all for six NBA championships and five MVP trophies. Isiah and the Ice Man looked stunned, as intimidated 50 feet from the stage as they might have been on the basketball court.

The cheering and laughter egged Jordan on, but this was no public service for him. Just because he was smiling didn’t mean this speech hadn’t dissolved into a downright vicious volley.

Worst of all, he flew his old high school teammate, Leroy Smith, to Springfield for the induction. Remember, Smith was the upperclassman his coach, Pop Herring, kept on varsity over him as a high school sophomore. He waggled to the old coach, “I wanted to make sure you understood: You made a mistake, dude.”

Whatever, Michael. Everyone gets it. Truth be told, everyone got it years ago, but somehow he thinks this is a cleansing exercise. When basketball wanted to celebrate Jordan as the greatest player ever, wanted to honor him for changing basketball everywhere, he was petty and punitive. Yes, there was some wink-wink teasing with his beloved Dean Smith, but make no mistake: Jordan revealed himself to be strangely bitter. You won, Michael. You won it all. Yet he keeps chasing something that he’ll never catch, and sometimes, well, it all seems so hollow for him.

This is why he’s a terrible basketball executive because he still hasn’t learned to channel his aggressions into hard work on that job. For the Charlotte Bobcats, Jordan remains an absentee boss who keeps searching for basketball players on fairways and greens.

From the speeches of David Robinson to John Stockton, Jerry Sloan to Vivian Stringer, there was an unmistakable thread of peace of mind and purpose. At times, they were self-deprecating and deflective of praise. Jordan hasn’t mastered that art, and it reveals him to be oddly insecure. When Jordan should’ve thanked the Bulls’ ex-GM, Jerry Krause, for surrounding him with championship coaches and talent, he ridiculed him. It was me, Jordan was saying. Not him. “The organization didn’t play with the flu in Utah,” Jordan grumbled.

For Jordan to let someone else share in the Bulls’ dynasty never will diminish his greatness. Just enhance it. Only, he’s 46 years old and he still doesn’t get it. Yes, Jordan did gush over Scottie Pippen, but he failed to confess that he had wanted Krause to draft North Carolina’s Joe Wolf. Sometimes, no one is better with half a story, half a truth, than Jordan. All his life, no one’s ever called him on it.

Whatever Jordan wants to believe, understand this: The reason that Van Gundy’s declaration of him as a “con man” so angered him is because it was true on so many levels.

It was part of his competitive edge, part of his marketability and yes, part of his human frailty.

Jordan wasn’t crying over sentimentality on Friday night as much as he was the loss of a life that he returned from two retirements to have again. The finality of his basketball genius hit him at the induction ceremony, hit him hard. Jordan showed little poise and less grace.

Once again, he turned the evening into something bordering between vicious and vapid, an empty exercise for a night that should’ve had staying power, that should’ve been transformative for basketball and its greatest player. What fueled his fury as a thirtysomething now fuels his bitterness as a lost, wandering fortysomething who threatened a comeback at 50.

“Don’t laugh,” Michael Jordan warned.

No one’s laughing anymore.

Once and for all, Michael: It’s over.

You won.

Saturday, September 12, 2009

Test your understanding of economics in the news: Is this a change in supply or a change in demand?

In the September 12, 2009 Milwaukee Journal Sentinel article "Airline competition driving down prices at Mitchell," Tom Daykin reports that airfares from Milwaukee have decreased recently.

Is the reduction in the price of Milwaukee airfares caused by (a) an increase in the supply of flights from Milwaukee, (b) a decrease in the supply of flights from Milwaukee, (c) an increase in the demand for flights from Milwaukee, or (d) a decrease in the demand for flights from Milwaukee?

Read the article below and then illustrate this price change with a graph that shows the initial positions of the supply and demand for a seat on a flight from Milwaukee and the new positions of the supply and demand curves. (Hint: Only one of the curves shifts.) There is a link at the bottom that provides the answer.
With AirTran Airways and Southwest Airlines providing more competition, now is a good time to book a flight out of Milwaukee's Mitchell International Airport.

Fares for flights departing from Milwaukee this fall have dropped 20% compared with fall 2008, according to data compiled by Kayak.com.

Also, flights booked through Orbitz.com departing Milwaukee between the day after Labor Day and the Sunday before Thanksgiving are 21% cheaper than the same period last year.

But it gets even better, according to Simon Bramley, vice president of flights for Travelocity.com.

His numbers show that the average airfare for a Milwaukee departure is 16% less than the national average for January through October. But for the upcoming period from November through March, the average airfare for a Milwaukee departure will be 30% less than the national average.

"That's a pretty significant discount," Bramley said.

Not coincidentally, Southwest Airlines begins service in Milwaukee on Nov. 1. The discount carrier will offer 12 daily nonstop flights to Baltimore, Kansas City, Las Vegas, Phoenix, Orlando and Tampa, Fla.

"It's obviously true that when any new airline starts service in a city, prices drop," Bramley said.

While Southwest has built its business as a low-fare carrier, some of the big savings can be found on its rivals flying from Milwaukee, Bramley said. Some airlines offer flight and hotel packages that Southwest doesn't provide - providing another way to find a bargain, he said.

Even before Southwest announced its plans for Milwaukee, fares were dropping because AirTran, another discount carrier, was greatly expanding its service, said Bramley and Vaughn Cordle, an airline industry consultant.

"It was kind of a no-brainer" that Southwest and AirTran service expansions would drive down fares for Milwaukee travelers, said Cordle, who operates Airline Forecasts LLC.

Both AirTran and Southwest have been adding flights after Oak Creek-based Midwest Airlines cut service nationwide by around 40% last year.

As a result of those reductions, Midwest, long the dominant carrier in Milwaukee, saw its market share drop. Midwest, which in recent years had a market share of around 50%, had a 34% share in June, the latest month for which airport data was available.

AirTran in June had a 24% market share at Mitchell International.

Midwest was recently sold to Indianapolis-based Republic Airways Holdings Inc., which has restored service from Mitchell International to Los Angeles and Louisville, Ky., and plans to add more flights out of Milwaukee.

Meanwhile, travelers like Jim Fontanini are enjoying the savings.

Fontanini regularly travels from Milwaukee to St. Louis to see his girlfriend. He used to pay around $150 for a roundtrip flight on Midwest Connect, the Midwest Airlines commuter service. But Midwest dropped nonstop flights from Milwaukee to St. Louis last year, so Fontanini began to drive instead.

Fontanini lately has been finding cheap flights, including a $78 roundtrip ticket booked for October on American Airlines.

"I'm back to flying," he said.

CLICK HERE FOR THE ANSWER

Wednesday, September 9, 2009

Test your understanding of economics in the news: Is this a change in supply or a change in demand?

In his September 9, 2009 blog entry "Apple sets stage for music event with iPod price cuts," Ben Patterson announces Apple is lowering the price of its iPod music players.

Is the reduction in the price of iPods caused by (a) an increase in the supply of iPods, (b) a decrease in the supply of iPods, (c) an increase in the demand for iPods, or (d) a decrease in the demand for iPods?

Read the article below and then illustrate this price change with a graph that shows the initial positions of the supply and demand for iPods and the new positions of the supply and demand curves. (Hint: Both of the curves shift.) There is a link at the bottom that provides the answer.
Just hours before its "rock and roll" music event was set to kick off in San Francisco, Apple went ahead and chopped the price of its entire iPod Touch line by as much as $120. Also: price cuts for the Nano, Classic.

The 32GB iPod Touch—formerly $399, or a whopping $110 more than the upcoming 32GB version of the competing Zune HD—now sells for $279, a $120 discount that slightly undercuts the new Zune.

Meanwhile, the 16GB version of the Touch got a $50 price cut to $249—cheaper, but still $30 more than the 16GB Zune HD (which is slated to go on sale next week; check out my hands-on impressions). Finally, the 8GB Touch got a $40 haircut, to $189 from $229.

The iPod Touch wasn't the only iPod model to get a price cut. Apple also trimmed the price tag of its iPod Nano players by $50 for the 16GB version (was $199, now $149) and $20 for the 8GB device (was $149, now $129). Also cheaper: the venerable, 120GB iPod Classic, now $229 after a $20 price cut.

The discounts come amid rumors of new iPods with built-in cameras (which may or may not be unveiled later today), although there has been chatter (all unconfirmed) of manufacturing problems that may delay their release.

And then there's the touchscreen Zune HD, set for release Sept. 15, that boasts 720p HD video playback on an external HDTV with the help of an optional HDMI-enabled A/V dock. The Zune, of course, has a mighty big hill to climb before it can even begin to compete with iPod sales, but the Zune HD's price tags—$289 for the 32GB model, and $219 for the 16GB version—were considerably cheaper than those of the iPod Touch before today's price cut.

CLICK HERE FOR THE ANSWER.

Declining Fish Populations are an Example of How Free Markets Overuse Public Resources.

In the September 9, 2009 New York Times article "From Deep Pacific, Ugly and Tasty, With a Catch" William J. Broad provides an example of how unregulated markets overuse public resources:
The answer to the eternal mystery of what makes up a Filet-O-Fish sandwich turns out to involve an ugly creature from the sunless depths of the Pacific, whose bounty, it seems, is not limitless.

The world’s insatiable appetite for fish, with its disastrous effects on populations of favorites like red snapper, monkfish and tuna, has driven commercial fleets to deeper waters in search of creatures unlikely to star on the Food Network.

One of the most popular is the hoki, or whiptail, a bug-eyed specimen found far down in the waters around New Zealand and transformed into a major export. McDonald’s alone at one time used roughly 15 million pounds of it each year.

The hoki may be exceedingly unattractive, but when its flesh reaches the consumer it’s just fish — cut into filets and sticks or rolled into sushi — moist, slightly sweet and very tasty. Better yet, the hoki fishery was thought to be sustainable, providing New Zealand with a reliable major export for years to come.

But arguments over managing this resource are flaring not only between commercial interests and conservationists, but also among the environmental agencies most directly involved in monitoring and regulating the catch.

A lot of money is at stake, as well as questions about the effectiveness of global guidelines meant to limit the effects of industrial fishing.

Without formally acknowledging that hoki are being overfished, New Zealand has slashed the allowable catch in steps, from about 275,000 tons in 2000 and 2001 to about 100,000 tons in 2007 and 2008 — a decline of nearly two-thirds.

The scientific jury is still out, but critics warn that the hoki fishery is losing its image as a showpiece of oceanic sustainability.

“We have major concerns,” said Peter Trott, the fisheries program manager in Australia for the World Wildlife Fund, which closely monitors the New Zealand fishery.

The problems, he said, include population declines, ecosystem damage and the accidental killing of skates and sharks. He added that New Zealand hoki managers let industry “get as much as it can from the resource without alarm bells ringing.”

The hoki lives in inky darkness about a half-mile down and grows to more than four feet long, its body ending in a sinuous tail of great length. Large eyes give the fish a startled look.

Scientists say its fate represents a cautionary tale much like that of its heavily harvested forerunner, orange roughy. That deepwater fish reproduces slowly and lives more than 100 years. Around New Zealand, catches fell steeply in the early 1990s under the pressures of industrial fishing, in which factory trawlers work around the clock hauling in huge nets with big winches.

Hoki rose commercially as orange roughy fell. Its shorter life span (up to 25 years) and quicker pace of reproduction seemed to promise sustainable harvests. And its dense spawning aggregations, from June to September, made colossal hauls relatively easy.

As a result, the New Zealand Ministry of Fisheries set very high quotas — roughly 275,000 tons a year from 1996 to 2001. Dozens of factory trawlers plied the deep waters, and dealers shipped frozen blocks and fillets of the fish around the globe.

Moreover, the fishery won certification in March 2001 from the Marine Stewardship Council, a private fisheries assessment group in London, which called it sustainable and well managed. The group’s blue label became a draw for restaurant fish buyers.

“Most Americans have no clue that hoki is often what they’re eating in fried-fish sandwiches,” SeaFood Business, an industry magazine, reported in April 2001. It said chain restaurants using hoki included McDonald’s, Denny’s and Long John Silver’s.

Ominous signs of overfishing — mainly drops in hoki spawns — came soon thereafter. Criticism from ecological groups soared. The stewardship council promotes hoki as sustainable “in spite of falling fish stocks and the annual killing of hundreds of protected seals, albatross and petrels,” the Royal Forest and Bird Protection Society of New Zealand said in May 2004.

When the stewardship council had to decide whether to recertify the hoki fishery as sustainable and well managed, the World Wildlife Fund, a Washington-based group that helped found the council, was strongly opposed. “The impacts of bottom trawling by the hoki fishery must be reduced,” the fund said.

The wildlife fund was overruled, and the council recertified the fishery in October 2007. At the same time, the New Zealand ministry cut the quota still further, reducing the allowable commercial catch from roughly 110,000 tons to about 100,000 tons.

Some restaurants cut back on hoki amid the declines and the controversy.

Last year, Yum Brands, which owns Long John Silver’s, issued a corporate responsibility report that cited its purchases of New Zealand hoki as praiseworthy because the fishery was “certified as sustainable.”

Now, Ben Golden, a Yum Brands spokesman, said hoki was “not on the menu.”

Denny’s said it served hoki only in its New Zealand restaurants.

Gary Johnson, McDonald’s senior director of global purchasing, said hoki use was down recently to about 11 million pounds annually from roughly 15 million pounds — a drop of about 25 percent. “It could go up if the quota goes up,” he said in an interview. He noted that McDonald’s also used other whitefish for its Filet-O-Fish sandwiches.

Mr. Johnson called the diminishing quotas a sign not of strain on fish stocks but of good management. “Everything we’ve seen and heard,” he said, “suggests the fishery is starting to come back.”

The Ministry of Fisheries agreed. “If you look at the current state of the fishery, it’s apparent that the string of management actions that we’ve taken, which came at severe economic impact, have been effective,” said Aoife Martin, manager of deepwater fisheries.

But the Blue Ocean Institute, a conservation group in East Norwich, N.Y., that scores seafood for ecological impact on a scale from green to red, still gives New Zealand hoki an unfavorable orange rating. The fish is less abundant over all, the group says, and the fishery “takes significant quantities of seabirds and fur seals.”

Mr. Trott of the wildlife fund was more pointed. He called the fishery’s management “driven by short-term gains at the expense of long-term rewards” — a characterization the ministry strongly rejects.

But he, too, held out the prospect of a turnaround that would raise the hoki’s abundance off New Zealand and significantly reduce levels of ecological damage and accidental killing.

“We are currently working with both industry and government to rectify all these issues,” he said. “Our hope is that we will see great change and willingness by industry and, importantly, government to improve the situation dramatically.”

Tuesday, September 8, 2009

Kiva microloan: Reyna Isabel Poveda Toleno

Every year, students in my economics courses lend money to aspiring entrepreneurs in less developed countries through Kiva.org. One of our recipients is:

Reyna Isabel Poveda Toleno

Reyna Isabel is 36 years old and resides in the Laureles Norte neighborhood in the capital of Managua. She is single and has three children ages 7, 13, and 18; the eldest works and the two younger children study. She has run a small convenience store for many years, which has been difficult given that she does not have help from the father of her children. With this loan she will purchase basic grains, meat, candies, and other products to increase her sales and earn better profits. She thanks the institution for the opportunity to increase the inventory of her business, which will bring benefits for her family.

Translated from Spanish by Mariela Cedeno, Kiva Volunteer

La señora Reyna Isabel de 36 años de edad, reside en el barrio Laureles Norte en la capital de Managua, soltera con tres hijos de 7, 13 y 18 años de edad, el mayor trabaja y los dos menores estudian su negocio es una pulpería que desde hace varios años administra, difícil ya que no tiene la ayuda del padre de sus hijos, con este préstamo que esta haciendo es para comprar granos básicos, carne, golosinas y otros productos para incrementar las ventas y poder tener mejores utilidades. Da las gracias a la institución por la oportunidad de incrementar el inventario de su negocio el cual traerá beneficios para su familia.

Kiva microloan: José Daniel Galán Dávila

Every year, students in my economics courses lend money to aspiring entrepreneurs in less developed countries through Kiva.org. One of our recipients is:

José Daniel Galán Dávila

In the district of Masaya, Sr. José Daniel Galán manufactures and sells shoes for children, as well as women and men. This business allows him to support his wife and two children.

He came to CEPRODEL to request a loan so that he can buy materials for making shoes, which will allow him to continue feeding his family. He works with his own sewing machine, which he purchased with money that he saved up over time.

Translated from Spanish by Ronan Reodica, Kiva Volunteer

En el departamento de Masaya, el señor José Daniel Galán se dedica a su actividad de elaboración y venta de calzados ofreciendo el producto tanto a niños como a damas y caballeros. Se ha destacado en esta actividad con la que mantiene a su familia compuesta por su conyuge y sus dos hijos.

El motivo por el que acudió a Ceprodel es para solicitar un crédito para la compra de los materiales de trabajo para continuar en la elaboración de los calzados y así seguir llevando el sustento a su mesa. Él trabaja con su propia maquina de coser la cual la adquirió por medio de sus ahorros de largo tiempo.

Kiva microloan: Paula Argentina Aguirre Calero

Every year, students in my economics courses lend money to aspiring entrepreneurs in less developed countries through Kiva.org. One of our recipients is:

Paula Argentina Aguirre Calero

La señora Paula Argentina Aguirre, tiene la edad de 38 años, habita en el barrio Los Martínez, ubicado en el municipio de La Concepción; junto a su esposo el cual trabaja y le apoya con los gastos del hogar, ellos tiene tres hijos uno de ellos independiente y los otros estudiantes de secundaria, los planes hacia su familia es mejorar las condiciones de vida, doña Paula desde hace 26 años se dedica a venta y compra de frutas y verduras el cual se vende mucho la dificultad es cuando la alza de precios aumenta y las ventas bajan por que no la quieren comprar. Los planes hacia un futuro en su negocio es poder expandirse. Con el préstamo va a comprar frutas y verduras para dar un mejor servicio cada día a sus clientes. Da las gracias Afodenic por la oportunidad de estos séptimos ciclos el cual ha logrado invertir en su negocio.

Calif. violence shelters closing amid budget cuts

In the September 8, 2009 story "Calif. violence shelters closing amid budget cuts," Associated Press writer Juliet Williams reports that California's restriction of tax revenues is resulting in cuts to government services, such as domestic violence shelters. When people argue for tax cuts, should they also specify which government services they would like to reduce or eliminate?
SACRAMENTO, Calif. – Six domestic violence shelters in California have been forced to close while dozens more are scaling back services after Gov. Arnold Schwarzenegger eliminated all state funding for the program that supports them.

Shelters in the Central Valley town of Madera, the Sierra foothill town of Grass Valley and in Ventura County in Southern California have closed. Others in the San Francisco Bay area, Los Angeles and Bakersfield are on the verge of closing.

Many centers are laying off staff and closing satellite offices that serve remote areas of the state as they cope with the budget cuts. A national domestic violence group describes California's as the deepest cuts to such programs nationwide, even as other states have reduced funding.

In Madera County, officials have turned away six domestic violence victims and eight children since the county's only shelter closed Aug. 7, said Tina Figueroa, the shelter's director. The Martha Diaz Shelter served about 100 victims a year, many of them low-income and with no place else to turn, she said.

"Their only option is the local rescue mission, but they're reluctant to go there because it's a majority of men (who stay there)," Figueroa said. "Also, it's not protected. Anybody could walk in there."

Three families — mothers and their children — who were staying at the secret location also were forced to leave quickly when it was shuttered, she said.

The California Department of Public Health's Domestic Violence Program provided funding to 94 agencies statewide, some of which operate multiple shelters. Most also assist victims with restraining orders, legal aid, child services, money management and other life skills. Nearly all the agencies say they are cutting back on such assistance programs in the wake of the budget cuts.

Schwarzenegger eliminated the program's $20.4 million budget when he used his line-item authority to veto nearly $500 million in the revised budget passed by the Legislature. Lawmakers had voted to maintain the program but cut its budget by 20 percent, to $16.3 million.

"We were appalled by the governor's reckless action, in shock," said Sue Else, president of the National Network to End Domestic Violence.

She said a handful of other states, including Iowa, Illinois and New Jersey, have reduced funding for domestic violence programs this year, "but nothing like the devastating cuts completely eliminating the domestic violence budget in California."

California's program was created 15 years ago to fund local agencies for abuse victims after the high-profile death of Nicole Brown Simpson, O.J. Simpson's former wife. The agencies also rely on grants from foundations, the federal government and private donors.

The state's 2009-10 budget still includes $5 million for other programs related to sexual assault and domestic violence, including prevention programs, crisis hotlines, shelters and funding for law enforcement.

"The governor understands how difficult these cuts are and sees the real Californians and the real consequences behind them, but had no other choice because the Legislature failed to pass a budget that closed the entire deficit," said Rachel Cameron, a spokeswoman for Schwarzenegger.

Advocates, however, say the decision was shortsighted.

According to the state attorney general's office, 113 people died in 2008 in cases related to domestic violence, a number that had dropped from a decade-high of 187 deaths in 2003. In 83 percent of the 2008 deaths, the perpetrator was the victim's husband or boyfriend. In 10 percent, the perpetrator was a wife or girlfriend.

"It's the cheapest form of safety the state can have. It's homicide prevention," said Eve Sheedy, director of domestic violence policy at the Los Angeles city attorney's office. "If you take the cost of arresting, trying, incarcerating someone for a serious physical crime or homicide and you compare that to what these shelters were getting, it's an unbelievable cost benefit."

She said domestic violence reports make up the majority of 911 calls, although many victims never reach out for help from police.

The national network, which conducts an annual survey of domestic-violence programs across the country, reported that 3,872 California victims were served during its 24-hour survey period in September 2008, more than half of them for emergency or temporary housing.

Nearly 700 were denied services, often because of short-staffing. About 310 were denied access to temporary shelter because none was available, according to the Washington, D.C.-based group.

A bill by state Sen. Leland Yee, D-San Francisco, would restore $16.3 million for the program by taking money from a California fund designed to compensate injured crime victims or their survivors.

The legislation needs approval from Speaker Karen Bass, D-Los Angeles, to move out of a committee and to the Assembly floor. Bass has not taken a position on the bill, said her spokeswoman, Shannon Murphy.

Because it's an urgency bill, it must pass the Senate and Assembly with a two-thirds vote by the end of the regular legislative session on Friday. Otherwise, it will die.

Failure to restore funding would "result in increased health care, law enforcement and other costs to the state," Yee said in a statement. "But more critically, it puts victims of domestic violence and their children in grave danger."

The governor also has not taken a position on the bill, Cameron said.

The group Crime Victims United of California opposes transferring money from the fund. Chairwoman Harriet Salarno said in a letter to Yee that raiding the fund would put a financial strain on the program for "one subset of victims in California."

She said some domestic violence victims might already be entitled to compensation, putting an added financial burden on the fund, which receives money from restitution fines, penalties against people convicted of crimes and traffic offenses, and the federal government.

Tara Shabazz, executive director of the California Partnership to End Domestic Violence, said domestic violence victims also are crime victims, so it was logical to look to the fund for help in an emergency.

"These budget cuts have made domestic violence victims extremely vulnerable, and we hope that our allies advocating for crime victims will join us in exploring all means of keeping California's shelters open," she said.

Fed: consumers cut debt by record $21.6B in July

In the September 8, 2009 article "Fed: consumers cut debt by record $21.6B in July," Associated Press economics writer Jeannine Aversa reports that consumers have paid down their debt as they have reduced their consumption spending:
WASHINGTON – Consumers slashed their borrowing in July by the largest amount on record as job losses and uncertainty about the economic recovery prompted Americans to rein in their debt.

Economists expect consumers will continue to spend less, save more and trim debt to get household finances decimated by the recession into better shape. However, such action is a recipe for a lethargic revival, as consumer spending accounts for 70 percent of economic activity.

The Federal Reserve reported Tuesday that consumers ratcheted back their credit by a larger-than-anticipated $21.6 billion from June, the most on records dating to 1943. Economists expected credit to drop by $4 billion.

Wary consumers and hard-to-get credit both factor into the scaled-back borrowing. But economists are split on which force — lack of demand by consumers or lack of supply from banks — is having the bigger influence.

"It's really a tug of war," said Mark Williams, professor of finance and economics at Boston University and a former Fed bank examiner. "It's true that consumers are being more responsible, saying 'I don't really need that extra credit card,' but it is more related to banks clamping down on lending."

But Erik Hurst, economics professor at the University of Chicago Booth School of Business, says it is impossible to know for sure. "We are seeing declines in demand for loans from consumers but also declines in the supply of loans from banks. How much of the credit cutback is due to the decline in supply or demand, you can't really tell."

Last month, the Federal Reserve, in a survey of bank loan officers, found somewhat weaker demand for all types of consumer loans. But fewer banks reported tightening their standards on credit card and other consumer loans, the Fed survey said.

Still, a report earlier this year by the company that produces the most widely known credit scores found that companies slashed limits for an estimated 58 million card holders in the 12 months ended in April, even though a high percentage had good credit scores when their limits were cut.

The cuts affected about a third of consumers, according to the study by FICO. But most people did not see a big impact on the credit scores because lenders often cut limits on cards that were unused or lightly used.

In Tuesday's report, demand for non-revolving credit used to finance cars, vacations, education and other things fell by $15.4 billion, also a record decline. That 11.7 percent pace was on top of an 8 percent annualized decline in June.

Consumers' appetite for revolving credit, primarily credit cards, declined by $6.1 billion in July, an annualized rate of 8 percent that followed a 6.4 percent drop in June.

July's retreat translated into an annualized decline of 10.4 percent. That followed a cut of $15.5 billion in June, or a 7.4 percent annualized drop, and the most since a 16.3 percent decline in June 1975.

The latest cut left total consumer credit at $2.47 trillion.

The magnitude of the drop surprised analysts. Some thought the Cash for Clunkers program — which began in July and aided auto sales and car loans — would have blunted cutbacks in other lending areas.

The Fed's measure of consumer borrowing does not include debt secured by real estate, such as mortgages or home equity loans.

Even though the unemployment rate dipped in July, it jumped in August to a 26-year high of 9.7 percent. Already, the recession has snatched 6.9 million jobs and unemployment is expected to top 10 percent this year as employers keep cutting.

That will make it harder for Americans to keep up with payments on credit cards and other kinds of loans, analysts said.

"As great as the clunkers program has been, it's tough to head out and buy a big ticket item when you don't have a job," said Richard Yamarone, economist at Argus Research. "Don't expect consumer credit to increase any time soon; the job situation is dismal, at best."

Swiss topple U.S. as most competitive economy: WEF

In the September 8, 2009 article "Swiss topple U.S. as most competitive economy: WEF," Sven Egenter provides highlights from the World Economic Forum global competitiveness report:
GENEVA (Reuters) – Switzerland knocked the United States off the position as the world's most competitive economy as the crash of the U.S. banking system left it more exposed to some long-standing weaknesses, a report said on Tuesday.

The World Economic Forum's global competitiveness report 2009/2010 showed economies with a large focus on financial services such as the U.S., Britain or Iceland were the losers of the crisis.

The U.S. as the world's largest economy lost last year's strong lead, slipping to number two for the first time since the introduction of the index in its current form in 2004.

"We have been expecting for some time that it may lose its top-position. There are a number of imbalances that have been building up," said Jennifer Blanke, Head of the WEF's Global Competitiveness Network.

"There are problems on the financial market that we were not aware of before. These countries (like the U.S. and Britain) are getting penalized now," she said.

Trust in Swiss banks also declined. But in the assessment of banks' soundness, the Alpine country still ranked 44th. U.S. banks fell to 108 -- right behind Tanzania -- and British banks to 126 in the ranking, now topped by Canada's banks.

The WEF bases its assessment on a range of factors, key for any country to prosper. The index includes economic data such as growth but also health data or the number of internet users.

The study also factors in a survey among business leaders, assessing for example the government's efficiency or the flexibility of the labor market.

The WEF applauded Switzerland for its capacity to innovate, sophisticated business culture, effective public services, excellent infrastructure and well-functioning goods markets.

The Swiss economy dipped into recession last year, too and had to bail out its largest bank UBS. But its economy is holding up better than many peers and most banks are relatively unscathed by the crisis, which drove U.S. banks into bankruptcy.

The WEF said the U.S. economy was still extremely productive but a number of escalating weaknesses were taking its toll.

Concerns were growing about the government's ability to maintain distance to the private sector and doubts rose about the quality of firms' auditing and reporting standards, it said.

BRAZIL LEAPS

Leading emerging markets Brazil, India and China improved their competitiveness despite the crisis, the report showed.

But Russia saw one of the steepest declines among the 133 countries assessed, falling back 12 places to 63, as worries about government efficiency and judicial independence rose, the WEF said.

After years of rapid improvement, which took it to place 29, China now had to tackle shortcomings in areas such as financial markets, technological readiness and education as it could no longer rely on cheap labor alone to generate growth.

India, ranked 49th, was in turn well positioned in complex fields such as innovation but had still to catch up on basics such as health or infrastructure, the WEF said.

Brazil leapt by 8 ranks to 56th, as measures to improve fiscal sustainability and to liberalize and open the economy showed effects, the report said.

Among the top-ten, Singapore moved up to third from fifth, swapping positions with Denmark, which fell behind fellow-Nordic country Sweden. Finland as 6th and Germany as 7th stayed put while Japan and Canada overtook the Netherlands.

The WEF study named African countries Zimbabwe and Burundi as the world's least competitive economies.

In the case of Zimbabwe, the WEF noted the complete absence of property rights, corruption, basic government inefficiency as well as macroeconomic instability as fundamental flaws.

For the full report click on: www.weforum.org/gcr

Monday, September 7, 2009

Recession drives U.S. restaurateurs, diners to trucks

In the September 6, 2009 article "Recession drives U.S. restaurateurs, diners to trucks," Laura Isensee reports:
LOS ANGELES (Reuters) – Every Thursday night, Lonnie Bishop and Lisa Case have a dinner date. For $5 each, the couple dines on fancy hot dogs served from a food truck parked outside their favorite wine shop in Los Angeles.

The fire engine-red truck labeled "Let's be Frank" is part of a growing fleet of mobile food vendors that serve tasty and inventive fare, often organic.

The trend has drawn entrepreneurs looking for opportunities in the recession and diners seeking cheap eats.

The new vehicles raise the bar from the traditional "taco trucks" that sell mainly Mexican fare at construction sites and in neighborhoods in U.S. cities with big Latino populations.

Their menus are wildly different, attracting adventurous foodies with unusual items: tacos filled with Korean-style barbecued meat, vegan burgers, sushi, cupcakes, and architecturally inspired ice cream sandwiches.

"I've eaten all over the world in three-star restaurants. I enjoy this as much as I enjoy anything and I save a lot of money," said Bishop, 46, holding a bun-wrapped sausage made from family-farmed pork and topped with pickles.

With the economic downturn, restaurateurs have struggled to find funding to open full-scale restaurants, said Tom Forte, an analyst at Telsey Advisory Group in New York City.

The cost of setting up an eatery on wheels is a fraction of what's needed to open a sit-down restaurant, Forte said, noting it takes $900,000 to open a Chipotle Mexican Grill.

Erica Cohen, 34, began her career at an upscale restaurant group but scaled down her dream of opening a traditional burger joint because it seemed so risky during the recession.

So, for $30,000, Cohen and her business partner leased a boxy truck complete with a kitchen and an order window.

BURGERS AND TRUFFLES

Their hot pink truck, called "Baby's Badass Burgers," flaunts a logo of two buxom cooks who could double as pin-up models and sells gourmet mini-burgers. Parked off Hollywood Boulevard, the truck draws workers like Lara Yturriaga, who ordered a Cougar -- two mini burgers topped with St-Andre cheese and black truffles.

"I'm on a quest this whole month (to eat at) 10 food trucks," Yturriaga, 25, said. So far, she's tasted Indian crepes and Asian-style meat in a rice-patty bun.

"I like that it's always something different," she said.

Many operators use Twitter to tell customers where they're going next. 'Kogi,' which serves Korean barbecue tacos, was among the first to use the free social media site.

"A restaurant is more like a passive sell. The lunch truck is more active," said Takeshi Kimura, who launched his "Fish Lips" sushi truck this summer.

Big chains are putting their own spin on the trend.

Taco Bell, owned by the giant Yum Brands Inc, uses Twitter for its promotional taco truck that hit the road this summer, handing out free food along its cross-country route.

Diner Michelle Madrid, 26, said the fun is in the chase.

"It's cool -- the whole 'guess where we are,'" she said.

Plus, it's now hip to be a penny-pincher.

"It used to be cool to have a credit card and be all high-flying. Now cash is king," said Kam Miceli, who helped start "Green Truck," which serves high-end organic fare.

Miceli, who built up a fleet of 11 trucks in Los Angeles and New York, plans to expand in Miami in the fall and is eyeing markets like Austin, Texas, and Washington, D.C. While developers have tried to convince him to open a traditional sit-down eatery, Miceli says he is not interested.

"We are sticking with trucks," he said.

New frugality is the new normal, by necessity

In the September 7, 2009 article "New frugality is the new normal, by necessity," Associated Press retail writer Ashley M. Heher reports:
CHICAGO – A year after "shop 'til you drop" stopped, the nation fixates on this question: Will consumer spending ever return to pre-recession levels?

Increasingly, the answer appears to be no. Belt-tightening in bad times is normal. And after every other recession since World War II, penny-pinching quickly fell out of fashion and Americans resumed their demand for houses, cars and everything else.

This time it's different. Like the Great Depression in the 1930s, the Great Recession seems destined to turn many Americans into lasting coupon-cutters, scrimpers and savers. Consumers dug a debt hole over the past decade from which there's no easy climb out. The population segment that drives spending the most — baby boomers — faces special pressure: Boomers are running out of time.

A study by research firm AlixPartners concluded that once a new normal sets in after this recession ends, Americans will spend at about 86 percent of their pre-downturn level.

In an economy driven by consumption, the implications are far-reaching if that forecast proves correct:

• For every kitchen not remodeled, there will be lost sales of appliances and supplies, and fewer jobs for designers and contractors. As homeowners do work around the house themselves, there will be less work for gardeners, plumbers and handymen.

• For every shopper who trades down from luxury stores to discount stores, it will mean less profit for retailers and manufacturers. Retailers will continue to offer few product choices and leaner inventories, and they'll reassess store locations and advertising.

• If sales of cars and trucks average closer to the recession level of 10 million a year than the 16 million in boom times, more suppliers will fail and further consolidation among automakers could occur. Taxes not paid on lost vehicle sales will continue to stress budgets of state and local governments.

Frugality may be good for family budgets, but it's bad for the national economy. And that has the potential to reinforce and continue the miserly mood. A Gallup survey last month found seven in 10 Americans are cutting weekly expenses — a number that has been consistent through the summer.

A year after last fall's financial meltdown turned a garden-variety recession into the worst downturn since the Depression, thriftiness is still driven by the twin engines of necessity and fear. Unemployment, now at 9.7 percent, is still rising and expected to reach double digits before year's end for the first time since 1982. Many who still have jobs are getting paid less, and investments have a long way to go before they return to pre-meltdown levels.

Kathy Haney, 46, of Orland Park, Ill., has a job but is scaling back her shopping and packing her lunch.

"You put your priorities in different places because you never know if you're going to have a job tomorrow," the legal secretary says. "You think twice now. I have six TVs in the house. Do I really need a new flat screen?"

For her and many other Americans, the answer is no. The underlying causes of the meltdown and where it left millions financially suggests a fundamental change is under way. Personal spending has fallen in four of the last six quarters — the only time that's happened since quarterly records were first compiled in 1947.

In a normal recession, a vicious downward cycle of reduced spending by consumers and layoffs by employers finally eases and a virtuous cycle begins. Consumers start spending again. Factories ramp back up to meet the demand and hire workers. Incomes rise, fueling greater spending, more production and more jobs.

Until the Great Recession, the worst recession since World War II was in 1981-82. Unemployment peaked at 10.8 percent in December 1982, a month after the recession had ended.

The recovery that followed was powered by baby boomers, they were mostly in their 20s and early 30s then. Their careers were taking off, they were starting families, and they were spending freely. On homes, furniture, cars — and everything else. Saving for retirement was the last thing on their minds.

Fueled by boomers, when the recession ended, growth was explosive. Consumer spending rose 5.7 percent in 1983. GDP rose 4.5 percent in '83 and 7.2 percent in 1984.

"If someone gets more comfortable, they spend a little more," says Erik Hurst, an economist at the University of Chicago's Booth School of Business. "As they spend a little more, someone else spends more."

Jump to today. For most of this decade, Americans enjoyed a credit-fueled binge that allowed them to spend more than they made. They snatched up everything from gadgets to houses.

Those houses soared in value and became as valuable a source of cash as a bank ATM. Home equity was tapped to pay for vacations, new cars and kitchen renovations. The rising stock market gave people an inflated sense of wealth as they watched their retirement accounts grow.

Not unlike the Roaring '20s, which preceded the Great Depression three generations ago, people believed the good times would never end. Per capita personal spending ballooned 25 percent from 2003 to 2005, according to data from Euromonitor International.

When the party ended, the nation was left with more than just a hangover. Personal debt had doubled in a decade. As of July, it stood at $13.8 trillion, or about $124,000 per household. Despite months of frugality, that was only slightly below its 2008 peak.

It will take years to work down the debt, which will prolong people's thriftiness. Paying it down will be harder because of the layoffs, pay cuts, freezes and furloughs. Personal income has fallen or been flat eight of the past 10 months.

On the asset side of their balance sheets, plunging stock prices and home values have made Americans feel poorer. Their net worth — the difference between the value of what they own and what they owe — has taken a staggering $12.2 trillion hit in the Great Recession. Net worth fell from $62.6 trillion at the end of 2007 to $50.4 trillion at the end of this year's first quarter, figures from the Federal Reserve show.

The result: Consumer spending adjusted for inflation fell 0.2 percent in 2008 — the first annual drop since 1980. Hardest hit from the first half of last year to the first half of this year: Motor vehicles and parts (down 17.2 percent); furnishings and durable household equipment (down 8.8 percent); clothing and footwear (down 5.8 percent).

"There will be a fundamental shift in the kind of cars we buy, a fundamental shift in the homes we buy, and a fundamental shift in consumption generally," says Matt Murray, an economist at the University of Tennessee. "And that is not something that took place in the 1980s."

As in the 1980s, much of that shift will be driven by baby boomers. For the 78 million people born from 1946 through 1964, the Great Recession hit at a particularly inopportune time — during peak years of earning and saving before retirement. Boomers range from 44 to 63 today — the youngest is nearly 10 years older than the oldest was in 1982. They are running out of time and are most likely to remain cautious spenders and become aggressive savers even as the economy improves.

The housing bubble mistakenly led boomers and millions of others to believe their home was their retirement nest egg. If they left their home equity alone during the boom, they've taken a hit the last couple years but are still ahead. But many treated their home like a personal bank and spent the gains by tapping a home equity line of credit.

Some now feel disgusted with the great national buying binge and are reacting against it. Last month, Chicago playwright Maureen Riley began giving away what she amassed.

"I felt this tremendous clarity as I looked around and saw my space emptying out and my closet emptying out," the 55-year-old says.

Despite all the battered personal balance sheets, thriftiness will abate somewhat as the economy continues to recover. There will still be vacations and home remodeling. But there will be caution, too.

Sanda Schramm, 63, a second-grade school teacher from Florham Park, N.J., and her husband Rob, 64, made changes after their retirement funds fell 20 percent below their peak. They considered themselves frugal before the recession. Now, they are even more tightfisted.

Instead of scouring for 40 percent discounts at Macy's and other department stores, she looks for 75 percent markdowns and shops more at consignment stores. They go out to dinner once a month instead of twice a week. And most everything they buy is paid for in cash, not with a credit card.

When the economy bounces back and her retirement accounts recover, Schramm says she'll continue to shop at consignment shops but will probably go to restaurants more.

"When the housing market and stocks were booming, everybody felt wealthy," she says. "But when everything goes down, you feel you're vulnerable ... I have always been careful, but now I am even more careful."

Made in the USA

I received the following e-mail message from a friend advocating that we shun foreign products in favor of those made in the United States. That is an easy choice if the U.S. product is of equal or better quality and has a lower price. What if the U.S. product is more expensive? At what point do campaigns to buy domestic goods and services work against the benefits of specialization and trade?
Made in the USA

Thought this was a good suggestion.

A physics teacher in high school, once told the students that while one grasshopper on the railroad tracks wouldn't slow a train very much, a billion of them would. With that thought in mind, read the following, obviously written by a good American.

Good idea . . . one light bulb at a time . . . .

Check this out. I can verify this because I was in Lowes the other day for some reason and just for the heck of it I was looking at the hose attachments. They were all made in China. The next day I was in Ace Hardware and just for the heck of it I checked the hose attachments there. They were made in USA. Start looking.

In our current economic situation, every little thing we buy or do affects someone else - even their job. So, after reading this email, I think this lady is on the right track. Let's get behind her!

My grandson likes Hershey's candy. I noticed, though, that it is marked made in Mexico now. I do not buy it any more. My favorite toothpaste Colgate is made in Mexico now. I have switched to Crest. You have to read the labels on everything.

This past weekend I was at Kroger. I needed 60 W light bulbs and Bounce dryer sheets. I was in the light bulb aisle, and right next to the GE brand I normally buy was an off brand labeled, "Everyday Value." I picked up both types of bulbs and compared the stats - they were the same except for the price. The GE bulbs were more money than the Everyday Value brand but the thing that surprised me the most was the fact that GE was made in MEXICO and the Everyday Value brand was made in - get ready for this - the USA in a company in Cleveland , Ohio. So throw out the myth that you cannot find products you use every day that are made right here.

So on to another aisle - Bounce Dryer Sheets . . . yep, you guessed it, Bounce cost more money and is made in Canada . The Everyday Value brand was less money and MADE IN THE USA! I did laundry yesterday and the dryer sheets performed just like the Bounce Free I have been using for years and at almost half the price!

My challenge to you is to start reading the labels when you shop for everyday things and see what you can find that is made in the USA - the job you save may be your own or your neighbors!

If you accept the challenge, pass this on to others in your address book so we can all start buying American, one light bulb at a time! Stop buying from overseas companies!

(We should have awakened a decade ago . . . . .)

Let's get with the program . . . . help our fellow Americans keep their jobs and create more jobs here in the USA.

Why the August Jobs Report Is No Labor Day Present

In the September 4, 2009 U.S. News & World Report article "Why the August Jobs Report Is No Labor Day Present," Liz Wolgemuth analyses the data from the August labor market report:
Last month, U.S. employers slashed 216,000 jobs from their payrolls, their smallest cut since August 2008, the Labor Department reported today. The job number was largely in line with economists expectations. But it wasn't all good news. Indeed, this Labor Day, nearly 10 percent of the nation's workers will be unemployed and searching for work. The unemployment rate shot to 9.7 percent, its highest level since June 1983. The unemployment rate is measured through a household survey, a different survey than is used to measure the monthly jobs number. The household survey showed the labor force increased by 73,000 workers last month, and employment dropped by 392,000.

What happened to teens this summer? Jobs were far more scarce than usual for teenagers this summer, and with fewer openings, they faced much more competition than in a typical summer. The teen unemployment rate rose to a record high of 25.5 percent in August, up from 23.8 percent in July. The unemployment rate could very well fall in the next few months, thanks to the normal seasonal decline, economists David Greenlaw and Ted Wieseman of Morgan Stanley Research said in a morning note.

Who else is hurt most by this job market? Men are clearly in worse shape than women. The unemployment rate for adult men is 10.1 percent, compared with 7.6 percent for adult women. The unemployment rate for Hispanic or Latino workers rose 0.7 percentage point to 13 percent, compared with a 0.3 percentage point rise to 8.9 percent for white workers. Black unemployment increased 0.6 percent to 15.1 percent, compared with an unemployment rate of 8.4 percent before the start of the recession.

Job seekers continue to face long job searches. The number of people who have been unemployed for 27 weeks or more continued to grow by a small margin and now totals close to 5 million. That, along with the jump in the unemployment rate, will likely put additional pressure on Congress to extend federally funded unemployment benefits again, despite the fact that many states already have as many as 79 weeks of benefits.

When will we see some job growth? One positive sign of things to come: Job losses in temp services have slowed "markedly" in the past four months, the Labor Department says. Temp jobs can be a useful indicator for the future trends in overall hiring. Economists still, by and large, expect unemployment to peak around 10 percent--and not until sometime next year, probably early in the year.

Which industries are doing worse/better? Despite the success of the "cash for clunkers" program, employment in motor vehicles and parts manufacturing fell 15,000 last month. Jobs in the sector had increased 31,000 in July. Construction has lost 1.4 million jobs since the start of the recession, although monthly job losses have moderated from their previous levels. Losses have moved from the residential construction industry to the nonresidential and heavy construction industries.

On the other hand, education and health services added a healthy 52,000 jobs in August. Retail job losses slowed--employers cut 10,000 jobs.

What are the experts saying?

"Today's report--together with other indications of a moderation in the pace of layoffs--is consistent with the notion that the labor market is progressing toward recovery. We expect to see payroll growth by the end of this year. However, as mentioned earlier, the unemployment rate probably won't peak until early next year. In fact, if the participation rate begins to flatten out (as seems likely), employment will need to rise 125,000 or so per month merely in order to maintain a steady unemployment rate." --Ted Greenlaw and Ted Wieseman, Morgan Stanley Research

"The August report continues a string of official results which are better than suggested by other labor market data (initial claims, the ADP survey, withholding tax receipts, etc.). Nonetheless, whether or not today's and other recent reports overstate the case, the improving trend of the labor market after the autumn/winter carnage cannot be denied. What is still very much open to question is how fast the move will be to stabilization of payrolls and eventually to job growth. We continue to believe that the process will be a slow one, and that households will be contending with weak income growth and balance sheet issues for some time." --Joshua Shapiro, chief U.S. economist at MFR