Business, Federal Government, and Exports Carries GDP to 5.9% Growth

Today the Bureau of Economic Analysis (BEA) published a revision to the 2009 4th Quarter Gross Domestic Product (GDP) reading. It was originally estimated to be 5.7% annualized growth, but now reads a surprising 5.9%. This number further cements the recession ended during the summer of 2009 (the third quarter GDP growth grew at a rate of 2.2%).

5.9% growth is a big number for the US, no matter what the year or the circumstances are. But I’m curious as to what is driving it. According to the BEA the major contributors to it are government expenditures, business spending, and exports. Private Consumption, which comprises about 70% of the calculation of GDP (GDP = private consumption + gross investment + government spending + (exports − imports)) accounted for none of the growth though. People are still sitting on the sidelines getting their wallets in order. Business investment shot up as inventories were depleted. This is a good sign.

What strikes me though is how little media attention this got today. I suppose its because a GDP increase without a comparable jobs increase is seen as phantom good news. But jobs always lag GDP. But maybe there is more to it. Many smart people believe measuring this way isn’t a real reflection of how the US is doing economically or otherwise. A term called Gross National Product (GNP) was more heavily used at one time and it focused not on geography like GDP does, but on what US owned entities produced, whether it is India, China, or in the US. This measure has somewhat died out because of the rise of foreign outsourcing. I mention it because I ran across this speech by Bobby Kennedy to University of Kansas on March 18th, 1968:

And this is one of the great tasks of leadership for us, as individuals and citizens this year.  But even if we act to erase material poverty, there is another greater task, it is to confront the poverty of satisfaction – purpose and dignity – that afflicts us all.  Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things.  Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product – if we judge the United States of America by that – that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage.  It counts special locks for our doors and the jails for the people who break them.  It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl.  It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities.  It counts Whitman’s rifle and Speck’s knife, and the television programs which glorify violence in order to sell toys to our children.  Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play.  It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.  It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.  And it can tell us everything about America except why we are proud that we are Americans.

One measurement that could catch on is the Human Development Index. It looks at life expectancy, education, and standards of living as its man components. I wouldn’t argue with increases in each of these areas.

Working Thoughts 02/26/09
Sizing Up the New Guy

Unemployment Is Not Distributed Evening Across Income Levels – No One Thought It Was

Ten or so days ago I ran across several citings of a report issued that revealed that those at the lower income levels are economically suffering at a disproportionate level than those at the higher income levels. I pulled up the report titled Labor Underutilization Problem of US Workers Across Household Income Groups at the End of the Great Recession: A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent and noticed that it is written by the same group of people that did the analysis I used for a couple of wealth distribution entries I wrote in April of 2009. I respect their research and many of the their findings.

However, this paper seems to be a little high on dramatics. For instance, the research shows that those with an income level of $12,499 or less has an unemployment rate of 30.8% and an underemployment rate of 20.7% (over 50% of this population pool is not employed at a full level). Those with an income level between $12,500 and $20,000 have numbers of 19.1% and 17.2% respectively. The point of the paper is to show that as income levels increase unemployment and underemployment levels drop to practically full employment levels (those with an income of $150,000 or more have numbers of 3.2% and 1.6%). These are WOW numbers.

But I’m left with several questions. The first is what are the relative numbers during good or normal times anyway, meaning, are those at the bottom always unemployed at a factor of 10 (30.8% to 3.2%)? If not, at what rate is that factor increasing/decreasing? Also, what are the upper and lower normal limits to these numbers historically? I suspect that those at the lower income levels have fluctuations that spike as business cycles come and go. Finally, are these numbers a forecast for what it means to be a knowledge economy? It looks like we are moving to a resort town of society – those that own the hotels and those that clean the rooms. The middle class are the tourists, except in this case they are Chinese?

Working Thoughts 02/23/09
Trade Up to the Future

“EL GRANDE BIGOTE” Victory

It has been too long since I’ve mentioned one of my favorite charity organizations – Donorschoose.org. I’m sure giving is down with the economic conditions – I know I’m guilty – but Donorschoose has such a great business model and their people are so creative. Below is an email from a friend of mine: Mike “EL GRANDE BIGOTE” Szarowicz. As you can tell he has a lot of fun with the drive and students benefit. I especially love the mustache logo.

Here’s how I like to think about it though – $50 is not memorable, but I won’t forget Mike’s costume and I know that kids, who have a trailer as a classroom, just got four bean bag chairs to read in.

——————————————

To my loyal mustache aficionados:

Another tremendously successful Mustaches for Kids campaign is in the books!   Our Charlotte Chapter raised over $58,000 and impacted the lives of over 26,000 students.  Thank you, thank you, thank you for all of your support.  Every year I’m amazed by the generosity of my friends and colleagues (and by the power of the MUSTACHE)!

All of your help also allowed me to retain my “Top Fundraiser” crown with $5,516 raised.  Here’s the series of pictures we all hoped to see:

Three-peat!!!

And if you’re of sane mind you’re likely asking yourself – “what the heck is that outfit on the right?!?!”  Well, that’s my 2010 Mustache Persona – “El Grande Bigote”.  He was inspired by a Hispanic wrestling show I saw in LA about 11 months ago.

Here are some close-ups:

   

The second picture there is now my facebook profile.  And that’s right – that’s a customized “E.G.B” cape and “El Grange Bigote” logo.  I owe credit on the cape to my lovely and talented wife Katie.  The logo I made myself.  I promised I’d top the prior two year’s costumes and in my mind I delivered.  I’m very concerned about 2011. 

Alas, I did not win best costume, as the police officer below took home the big prize:

 

Those are the five “best costume” finalists.  I’ll let you decide if the judges made the right decision.  [Note my boots!]

Oh well, it was another great year.  I hope you’ve enjoyed my crazy pictures.  I know our local schoolteachers and students are extremely grateful for everything we’ve done in this campaign.

Until next year…..

Michael
[a.k.a. “EL GRANDE BIGOTE”]

Take a Moment and Ask “What Story Would I Tell about Myself?”

It’s Sunday morning and there is snow on the ground. These are the type of mornings when you relax with a cup of coffee and read the news and just kind of veg out. I have my browser open and plenty of good stories ahead of me. But there is one thing I forgot to mention, my plan for a low key morning is not going to happen. My youngest just excitedly decided to dump out her crayon container and put it on her head as a hat. With her messed up blonde hair and three bottom teeth, she deviously smiles at me. But I’m not amused.

In between these occurrences of Sunday morning distraction I take in a blog post by Peter Bregman on HBR.com called A Story About Motivation. It’s about an elderly man who needed help into his “person’s with disabilities” van. It was raining and the walk was difficult to maneuver. Five good samaritans helped load the man into his ride while the driver curiously sat idle in the driver seat. Bregman didn’t get the sense that the driver was being malicious or even soulless. It just seemed like this was an everyday, every stop event. The driver wasn’t motivated to continually help in these situations. From his point of view it doesn’t change what he needs to do. One way or another, his riders are going to get into the van, he is going to driver them, and they are going to get out. He will do it again the next day and the day after that. So why get wet in the rain?

Bregman at this point hits on the theme of Drive by Dan Pink, a book about motivation. People put themselves into a story. Their role in the story is how they identify themselves. How that is defined is by how the question is framed. Here is an excerpt from the blog entry that helps clarify:

People tend to think of themselves as stories. When you interact with someone, you’re playing a role in her story. And whatever you do, or whatever she does, or whatever you want her to do, needs to fit into that story in some satisfying way.

When you want something from someone, ask yourself what story that person is trying to tell about himself, and then make sure that your role and actions are enhancing that story in the right way.

We can stoke another person’s internal motivation not with more money, but by understanding, and supporting, his story. “Hey,” the driver’s boss could say, “I know you don’t have to get out of the van to help people, but the fact that you do — and in the rain — that’s a great thing. And it tells me something about you. And I appreciate it and I know that man with the walker does too.” Which reinforces the driver’s self-concept — his story — that he’s the kind of guy who gets out, in the rain, to help a passenger in need.

And this snaps me out of my frustrated mood. Remember, I wanted to read the news and drink my coffee. My daughter wanted to wear a hat. I asked myself a personal question about being a father.

The Last Mile is a Land of Opportunity

It’s practically cliche to say these day, but we live in an knowledge economy. Other parts of the economy are commoditized. This places a premium on smart ways to look at business problems and most often the toughest nut to crack is the human element of it. We all approach problems from different points of view and that makes it hard for us to accept the reality of others. To us, the answer is always obvious.The TED talk below, is about the last mile. We can have the system, the supply chain to the technology, completely figured out but that doesn’t mean the consumer is going to understand it, see value in it, and buy it. There are people out there that overcome these situations. They seem to get the people side. They seem to know when and how to nudge.http://video.ted.com/assets/player/swf/EmbedPlayer.swf

Ask Yourself “What if…”

There are signs out there that the US economy is healing. The Jobs Report looks relatively OK, GDP is going gang busters, and the PMI is showing a rebounding manufacturing sector. Plus home sales are coming off lows. There is certainly weakness too – foreclosures are still on the rise.

What if we are at the precipice of a turn around? What if the economy is about to change for the better? How does that change your view of 2010?

  • Are you as mad at the government?
  • Do you buy a new car?
  • Will you take a up a new “you never know” hobby?
  • Is there a trip to Disneyland instead of camping?
  • Will you move to a different city?
  • Are you financially scarred by this?
  • Do you look back at 2007, before we went off the economic cliff, with a suspicious eye?
  • Do you wish it was still 2007?

We’ve spent the last two years healing our wallets, paying debts, getting the house in order and biding our time. It feels like there is an enormous amount of pent up demand for the things like clean energy, demonstrating ethics, and new forms of education. So many people have sacrificed and tested their mental will power – they are changed, but it doesn’t mean they don’t enjoy a bucket of beer, a beach, and a sunset.

What if…

Job Report Statistics

This is a list of job report statistic posts. It is updated at least monthly.

May 2010 Jobs Report and Wages
April 2010 Jobs Report and Wages
March 2010 Jobs Report and Wages
February 2010 Jobs Report and Wages
January 2010 Jobs Report and Wages
December 2009 Jobs Report and Wages
November 2009 Jobs Report and Wages
October 2009 Jobs Report and Wages
September 2009 Jobs Report and Wages
August 2009 Jobs Report and Wages
July 2009 Jobs Report and Wages
June 2009 Jobs Report and Wages
May 2009 Jobs Report and Wages
April 2009 Jobs Report and Wages
March 2009 Jobs Report and Wages
February 2009 Jobs Report and Wages
January 2009 Jobs Report and Wages
December 2008 Jobs Report and Wages
November 2008 Jobs Report and Wages

October 2008 Jobs Report and Wages
September 2008 Jobs Report and Wages

August 2008 Jobs Report and Wages
July 2008 Jobs Report and Wages
June 2008 Jobs Report and Wages
May 2008 Jobs Report and Wages

April 2008 Job Report Stats

March 2008 Job Report Stats
February 2008 Job Report Stats
US Productivity Stats for Q4 of 2007
Long Term Unemployment and Layoff Stats for January ’08
January Job Report Statistics, Wage, Spending, Inflation, and China Changes
December 2007 Job Report Statistics
November 2007 Job Report Statistics
Third Quarter Worker Productivity is Strong
October 2007 Job Report Statistics
September 2007 Job Report Statistics

Bureau of Labor Statistics

January 2010 Jobs Report and Wages

Here are the job market and compensation numbers for January 2010 (based on the job report):


Net
loss of 20,000 jobs in the month (revised in March 2010 to a gain of 14,000 jobs)

  • Analysts expected a gain of 13,000
  • A benchmark adjustment was made to the unemployment numbers for the last 18 months
    • The job losses of 2009 were actually under reported by a sum of 617,000
    • One year ago the US lost 779,000 jobsstill jaw dropping

  • October was revised to a loss of 224,000 from an original reading of 190,000 and revised reading of 111,000
  • November was revised to a gain of 64,000 jobs, up from an original gain of 4,000
    • The first gain in 23 months

  • December was revised to a loss of 150,000 from an original loss of 85,000
  • 14.8 million of people are unemployed, it was 15.3 million in December 2009
  • 9.3 million are unemployed due to job loss, down from 9.7 million last month
  • 6.3 million people have been jobless for more than 6 months
  • Temporary work, which usually precedes full time employment gains, added 52,000 jobs in January. This is after adding 46,500 jobs in December
  • Major federal government hiring is underway for the census – 9,000 jobs were added (part of an overall increase of 33,000)
  • Layoffs are flattening out, but hiring isn’t happening

Unemployment rate fell at 9.7%

  • Analysts predicted it would stay at 10.0% or possibly go up
    • The Unemployment rate hit 10.8 in 1982
    • As employment picks up, the labor pool will grow again and the unemployment rate should go up

  • The U-6 report, which is a broader group, dropped to 16.5%. It reached 17.3% last month
  • GDP, which earned its status as an economic indicator for growth in the 1950s, showed an annualized gain of 5.7% in the 4th quarter of 2009
  • PMI, a measure of manufacturing pace, showed a reading of 58.4%. Anything above 50% means the machines are running.

Specific Segment Job numbers:

  • Manufacturing added 11,000 jobs
  • Construction lost 75,000 jobs
  • Retailers gained 42,100
  • Leisure and Hospitality Services lost 14,000 jobs
  • Government sector lost 8,000, Federal gains were 33,000
  • Education and Health Services grew by 16,000 jobs
    • Health Care and Social Assistance grew by 17,100

  • Professional and Business Services grew by 44,000
    • Temporary work added 52,000 jobs in December

Wage (can be revised):

  • The average weekly paycheck (seasonally adjusted) is $629.04
  • The average hourly earning (seasonally adjusted) is $18.89 – up 5 cents
  • The average hourly work week rose to 33.3

Bureau of Labor Statistics

Job Report Stats Summary

Understanding Your Customers in Context

Perhaps this goes without saying, but many business owners don’t consider their product or service in context. They take the long way around to it, but Anthony Tjan over to HBR.org cuts the chase in his blog entry titled The Three-Minute Rule. He comments about the traditional ways to gather data via surveys and focus groups, but he feels to better understand the customer, ask them what they did three minutes before they used your product or service and three minutes after. This type of understanding can help uncover feedback that people didn’t realize was important. My favorite part of the his entry is excerpted below. It’s my favorite because as a father of two young children I go to the store a lot and inevitably…

One final retail example is described beautifully by my friend Paco Underhill, a shopping-pattern guru. In his book, Why We Buy, he describes how shoppers who do not have a shopping basket or shopping cart go quickly to the checkout when their arms get full. Okay…so what? A casual observer says that is obvious. A savvier approach might be to interview people in a checkout line with an armful of goods to ask where they were three minutes earlier and if they would have considered buying anything else if it hadn’t been so difficult to carry so many items. Underhill concludes that more establishments should consider putting shopping baskets in the middle of the store to keep customers in shopping mode longer (since research showed that few would go back to the front of the store to get a cart once engaged with shopping).

Working Thoughts 2/3/09
Two Ways to Make Your Resume More Significant

Working Thoughts 2/3/08
1st 100 Entries at Working Thoughts