News Cut Category Archive: Economy

Is it halftime in America?

Posted at 10:45 AM on February 6, 2012 by Bob Collins (2 Comments)
Filed under: Economy, Marketing and advertising

No ad in yesterday's Super Bowl has been more talked about than the one in which Clint Eastwood pitches for Chrysler, declaring it's "halftime in America." Forget that Eastwood opposed bailouts and has little love for Barack Obama, some say the ad is a re-election ad for the president, sounding as it does the same themes of Ronald Reagan's "morning in America" ad:

Unemployment in the U.S. is about 1 percent higher than it was when Reagan (whose birthday is today) sounded the "comeback" theme in his famous commercial.

But this latest ad is another in a long line of attempts to hold Detroit up as a model for sticking to it through time times.

A success story? Don't tell Comerica Bank chief economist Robert Dye, who issued his forecast for the Detroit area just last week. One of the reasons the unemployment rate has fallen is 150,000 people have moved out of the area. Dye says that trend may continue and for those staying, "prospects for near-term re-employment of most of the unemployed look dim,"

The ad also ignores another truth: There's more to an economy than making cars in Detroit.

True, Detroit may no longer be the nation's basket case. That distinction belongs to El Centro, California, where the unemployment rate -- the official unemployment rate -- is 26.8 percent.

Even Harry Callahan can't put lipstick on that one.

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Examining Lake Elmo

Posted at 12:04 PM on February 1, 2012 by Bob Collins (0 Comments)
Filed under: Economy

Urban planner Nathaniel Hood, writing at Streets.mn, is asking whether a city like Lake Elmo can be "pro-business" and for "organized growth" at the same time.

The discussion is sparked by a weekend article in the Pioneer Press in which business interests lamented the city's approach to growth by removing their parcels of land on the border to get them out of the control of the city.

Says Hood:

Lake Elmo saved itself at the expense of others, of whom now struggle with growth in an age of economic austerity. It's hard to feel bad for those communities though, they welcomed "growth" with open arms.

It doesn't appear if stopping sprawl was ever one of Lake Elmo's primary goals; the town merely wants to maintain rural character and charm. Over the last two decades, Lake Elmo seems unfazed by sprawl happening elsewhere - they just didn't want it in their backyard. In reading the article, you'll discover that Lake Elmo did created an unfortunate zoning code that favors one home per 2 acres, which can be classified as 'rural sprawl'. Yet, this sprawl never really happened because of the municipality's unwillingness to extend sewerage lines and more difficult and rigorous approval process. Now , as it stands today, Lake Elmo revised its master plan to promote development near its existing downtown-village-like infrastructure.

The economic downturn has its advantages. It halted the breakneck speed of sprawl long enough for communities to assess what they want to be. Can a metropolitan city maintain its rural charm and grow at the same time? If so, how?

Find the entire article here. It's well worth reading.

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The Super Bowl and economic superstition

Posted at 12:09 PM on January 30, 2012 by Bob Collins (0 Comments)
Filed under: Economy, Sports

Well, now, this is a problem. If you're a New England Patriots fan with money in the stock market, you have to decide which is more important: another Super Bowl trophy or the ability to retire.

The Boston Globe takes apart a superstition -- that the market and economy do better when the NFC wins a Super Bowl -- and finds that it's true. Sort of:

Since the first Super Bowl in 1967, this superstition has held true 80 percent of the time (36 for 45); prior to 1997, the indicator was correct 28 times in 31 years, including going 12 for 13 between 1984 and 1996. Lucky for investors, in 40-plus years of Super Bowls, AFC teams that were not originally part of the NFL have won just a dozen times.

Still, whether or not a Patriots win historically hurts the economy is debatable. Of the six seasons the Pats have made it to the Super Bowl, the theory has held true four times; Brady & Co. beat Carolina in 2004, a bull year, and lost to the Giants in 2008, the third-worst year on record. In the four years where the Super Bowl indicator has held up, New England is 2-2, and stocks have gained a net total of 27.8 percent. But if you count all six Super Bowl seasons, stocks have lost a net total of 7.94 percent.

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Despite new rules, airline fare advertising is still 'sneaky'

Posted at 11:34 AM on January 26, 2012 by Bob Collins (2 Comments)
Filed under: Aviation, Economy

New rules for airline fares began today and, predictably, the airlines don't like them much.

Gone, at least by design, are the low fares that are advertised because all the fees and taxes aren't mentioned. Consumers consistently have thought of the tactic as "sneaky."

So there was some irony today when the head of one airline called the new rules "sneaky," because the taxes and fees are now hidden in the advertised price.

But there's actually nothing to prevent the airlines from revealing what those taxes and fees are.

Check out the fare search on US Airways for a flight from Minneapolis to Boston this afternoon:

Simple. The entire fare is listed, and the part of the fare that is taxes and fees is also listed.

But the rules don't eliminate one of the "sneakiest" of all airline fare advertising tactics: There's usually only one seat on sale at the advertised price.

Watch what happens when you want to travel with a second person.

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A big threat to Target: Shoppers with smartphones

Posted at 11:25 AM on January 23, 2012 by Bob Collins (10 Comments)
Filed under: Economy

Smartphones, you're killing Target, apparently.

It's becoming an increasing practice that people patrol brick-and-mortar stores, check the prices, see the cheaper price online, and order it via their phone. This is reducing the stores to little more than showrooms for an online store.

Target, the Wall St. Journal reports, wants to stop it, and has sent a letter to vendors with a plea for products that can't be found online, or lower prices to compete:

"What we aren't willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands," according to the letter, which was signed by Target Chief Executive Gregg Steinhafel and Kathee Tesija, Target's executive vice president of merchandising.

Showrooming is an increasing problem for chains ranging from Best Buy Co. to Barnes & Noble Inc., at the same time that it's a boon for Amazon.com Inc. and other online retailers. This year store sales overall edged up 4.1% during the holiday shopping season, while online sales jumped 15%. And while online sales represent only 8% of total sales, that is up from just 2% in 2000.

Some analysts in the story say Target won't succeed since it's using an old business model to compete with online sites that have reinvented the game.

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The Kodak picture

Posted at 1:08 PM on January 19, 2012 by Bob Collins (5 Comments)
Filed under: Economy, Icons

It was a Kodak moment today when the company filed for bankruptcy and there's a pretty good chance few people get the pun. It wasn't always that way, of course. Probably millions of homes have shoeboxes full of unsorted pictures, all taken with Kodak film and printed on Kodak paper.

The writing has been on the digital wall for years; it's hard to believe there was anyone still working at the company who didn't know they were on the good ship Titanic.

Nonetheless, its history alone documents the way the country once was, the same way its products preserved how our families once were. In the '20s, for example, the company started the Eastman Savings and Loan Association to help employees finance home purchases.

A look at some of the historic Kodak commercials not only tells the tale of the company, but how much a commercial product can influence the culture and lives we lead.

Take the '50s, for example, when Kodak offered "easy payment terms" on a camera that cost $29.95 ($230 in today's dollars). .

The '60s brought the concept of cartridge-loading film, which eliminated the need to manually load film through reels and sprockets. And it ended the era of fumbling for a flash bulb for every shot.

In 1975, Kodak engineer Steven Sasson invents the world's first digital camera. It recorded black-and-white images at .01 megapixels.

In the '70s, this jingle became so popular, it later became a pop radio hit:

In the '80s, however, popular music migrated from the radio to the commercials:

And, being the '80s, throwing cameras away became acceptable when Kodak introduced the Fling Camera.

By the 1990s, Kodak was trying to keep up with technology by getting into other businesses. It bought a pharmaceutical business. And it manufactured batteries.

It tried a digital makeover in 1994:

But by the mid-'90s, Kodak had a ton of debt, and began selling off its assets. It sold its office products division and non-imaging health divisions. In '99, the digital printer business was sold to a German firm.

Late in the '90s, the company joined with America Online to deliver processed film via your computer.

By the new millennium, the company was still embracing the idea that your pictures would be printed on paper:

But in 2004, Kodak was dropped from the Dow 30, it shed thousands of jobs, and its digital camera line was sold.

In 2010, it sued Apple, claiming the smartphone technology belonged to it.

In recent years, Kodak tried to be hip, the same way any person in decline tries to be hip. Embarrassingly.

Last year, the company tried to raise money by selling about ,100 digital-imaging patents. But a judge delayed decisions on the patents, and Kodak's shares dropped below $1. The stench of economic death was in the air.

The companies digital and printing technologies, which last year accounted for 75 percent of its revenue, may be one of the few specialties left if and when Kodak emerges from bankruptcy.

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Report: Somali cabbies learn price of protest

Posted at 3:29 PM on January 18, 2012 by Bob Collins (5 Comments)
Filed under: Economy

Two-hundred Somali cabdrivers in the Twin Cities found out what happens when you protest. They were fired from their jobs at Airport Taxi, Twin Cities Daily Planet is reporting.

The drivers were involved in a protest that reportedly has been going on for at least a decade, lately centering on the amount the drivers are paid for ferrying clients of UCare and Medicaid.

Fisseha Guanje, who's been driving a cab for 13 years and has two kids, said the drivers don't want to join a union. "We just want to sit down and talk to the company owner," he said. Instead, they all got fired for showing up to protest. Guanje is particularly concerned about the $1,000 deposit he made when starting with the company. He's not sure he'll get it back -- and in any case, there is no interest. "They kick you out - no interest!" he said.

Taxis that showed up to protest were slapped with fliers that said, ""Your lease has been terminated and your auto insurance has been cancelled effective immediately."

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Greece in the third world?

Posted at 10:40 AM on January 12, 2012 by Bob Collins (2 Comments)
Filed under: Economy

For the most part, economic jargon and complicated debt restructuring stories are Greece to us. Today, for example, the U.S. business media is previewing debt talks, which begin tomorrow. It's an ongoing dance between private creditors and Greece's "economic partners," other countries with skin in the game.

What about the Greek people?

There is belt tightening, and then there's strangling in a noose. Greece is about to join the Third World, if reports of the effects of its austerity measures are any indication.

The Daily Mail says parents are abandoning children they can no longer afford, and the country is running out of medicine, including aspirin.

It's a terrible situation based on the Daily Mail account, but it's difficult for people here to know where it fits in the big picture, especially when considering this BBC story, which says Greece is adding new categories of behavior to the definition of "disabled."

The new government "disability" list also includes compulsive gamblers, fetishists, exhibitionists and sado-masochists, the Associated Press news agency reports.

The Greek Labour Ministry said a panel of medical experts had decided to include such behavioural disorders on the list, but the new categories did not signify benefit entitlement.

But some people in Greece are fretting that it will lead to state payments to the new categories.

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Are the ethics of a landlord 'our' business?

Posted at 10:09 AM on January 11, 2012 by Bob Collins (20 Comments)
Filed under: Economy, Politics

Question (Note: This is not a rhetorical question): Should an employee of the House of Representatives be held to a higher standard in private business dealings? Is the recent inspection of legislators' private lives more or less serious than an employee of the Legislature owning a couple of buildings that would earn most anyone else the slumlord epithet?

I've seen firsthand the problems at the Westminster Court apartments in Saint Paul when I dropped in to interview this couple a few years ago. Squalor is the perfect word for the "problem property" that every housing expert in Saint Paul has known about for years.

"Your clients paid a lot of money and let the buildings go to heck," a judge told the landlords at a hearing taking place at this hour (the Pioneer Press' Fred Melo is tweeting it).

MPR's Curtis Gilbert got an up-close view of the place for his story today:

The radiators in the unit are unreliable, James said. And that's just one of the problems. She opens a cupboard, and little brown beetles go scurrying.

"Look. Crawling all out everywhere."

She charges into the bathroom. The toilet doesn't flush.

"I gotta flush it like this," James said, reaching her hand into the toilet tank to pull the drain plug.

The sink is clogged. Cloudy water fills the basin.

"Won't even go down, this water. It's been like that for the longest."

James said she's reported all these problems to her landlord, but nothing's been fixed. Late last year, city inspections found some 600 code violations between this building and the one next door.

The families, many of whom spend their days on the edge of homelessness anyway, face eviction because the landlord stopped paying the mortgage and the buildings are in foreclosure.

The "she" in this story is Peggy Chun, who told the Star Tribune that Saint Paul's housing code "has caused landlords and low-income tenants hardship for many years."

"She takes the money from the government and she doesn't do anything," tenant Adade Kuegah said of Mrs. Chun.

But it's the he in the story who gives it a different twist, as revealed by the newspaper:

Randall Chun earns $99,400 as a researcher in the state House of Representatives. Neither he nor his wife returned several calls to home and office.

Based on the House Research website, Chun's area of expertise in his research is services for low-income Minnesotans.

Does it make a difference that he's an employee of the House of Representatives? Should his side businesses be held to a higher standard? Or is it none of the people's business?

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A return to the good times?

Posted at 2:41 PM on January 9, 2012 by Bob Collins (4 Comments)
Filed under: Economy

We haven't asked this question in awhile and today seems like an appropriate day to do so: Are you confident that your economic life is getting better and heading in the right direction?

A lot of people clearly are.

The Associated Press reports today that Americans increased their borrowing in November by the largest amount in 10 years. The Federal Reserve says total consumer borrowing rose $20.4 billion in November, the largest increase since a $28 billion gain in November 2001. A category that measures credit card debt rose by $5.6 billion, the most since March 2008.

Auto loans also took a big jump.

The total increase works out to about $65 per person in the U.S.

For all accounts that accrued interest, the new debt has an average annual interest rate of 13.67 percent.

Have your good times returned? Or are you just replacing the things that have worn out from a decade of trying to make do.

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The price of convenience

Posted at 1:31 PM on December 30, 2011 by Bob Collins (1 Comments)
Filed under: Economy

The FCC reportedly will investigate Verizon's plan to start charging $2 to some people to pay their bills.

Verizon will start charging the fee to people who make a one-time payment online with a credit or debit card over the phone or online.

"On behalf of American consumers, we're concerned about Verizon's actions and are looking into the matter," the statement from the FCC said.

It's an obnoxious idea, of course, this notion of paying money as a convenience charge to pay money, but it's hardly new.

A few weeks ago, for example, I wrote about Ticketmaster's "convenience fees." The Twins and others charge a "convenience fee" for the convenience of using your ink, and your paper, and your Internet connection to print out their tickets, thus saving them the cost of paper, ink, and postage to send them to you.

State Farm, for example, charges me a $1 "fee" each month for the convenience of extracting about $400 automatically from my checking account, a process that occurs between banks every day for pennies.

But Verizon's plan that's drawing so much consumer outrage mirrors most closely the policy of Xcel Energy, which charges a fee if you pay the bill online. The company, however, makes clear it doesn't benefit from the transaction. It says payments go to NCO Financial Systems, a call center and collection agency.

More than likely, that's what the FCC will find is behind Verizon's convenience fee; it pays for some third party's work.

"Customers have a number of alternatives to pay their bill and not incur the convenience fee," A Verizon spokeswoman told Bloomberg this afternoon. "Paying the fee is an option, not an absolute."

Update 2:31 p.m. - Verizon says it will drop the fee.

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A hero's last day

Posted at 10:50 AM on December 30, 2011 by Bob Collins (16 Comments)
Filed under: Economy, Health

In the four years of writing NewsCut, I've only encountered a conflict of interest once. It was this post -- the story of a couple forced into homelessness because of a health crisis. They were my wife's "clients." She's a "health care navigator" for an innovative program called the East Metro Crisis Stabilization Program, founded by HealthPartners and Regions Hospital in 2002 "to address the unmet needs of adults who experience a mental health crisis."

My wife, Carolie, and the people who work in the program, were the answer to the prayers of the most desperate people among us, people who were in no position to navigate the byzantine world of human services and health care in Minnesota. Its goal was what everyone said they wanted: early intervention and help to prevent high costs later.

For years, she's come home with stories of the people she helped -- saved, really -- one at a time. In the morning, she'd pick up the homeless, mentally-ill teen who'd been sexually abused, and get her health care, food, and a home by nightfall, for example. The program team then focused on long-term help.

When she told her stories, I'd confide my inadequacy by saying, "I wrote a blog today."

When the bureaucrats slammed the doors in the face of people who needed a hand (and they did, often by ignoring the rights and rules they knew the downtrodden wouldn't know), she knew all the angles to open them again. She was the Radar O'Reilly for the helpless.

"I'm off to do battle with the forces of evil," she'd joke when she left the house each day.

Dakota, Ramsey, and Washington counties, the Department of Human Service, social service groups all joined the program. Other counties in the state wanted to know how she -- and they -- did it because it made so much sense, got help for the most vulnerable people few cared about, and saved money in the process.

Today, she went to work the way she always does, a little mischief in her heart, a plan to help people who need help, and a smile on her face, even though it's the last day she'll have the job.

Officials pulled the plug on the program and the "mobile crisis team" and it closes it down today.

They are the heroes who walk among us, make a difference, and deserve a few minutes of recognition for the work they did in relative obscurity.

They're the people who gave a damn about someone other than themselves.

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Grocery shopping like a man

Posted at 11:24 AM on December 27, 2011 by Bob Collins (10 Comments)
Filed under: Economy

Men are taking over grocery stores.

The Chicago Tribune today reports on a movement to make it easier for men, now that surveys suggest they're doing more grocery shopping. The paper cites surveys showing 31 percent of men are the principal grocery shopper now, more than double what it was in 1985.

So merchandisers, like Proctor & Gamble, are creating "man aisles."

The man aisle puts all men's products, including P&G competitors, in one place, with shelf displays and even small TV screens to guide men to the appropriate skin-care items. Jones said the tests have gone well, with men spending more time in the aisles and, ultimately, more money.

On the food side, Barry Calpino, vice president of breakthrough innovation at Kraft Foods, said the company selected several products to market to men in 2011, with solid results. The Northfield-based company developed, packaged and marketed MiO, bottles of liquid flavor droplets to make water more enticing.

"Guys, when it comes to shopping and cooking, they love to customize and add their own personal touch," Calpino said, adding that the interest also extends to beverages.

Bottles of flavored droplets to make water "more enticing?" Guys!

Apparently, men simply shop differently -- more slowly, less organized.

The mindset has been that she shops, she really knows every inch of the store, she is really organized, has a list, is in a huge hurry," Calpino said. "We talk to a lot of these millennial guys about shopping, and the biggest headline is they're not as structured, not as hurried, much more experimental, more adventurous."

Men are more likely to buy on impulse, one expert says, because. "they have a little brighter outlook on the economy and their finances..."

That's a somewhat surprising analysis given that the paper says one of the reasons more men are grocery shopping these days is because they've lost their jobs and have more time to do so.

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The $180 sneakers

Posted at 2:41 PM on December 23, 2011 by Bob Collins (0 Comments)
Filed under: Economy

Today's news story that indicates some people have more money to spend than we've been led to believe.

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The "attitude gap" and unemployment

Posted at 12:16 PM on December 16, 2011 by Molly Bloom (4 Comments)
Filed under: Economy

When he hears discussion in the news of long-term unemployment, Paul Jensen grows frustrated. He owns Jensales, a small business a few miles outside Albert Lea in southern Minnesota. The business prints and sells technical manuals -- and it does commercial printing as well. Jensen also owns the local newspaper, The Alden Advance. He currently employs 12 people and has two more openings he's trying to fill: a bookkeeper and a printing assistant. The problem is he can't find anyone.

These aren't entry-level jobs, but they don't require a lot of experience either. It's these mid-level jobs that he's found particularly hard to fill. He's worked with placement agencies and the Minnesota Workforce Center, and he's posted ads in the newspapers to no avail.

The root of the problem, as he sees it, is both a skills gap and an attitude gap. Jensen's seen the skill gap addressed in discussions of unemployment in the media and among employers, but he wants to see community colleges and workforce centers react more quickly to the problem. He doesn't expect people to have all the skills necessary to do the job. All he's looking for is a base level of knowledge that he can build on with on-the-job training.

The more worrying problem to Jensen, however, is what he calls "the attitude gap." Jensen says, "People come in wanting the same job they had in 2008. The fact is, those jobs are gone."

As a small business owner, Jensen can't afford to offer health benefits. He tries to compensate employees in other ways, by allowing flexibility with family commitments and allowing them to work from home. He points to the fact that over half of his employees have worked for him for more than 10 years as a sign that they are satisfied.

Jensen also sees an unwillingness to move to a smaller town like Albert Lea. "People aren't thinking outside the bubble. But living down here is cheap, schools are good and there's almost no crime."

And he says the problem is not just here in Minnesota. He's a commanding officer of a naval reserve unit out of San Diego, made up of 150 people from across the country. He's seen many of them struggle with job loss and several of them have that same "attitude gap." One of the men in his unit had been unemployed for two years but had turned down a number of jobs.

"It's frustrating. At a certain point you have to accept the fact that the jobs are different and you can't have the same job you had a few years ago. And you can't be so specialized. You have to do a little of everything."

If you're an employer, what are you seeing? Have you seen a skill or attitude gap?

To look at it from the employee side, check out this map that my colleague Paul Tosto put together yesterday. We asked people in the Public Insight Network who have dealt with unemployment to tell us about their search for work in this economy and what they've learned. Many of the people who responded did indeed take jobs that were not the same as the ones they had in 2008, some even taking significant pay cuts in order to find work.

View How's it going in Minnesota's job market? in a full screen map

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Dismantling Occupy

Posted at 9:27 AM on December 10, 2011 by Bob Collins (11 Comments)
Filed under: Economy

Of all the cities where officials have dismantled the Occupy protesters, Boston may be the most symbolic, it being the home of the Freedom Trail and the place where patriots took a stand against a system they considered unjust.

But irony wasn't much of a concern when the cops moved in this morning, after informing the media they'd be allowed to watch.

As the Boston Globe tells it...

As police entered the site, they forced most members of the media to stand on the sidewalk on Atlantic Avenue, on the outskirts of Dewey Square. A line of about a dozen uniformed officers stood between them and the square, where at least 46 people were arrested.

Boston Police Superintendent William Evans said this was done so members of the media wouldn't interfere with the operation.

If there's one thing that the police around the country have discovered in the Occupy protests, it's that letting people see what's going on -- peaceful or not -- is not in their best interests.

What did the Occupy protests accomplish? Nothing, a Globe columnist contends:

The Occupiers, and many in the media, will argue that at a minimum they provoked discussion about the concentration of wealth in the hands of a few and the decline of the middle class. I'm not sure that's correct. The debate was already under way. Democrats have been harping on tax cuts for the wealthy over the last couple of years. Occupy was more a consequence of that discussion than its provocateur.

But whether one gives the Occupiers credit for the conversation or not, it's hard to see how they've played any role in figuring out a solution. The principal impact of the Occupiers' leaderless, agenda-free movement was pretty much to persuade everyone else that leaderless, agenda-free movements don't work. The Tea Party activists, with whom the Occupiers are often compared, turned their anger into political action. But much of the rhetoric from the Occupiers specifically rejected participation in voting and politics, leaving one puzzled as to how anything meaningful was to be accomplished.

The columnist complained the protests were making it impossible for anyone else to use the park. After the raids this morning, police erected metal barricades around the park.

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The power of the penny

Posted at 4:06 PM on December 2, 2011 by Bob Collins (2 Comments)
Filed under: Economy

If we got rid of pennies, what would we put on our bedroom bureaus to replace the old milk bottle full of pennies?

These are the many questions that are surfacing as this video, posted this week, zips around the Internet. Another: How will we raise sales taxes -- as we have for the arts, outdoors, gasoline, and maybe the Vikings -- if we can't raise them by an amount that provides a round-up to the nickel? That would raise all sales taxes to at least a dime.

Here's another question: What would happen to fundraising ideas like the one? In Peterborough, Ontario, a kid started raising money for a Christmas charity. Noah Leslie only asked for pennies "because it's the least you can ask for." Today, he announced he's raised $1,229.36 in pennies, which a bank is matching.

The same thing happened, more or less, over in New Richmond. Kids in a middle school last month held a "penny war," raising about $700 for a food pantry:

The rules were: Each homeroom competed against other homerooms in the same grade. All silver and bills counted as negative toward their totals and pennies were counted as positive. The team with the highest positive amount (or closest to zero if they were all negative) was the winning homeroom, explained NRMS physical education teacher and Student Council co-advisor Karen Stellrecht.

The teacher said she wanted to teach the young people that every penny counts.

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The 'processing fee' money grab

Posted at 1:48 PM on December 2, 2011 by Bob Collins (7 Comments)
Filed under: Economy

It's a typical result of a big class action settlement. By the time the damaged parties get compensated, there's not much money left.

Ticketmaster announced today it's giving $1.50 refunds to people who ordered tickets from the service between Oct. 21, 1999 and Oct. 19, 2011.

Business Insider reports the settlement of a class action suit comes because Ticketmaster did not tell anyone that they make a profit off "processing fees." In other words, it wasn't really a "fee," it was just a money grab.

The settlement doesn't ban Ticketmaster from doing this in the future, it just has to say on its website that it's doing it. People will also get an additional $5 if they used "expedited delivery" because Ticketmaster was apparently adding a profit margin to the actual cost of UPS delivery, too.

Coincidentally, tickets for next March's Buddy Guy concert in Minneapolis went on sale this afternoon. Here's the breakdown of what people are forced to pay on a typical Ticketmaster order:

Ticket price: $54.50
Facility charge: $4.00
Convenience charge: $12.55
Taxes: $1.36
Order processing fee: $7.21

So what good did the lawsuit against Ticketmaster do? This line in the story answers the question:

Also, the Counsel attorneys plan to ask for an award of up to $16,500,000 in attorneys' fees and expenses, as well as $20,000 to the two plaintiffs who brought forward the class action in the first place.

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103-year old remains in home; officials refuse foreclosure orders

Posted at 1:44 PM on November 30, 2011 by Bob Collins (2 Comments)
Filed under: Economy

There's no limit, apparently, to who banks will foreclose upon, but at least in Atlanta, there's a limit for the people who actually have to do the dirty work.

A 103-year old woman was allowed to stay in her home, after the movers and the sheriff's deputies refused to carry her out.

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Life in a shipping container

Posted at 11:36 AM on November 30, 2011 by Bob Collins (4 Comments)
Filed under: Economy

We were driving home from Aitkin last Friday afternoon and spotted a "home" on Mille Lacs -- I think it was in the Garrison area -- made of a shipping container. Maybe they're at the front of a parade.

Today, for example, Fair Companies reports on a single mother in California who didn't want to add a mortgage to her student loan debt. She was offered a shipping container for free, and made a home out of it.

Good luck trying the idea in most communities in Minnesota, though. It'd be against many local zoning laws.

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Can retail survive in Saint Paul?

Posted at 12:32 PM on November 28, 2011 by Bob Collins (11 Comments)
Filed under: Economy

If you ever have an urge to get away from the crowd in downtown St. Paul, there are fewer places with more solitude than Macy's. Since it's days as a stripped-down Dayton's, to Marshall Field's, to Macy's, it's always been a little bit sad to stroll through downtown's last department store.

The Pioneer Press reports today that store executives say the store is making money, which is hard to believe given how few people seem to shop there. Still, it's hard to find people who think the store will remain open after its obligation to do so expires at the end of next year.

"I think the handwriting is pretty much on the wall for the St. Paul store," David Brennan, co-director of the Institute for Retailing Excellence at the University of St. Thomas, told the newspaper.

Macy's has to stay open until next December in order to satisfy the terms of a city subsidy in 2001 to revamp what was then Dayton's. Many people think it's the only reason the store is still open at all. Light-rail construction has made it impossible to drive near the area, even if people wanted to, which they clearly don't.

Other plans for retail downtown have stalled badly. The plan for the Penfield, a large condo project around the old police station, were downsized and nothing has happened on the site. In 2008, Lund's announced it would open a grocery store at the project with construction scheduled to start in 2009. It never happened. The site looks pretty much like what it looked like three years ago. I took this picture three years ago Thursday.

The Lowertown section of the city was just getting vibrant -- and to a degree, still is -- when light-rail construction started last year.

But even so, downtown Saint Paul remains the Bermuda Triangle of retail.

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Show me your property tax bill

Posted at 1:35 PM on November 18, 2011 by Bob Collins (31 Comments)
Filed under: Economy

If I said my property taxes went up $75, would that be a lot? What if I said they went up 3 percent?

My property tax statement came in the mail yesterday and it shows they're going up $75, or 3 percent. To me, 3 percent sounds worse than $75, which, of course is only $6.25 a month. I probably can swing it.

In a story about Floodwood earlier this week, we noted that property taxes on one business have gone up 36 percent the last 10 years. Is that a lot? It's hard to say without actual numbers. For example, if the typical tax bill was $1,500 a year, that's an average increase of about $57 a year. Is that out of line? Inflation alone would have increased that $37 a year.

Every year, I invite people to add their particulars in the comments section below. How much -- in actual dollars -- is your property tax bill rising -- or falling?

Also, the Public Insight Network is gathering data on the subject here.

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'Anywhere but Minot'

Posted at 1:48 PM on November 15, 2011 by Bob Collins (7 Comments)
Filed under: Economy

In western North Dakota, the oil boom is making a lot of people rich. It's also making it enticing to kick members of the military out of a place to live.

Minot has never been on the dance card of many people in the military. It's a missile base on a flat piece of prairie with a wicked wind chill. But at least the people who served in the Air Force could find a place to live there. What with the expanding oil boom and this year's Souris River flood, those days are over.

"It's a war zone," says Stacy Baldus, a native of Grand Meadow, Minnesota.

Next June, she and Lt. John Nordstrom will be married and be that much closer to putting Minot in the rear-view mirror. For now, however, they have no idea where they're going to live, nor how they can afford the good times in North Dakota on military pay.

Single people in the Air Force are not allowed to live on base and have to fend for themselves in the real estate market. Lt. Nordstrom was renting a small house for about $1,000 a month when the flood hit.

"His landlord was going to rebuild, the rent would be the same, and we'd finish up his stint," Ms. Baldus told me this afternoon. Then, with a FEMA loan to help rebuild, and the housing market tight, and an influx of oil patch workers, the owner decided he needed to make more money and raised the rent to nearly $2,000 a month. There's a lot of that going on in North Dakota.

"He was trying to be as nice as he could ," she says. "We didn't need anything fantastic; it's just a small house."

It's even worse to the west. In Williston, 125 miles away, a one-bedroom living area is going for $3,000 a month.

An Air Force lieutenant can't afford that kind of money. With living on the base off-limits for single people, and a waiting list for those who are married, many airmen are essentially homeless, she says.

"Many of the apartments in Minot are owned by real estate companies outside of North Dakota, and they have found an easy way to boost profits by exploiting the very real housing shortage," Lt. Nordstrom said in an e-mail this afternoon. "Many people on fixed incomes, such as retirees, teachers, and military personnel, cannot afford to stay in their place. The lack of any kind of protective legislation for these people is causing serious pain to those affected, and it finds its roots in the oil boom."

Lt. Nordsrom has been "bouncing between friends." for six months. "It's definitely been tough on a number of different people, those who live on base and weren't directly impacted by the flood, a lot of them have opened up homes to people," Stacy Baldus says. "Initially, it's an easy commitment to make, but it goes on."

"We can't sign up on the waiting list until two months before we're married, and then the wait is about a year and a half," Ms. Baldus said. "But we're going to be out of here in a year and a half."

It's a crisis, she says, and one that's going unnoticed in the boom times. "It's added a lot of stress. Minot's a little isolated. They just recently had a suicide on base, and this puts a lot of added strain. We get the national news, and we hear about all these wonderful opportunities in North Dakota, but not about the downside."

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Black Friday is now 'black Thursday'

Posted at 1:20 PM on November 10, 2011 by Bob Collins (12 Comments)
Filed under: Economy

It's done. WalMart has killed Thanksgiving -- as expected. The giant retailer has responded to other stores following its lead by opening at midnight on the Friday after Thanksgiving, by announcing today it will open at 10 p.m. on Thanksgiving, the Pioneer Press reports.

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Can't we all just make bagels?

Posted at 10:51 AM on November 4, 2011 by Bob Collins (6 Comments)
Filed under: Economy, Religion

In New York, Coney Island Bialys and Bagels, which Morris Rosenzweig, a Jewish immigrant from Poland founded in 1920, was about to go out of business.

Zafaryab Ali and Peerzada Shah first tasted bagels when they arrived from Pakistan 16 years ago.

The New York Daily News has the compelling story today of Ali and Shah's -- two Muslims -- effort to keep the place going, and keep it kosher.

"I felt I had to save this store," said Ali, 54, who worked for Rozenzweig's grandson Steve Ross for 11 years, making bagels and bialys by hand, committing to memory the recipes Rosenzweig brought over from the old country.

Ali, a married father of two young girls, said he quit five years ago to earn a bigger paycheck as a cabbie.

"I'm happy I can take care of this store, turn a profit and make customers happy," Ali said.

Ali and Shah said geopolitics that divide Muslims and Jews have no bearing on making 95-cent bagels and their flatter, oniony cousins, the bialys.

The Jewish Daily Forward, which first reported the story, had a fitting conclusion to it:

When asked about the patchwork of neighborhood ethnicities that makes possible the Muslim ownership of a landmark kosher Jewish bialys store, Ali said with a smile, "That's America."

(h/t: Ken Paulman)

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America's disaster

Posted at 3:18 PM on November 3, 2011 by Bob Collins (5 Comments)
Filed under: Economy

The longer the economy remains a disaster, the more people may start wondering whether some of America's cities are anything but a lost cause and, if so, what does that mean?

In Highland Park, Michigan -- Detroit -- the city can't even pay its electric bill, anymore, so the city is turning off street lights.

"How can you darken any city?" the Associated Press quotes Victoria Dowdell asking as she stood in the halo of a light in her front yard. "I think that was a disgrace. She said the decision endangers everyone, especially people who have to walk around at night or catch the bus.

In 1980, the census counted 27,000 people living in Highland Park. By 2010, that number had fallen to 11,776.

The median household income is $18,700, compared with $48,700 statewide. And 42 percent of the city's residents live in poverty.

"It's pretty ghetto," Cassandra Cabil said from her front yard. Voices drift in the darkness from down the street, but the speakers can't be seen.

It was an auto city, of course, and nobody thinks the jobs are ever coming back.

Yesterday on Twitter, actor Denis Leary called attention to this documentary being made about Detroit.

BURN: One Year on the Frontlines of the Battle to Save Detroit (Kickstarter sneak peek) from BURN on Vimeo.

In Washington state, the governor is thinking about getting rid of school buses.

For the most part, it's not that dire -- yet -- in Minnesota, where MPR's Ground Level project has been documenting the cuts that cities are making: Foley, for example, is cutting police protection, Nowthen is about to decide whether to also give up all but emergency services, libraries are being closed, and businesses are closing and cutting back.

Street lights, cops, libraries, school buses. These were once the "core services" of government and their demise signals a new phase of deterioration.

The unanswered question is: Can it ever change or is this the new America in which we try to "save" only those whom we believe can be saved?

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More shopping, less Thanksgiving

Posted at 11:45 AM on November 1, 2011 by Bob Collins (15 Comments)
Filed under: Economy

Just about every major retailer is going on "all in" now on opening at midnight on the Friday after Thanksgiving.

"People want to shop through the night," Martine Reardon, Macy's executive vice president of marketing told the Associated Press. She said the expanded hours were in response to customers' requests.

Really? People were asking to be able to go shopping at midnight? Were store employees begging to go to work at midnight, too?

Kohl's announced today it, too, will open at midnight. In a press release, company chairman Kevin Mansell said. "We are making shopping easy and even more convenient this holiday season." Just one question: What's convenient about shopping for slippers for Uncle Andy at 1 in the morning?

The next step in retailing seems obvious: Destroy Thanksgiving Day. Target, for example, will experiment with Thanksgiving Day openings in Denver, matching some of the other discount store competition.

That makes it less convenient to get the family together on one day of the year without having to be distracted by going to work or going shopping. But perhaps people aren't requesting that.

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A day in the life of the harvest

Posted at 10:50 AM on October 25, 2011 by Bob Collins (9 Comments)
Filed under: Economy, Life

"Can you watch that gate and make sure none of the cows walks through?" Mena Kaehler asked as she drove by with a bucketloader full of silage for some of the heifers and bulls on her and her husband's 163-acre farm in St. Charles last week. It's a little after 7 a.m. -- morning chores time.

It was a reasonable request of two public radio city slickers -- me and photographer Jeff Thompson -- who were anxious to show our agricultural chops, minutes into spending the day with the Kaehlers in southeast Minnesota farm country.

While Thompson and I chatted at the gate, at least one heifer walked by us undetected and into the no-cow zone. The escapee was Miss Hoya Saxa, who was scheduled to be picked up in an hour or so by her new owner, having been sold at an online auction a few days ago for more than $24,000.

"No!" the anguished voice from the returning bucketloader shouted. Mena Kaehler recognized that the family's big payday was heading for the running of the bulls, and not needing to acknowledge that public radio city slickers make lousy gate guards.

It didn't take much for her to steer the bank account back to safer ground, and she didn't have to tell us the lesson we just learned: Every detail matters on the farm, and inattention can cost you plenty.

Mena and Ralph Kaehler are the fifth generation of Kaehlers working this farm, and with any luck, there'll be a sixth someday. One of their sons is working in New York, trying to get a bankroll started to buy a farm. The other is a student at Ridgewater College in Willmar. They hope to be partners one day.

(Ralph Kaehler leaves early for a work assignment at a farm in Mabel, MN. He asks his wife, Mena, to take a corn sample to the grain elevator to have its moisture content checked.)

But there's a rite of passage on the farm. "You don't come here to get into farming," Ralph Kaehler says. "You go somewhere else first, and then you come back." Ralph went to Colorado to get a Masters degree, where he met Mena, and came back to Minnesota to take over his part of the farm from his mother 20 years ago. His dad died in 1984.

You also go to college. All seven children of Kaehler's mother, Maxine, went to college. "I did it," she says proudly when I asked her how.

"We want to be able to give them this farm; we've told them that from day one," Mena says of her own sons. But, she adds, there's no family pressure to continue the farm.

It'll be a challenge if they do, though. The farm, on which the Kaehlers raise cattle, is small at 163 acres. "We wouldn't be able to farm 163 acres if Ralph didn't have an outside job, too," Mena says. Ralph is district sales manager for Quality Liquid Feeds.

There's little room for the expansion that keeps most farms in business by necessity. Cattle raised for breeding and beef need space, but pastureland is hard to come by these days in Minnesota.

Mena Kaehler brings a plate of cookies to her brother in law, Ed, who is harvesting corn on property he rents from the Kaehlers

It's harvest time, a chance to recalibrate the rhythm of rural Minnesota. Ralph's brother, Ed -- 12 years older -- has moved his combine onto Ralph and Mena's property. He rents the land from his brother to plant corn, and when he's done, the Kaehlers will graze their cattle on the corn flotsam over the winter.

"You have to treat this like a business, even though family is involved," Mena says. "And it is a business, but you still have to sit at the table at Thanksgiving."

"Ralph got a good deal," brother Ed says of the lease on the land from which he's pulling a season's worth of corn, sounding more business partner than brother.

"It's a good time to be a farmer and anyone who says different isn't telling the truth," he says while waiting for the combine to disgorge its pickings into a bin that a tractor will take to a semi parked nearby, and then take it to Ed's farm where it will be dried and stored until the price is right.

( From an office in his 1800's farmhouse, Ralph Kaehler sells cattle to the world and manages his feed business.)

These days, the price is right. Corn is selling for nearly $6 a bushel. But farmers are as concerned about its moisture content during harvest as the price it fetches. The summer dry spell has created fairly dry corn, which should minimize the amount of time and energy required to dry it.

On this day, a computer in the combine tells Ed the corn he's picking has 17 percent moisture content. The shipper at the river in Winona won't accept anything over 15 percent. The ethanol plant farther away will not only take corn with a higher moisture content, it'll pay a little more than "taking it to the river." But the river is closer.

Details.

From his perch in the combine at the top of a hill, Kaehler can see the past and, maybe, the future. He points out four or five neighboring farms and recites the number of dairy cows each raised at one time. Then he points out the farms that still have dairy cows. He points to one farm.

People are moving out here from St. Charles and buying farmhouses. "They just want their five acres," he says. He laments that he doesn't know half the people who live in the county, anymore.

He says every farm used to raise at least one pig. "Now, you can't find a pig in Winona County," he says. Apparently, the family pig is the agricultural canary in the coal mine.

He describes a litany of challenges to farmers of smaller operations. "It's not a fair playing field," he says. Monsanto sells seed to larger operations at a fraction of the price it'll sell to him and other small farms. When land comes on the market, it's snapped up for far more than a local farmer can afford to pay.

Cropland prices are about 20 percent higher this year from a year ago, according to the Federal Reserve Bank of Chicago. When the price of corn goes up in farm country, the price of everything else goes up, too.

"The owner of that property lives in Chicago," Ed Kaehler says, gesturing toward a neighboring field. "They can never make enough off it" considering the price paid, but with the differing tax laws, owners can write the difference off against other parts of their operations.

Ironically, those big operations might be his ticket to a nicer combine. This one -- 12 years old -- is reaching the end of its life. Government incentives and a big spike in the farm income have made it likely the bigger operations can afford the price of a new combine. That should lead to a glut of used combines for the smaller operation to buy.

It's big money on the farm these days. "How do you get into farming if you don't grow up on a farm?" I ask.

"You don't," Ed says.

It's a debatable point. Earlier, Ralph Kaehler said young people willing to "start at the bottom and work their way up" on a farm can advance to managing or owning one. But that, he acknowledges, isn't a strong suit for young people. Many employees of larger farm operations in Minnesota are recent immigrants.

Kaehler halts his combine; the semi is now full of corn and has to be taken to his farm 10 miles away. His cousin, Bob Larkin, has arrived from Redding, California to help bring in the harvest. While Kaehler waits, Larkin drives 10 miles to Eyota to unload the morning's bounty.

Larkin, a retired truck driver, returns to Minnesota in the spring to help Kaehler plant, and in the fall to help harvest. "I have the best of both worlds," he says. He avoids a Minnesota winter. While here, he spends a fair amount of time in the truck. If he's not hauling corn to the dryer at Ed's house, he's taking it to Winona, and waiting two hours to unload it. It takes seven minutes for the ubiquitous grain trucks to unload a full load of corn if all goes well.

On this day, things don't go well. An attachment on a tractor -- called a power take off -- snaps as it powers the auger, which carries the corn to a silo and dryer. Corn starts spilling everywhere.

"This is going to take longer than I thought," Ed says after also driving the 10 miles to answer Larkin's call for help. The harvest of 2011 grinds to a stop while he figures out what's causing the shear bolt on the attachment to snap repeatedly.

Back at the Kaehlers, Miss Hoya Saxa has been loaded into a trailer and is on her way to her new home. Ralph, back from a morning feed tank construction job in Mabel, MN., is trying to get a veterinarian to stop by for a round of vaccinations before a cattle show at the State Fairgrounds. But eight is too much for the vet to make time for the next day. He'll work out the details later.

(After lunch with his wife, 90-year-old mother, and a man who has worked for the family for 43 years, Ralph Kaehler stops to mail letters in the small town of Utica, Minnesota. Many small town Post Offices are closing, but Kaehler says everyone ends up in another town everyday anyway, so he doesn't think it'll cause big problems )

Kaehler is, unsurprisingly, as animated a booster of Minnesota agriculture as the state has. If there's a conflict between the types of farming done around the St. Charles area -- large, small, Amish, cattle, dairy, swine -- it doesn't show when he surveys the region.

He's clearly proud of the good times the industry is experiencing, but mindful that there's a yin and yang to agriculture. "It wasn't long ago I'd get up in the morning knowing I'd make less than the day before and there wasn't a damn thing I could do about it," he says while driving to the giant Daley Farm of Lewiston, a family-run farm with 1,500 cows, and a stack of employment applications on a counter in the office.

He points out the environmental benefits of the large-scale operation, answering criticism of the industry not yet stated. The family has spent $1.5 million on a new technology that reclaims the bedding sand from manure from four huge barns. The cows appear to be well pampered, and a younger generation of farmer seems well established.

(At the Daley Farm, cows stand on a moving platform while being milked. Computers monitor the health and production of the cow.)

The manure lagoons at the farm are being replaced by two large ponds of mostly-liquid fertilizer that will be injected into the cropland rather than spread by tossing it through the air, as is the practice at most farms.

At the dairy where the cows are milked for all but three hours a day, the harvest ended a little more than a week ago. But it's not shipped elsewhere. "It's a self-sustaining operation," Kaehler points out. Most of what the cows eat is grown on the property, which is picture tidy and oozes "professional."

Throughout the valley, there's a "newness" surrounding agriculture. Across from the Kaehlers, Twin Valley Ag Coop has opened a gleaming new grain elevator and farm services facility. Its owners -- farmers -- deemed the time right to move from downtown. In Utica, the old grain elevator with its traditional Purina Checkerboard Square sign has been replaced by a more modern facility. The farm implements dealer appears to be selling and the sheen on the valley proclaims that while the rest of the nation's economy tanks, this is agriculture's time.

Kaehler seems to know everybody in St. Charles, Lewiston, and nearby Utica, all stops during his day. He knows Fidel Castro, too, and may be the only person ever to upstage Jesse Ventura. During a trade mission, the then-governor played second fiddle to Kaehler and his family while negotiating to sell beef to Cuba.

Farming and politics are often joined at the hip. As darkness falls, lights of the combines dot the black fields along U.S. 14. Mena Kaehler is driving to Winona for a meeting of the Winona County Planning Commission, which is holding a public hearing on frac sand mining. Ralph is off to a Farm Bureau meeting.

Mena isn't planning to say anything at the hearing, but she's the chairperson of the Winona County Board of Commissioners and there's a fair chance she'll have to decide on a proposed moratorium in a matter of weeks.

By close to 10 p.m., the commission still has only tackled one of the three proposals when it takes a break. She notices commission members are stocking up on rations of Mountain Dew and figures it'll be a long night before the next early morning on the farms of Winona County, where the harvest doesn't sleep in.

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Harvest fun

Posted at 7:56 AM on October 22, 2011 by Bob Collins (4 Comments)
Filed under: Economy

Bob Larkin, of Redding California, comes to Minnesota twice a year -- planting time and harvest time -- to help his cousin, Ed Kaehler of Eyota, MN. "I get the best of both worlds," he says, returning to California during Minnesota's winter to enjoy retirement.

He's unloading corn that his cousin just picked with the combine, but before it goes to market, it has to be dried. Each truck holds about 1,000 bushels of corn -- worth close to $6,000 on the grain market this week.

The roads of rural Minnesota are full of grain trucks this week; the fields are being transformed by combines before the winter comes.

It's a good time to be a farmer in Minnesota, so long as you've got a cousin to help, and don't mind working weekends.

I'll have a post about NewsCut's visit to the farms next week.

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What money can buy at Christmas

Posted at 12:36 PM on October 18, 2011 by Bob Collins (1 Comments)
Filed under: Economy

At a time when 99% and 1% are feuding, this might not be the best time to make a big splash out of extravagant and wasteful wealth.

No matter, if you're Neiman Marcus, which unveiled its annual Christmas "catalog" today in Dallas.

John E. Koryl, president of Neiman Marcus Direct, tried to put a working class spin on the unveiling, pointing out half of the 600 items are under $250.

These are not among them:

His and her dancing fountains: When you spend $1 million on these, the store will done $10,000 to an organization that works to provide safe drinking water to people in developing countries.

For the job creator who has everything, this $20,000 weekend for two at a farm in upstate New York will help you plot your own garden. Too busy for a weekend. Just spend the day for only $9,500.

You and nine friends can jet -- of course it's a private jet -- to the International Flower Show. Cost: $420,000.

Apparently, this tent's interior is designed to look like the inside of the genie's bottle in the TV series, I Dream of Jeannie. Cost: $75,000.

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For Wells Fargo, record profits not good enough

Posted at 10:35 AM on October 17, 2011 by Bob Collins (8 Comments)
Filed under: Economy

Wall Street is one tough taskmaster.

It is being characterized as "disappointed" in the earnings reported today by Wells Fargo bank and, as a result, the Dow industrials are dropping.

What did Wells Fargo do to warrant such scorn? It reported a $4.1 billion profit in the third quarter, a 21-percent increase over a year ago.

But while its profit increased, the amount of revenue the bank generates did not.

Still, more people are putting money in the bank than taking it out -- deposits are up 8 percent, and the total amount of "bad" loans dropped.

How can Wells Fargo increase its revenue? The company has dropped all of its reward programs for credit cards and is "testing" a monthly fee in some markets, mostly in the south.

What's good for banks and Wall Street isn't always so hot for customers.

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Occupying prison

Posted at 10:39 AM on October 13, 2011 by Bob Collins (0 Comments)
Filed under: Economy

Away from the bright lights surrounding protesters on Wall Street, Raj Rajaratnam continued his relative anonymity outside of the financial world, even though he is, as the Wall Street Journal said today, "the face of the biggest trading scandal in a generation."

He was sentenced today to 11 years in prison, although prosecutors want a near 20-year sentence for insider trading.

Federal prosecutors in Manhattan had accused Mr. Rajaratnam of persuading fellow hedge-fund traders, industry consultants and even corporate directors to provide him with confidential corporate information as he searched for an "edge" over the investing public. Prosecutors alleged Mr. Rajaratnam made profits or avoided losses of $72 million through his trading.

He got caught, but judging from this "debate" with financial insiders on CNBC today, he won't be the last to get rich illegally. Not with the assertion that insider trading is a "victimless crime." (Note the unusual spine displayed by a show host in this video.)

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Why some 'job creators' don't get 'it'

Posted at 12:30 PM on October 12, 2011 by Bob Collins (28 Comments)
Filed under: Economy

I've been thinking a lot these days about the local hardware store that ran Home Depot out of town in Brattleboro, Vermont a few years ago. It couldn't compete in all of the areas where 'big" dominates, so it competed in a way "little" dominates -- friendly, customer service.

It's the sort of lesson that American business should have learned going into a recession and, obviously, some have. But good customer service remains a vanishing experience.

Over the weekend, I received a package I'd ordered from a big chain -- auger belts for the snowblower that bears the company's name. But inside were two engine pulleys, not rubber belts.

If you've ever ordered anything online, you know that you search for a part number, get a listing with pictures and then click "add to cart." It's pretty hard to mess it up, especially if (a) the page doesn't include engine pulleys and (b) you can spot the difference between an engine pulley and a rubber belt.

And yet, when the box was opened, there were the engine pulleys.

"There's no place in our system where that mistake could have been made," the customer service woman on the phone said when I called. "So you are responsible for the cost of sending them back."

It wasn't so much that she was so clearly wrong -- I've coded a web page or two in my day and I can tell you eight different ways an online ordering system could introduce errors -- it was the sweet voice that did little to mask the underlying derision. A sweet voice in customer serviceland acts like the word "alleged" in news stories about crime. It's not meant to indicate that maybe the guy didn't do it, it's meant to keep the lawyers out of the newsroom. But that's a story for another day.

I'm not much of a consumerist. I don't argue with customer service people. But I had a hard time hearing this one because next to her cubicle, a group of her colleagues were laughing and carrying on, perhaps regaling each other with their phony sweet voices while actually saying, "You should die."

"I can hardly hear you, could you please tell your colleagues to keep it down?" I said.

"No, sir," she said sweetly. "I can't do that."

Message received: "Your business doesn't mean anything near as much to me as me letting you know how much I dislike you and your engine pulley story." Allegedly.

After telling me it would cost $7 to send the package back, she offered to send me the items I actually ordered. "It will be $32. $48 after the shipping charges," she said.

I let it go. It would be pointless to ask why sending a package back to the company (a package of engine pulleys weighs more than a package of rubber belts) would be half the cost of sending a package to me. And, besides, by then I didn't want to give this company any more business.

A consumer today has but one option during times like this. Shop elsewhere and tell Twitter. So I did, and yesterday a person in the company's executive offices called and offered me a $40 gift certificate for my trouble.

Continue reading "Why some 'job creators' don't get 'it'"

The revolution will be Tumbld

Posted at 1:16 PM on October 11, 2011 by Bob Collins (18 Comments)
Filed under: Economy

There is now an organized anti-Occupy Wall Street social networking effort. "We Are the 53%" is a tumblr blog

The site was started by Erick Erickson, and refers to studies showing the number of people who do not pay federal income tax.

The Occupy groups have a tumblr blog too: We are the 99%:

This is how we discuss issues in 2011.

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Economic signs

Posted at 3:21 PM on October 4, 2011 by Bob Collins (2 Comments)
Filed under: Economy

We're always looking for economic signs and signals in this business. Here are some of the favorites we've spotted from the Occupy Wall Street protest in the last two days.

(via Flickr. David Shankbone)

(Emmanuel Dunand/Getty Images)

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The economy in headlines

Posted at 1:07 PM on October 3, 2011 by Bob Collins (2 Comments)
Filed under: Economy

As usual, figuring out the state of the economy and where it's heading is a matter of interpretation. Here are three stories to help:

Survey suggests region's economy continues to grow (AP)

Layoffs coming to Minn. factories, survey predicts (MPR)

Reports show Iowa, Midwest economies could face challenges (Des Moines Register)

By the way, those headlines are all describing the same survey.

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The death of the debit card?

Posted at 2:07 PM on September 29, 2011 by Bob Collins (25 Comments)
Filed under: Economy

Unlike when I first moved to the state almost 20 years ago, you don't see many people with their checkbooks in hand at the checkout line anymore, thanks to the debit/ATM card. Minnesota, more than any other place I'd visited, had a love affair with the checkbook.

Cup of coffee? Hang on while I write this check. Minnesotans seemed to write checks for everything.

That all ended when the debit/credit card replaced it, but are the heady days of checkbooks in the back pocket about to return?

Bank of America announced today that it's going to start charging $5 a month for its customers who use debit cards.

The announcement coincides with the October 1 start of the Dodd-Frank Act's Durbin amendment, which caps fees banks can charge merchants for processing debit cards to 21 cents per transaction, potentially costing banks billions of dollars in fee income.

Plug a leak somewhere, it'll sprout somewhere else. There's a reason why banks have the biggest buildings in most cities.

Wells Fargo has been testing a $3-a-month fee in some states to see if people will rebel against it. The test markets do not include Minnesota, however.

It's not just the banks that are causing a big jump in plastic. VISA and Mastercard are planning to sharply raise the debit card transaction fees for small purchases for merchants, according to an analyst note today.

As the Associated Press reported, it's going to change the way you pay for things...

Such a hike could pose problems for the operators of self-service kiosks like DVD rentals, which would have to deal with a big increase without alienating customers, the analyst said. It also risks alienating important merchants like Starbucks Corp. that rely on small purchases, he said. "These operators will be violently opposed to this price change," and could slow down their investments in new technology needed to accept mobile payments in response, Janney Capital Markets analyst Thomas McCrohan said. It will also "reinforce merchants' view that the networks are not friends of merchants."

And the increased costs of transactions undoubtedly will be passed along to consumers. Will gas stations again have a two-tiered pricing system -- one for debit/credit and one for cash? Will your $1.84 coffee go to $2?

And, most important, are you the consumer going to accept the cost of debit cards or change the way you pay for things? Will cash make a comeback? Is the checkbook still alive?

Well?

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Word of job openings causes crush of applicants

Posted at 10:57 AM on September 28, 2011 by Bob Collins (1 Comments)
Filed under: Economy

We got another on-the-street glimpse of what a dying economy looks like today.

In Louisville, General Electric's Appliances & Lighting unit had 480 openings and planned to begin taking applications today, calculating that it would probably have enough online applications by Friday to find 480 people to hire for a planned expansion in February.

It shut down the application process today after 1 hour when it amassed 6,000 applications.

The jobs will pay about $13 an hour.

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What's spooked Wall Street?

Posted at 12:40 PM on September 22, 2011 by Bob Collins (6 Comments)
Filed under: Economy

The word "panic" was used generously today to describe a big sell-off on Wall St. By the time I made it to the website to view what that meant, the Dow was already down about 300 points. Bad, indeed, but certainly less than I expected when I heard the "p" word.

Matt Nesto of Yahoo Finance noticed it, too:

Three little words within a six paragraph statement released yesterday afternoon by the Federal Reserve have global markets in panic mode. The key phrase "significant downside risks" used by the Fed is an observation that in and of itself is not breaking news. Aside from the forecasters at the White House, no one was expecting an optimistic view on economic growth.

The same could be said for the Fed acknowledging "strains in global financial markets." Again - who hasn't noticed that Europe has some issues?

I am not trying to trivialize this sell-off, or suggest anything other than (my longstanding) angst for the US and global economies. I am trying to draw a line between selling and panicking. When basically every market and asset class in the world drops 3% to 10% (with exception to Treasuries and the US dollar), it suggests that something major just caught the market by surprise.

The Dow, as I write this, is down 419 points. I'm ruined. Worst it's ever been. Panic, indeed. The Dow stands at 10,697.69. You'd have to go all the way back to August 10 to find a lower point.

If it closes that low, it will be the lowest the Dow has closed since one year ago tomorrow, when the recovery seemed to be holding, things were looking up, and our cups seemed half full.

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It's the movies, stupid

Posted at 10:36 AM on September 19, 2011 by Bob Collins (25 Comments)
Filed under: Economy

Not having a masters -- or anything else -- in business, it's hard for me to see the wisdom of the announcement that Netflix is separating itself into two companies -- one that will mail you DVDs, and one that will sell you streaming video. Still, one easily gets the feeling we're watching how a CEO can take a company and drive it into the ground.

Reed Hastings, the co-founder of Netflix, must've had that feeling too, because his announcement that Qwikster will now handle DVD mailing as a separate company started this way...

I messed up. I owe everyone an explanation.

"It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology. I'll try to explain how this happened.

Over the summer, Hastings had announced a huge price increase for Netflix (the DVD Netflix, I mean, Qwikster. Or whatever), which caused people to drop the DVD portion and stay with streaming, a service that has a much smaller film library. The stock plunged.

In his apology today, Hastings announced his company's -- companies -- new direction:

Continue reading "It's the movies, stupid"

Thirty thousand people pay for bank's sins

Posted at 11:00 AM on September 12, 2011 by Bob Collins (1 Comments)
Filed under: Economy

(Source: Mother Jones)

It was all so clinical. Just like that, 30,000 jobs were wiped away from Bank of America today when it vowed to save about $5 billion a year. If you're "doing the numbers," that's about $167,000 saved for every job eliminated.

The bad news, which was anticipated, was delivered with typical corporate efficiency:

The first result of New BAC was the recently announced management reorganization, removing a layer of management and streamlining the company by aligning its businesses with the customer groups.

This reorganization follows on work that started in January 2010. The company continues to sell non-core business units and assets that don't support its strategy, thereby strengthening the balance sheet, and improving capital and liquidity.

One of the people losing their job, however, is not Ken Lewis. He already has, largely because he thought it would be a swell idea if Bank of America bought Countrywide Financial back in early 2008 for $4 billion. It's been a huge money-loser ever since.

When he was forced out some months later, he walked away with an $83 million "goodbye package" from the bank.

Somewhere, there's a person wondering how they're going to pay the mortgage, send the kids to college, and put food on the table when the unemployment checks run out.

That person is not named Ken Lewis.

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The search for big ideas

Posted at 1:23 PM on September 8, 2011 by Bob Collins (6 Comments)
Filed under: Economy, Politics

Mike Dukakis is firing back at Gov. Rick Perry for his jab at Mitt Romney last night.

Perhaps you remember the moment:

Former Gov. Dukakis tells the Boston Globe "All I know is that Perry was nice enough to compare my economic record with Romney's. But then, it would be very difficult not to do better than Romney's."

The reality? Politicians take too much credit -- and dish too much blame -- for things.

The early 1980s were a great time for Dukakis' home state but not because of anything Dukakis did. It was more the ebb and flow of an economy.

True, the state had lost lots of jobs in the '60s and '70s as the state's textile mills moved to the Carolinas.

But the explosion in jobs during the "Masschusetts Miracle," as it was called, had more to do with luck. Dukakis and other politicians rode the coattails of some small companies that struck it big with a nation entering the computer age. Digital Equipment, Apollo, Data General, Lotus Wang Labs, Prime Computer, and Polaroid were the big employers of the time.

The unemployment rate in Massachusetts then was 2.7%

Why those companies were there in the first place, however, offers a more instructional view of the economy -- and how jobs are created (rather than stolen from somewhere else) -- than punch lines at political debates attest.

The answer: That's where MIT was. And Harvard. That's where the smart people were. If they'd been in Texas, maybe the companies would've been located in Texas, too.

Today, however, only four companies in the top 10 list of employers in the state have anything to do with technology. The rest are mostly headquarters of retailers who provide low-level wages -- TJ Maxx (1) Staples (#2, that's Romney's company), BJ's Wholesale.

There is one health-care industry in the list, spawned, perhaps, by the Boston-area's hospital industry.

How much did a governor have to do with any of that? Not much, really.

Texas at the moment is hot, and part of it may have to do with political policies. Low housing prices and low taxes have encouraged companies to move there. Minnesota, for example, lost a fair number of high-paying railroad jobs when Burlington Northern merged with Santa Fe and everything moved south.

But that's not really creating jobs; that's moving jobs and while that distinction might be downplayed at the gubernatorial level, it can't be ignored at the presidential level. Taking a job from Minnesota, for example, and putting it in Texas hasn't created a job.

Lost in the assessment of the economy from the 1980s, is that its success depended on smart people with big ideas.

To the extent we're running short of jobs right now, perhaps it's because we're tapped out on big ideas.

Anybody got one?

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Are we making 'bad' worse?

Posted at 9:02 AM on August 30, 2011 by Bob Collins (4 Comments)
Filed under: Economy, Media

"That's really incredible," a CNBC anchor said this morning, seconds after the Conference Board reported that consumer confidence dropped to its lowest level since April 2009.

Incredible? Not really. People are influenced by reality and also the perception of reality. They may have the same income they had last month. They may have the same jobs. They may have even been able to sock away a few dollars. But if you keep up a steady drumbeat of, "things are getting worse and we may be heading for another perception," how reasonable is it to expect people not to lose confidence?

Clearly, fear is not the only thing we have to fear. But fear plays a big part in increasing worry. And worry is what makes people stop spending and people not spending is what creates recessions and recessions are what gives people more fear, which increases worry, which makes people..... well, you get the picture, right?

"A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade. Consumers' assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

Those expecting business conditions to improve over the next six months decreased to 11.8 percent from 17.9 percent, while those expecting business conditions to worsen surged to 24.6 percent from 16.1 percent, the Conference Board said. Those anticipating more jobs in the months ahead decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent. The proportion of consumers anticipating an increase in their incomes declined to 14.3 percent from 15.9 percent.

But the people surveyed aren't economists. It's regular consumers. And what those consumers think about the future makes up 60 percent of the survey results.Their view of the jobs outlook depends on what the people they listen to say is the outlook on jobs.

Sometimes those are the TV and radio business reporters. Sometimes it's the presidential and congressional candidates who point out how horrible things are and how worse they're going to get if you don't elect them a year from now.

More often than not, we think what we're told we should think. So the emotional component of a country's economy certainly presents a problem for politicians and reporters -- how to portray reality without contributing to a worse reality.

So far, few have mastered it.

American Public Media's Marketplace is taking a stab at it with it's new "Index," which purports to quantify the state of things on a daily basis via point system. It's unclear -- at least to me -- whether that's a step in the right direction of balanced economic assessment, or a step toward making the emotional component of the economy even worse.

What do you think?

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Fed provided $1.2 trillion in loans to big banks

Posted at 10:29 AM on August 22, 2011 by Michael Olson (5 Comments)
Filed under: Economy

"The U.S. Federal Reserve mounted an unprecedented campaign to head off a depression by providing as much as $1.2 trillion in public money to banks and other companies from August 2007 through April 2010," reports Bloomberg News.

The staggering amount far surpasses the $160 billion given in public bailouts to large banks after the 2008 housing market collapse.

How much is 1.2 trillion?

Denominated in $1 bills, the $1.2 trillion would fill 539 Olympic-size swimming pools.

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To wake or not to wake

Posted at 11:45 AM on August 15, 2011 by Michael Olson (0 Comments)
Filed under: Economy

Elected leaders in Sterns County are being asked to enact no-wake restrictions as high water swamps area lakes.

A group of lakeshore property owners grind their teeth every time they see a boat speed by their property and the high water waves slowly erode their land. Property owners have erected handmade "no-wake" signs that plead with boaters to slowdown without much success. Now they are heading to the county to request that wakes be curtailed until the water recedes.

The St Cloud Times reports that the request is being met with opposition from resort owners who rely on tourists that like to feel the breeze blow in their hair and drag their kids on tubes behind speed boats.

Jim DeRose owns Riverside Resort on Cedar Island Lake near Richmond. He said when Stearns County adopted a temporary no-wake zone for five days in July, some customers canceled their reservations.

DeRose said many of his customers look forward to boating, water skiing and tubing.

"They're not going to book a vacation if there's a chance they can't use their boat," DeRose said. That has an economic impact on the whole county, he said.

The paper points out that it's unclear if a no-wake zone is enacted if it would include all area lakes or just those hardest hit by flooding.

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Bootstraps for breakfast

Posted at 8:49 AM on August 15, 2011 by Michael Olson (3 Comments)
Filed under: Economy

Prime Minister David Cameron echoed the sentiment of many in the United Kingdom when he put the riots that spread across Britain in context.

"This has been a wake-up call for our country," he declared.

Cameron continued, "Social problems that have been festering for decades have exploded in our face. ... Do we have the determination to confront the slow-motion moral collapse that has taken place in parts of our country these past few generations?"

Cameron said senior ministers of his 2-year-old coalition government would spend the next few weeks formulating new policies designed to reverse what he described as a country being dragged down by many citizens' laziness, irresponsibility and selfishness. He said "the responsible majority" was demanding that the government build "a stronger society." (AP)

The BBC reports that Cameron's approach is expected to mirror that which was pursued in Los Angeles after the 1992 riots post-Rodney King verdict.

The LAPD learned tactics like bringing in large numbers of police officers, and the national guard, making a huge number of arrests to show their strength.

But the police also went through a long period of soul-searching after the riots.

"Across the board we made changes in our police department, adding more officers - more women, more minorities, a lot more Hispanic officers to match the community make up," said the LAPD's Commander Smith.

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PR battle for the face of a strike

Posted at 2:35 PM on August 12, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Marketing and advertising

A Fargo marketing firm this afternoon posted this video promoting the people at American Crystal Sugar company.

Yesterday, many of those faces may have been standing on the bridge that separates Fargo from Moorhead.

Workday Minnesota has posted its own "faces" of the company's workers, 1,300 of whom have been locked out of the Moorhead plant since workers rejected a contract offer that they say increases health care costs and makes it easier for the company to hire subcontractors instead of union workers.

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What do the faces of stock traders tell us?

Posted at 12:43 PM on August 10, 2011 by Bob Collins (1 Comments)
Filed under: Economy

Until the nation's news media figures out how to photographically depict the effect of the stock market on the majority of people -- and it must have an effect; it's been leading the news for several days -- we'll have to live with the daily front page photograph of the the faces of stock traders.

Once we know the outcome, it's easy to see the "this can't be happening!" look on the face of the trader.

Or is it?

Pick the stock traders below who were working on days the market dropped. The answer is below "the fold." You can click on the image for a slightly bigger version.

Continue reading "What do the faces of stock traders tell us?"

Decision time for little cogs in the big global economic machine?

Posted at 12:04 PM on August 9, 2011 by Jon Gordon (0 Comments)
Filed under: Economy

From Jeff Jones of APM's Public Insight Network:

There's a sense this week that everything's changing again with the economy, and it's either time to make a big decision or put off that big decision.

MPR's Public Insight Network is hearing from people reacting to the stock market turmoil.

Here's an audio montage they produced of three people reacting to yesterday's 5.6% drop in the Dow in very different ways. One woman decides this isn't the time to reconsider her work/life balance after all. A corporate actuary is consciously deciding to do nothing because weeks like this are exactly what diversification is for. And a small business owner actually spent the weekend advising a customer not to buy a truck from her for at least a week, until things calm down.

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Market meltdown: Stock traders looking worried

Posted at 11:24 AM on August 8, 2011 by Bob Collins (7 Comments)
Filed under: Economy, Media

One question: If the stock market is so all-fire important to everyone, how come news organizations can only figure out one kind of photograph when covering it?

A few examples:

Washington Post

Los Angeles Times

FoxNews

CNN

BBC

This is all, of course, quite depressing. Bring us back to the reality of what people really care about, Texas!

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Is the news media making the market meltdown worse?

Posted at 11:05 AM on August 8, 2011 by Bob Collins (6 Comments)
Filed under: Economy, Media

Faced with an overwhelming assault by news organization headlines warning of the market catastrophe that lay minutes ahead, there was a moment this morning that I almost cashed out all of my retirement portfolio that's in equity markets and joined who knows how many others on the sideline.

This goes against everything I've learned firsthand in 40 year of working for a living, but in the absence of even a decent nugget of information telling me what I should do, I felt no choice but to give in to the gloom. Only laziness prevented me from acting, but I wonder how many millions of Americans, more energetic than I, are reacting to the steady drumbeat of news organizations in addition to whatever market savvy they have?

So it was interesting to hear a caller on Midmorning today who insisted the media isn't, as alleged, "making things worse."

"I absolutely think that's true," Ross Levine, a financial planner said in response. "If you look at what's really going on as far as how companies are reporting their earnings, and if you look at the fact the dividend yield in the S&P is close to what 10-year Treasuries are paying, it's almost obscene that the markets are continuing to sell off at this level, and I think market short-term is very emotional. Market short term look like the weather forecasts; you have no idea what they're going to do in the short term. But long term, we have a pretty good sense of market valuation and that's going to be based on earnings, and it's going to be based on dividends, and it's going to be based on getting the economy going again."

"There's been a theme throughout this thing of 'shoot the messenger,' said Heidi Moore, the New York bureau chief for American Public Media's Marketplace program. "You see it with S&P and you see it with journalism. What we're trying to do here is inform people for the most part about what's going on. If those people are telling us that they're expecting a crisis, that they're expecting a panic, that they're expecting the Apocalypse, then of course we're going to reflect that. And when those people don't say that, we reflect that as well. It's important to note that it's not the press creating this; the press and S&P did not spend us into a $14 trillion deficit. So we have to kind of focus here on the issues, and I think people put way too much emphasis on what words are used, and they read stories to see which political parties they support. It's not really about that; it's about are we keeping you informed enough so you can do your duty as a citizen? And that means you have to read the financial news and be able to filter that."

"Words are important," Levine countered. "If you take two situations and you look at the stock market and you say, 'stocks are having a major sell-off,' or 'stocks are trading at the lowest valuations we've seen in three years,' people will interpret that differently. I think that the words shape the context of the story. I'm not saying it's the press' fault because the press is reporting and I think they're doing a good job... but I do think words matter and the interpretations of those words matter even more."

Ms. Moore acknowledged the market is emotional and a reflection of the psychology in it. "I do think the words matter, but for daily market movements, that doesn't tell us so much about what's going on in the economy."

And it doesn't tell me what I'm supposed to do about any of this.

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How to lose a quick $1.5 million

Posted at 3:05 PM on August 4, 2011 by Bob Collins (4 Comments)
Filed under: Economy

Timing is everything.

3M boss George Buckley told the Securities and Exchange Commission in a filing that he plans to sell a third of his shares in his company by the end of the year.

The filing said Buckley could sell up to 376,037 shares, worth about $32.4 million based on the stock's Wednesday closing price of $86.18 a share, the Star Tribune reported this morning.

In the egg Wall Street laid today, 3M's stock dropped almost 5% in value, to $82.23 a share. Buckley's value of the shares he intends to sell dropped $1.5 million. It lost $364,000 in the last 20 minutes of trading.

He'll probably be OK, anyway.

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The view from the ledge

Posted at 1:30 PM on August 4, 2011 by Bob Collins (3 Comments)
Filed under: Economy

The stock market, you may have heard or felt in your portfolio, is having a lousy time of it.

The last time I checked, the Dow Jones Industrial Average was down 372 points to stand at 11,501. That's a big drop, of course. The Dow is down more than 1,000 points from its recent high, which means you don't want to be hitting "one step update" on Quicken anytime soon. Oh, and you don't want to retire.

Clearly, there's lousy economic news to feed the bear. But the "lousy economic news" is also a media narrative that creates even more lousy economic news. To feed the narrative, you have to work harder for new angles to explain just how lousy the economy is. That's simply the way it works in the news business.

That's not saying things aren't lousy; they obviously are.

But you see that picture up there? We're using it to accompany the story today about how lousy things are and it's clearly captioned as a file photo from May 25, 2010 (No sense buying a new one; all pictures of stock market traders look the same). Things were perceived as lousy on that date, too, apparently.

Those panicked traders had no idea what August 4, 2011 would bring. On May 25, 2010, the Dow lost 22 points and closed about 1,500 points lower than it will today.

Everyone come in off the ledge. There's something terribly wrong if I'm the half-full guy around here.

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First world problems

Posted at 1:00 PM on August 4, 2011 by Bob Collins (5 Comments)
Filed under: Economy

(If you don't see the WCCO story above, go here)

It's a good life when the worst that can happen is Caribou Coffee runs out of cards for its summer sticker promotion that gives people a free cup of joe every so often.

In other news....

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The economy in four acts

Posted at 10:53 AM on August 4, 2011 by Bob Collins (10 Comments)
Filed under: Economy

The economy is beyond the means of mortal people to understand, which doesn't prevent me from trying.

Let's take a look, for example, of this morning's economic reporting, in the order I consumed. it.

Act 1: I heard this on Marketplace last evening....

Right now about 75 percent of companies have reported, and we're on pace to have record earnings. You know, that beats 2007, when the earnings were all phony banking profits.

Act 2: - Unemployment dips in sign of improved job market

The number of people seeking unemployment benefits dipped last week, a sign the job market may be improving slowly.

Sweet.

Act 3: Target reported its earnings this morning. Phil Picardi reported on them as I drove in this monring...

Minneapolis-based Target says a key sales figure rose more than 4 percent last month as shoppers bought groceries and health and beauty products. Target says overall sales for the four-week period climbed 6 percent from the same quarter last year to 4-point-8 billion dollars.

Six percent? That's great, right?

Over to you, Wall Street. Bring it on home!

Act 4:

Ruh roh.

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Financial community to politicians: 'Your deal stinks.'

Posted at 3:30 PM on August 2, 2011 by Bob Collins (11 Comments)
Filed under: Economy

Did the politicians ever talk to the financial "experts" before coming up with the "solution" to the debt crisis?

It wouldn't seem so. For a second day, the financial community is weighing in on the debt solution signed into law by President Obama today. Financial community to politicians: "Your deal stinks."

The Dow, at last check , is down almost 300 points. The S&P 500 has turned negative for the year, and those aren't even the indicators that matter to the experts. For the Dow, it's been the longest losing streak -- 8 days -- since the fall of 2008, which was also the fall of the American economy.

Economist Ed Yardeni, quoted in the Wall Street Journal, said "One especially negative PM told me: 'This is the 1930s on Prozac!' That's a very clever turn of phrase. In other words, we are in a depression, but thanks to very stimulative monetary and fiscal policies, it hasn't been another Great Depression so far."

Mohamed El-Erian, chief executive officer and co-CIO of Pacific Investment Management Co., says the politicians not only didn't make the future any better, they made it worse.

"We're out of the woods in the sense that we will avert this real threat of the technical default," Mr. El-Erian says. "However if you judge it in terms of the broader objectives, which is to put the country on the path of medium-term growth and medium-term fiscal viability, we may have made things worse rather than better," he said.

That's just the kind of pick-me-up the financial markets need.

U.S. Treasuries -- that is the indicator people in the know pay attention to -- rose for a fourth straight day today. They're considered a safe-haven when the economy tanks.

Or, as Neil Irwin, the economics reporter for the Washington Post put it...

In his subsequent article, Irwin describes the problem faced by the Fed.

The basic challenge for the Fed is this: It is charged by Congress with maintaining stable prices and maximum employment. But when those goals are in conflict with each other, the options are difficult to decide. That's the circumstance the nation faces now: It's adding jobs too slowly to reduce unemployment. Yet prices are rising at about the 2 percent or so annual pace that the Fed considers to be stable. Anything Fed leaders do to try to address the dire job market could push inflation above their comfort level.

Many politicians playing chicken with the economy last week said they didn't believe the tales of woe about the economy would happen if the debt crisis persisted.

It's happening, presumably because the solution is no solution.

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Long-term unemployment in Minnesota

Posted at 12:14 PM on July 25, 2011 by Bob Collins (0 Comments)
Filed under: Economy

The Wall St. Journal has today's most sobering graphic: An interactive map that documents the percentage of unemployed people who have been out of work for at least a year. Minnesota, with a comparatively low unemployment rate, ranks 41st in the category. Nevertheless, one out of five people unemployed in Minnesota, has been jobless for at least a year.

The majority of out-of-work Minnesotans are unemployed for between five and 14 weeks.

Find all the data and play with the map here.

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Be a federal budget hero

Posted at 3:02 PM on July 15, 2011 by Jon Gordon (1 Comments)
Filed under: Economy

While the Minnesota state budget battle is moving toward a final resolution, the federal fight is moving into high gear.

A new tool might help you make sense of a complicated issue.

"If you ever wanted to control where your tax dollars go, here's your chance to decide," begins the Budget Hero game from American Public Media's Marketplace.

"A new Web game has finally brought every American taxpayer's fantasy to life," writes CNET.com. "Budget Hero 2.0, a timely update to an earlier title, gives players the chance to choose where their tax dollars are spent while simultaneously working to save our ailing economy."

Play it, and let us know what you think.

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The magic trick the economy can't do

Posted at 12:09 PM on July 8, 2011 by Bob Collins (14 Comments)
Filed under: Economy

When the monthly unemployment figures come out, we become a nation of economists. But it doesn't take a degree in economics to realize that things are bad in the economy right now.

Unemployment last month reached 9.2%, and those are just the people who still want to be in the labor force. The actual percentage of people without jobs might be almost twice that.

Third District Rep. Erik Paulsen took to the floor of an empty U.S. House of Representatives this morning to offer his solution...

A close look at the economic argument reveals a complexity -- in the sense that a chicken-and-egg scenario is complex -- that most politicians' speeches don't address. Lower taxes and lower spending by government means smaller government. Smaller government requires fewer employees. Fewer employees requires more unemployment.

That's the reality behind the numbers released today.

According to the Labor Department, private businesses added jobs last month (though it was the fewest number in a year):

Within professional and business services, employment in professional and technical services increased in June (+24,000). This industry has added 245,000 jobs since a recent low in March 2010. Employment in temporary help services changed little over the month and has shown little movement on net so far this year.

Health care employment continued to trend up in June (+14,000), with the largest gain in ambulatory health care services. Over the prior 12 months, health care had added an average of 24,000 jobs per month.

In June, employment in mining rose by 8,000, with most of the gain occurring in support activities for mining. Employment in mining has increased by 128,000 since a recent low in October 2009.

Employment in leisure and hospitality edged up (+34,000) in June and has grown by 279,000 since a recent low in January 2010.

What sector of the economy is shedding jobs like there's no tomorrow? Government. According to the Labor Department:

Employment in government continued to trend down over the month (-39,000). Federal employment declined by 14,000 in June. Employment in both state government and local government continued to trend down over the month and has been falling since the second half of 2008.

There's no question that private hiring could be much better than it is. But at a time when Congress is debating whether to increase the national debt, it's difficult to see how the private sector is going to add jobs, government spending is going to drop, and taxes are going to be lower, all while avoiding enough pink slips for government workers to make the unemployment rate in the nation climb.

It didn't happen in June.

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Minneapolis housing prices: One of the worst and one of the best in U.S.

Posted at 8:53 AM on June 28, 2011 by Bob Collins (1 Comments)
Filed under: Economy

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The politics of oil

Posted at 11:32 AM on June 23, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Energy

Gasoline prices have been falling lately -- almost 50-cents a gallon -- so it was a surprise today when the Energy Department announced its tapping the strategic petroleum supply in an effort to push the price of gasoline down.

Energy analysts expect the move will mean lower gasoline prices for consumers this summer. That would give Americans more discretionary spending power, helping businesses ranging from grocery stores to ice cream parlors. It will also give manufacturers and truckers a break, because the price of diesel fuel is expected to drop as well.

What will it mean? It means the price of gasoline will drop, then it will go back up again.

Some data earlier this week helps to explain why.

MasterCard reported that the demand for gasoline rose .4 percent from a year ago because the price has fallen...

"As prices continue to fall, gasoline demand seems to have climbed into barely positive territory in year-over-year terms, after the 1 percent to 2 percent declines recorded throughout most of April and May," John Gamel, director of economic analysis for SpendingPulse, said in the report.

It's an intriguing cycle. As prices rise, mostly because of demand, consumption falls, which creates more of a supply with less of a demand, causing prices to fall.

There's no question, of course, that the high price of energy threatens the global economy and the weak recovery from the economic collapse. The blog, The Oil Drum today said that should be enough for governments "to wake up and introduce serious energy policies to deal with the clear and present dangers posed by peak oil."

Christopher Helman at Forbes.com says Americans weren't going to feel the effect of the Libyan oil cut until later this summer, and today's move -- coordinated with OPEC -- indicates a longer term view of what's coming than merely the price of gasoline today.

Markets move based on today's fundamentals and expectations of future supply and demand. The coming months, as we head into the driving season, would likely see the impact of the Libyan crisis felt most keenly; this is why the IEA is acting now. Some producer countries have announced their intentions to raise production, but it takes time for these incremental barrels to be produced and shipped to consuming markets. The use of IEA strategic stocks now will help bridge the gap until these new supplies are available. The IEA will continue to monitor the situation. If supply remains disrupted and markets remain tight in the future, the IEA does not exclude another decision to make additional supplies available to the market.

There's another angle to all of this, of course. Politics. Jay Hancock's economic blog at the Baltimore Sun smells something that's not oil.

This isn't what many people believe the petroleum reserve is for. It's widely thought of as being there for true emergencies such as war and severe supply shocks. This isn't as nakedly political as if reserves had bene tapped in summer 2012. Nevertheless, the political overtones could hurt Obama

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Food prices changing global consumption behaviors

Posted at 11:00 AM on June 15, 2011 by Michael Olson (1 Comments)
Filed under: Economy

Global food prices have increased 37 percent in the past year. Researchers at the United Nations expect prices to stay high.

Roughly two-fifths of people in 17 countries say high food prices have changed what they eat. People in poorer nations are hit hardest by increased costs according to Bloomberg.

A survey conducted for Oxfam International indicates that more than half of the 16,000 respondents are eating different food than they were two years ago.

"Huge numbers of people, especially in the world's poorest countries, are cutting back on the quantity or quality of the food they eat because of rising food prices," Raymond Offenheiser, the president of the U.S. affiliate of Oxford, UK- based Oxfam, said in a report. (PDF)

The Guardian has an interactive graphic that provides detail on price changes of the global food supply. Take a look at how wild sugar prices have been.

Is your family feeling the pinch? What are you doing differently in the kitchen?

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A bad case of bad

Posted at 2:03 PM on June 8, 2011 by Bob Collins (3 Comments)
Filed under: Economy

Pew Research is out with a survey this afternoon that says "46% say they are hearing mostly bad news about the nation's economy." What's the story there? That 54% of people apparently aren't.

It's not, however, as if most people are finding things pretty cheery; most are finding a mix of good and bad news on the economy. This is a big deal because economies are notoriously emotional things. A 9-percent jump in people who say they're hearing mostly bad news probably means most people believe what they're hearing and are likely to make some decisions because of it. That's the kind of thing that starts recessions.

This is one of the challenges facing presidential candidates. They will hammer the Obama administration mercilessly in the coming months, potentially causing consumers to pull back, stuff the nation into a recession, which -- if they're successful with their strategy -- they get to inherit.

The dismal science, indeed.

Maybe the economy needs more people in search of instant gratification. A separate study says if that's the case, young people are the answer. The survey said the more credit card debt and college loans young adults had, the higher their self-esteem and the more they felt in control of their lives.

Until they turn 30, according to the Discover Disco Blog.

Right around that fateful 30th birthday, however, the stress of owing tons and tons of money seemed to kick in. Starting at age 28, the more debt people had, the bigger a hit their self-esteem took. This may be because if you ask an 18-year-old with a credit card how much money they expect to making by the time they reach the distant age of 30, they'll probably put the figure at around a bajillion dollars. By their late 20′s, these folks "may be realizing that they overestimated how much money they were going to earn in their jobs," as Dwyer puts it. "When they took out the loans, they may have thought they would pay off their debts easily, and it is turning out that it is not as easy as they had hoped.".

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The world's top incomes

Posted at 10:56 AM on June 6, 2011 by Bob Collins (6 Comments)
Filed under: Economy

Barry Ritholtz at The Big Picture has an intriguing graphic posted today. It's a historical comparison of the top 1% of income owners in major countries.

It comes from the Paris School of Economics, which is also building an online database to allow you to crunch the numbers some more. Unfortunately, it's not entirely built out yet, although you can do a little playing on it.

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Minneapolis housing market: Busted, again

Posted at 10:52 AM on May 31, 2011 by Bob Collins (10 Comments)
Filed under: Economy

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The day the Dow died

Posted at 1:31 PM on May 6, 2011 by Bob Collins (1 Comments)
Filed under: Economy

I'll be honest with you. I still struggle to understand exactly what was going on in the last scene of Trading Places, but I at least I knew it was entertaining.

Floor trading is like that, apparently, even if you don't know what's going on. It is soon to be a relic as more trading is taking place online. The day of the floor trader is numbered.

It was one year ago today that the Dow dropped 1,000 points before it recovered before the close. It turned out to be a mistake because someone entered some numbers wrong in a -- and isn't this ironic? -- a computer. But the traders didn't know that.

This floor trader, who works for a Web site that broadcasts him live each day, provided a great "call" of the disaster, rivaling the greatest of horse racing announcers.

Shortly before the close today, the Dow was up about 35 points, in an entirely non-entertaining session.

(h/t: The Big Picture)

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Do most people still want to own their home?

Posted at 8:48 AM on April 26, 2011 by Bob Collins (11 Comments)
Filed under: Economy

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Waiting on Lawson

Posted at 1:34 PM on April 25, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Tech

Lawson Software is about to be sold, according to the Wall St. Journal. Infor, a Georgia-based software company, is said to be the winning suitor.

But the bigger question is what happens to Lawson's St. Paul presence? Nobody, so far, is talking about that because the deal hasn't been announced yet. But downtown St. Paul watchers are like Vikings fans; thinking that things like this are bound to end badly.

But maybe not. The Georgia company has dozens of companies and offices spread around the world and doesn't appear to be the type to close out-of-town properties and move everyone to Georgia. The company already has one facility in Minneapolis (SoftBrands).

As of last fall, the company had 700-800 employees working at its St. Paul headquarters. Any economies of scale in a takeover may cut into the Minnesota workforce.

By most accounts, the Lawson addition to St. Paul has been a decent investment. Former Mayor Norm Coleman lured Lawson to downtown St. Paul, offering to build the company's headquarters for $101 million, then selling it to a real estate firm for about half that in 2000, keeping the retail space -- known as Lawson Commons --and the parking ramp in city hands.

Although one parcel on the sidewalk property has been problematic, most of the rest of the retail space seems to be relatively full with a mixture of chain and high-end restaurants. The area around Landmark Center, where Lawson is located, is among the downtown's brightest spots.

The city is already facing a likely challenge downtown in late 2012. Macy's committed to staying downtown when taxpayers paid for a $6.3 million loan to renovate the store. The loan is forgiven if the store stays downtown through Dec. 31, 2012. After that, the company is free to leave.

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With the economy, divorce rebounds too

Posted at 3:45 PM on April 22, 2011 by Bob Collins (0 Comments)
Filed under: Economy

Now that the economy is rebounding, more people are shedding their spouses, the Financial Times reports (registration required)

During the recession, couples who were out of work or unable to sell their house stayed married to save money. The percentage of the population 15 years and older who counted themselves divorced dropped to 9.7 in 2009, from 9.9 three years earlier, according to the Census Bureau. More than half of the 1,600 attorneys who are members of the American Academy of Matrimonial Lawyers reported a downturn in their business in 2009, the most recent year for which survey data are available.

Divorce hasn't become any less bitter, some of the divorce lawyers contacted said, but the issues are changing. Before the economic collapse, couples argued about who gets the house, now they're arguing about who gets stuck with it.

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What should be done with vacant property?

Posted at 11:54 AM on April 20, 2011 by Bob Collins (7 Comments)
Filed under: Economy

MinnPost's Jeff Severns Guntzel is mapping every vacant property in Minneapolis, a worthy effort in light of a shift in attention from the mortgage market meltdown to what will happen with all of these empty buildings in Minneapolis and elsewhere.

On CNBC, this morning, one "analyst" had this idea: knock them down, says Joseph LaVorgna, Deutsche Bank's chief economist.

"If we have excess housing, why not pay to remove the excess supply from the market, the marginal supply goes up, people feel wealthier, and it deals with the problem, "LaVorna said.

"It shouldn't count on taxpayer dollars to do any of it, " CNBC's trader/ranter Rick Santelli countered. " He says if the idea has merit, the owners of record -- usually a bank -- should pay.

Most experts figure the housing market won't rebound until the "excess supply" of foreclosed houses are off the market, either because someone buys them or someone destroys them.

(Video: Craig Stellmacher)

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Economic jitters

Posted at 10:08 AM on April 18, 2011 by Bob Collins (1 Comments)
Filed under: Economy

What was your favorite economic recovery moment?

It all went up in a cloud of uncertainty today when Standard & Poor's said there's a 1 in 3 chance it will lower its credit rating on the United States. That's fancy talk for the U.S. isn't a trustworthy debtor, a hard pill to swallow for the country once seen as the most stable economic power in the world.

It raises the possibility of the country defaulting on its obligations.

On CNBC this morning, analysts talked about ending "the big party we're having," while ignoring the elephant in the room...

MPR's Midmorning today considered the nation's debt with a guest from the left and a guest from the right.

What's the elephant in the room? Let's put it this way:You have a much better chance of hearing an "expert" utter the phrase "we can't keep kicking the can down the road" than you do the phrase "the cost of fighting three wars at once."

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How to get rich(er)

Posted at 11:16 AM on April 13, 2011 by Bob Collins (7 Comments)
Filed under: Economy

Rolling Stone's Matt Taibbi, in an article due in the next issue, is making waves by casting light on part of the financial bailout he says gave away billions of dollars to financial fatcats -- and their spouses -- who gamed a system designed to free up allegedly frozen credit markets.

In his article, Taibbi describes the TALF program -- Term Asset-Backed Securities Loan Facility -- in which "investors" put 10 percent down, the government puts up the other 90%, and assumes most of the liability.

Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even.

This is the deal of a lifetime. Think about it: You borrow millions, buy a bunch of crap securities and stash them on the Fed's books. If the securities lose money, you leave them on the Fed's lap and the public eats the loss. But if they make money, you take them back, cash them in and repay the funds you borrowed from the Fed. "Remember that crazy guy in the commercials who ran around covered in dollar bills shouting, 'The government is giving out free money!' " says Black. "As crazy as he was, this is making it real."

But a comment attached to Taibbi's article attempts to shift the discussion back to where it always seems to go. The meltdown wasn't the fault of the "big" people, it was the fault of the "little" ones.

The article is very slanted. What really happened: greedy irresponsible Main Street got caught up in a real estate frenzy thanks to easy credit, predatory mortgage brokers, and the naive notion that "real estate never goes down". Americans thought they could buy and flip homes forever with no doc loans. Wall Street didn't underwrite or default on these subprime mortgages, but was only guilty of packaging and reselling them to greedy investors who thought that real estate never goes down. When the bottom inevitably fell out, investment banks like Goldman and Morgan took a hit but still had billions on their relatively healthy balance sheets. They reluctantly became commercial banks at the government's urging so they could borrow from the Federal Reserve window, to improve consumer confidence and prevent a panic. The author's reference to "billions in emergency loans" is actually what they borrowed at the Federal Reserve Bank Discount window, just like all commercial banks have routinely done since 1913. The TALF was open to everybody and without such government lending, Main Street wouldn't have been able to get credit since 2008 when they started defaulting on mortgages and walking away from foreclosures. John Mack earned $41 million in 2006 and thus could easily afford a $13.5 million home in 2009 without government help. Once the crisis hit, he paid himself almost nothing for a couple of years before retiring as CEO. With the exception of Madoff, almost nobody from Wall Street is in jail, because almost nobody on Wall Street broke the law. Question is: why isn't Main Street held responsible for defaulting on mortgages, credit cards, and student loans? Americans' credit ratings go down but at the end of the day, unlike Wall Street, they don't have to repay their loans.

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An end to the mortgage deduction?

Posted at 2:45 PM on April 11, 2011 by Bob Collins (23 Comments)
Filed under: Economy

Is it time to get rid of the home mortgage interest deduction?

LiveScience.com reports today on a study from Kansas State University that says because most of the tax break goes to people making more than $100,000 a year, it doesn't adequately help the more dense urban cities.

Turner's study, based on household data collected from 1984 to 2007 by the Panel Study of Income Dynamics, showed that in denser, urban cities with limited available housing, the deduction has a negative impact because it both reduces homeownership and inflates housing prices.

"It's just driving up prices, which makes it harder to come up with the down payment," she said.

Believing in the theory that homeowners have more of a stake in the success of their community, Turner noted it's those urban areas where homeownership is needed the most to improve the community as a whole.

The mortgage deduction has been termed "America's favorite deduction," but as tax day approaches, it seems harder to find its friends.

ING Direct boss Arkadi Kuhlman, writing in the Wall St. Journal today, theorizes that it allows borrowers to spread their home payments out over too many years. He favors a deduction based, instead, on principal payments, rather than interest.

Must the U.S. government remove itself entirely from the mortgage market--or take away every family's favorite tax deduction--to fix it? Not necessarily. Congress could as easily create an incentive for consumers to pay down their mortgages by letting them deduct payments on principal, rather than on interest.

A successful model exists to our north. In Canada, the interest on mortgages is not tax deductible, which gives homeowners good reason to pay down their principal as quickly as possible. Canadian banks also hold about 75% of their loans on their books, which encourages more prudent lending. Thanks to such policies, just 1% of Canadian mortgages are currently in foreclosure or delinquent, compared to about 14% of American mortgages. The Canadian real estate market has already rebounded above pre-recession levels.

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Employee mistake not enough to lose unemployment

Posted at 1:47 PM on April 5, 2011 by Bob Collins (3 Comments)
Filed under: Economy

Being fired for making an inadvertent mistake at work is not a reason for losing the right to unemployment benefits, the Minnesota Court of Appeals ruled today.

The court settled the case of Joan Dourney, who was fired from Panino's Restaurant in Shoreview, where she'd worked for 11 years, because she served alcohol to a minor (see update below). Dourney said she thought a woman, who was accompanying a man she knew was over 21, was old enough to drink.

Her boss ordered her to card the woman, Dourney removed the drink, and then she was fired. But the restaurant objected to her unemployment claim , saying she was guilty of employment misconduct and, therefore, ineligible for unemployment benefits.It appealed the unemployment claim that was approved by the state.

Today, the court said "even if a reasonable person would have carded the customer whom Dourney failed to card and Dourney's conduct could be considered negligent, (state law) expressly provides that inadvertence is not employment misconduct... Because Dourney's forgetting to card the customer was conduct marked by unintentional lack of care, the conduct was inadvertence." (Decision here)

The case, however, shows the extent to which a worker occasionally has to go to get unemployment

Update 10:29 a.m. 4/11 - The Department of Employment and Economic Development disputes two items in this post. Lee Nelson, an attorney for the department writes.

(1) The applicant, Joan Dourney, did not serve alcohol to a minor. A Department Unemployment Law Judge found, adn the Court of Appeals agreed on page six of its decision, that "We have no evidence that the individual was actually too young [to drink]." This would have been a very different case indeed had Dourney served a minor, and certainly a more sensational one, particular in light of the recent "Wally the Beer Man" verdict. But by all accounts the woman that Dourney served was at least 23 years old, and Dourney broke no law by serving her.

The "Wally the Beer Man" story is irrelevant to the context of the case regardless of whether Ms. Dourney did or did not serve a minor. The assertion that the woman was a minor was based on the reading that the server removed the drinks. I neglected to note that it was because the woman could not produce identification.

(2) Dourney was not involved in the case pending before the Court of Appeals. While Dourney was a seconday respondent, the Department was the primary responding party to the case under Minn. State. 268.1056 subd. 7(e), as unemployment benefits are paid from state funds. The Department drafted the brief defending Dourney's receipts of benefits, and argued the case in front of the Court of Appeals. Dourney played no role at all in this process. The "extent" wo which Dourney had to go to get benefits was actually quite minimal; a year ago she filled out the questionnaires that the Department sent to her, and participated in a brief telephone hearing before an Unemployment Law Judge.

The characterization of the difficulty an employee often has to go to get unemployment is based on the assertions of the establishment, not the work the Department has to go to at the Court of Appeals. The initial post stated, in fact, that the department approved her unemployment claim.

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Cravaack throws in with Ryan on budget plan

Posted at 11:12 AM on April 5, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Politics

Eighth District Congressman Chip Cravaack has apparently signed on to Wisconsin Rep. Paul Ryan's budget-cutting plan that constitutes the line in the sand some Republicans are drawing in Washington.

Ryan unveiled his proposal in a Wall Street Journal column this morning (and a very spiffy Web site here), calling for cuts in domestic spending, Social Security (it's called reform, however), welfare, Medicare, the health care law, alternative energy programs etc.

Says Ryan:

A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage's analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.

It also says the unemployment rate will be 2.8% by the next decade. "It's an assumption, in other words, that's unrealistic enough to be considered somewhat bizarre," The Economist says. "Everyone puts a positive spin on their policy proposals. But fundamentally worthy policies shouldn't need to promise laughably overoptimistic outcomes to win support."

For the record, the unemployment rate has only been that low once -- 1953.

The study is not from a non-partial source. It's from the Heritage Foundation, "whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense."

The Economic Policy Institute leans in the other direction and -- funny -- has a different view:

"This budget is impressive in its ability to not only inflict maximum harm on the economy, but to concentrate that harm on those most in need," its director, John Irons, said today. "This will not only cost the economy hundreds of thousands (and perhaps millions) of jobs over the next five years, it will also destroy the social safety net and undermine policies that support the middle class."

It's just the kind of debate that demands the curmudgeonly hand of CNBC's Mark Haines

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Sizing up the McConomy

Posted at 12:41 PM on April 4, 2011 by Bob Collins (3 Comments)
Filed under: Economy

Fifty-thousand people will get jobs in one day later this month.

The jobs will be at McDonald's, which announced today that it will hire the workers on April 19.

On the surface, it's quite a numbers story in the company news release:

* McDonald's and its franchisees will spend more than $518 million more in wages and salaries in the coming year, an average of more than $1.4 million every day.

* More than $41.5 million in training will be invested in the company's new workforce - instilling life-long business and customer service skills as well as setting employees up for success in current and future opportunities.

* The addition of 50,000 potential hires translates into $54 million more in payroll taxes contributed to the broader economy.

* Using a statistical multiplier effect, 50,000 new workers will generate almost $1.4 billion in annual spending - more than $3.5 million per day.

$1.4 billion works out to $28,000 per year.

The angle that the McDonald's president is pushing is this one:

..the average pay for the new positions will be $8.30 per hour, higher than the federal minimum wage of $7.25 per hour.

The natural conclusion is that McDonald's is paying more than minimum wage to its people, the bulk of whom are the customer service people and cooks. But the figure includes the restaurant managers who will also be hired and, according to McDonald's, they can make up to $50,000 a year.

The company doesn't say how many of the 50,000 jobs are managers.

Are 50,000 fast-food jobs a sign of a recovering economy, or a sign that it's not recovering very fast?

The company's national hiring day mirrors one it had on the West Coast last summer.

"It's hard to be choosy right now," Serena DiPiero, 48, of Sacramento, told the Sacramento Bee at the time.

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The future: What if this is as good as it gets?

Posted at 11:37 AM on April 1, 2011 by Bob Collins (17 Comments)
Filed under: Economy

It's hard to listen to experts and people living in the real world and not hear the famous words of Jack Nicholson, "What if this is as good as it gets?"

What if my generation -- Baby Boomers -- are the last generation in the history of the United States to have a better standard of living than the previous one? What if the national dialogue started including that as a possibility?

The prediction that the war in Libya could last for years, a story that Minnesota is losing its young teachers, and today's announcement that a lower unemployment rate masks the reality that the majority of the lost jobs may not return in this generation, feed the gloom.

But nothing matched this caller -- James, from Bloomington -- on today's Midmorning segment on how student loan debt, heaped on students by colleges inflating the job prospects of graduates, may never disappear for our generation of the future.

He has $250,000 in debt, he makes $30,000 a year in a public-service job and he says, "every dream I've ever had of doing anything in my life is gone."

The News Cut psyche can use some better individual stories. Have you got one?

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Minneapolis, basket case

Posted at 9:17 AM on March 29, 2011 by Bob Collins (28 Comments)
Filed under: Economy

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Budget analysis: What's Plan B?

Posted at 2:07 PM on March 18, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Politics

The Congressional Budget Office -- as in the non-partisan Congressional Budget Office -- threw cold water on the notion that President Obama's proposed budget is going to do anything to lower the budget deficit. One reason? Lower taxes.

Here's what the CBO has to say:

Of the various initiatives that the President is proposing, tax provisions would have by far the largest budgetary impact. The 2010 tax act (officially the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Public Law 111-312) extended through December 2012 many of the tax reductions originally enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). The President proposes to extend those reductions permanently, with some modifications, and to permanently index for inflation the amounts of income exempt from the alternative minimum tax (AMT), starting at their 2011 levels. In addition, the President proposes that, beginning in January 2013, estate and gift taxes return permanently to the rates and exemption levels that were in effect in calendar year 2009. Those policies would reduce tax revenues and boost outlays for refundable tax credits by a total of more than $3.0 trillion over the next decade relative to the amounts projected in CBO's baseline. That total exceeds the $2.7 trillion net increase in the deficit over the next 10 years that would result from the President's budget as a whole; the President's other proposals would reduce the deficit, on balance, over 10 years.

Theoretically, the tax cuts would boost economic activity to make up for their cost to the Treasury. That doesn't appear to be the prediction.

Both sides, of course, will point to the other side in this debate to indicate who's causing this reality. But it's this chart, supplied by the CBO, that shows the fallacy of just about every campaign speech ever given on the subject.

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How will you deal with the rising price of gas?

Posted at 2:25 PM on February 28, 2011 by Jon Gordon (6 Comments)
Filed under: Economy, Energy

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Gloom returns to TC housing market

Posted at 11:40 AM on February 22, 2011 by Bob Collins (4 Comments)
Filed under: Economy

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Should the nation build high-speed rail?

Posted at 11:10 AM on February 18, 2011 by Bob Collins (5 Comments)
Filed under: Economy

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The coming brain drain

Posted at 11:18 AM on February 10, 2011 by Bob Collins (1 Comments)
Filed under: Economy

Here. Watch this. Here's a Kleenex.

Ella Chou, who is subbing for James Fallow this week, writes about this ad today on The Atlantic's site.

She says the "best and the brightest" may not necessarily be the ones who were born here, and increasingly, they're not the ones staying here:

The video spread like a wild fire among the oversea Chinese communities because it tells the typical story of a young Chinese with a "dream" (as mentioned in the ad): prep hard for the exam; wave goodbye to family in the airport (Beijing Airport in this case); pursue study at a top American University (this video shows, as many would recognize, Columbia University); get a job in a big American city (looks like a consulting job in New York). Last year alone, 128,000 Chinese students came to the U.S., pursuing more or less the same dream. They make up of the largest percentage (nearly 18%)of the international student body in the U.S..

Is U.S. still going to be the place where young people around the world dream to learn, to make their career and realize their potential? Is it going to keep the openness?

Around me among the Chinese community at Harvard, I've already begun to hear people saying they'll probably go back to China after graduation because of the difficulty in getting a job and the required work visa in the U.S. and also because the potential for growth they are seeing back at home. How is U.S. going to maintain its attractiveness to world talent? Ten years from now, will we see a different version of this ad?

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A little prayer for Bernanke

Posted at 10:33 AM on February 9, 2011 by Bob Collins (4 Comments)
Filed under: Economy

Some pictures just scream "caption contest."

Like this one of Federal Reserve chair Ben Bernanke

Bernanke went to Capitol Hill today to say what he and his predecessor have been saying for several years now: It'll be several more years before things return to what used to be normal.

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Mapping foreclosures

Posted at 2:53 PM on January 28, 2011 by Bob Collins (1 Comments)
Filed under: Economy

Google Maps has been tracking foreclosed houses for sale for a few years now, but more recently has made its application a little more robust as a way to show the pattern of foreclosures in particular neighborhoods.

Business Insider just mapped some of the worst cities in America. It's a great slideshow. Take Las Vegas, for instance:

Let's take a little tour around our state.

MINNEAPOLIS
Hennepin County foreclosures were up 26% in the 3rd qtr of '10 compared to '09

ST. PAUL
Ramsey County foreclosures were up 12% in the 3rd qtr of '10 compared to '09

ROCHESTER
Olmstead County foreclosures were up 33% in the 3rd qtr of '10 compared to '09

MANKATO
Brown County foreclosures were up 60% in the 3rd qtr of '10 compared to '09

FARGO MOORHEAD
Clay County (Mn) foreclosures were unchanged in the 3rd qtr of '10 compared to '09

LAKES REGION
Crow Wing County foreclosures were up 15% in the 3rd qtr of '10 compared to '09

DULUTH
St. Louis County foreclosures were up 36% in the 3rd qtr of '10 compared to '09

Want to play with this yourself, just go to Google Maps in your browser...

1. Punch in any US address into Google Maps.

2. Your options are Earth, Satellite, Map, Traffic and . . . More. (Select "More")

3. The drop down menu gives you a check box option for "Real Estate."

4. The left column will give you several options (You may have to select "Show Options")

5. Check the box marked "Foreclosure."

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Air continues to leak out of housing market

Posted at 4:18 PM on January 25, 2011 by Bob Collins (1 Comments)
Filed under: Economy

The recovery in the resale price of homes in the Twin Cities last year apparently was a mirage.

The Case Shiller Index from Standard & Poors, which measures the resale price of a home, has fallen for a fifth consecutive month in the Minneapolis area. It dropped 1.4% in November. It's the longest slide in prices since the index showed almost two consecutive years of declining home prices (month-to-month), which started in 2007.

Prices dropped 4.5% from a year earlier. After a near 18% decline in 2008, prices recovered slightly in 2009 (up a little over 1%).

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Has stimulus money helped the Minnesota economy?

Posted at 11:37 AM on January 24, 2011 by Bob Collins (1 Comments)
Filed under: Economy

Like the stimulus program itself, there's a little something for everyone in an investigation of what the stimulus program has brought to Minnesota and individual counties here. ProPublica's tracking shows $430 billion in stimulus funds have been dispersed through last September.

In the counties with the largest per-capita amount of stimulus funds, much of the money went to "broadband initiatives." In Lake County, for example, that was $56 million of the overall $69 million spent in the county.

That was the case in Cook County, too, where unemployment has gone steadily up -- from 6.6% to 7.8%.

The report, which is based partly on data from the recovery.gov Web site, does little to prove that the stimulus created or saved jobs... or that it didn't. In Minnesota as a whole, the unemployment rate dropped only .4 percent from November '09 to November '10.

Overall, comparison of the numbers is deceiving. Ramsey County, for example, is listed as having the largest per-capita share of the stimulus ($8,772), but that's because St. Paul is the state Capitol and much of the money went to state agencies.

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Is high-tech business friendly?

Posted at 11:28 AM on January 18, 2011 by Bob Collins (5 Comments)
Filed under: Economy

Comparing business tax climate from state to state is a dicey proposition. Tax laws in each state are so different, sometimes a direct comparison is difficult. Today's report that Minnesota has to hustle to close a "high-tech" jobs gap, however certainly invites some comparison of "business-friendly" climate vs. high-tech economic activity.

The Tax Foundation annually releases this map, which names the best and worst "business tax climate." Minnesota annually appears as one of the 10 worst. 2011 is no exception. It comes in #43. Click the image for a larger version. The darker the color, the less business friendly, according to the Tax Foundation:

The Minnesota report on high-tech job growth uses data from the State New Economy Index.

Here's the overall scorecard. The darker the state's color, the higher the score:

There appears to be comparatively little association between "business friendly" and the overall score.

"Knowledge jobs" presents an even murkier picture. Several of the Tax Foundation's "best" states for business appear in the top 10. But so do several of the "worst," including Minnesota.

Ditto for jobs in information technology:

According to the report, issued in November, Massachusetts, Washington, Maryland, New Jersey and Connecticut "are the top five states at the forefront of the nation's movement toward a global, innovation-based new economy. On the business-friendly survey, that's #32, #11, #44, #48, and #47.

The bottom five states were unchanged from 2008. Mississippi and West Virginia have lagged most in making the transition to the New Economy, the report said. The other lowest-scoring states include, in reverse order, Arkansas, Alabama and Wyoming. On the business-friendly scale, in order, that's #21, #37. #39. #28, and #3.

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Sign wars: What's your sign?

Posted at 10:15 AM on January 18, 2011 by Bob Collins (4 Comments)
Filed under: Economy

So, it's a fight you want, Wisconsin? Maybe you didn't know when you decided to erect those "open for business" signs on your borders that our state signs once said "the brainpower state."

We'll come up with a response. Just watch what News Cut readers can do. Here's a blank sign. Click on it to open the larger image, save it to your computer, come up with a proper response to Wisconsin, then send it back to me (you can also use this form).

I'll post them here. Like so:

"Karen E" of St. Paul cited data from The Daily Beast for her entry.

From Steve McPherson:

From reader Mark Anderson of Plymouth:

Kevin Whinnery's submission:

Charles Johnson is Wisconsin's new junior senator.

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The unemployed: Moira gets a gig

Posted at 4:04 PM on January 6, 2011 by Bob Collins (3 Comments)
Filed under: Economy, The Unemployed series

It's been quite awhile since I wrote News Cut's The Unemployed series, in which I interviewed people who were, as the name implies, unemployed (I'm not opposed to doing this again if you're unemployed and would like to tell me your story. Contact me.)

Moira Webster-Larranaga, of Burnsville, was a human resources manager who got laid off around the time she also got cancer in 2009.

The mail bag today, however, brings good news:

I am not sure if you are still looking for follow-ups on the unemployed series, but in case you are, here's mine. I started my new job today, as the HR Manager for the Wedge Natural Foods Co-op. That's right, it took 22 months, 335 resumes and 26 interviews, but I finally got a job. And, it's a GREAT job. It's more responsibility than I've had before, and with a terrific organization that helps make our community a better place to live.

The news is bittersweet, however. Moira's sister, who came out to Minnesota in 2009 to help her sister through her cancer treatment, was diagnosed last February with cancer and died last summer.

"As I wasn't working, I was able to travel several times to see her and her family last spring," Moira says.

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Battle continues in home loan modification effort

Posted at 2:13 PM on January 5, 2011 by Bob Collins (1 Comments)
Filed under: Economy

When last we left Vicki Hugen of Eden Prairie, she was trying to convince the bank that services the mortgage on her home to modify the mortgage. Wells Fargo had initially agreed to about a $2,000 a month mortgage, so she accepted her ex-husband's offer to take his share of the house in lieu of alimony. Then, the bank dropped her from the loan modification program and offered her a monthly payment over $3,000, which she couldn't afford. (Find the whole story here)

Things haven't changed much since I wrote about it last fall. The Minnesota attorney general's office said there wasn't much they could do other than send a letter to the bank suggesting it do something. The bank hasn't changed its offer, and thousands of dollars in late fees and penalties are piling up.

"I really don't have much of a plan now," she told me today. "Now I'm just getting random offers (from the bank). Each one starts out, 'this is to confirm the modification we discussed.' But I haven't talked to anyone. "

She says if her mortgage can be modified (she says she can afford about $2,300 a month), the fees and penalties would be removed, she could put the house on the market, sell it, and much of her mortgage could be paid off and she could "get out."

"I thought I was taking a reasonable settlement after the divorce. I'd like to be able to sell the house and end up not owing them 30 grand (in fees," she said. Filing bankruptcy is an option.

Hugen's story, of course, is being repeated thousands and thousands of times all over the United States. These aren't the old days when one could sit down with the banker who owns the mortgage. In Hugen's case, Bank of America actually owns her mortgage. Or does it?

Consider this chart, which popped up online in November when a homeowner "reverse engineered" who owned the mortgage:

Somewhere in there, something may make sense.

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Homeless man gets job, house

Posted at 11:43 AM on January 5, 2011 by Bob Collins (2 Comments)
Filed under: Economy

Updating the morning mention of Ted Williams, the former DJ turned homeless person: The Cleveland Cavaliers basketball team has hired him fulltime and, he says, given him a house.

Here's video of his appearance on an Ohio radio station this morning.

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The optimism gap

Posted at 10:06 AM on January 4, 2011 by Bob Collins (1 Comments)
Filed under: Economy

A Pew Research survey reignites an old debate -- at least for me: Are we more glum about the future because the future is more bleak than it was in the Depression? Or are we more glum about the future because we are connected to more information that tells us we should be glum about the future?

During the Depression, the Pew survey says, only 29% thought business conditions would get worse. Fifty percent figured things would get better.

Compare that to an October 2010 survey. Only 35% expect things to get better by this October.

Even in the Reagan recession -- when unemployment peaked at 11% -- Americans were more hopeful than they are today.

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Is water the next oil?

Posted at 3:29 PM on January 3, 2011 by Bob Collins (4 Comments)
Filed under: Economy

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What the airline-online reservation war means

Posted at 10:58 AM on January 3, 2011 by Bob Collins (4 Comments)
Filed under: Aviation, Economy

This is the kind of thing that could put travel agents back in business. Airlines are getting tough with online ticket booking sites. They're the sites who saved travelers money by allowing people to comparison shop for airfares. Who needed travel agents?

Expedia has stopped selling American Airlines tickets after American stopped selling on Orbitz. The airline wants people to go to its Web site, instead.

Might this cost you money? Maybe. Consider this: If you wanted to book a flight to Chicago and went to the American Airlines Web site, a Monday flight later this month (and a return flight a week later) would cost you $353. Booked via Expedia, many flights on United pop up with a round trip price of $139.40. Ouch.

Delta is doing the same, though with smaller sites. Delta stopped allowing three websites -- CheapOAir.com, OneTravel.com, and BookIt.com -- to list its flights.

If you've got the time to check every possible site, you'll probably be able to find the cheapest fare. Prism Money, the personal finance column, recommends this:

>>Check the sites that follow the other sites. Start a search with Kayak and Sidestep.com, both of which monitor several other airline ticket websites, and see what turns up.

>> Surf to individual airline sites for quotes, once you've seen the best that the aggregators and online agents are offering.

>> Call the airline of your choice and ask them what extra fees would apply before you buy your ticket. Factor that into your decision.

>> Join all the frequent flyer programs and email lists that you can, even if you're not really a frequent flyer. It's typically free to join. Airlines trying to gain tighter control of their customer relationships may start offering deals directly to consumers who are already on their list.

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What will you do with your tax break?

Posted at 2:24 PM on December 29, 2010 by Bob Collins (9 Comments)
Filed under: Economy

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Alfred Kahn's bananas

Posted at 1:08 PM on December 28, 2010 by Bob Collins (0 Comments)
Filed under: Economy

Economist Alfred Kahn has died at 93. The long-time Cornell University economics professor is considered the architect of airline deregulation. Say what you will about the joy of flying these days, but the fact airlines are now what long-distance bus service was generations ago is due primarily to him.

But Kahn was also memorable for one of the best economics lessons ever for someone trying to understand what makes recessions worse: emotion.

As an economic adviser to President Jimmy Carter, he warned lawmakers that if they didn't get inflation under control in the '70s, the nation was heading for a recession or a depression.

But, as we've seen since 2008, if you even say the "R" word, let alone the "D" word, consumers shut the spigot off, more companies lay off workers, which makes more people stop spending, which makes more companies lay off more workers and on and on it goes until you're where we pretty much are today.

Only Kahn introduced this concept by invoking a new economic term: "banana." When he was giving testimony at the Capitol, whenever he needed to say recession or depression, he'd simply say banana instead.

It even inspired the late William Safire to write an essay on why people find the word banana so darned funny.

In old American slang, banana oil means "nonsense" (its humorous connotation far different from snake oil , meaning "fraudulent"). A top banana is a leading comedian. To go bananas is to go crazy, and the nonsensical meaning is reflected in the verse of another 1930's song, "But Not for Me," from the Gershwins' "Girl Crazy": "I never want to hear/From any cheerful Pollyannas/Who tell you fate/Supplies a mate;/It's all bananas !"

A banana republic was not just a country that produced profits for the United Fruit Company; it was a country with a rinky-dink government, having "backwardness" as its hallmark (until the name was adopted by an American retailer; now it has a yuppie connotation). A banana boat is a very slow boat.

Of course Kahn's strategy did not work. It was funny and all, but Americans could easily figure out what was going on, they stopped spending, and we had a heck of a banana shortly thereafter.

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Reports of a housing rebound have been greatly exaggerated

Posted at 8:29 AM on December 28, 2010 by Bob Collins (4 Comments)
Filed under: Economy

Look out, below! The Twin Cities housing prices are in a nosedive. Again. The Case Shiller Index, which measures the resale values of homes, dropped another 1.9% in October from September, according to the report released this morning.

The drop wipes out all of the gains in prices the Minneapolis area made in 2010, most of which came in the late spring. Resale prices are down 1 percent on the year, and are down almost 3 percent from one year ago.

Housing rebound? It ain't happening. We may not have reached bottom yet.

It could be worse; we could be Chicago, where prices have dropped 6.5% in the last year, the survey said. Of the 20 metropolitan areas surveyed, only Los Angeles (3.3%), San Diego (3.2%), San Francisco (2%), and Washington (3.7%) recorded an increase in housing prices from a year ago.

Click on the table below to see a bigger image.

More analysis here.

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For the older and unemployed, the news is not good

Posted at 8:55 AM on December 10, 2010 by Jon Gordon (1 Comments)
Filed under: Economy, The jobs we do

A recent Labor Department report found that older people who lose their jobs take longer to find work, and that more than 2 million people without work are over 50, according to Midmorning. The first hour of the show featured a discussion about the challenges facing educated, experienced workers looking for a jobs.

It was a harsh dose of reality.

The guests were Katherine Newman of The Johns Hopkins University, and Carl Van Horn of Rutgers.

Here are some highlights gleaned from the program:

-Older workers who've left the workforce are adapting to being rejected by employers, but not in a willing way. They just don't see the opportunity. We have to be careful to conclude they are just closing the book on themselves. What's really bad: They are at risk of losing their skills so that even when the economy revives, they will not be able to find work. Fifty-five is way too young for this to happen. (Newman)

-Prospects for improvement in the short term are not great. The recession is just too deep. (Van Horn)

-Older, unemployed workers are chewing through whatever resources available to them, just like Roger, a 57-year-old caller who burned through his 401(k) after submitting 400 resumes and two and a half years with no response. Workers are trying to get disability, spending their savings, and retiring early to get Social Security benefits. (Van Horn)

-Forced early retirement will expose older Americans to poverty. People will be having "a much poorer old age." Some people will be on Social Security for 25 years. This has huge consequences for the whole country, not just for those who are unemployed. (Newman)

-Going back to college for an older America can be both help and hurt job prospects. Some employers think salary demands from an applicant with an advanced degree will be too high so the applicant gets passed by. On the other hand, many employers will see an opportunity to get a very qualified person for much less money than during a healthy economy. Job seekers must be prepared to lower their salary expectations. (Van Horn)

-More education is a very good thing in aggregate, but we should recognize that as a country it will be hard to keep educating people when public higher education institutions are in terrible shape, fiscally speaking, especially when we need them most. (Newman)

-Before you chase a new degree, do extensive research into the real job prospects for the field you want to enter, as well as proof that the school you want to attend is good at job placement. School is expensive, results in lost income, and takes you out of the labor market. (Van Horn)

-The situation for older, unemployed Americans is not impossible. But it will take an extraordinary injection of economic growth to make things better for older workers. (Newman)

-Some employers feel freer to behave badly toward their older employees because they can more easily find replacements. (Van Horn)

-Part time jobs are almost as hard to find as full time jobs but if you can get one, because there is an opportunity for it to expand to full time. Any foot in the door is good. (Newman)

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Fargo's odor problem

Posted at 2:00 PM on December 8, 2010 by Nate Minor (2 Comments)
Filed under: Economy

A methane well at the Fargo landfill. (Photo courtesy the City of Fargo.)

The Forum of Fargo-Moorhead reports this morning on a stinky problem: The city's landfill has lately been, shall we say, more odorous than usual:

"We kind of get used to it," said Paul Hanson, the Fargo landfill supervisor. "So when we can tell it's stronger than normal, then you know it's pretty bad."

The city isn't sure what the precise cause of the new stench is, but the likely culprit is wet weather this summer and fall, Hanson said.

Heavy rains washed away some of the landfill's dirt cover at 45th Street and Seventh Avenue North, exposing decomposing garbage and the smelly gases that come with it, he said.

The money line, for me anyway, is when the landfill supervisor says "Our biggest problem is that the city grew around us." If you've ever been to Fargo, you know it is not the most vertical of cities. 2,631 people per square mile in Fargo compared to 28,852 per square mile in NYC, according to US Census data.

The story as to why Fargo built out instead of up is similar to many American cities: cheap land. In the late 1960s, an urban renewal project in Fargo failed when a developer (who, ironically, was one of the original promoters of Fargo urban renewal), announced plans to build a shopping mall on the outskirts of town. The Forum dubbed it the "$15 million Bazaar on the Prairie."

The mall now anchors Fargo's retail industry, which attracts many Canadians and has turned the city into something of a regional shopping hub. New schools, restaurants and homes followed the trend out of building out of the old neighborhoods.

Let's just hope shoppers remember to plug their noses, in certain parts of town anyway, on their way to the mall.

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7 personal finance tips from Ruth Hayden

Posted at 9:18 AM on December 3, 2010 by Jon Gordon (3 Comments)
Filed under: Economy

In case you missed Midmorning's financial educator Ruth Hadyen on the radio today, here is some of the advice she offered to listeners:

1) What's considered a good credit score is creeping up. The high-600s used to be considered good, but now you need to be in the 720-760 range.

2) The two most important factors in achieving a good credit score are on-time payment of bills and the relationship between your credit use and credit limits. The more headroom the better.

3) Eighty percent of credit reports have errors, according to some reports. You need to visit AnnualCreditReport.com to check for errors. First, make sure all your personal information is correct -- spelling of your name, accuracy of address, etc. Then, check your actual financial records for errors. If you find errors in your personal info, contact the credit reporting bureau. For errors in your financial records, contact the creditor first. If you get no satisfaction, you can add the disputed information to your credit report.

4) One way to build good credit: Take out a small loan from a bank or credit union but don't spend the money. Make regular payments from that pool of money.

5) Think of the credit report as a picture of you being passed around. How can you make it look better? Change the things over which you have control. You can't change the system, so how do you work within it?

6) It's better to have two cards or stay well under the limit on one card, then to just have one card that's close to being maxed out.

7) Credit card balance transfers can be a good way to help pay off debt if you're not just moving debt around. Playing a debt shell game doesn't look good to credit bureaus. Consolidate to lower rates but then begin chipping away at the balance.

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How much is $6.2 billion?

Posted at 12:12 PM on December 2, 2010 by Bob Collins (9 Comments)
Filed under: Economy, Politics

The new budget deficit is $6.2 billion in Minnesota.

How much is that?

$6.2 billion is....

... the total payroll for legislators if the Minnesota House of Representatives had 199,100 state representatives, or one state rep for every 26 people who live in Minnesota.

... the cost to use the state airplane to ferry the governor hunting every weekend (weather permitting) until December 2, 2739.

... how much you would have counted out if you started now and counted out dollar bills every second and don't stop for the next 196 years.

... roughly the amount it would take to build one new fully-loaded high school in every county in Minnesota.

... approximately the entire year's income for everyone in St. Paul.

... enough to pay unemployment benefits for the next three years for all of those currently receiving them in Minnesota.

... what it would cost to build 62 miles of light rail.

... all the license tab fees paid in this state for the next 12 years.

... the cost of running a radio ad on a Sioux Falls radio station every 20 minutes for the next 2,359 years, urging businesses there to move to Minnesota.

Go ahead! Add your own here.

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The economy: Hot or not?

Posted at 12:31 PM on December 1, 2010 by Bob Collins (0 Comments)
Filed under: Economy

This month marks the third anniversary of the start of the Great Recession. It's officially over now, according to the economic statistics, but the economy is still horrible for many people. Remember back in 2008 how far away it seemed when the economists said things wouldn't improve significantly until late 2010?

It's late 2010 and an analysis from the liberal think tank Economic Policy Institute suggests it's getting worse, at least for people looking for meaningful work. It says the "underemployment rate" is going up, not down.

The large numbers of workers who have stopped looking for jobs or can only find part-time work suggest that high rates of unemployment will likely persist even when more jobs are created. Moreover, even the 17% underemployment rate does not include people who are working full-time but have had to take jobs below their skills, training or experience level.

Or is it?

Black Friday drew big crowds, CyberMonday sales were up 19 percent, consumer confidence is at the highest point since the beginning of the summer, and today the stock market is having its best day in three months.

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Wisconsin jeweler urges diamond purchases before Second Coming

Posted at 3:27 PM on November 30, 2010 by Bob Collins (4 Comments)
Filed under: Economy, Religion

Christmas is over-the-top season for jewelry store advertising. There's still a lot of the holiday season left to go, but a Superior, Wisconsin jeweler has already won this year's award for most-memorable TV commercial.

Larry Falter of LTD Jewelers is running a "Second Coming Sale," based on the belief that Jesus is returning to earth very soon. In the meantime, his diamonds are half off.

"I've had people come in and want to talk about Jesus Christ and I've had people come and say, 'Where are those diamond earrings? I want to buy them for half off," Mr. Falter told me this afternoon.

Falter has been running TV ads "for years and years," but this is the first time he's brought his religious beliefs into the mix. He recently returned from a visit to Israel as part of Jews for Jesus. "I just thought we would have some fun with it all," he said. "I haven't had any negative comments, but there could be some I don't know about. People are not responding because to them it's a negative. But I'm OK with it. We have signs in the store that talk about having a 50-percent-off Second Coming sale."

The need for diamonds and the Second Coming generally don't go together very well. "They don't," he acknowledges. "But my point is in the here and now if you're looking to do this or that, here we are. People can hear one message and maybe do something with that or not with regard to the Lord, and the other thing they can do something with -- or not -- is where to shop."

Falter doesn't see the ad, currently running on two Duluth TV stations, as being the beginning of a series on the Second Coming, but he's not ruling it out. "I'm a little more out there right now as a Christian businessman. Will I find I want to do more like this in the future? I don't know. It's just something that was timely for me right now, maybe because of my own personal convictions and having those reinforced by the trip to Israel, and also by the fourth quarter in any jewelry business being the most important to do business in. What will I do next year? I couldn't honestly give you a truthful answer."

For now, he's more concerned with the economy. "I think people are going to shop more strongly than in recent years," he said. But he's worried the publicity surrounding Friday's meeting of a presidential commission charged with finding ways to cut the U.S. deficit will kill consumer enthusiasm.

"If they hit the hammer on this really hard, it could set a shock wave of 'Maybe, I should hold back a little bit,'" he said.

Update 8:36 a.m. Wed. - I wasn't aware of this yesterday but Aaron J. Brown has written about this ad. Find it on his excellent blog.

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Is Minneapolis the new Cleveland?

Posted at 8:37 AM on November 30, 2010 by Bob Collins (5 Comments)
Filed under: Economy

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Pay freeze?

Posted at 11:45 AM on November 29, 2010 by Bob Collins (9 Comments)
Filed under: Economy, Politics

President Obama today proposed a pay freeze for federal employees for the next two years. It's a pre-emptive strike in advance of Republicans taking control of Congress. Many in the GOP have vowed to reduce the federal workforce by 10 percent.

Obama says his move will save $5 billion over the next two years. The pay freeze will not apply to the military.

There are about 2.1 million federal employees (including the military). The number has grown in recent years. Nextgov.com analyzed why:

There were fewer federal workers in 2009 than in 1990, 1980 and 1970. Now take a closer look at the OPM table. Much of the growth, understandably, occurred in Homeland Security agencies, increasing from 70,000 to 180,000 - a jump of 110,000. Justice Department jobs went from 98,000 to 113,000 -- more than 15,000 new jobs added. (Again, crime and more Homeland Security related.) Jobs at the Veterans Department increased from 220,000 to 297,000 -- that's 77,000 more federal workers. Again, a result of Homeland Security, or rather staffing up to take care of thousands of veterans coming home from two wars. And there's a lot of information technology jobs in there.

Almost all of the new jobs created were as a result of 9/11, the analysis said. Compared to the 1980s, federal jobs in agriculture, education, and the Treasury have all declined.

But back to the freeze. Will it work? Here's some napkin math:

There are (and this is debatable) 1.43 million federal workers.

A savings of $5 billion per year is the goal.

The average amount being forfeited by a federal worker is $3,496.

The current deficit is about $1 trillion.

On a per-dollar basis, the president's move cuts one-half cent for every dollar of the federal deficit. That doesn't quite reach the level of a drop in the bucket. It also assumes that the cost of benefits doesn't rise.

Would the Republican plan do much more? The average federal salary is about $68,000. Annual benefits, reportedly, cost $40,785 (this may include benefits under the GI Bill). The total saving from cutting 10 percent of the civilian workforce would be $15.5 billion or a penny and a half per dollar of the deficit. That, however, doesn't factor in the cost of lost income taxes and the cost of firing employees.

What else needs to be cut?

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The things you've just got to have

Posted at 9:02 AM on November 26, 2010 by Bob Collins (0 Comments)
Filed under: Economy

We understand the way evolution has made shopping after Thanksgiving instinctive, but we haven't seen anything this year in the "I've gotta have it" category that makes getting up early worth it.

Until now.

(h/t: Boing Boing)

Here's one from the Museum of Possibilities that's not yet available (maybe next year, better start sleeping out at the store now): The mobile motorcycle office.

Motorcycle and workplace angst sold separately.

Here's something we actually saw at Oshkosh this year. Probably not practical for a Minnesota winter. But still...

By the way, if you're not interested in the gizmo, zip ahead to the 5 minute mark and learn about this guy's background. You might have heard of his dad.

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Show us your tax bill

Posted at 11:31 AM on November 19, 2010 by Bob Collins (76 Comments)
Filed under: Economy

This is the time of the year when the proposed property tax bill statements are arriving in area households and early signs are there's a wide disparity in these bills.

The market value of homes is dropping universally, but some tax bills are going up, some are going down. What's your situation?

Last night, homeowners in Minneapolis flooded a hearing to protest the huge jump in their property tax bills.

Some said their total property tax bill is going up 18 percent.

By contrast, I opened my statement with some trepidation last evening, only to find out that my total tax bill is going down 3.8 percent. The taxable market value of my home has dropped about 12 percent.

I want to create a map showing the varying degrees of property tax bills. So please comment below and pass along your data. you don't have to reveal personal data such as market value. Just indicate the percent change of your total property tax bill and what city (and neighborhood, if applicable) you're in.

Update 11:59 a.m. - Ed Kohler at The Deets has an interesting look at Minneapolis property taxes.

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Simple conclusions hard to find in wake of Lockheed Martin announcement

Posted at 12:53 PM on November 18, 2010 by Bob Collins (5 Comments)
Filed under: Economy

Today's surprise announcement that Eagan is going to lose 650 jobs is certainly an invitation to revisit the simple proverbs of the recently completed campaign season.

Six-hundred-and-fifty jobs? That's a lot of people working and spending money. Is the impact of losing them going to be any less just because they were jobs created with government money?

Lockheed Martin, the largest defense contractor in the world, makes the avionics systems for the P-1 marine surveillance plane. It's a private company, of course, that employs the people because the U.S. and other nations wage wars and/or have huge defense budgets.

There's a little something for everyone in today's announcement. Except for the people losing their jobs.

The reality of how intertwined jobs are with government spending becomes more clear, and more confusing. Liberals, for example, might point out that conservatives are for less government spending and this is what happens when government spends less; that the claim that "government doesn't create jobs" is wrong. They could even point out that the jobs are going to three states, two of which are rated in the top 10 of business-unfriendly states.

But conservatives could equally point out that liberals who want the U.S. to cut its defense budget will cost people their jobs. And that peace thing? War employs people even as it bankrupts a treasury.

In the complex nature of the economy, where does the government part end and the private part begin?

In other unemployment news today, Republicans in the House have blocked a bill
that would have extended jobless benefits for the long-term unemployed beyond the holiday season.Two million people will lose benefits averaging $310 a week nationwide by the end of the year.

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What's the love for St. Paul, Duluth? It's not the economy

Posted at 8:58 AM on November 15, 2010 by Bob Collins (0 Comments)
Filed under: Economy

Knight Soul of the Community 2010 - National from Knight Foundation on Vimeo.

St. Paulites and Duluthians, what draws you to the city and makes you want to call it home?

The Knight Foundation and Gallup have completed three years of polling in 26 communities in the United States in which Knight owns newspapers-- Duluth and St. Paul were chosen in Minnesota. The goal was to find what creates an emotional bond between people and the community in which they live.

For all the talk about the economy and the importance of jobs, the economy wasn't much of a factor in either St. Paul or Duluth. Nationwide, however, the bond was related to economic growth.

In the St. Paul area, social offerings (entertainment infrastructure, places to meet people, community events), aesthetics (an area's physical beauty and green spaces) and openness (how welcoming the place is) are the most important factors emotionally connecting residents to where they live.

Aesthetics was perceived as a community strength, particularly the area's parks, playgrounds and trails. All aspects of aesthetics were rated significantly higher in 2010.

Social offering and openness need improvement to further attach residents to the area, however both were rated significantly higher in 2010. Nightlife was rated significantly higher. Gays and lesbians are seen as significantly more welcome in 2010 - all positive momentum that helped to improve these challenge areas for the community.

The study said the economy isn't rated very highly as a "bonding agent" for people. "Leadership" was rated even lower. Here's the St. Paul findings.

The findings for the Duluth area aren't much different:

In the Duluth area, social offerings (entertainment infrastructure, places to meet people, community events), openness (how welcoming a place is) and aesthetics (an area's physical beauty and green spaces) are the most important factors in emotionally connecting residents to where they live.

Aesthetics, particularly the natural beauty of the area is perceived as a community strength.

Social offerings, particularly the cultural opportunities, and openness, particularly to young talent needs improvement to increase resident attachment. However, nightlife is rated significantly higher in 2010. The area is perceived to be most welcoming to seniors and least welcoming to young talent, although both groups are seen as significantly more welcome in the area in 2010. Residents 55 and older are the most attached of all age groups, whereas 18-34 year old residents are least attached.

Duluth, why don't you welcome "young talent?" Here are the Duluth findings.

As of 9 a.m., a live presentation on the findings can be found here.

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Tales from the tough times

Posted at 3:39 PM on November 8, 2010 by Bob Collins (3 Comments)
Filed under: Economy

The Associated Press says old stigmas of shopping for price have faded away in tight economic times. People are buying store brand items in the grocery stores, and shopping Goodwill stores for clothing.

But the article might've missed when it tried to show that even the wealthy are "slumming it," too:

Jaime Palmer of Dallas used to go to Neiman Marcus and spend as much as $300 on dress shirts by such high-end designers as Hugo Boss and Thomas Pink.
Now, Palmer, a 36-year-old a managing partner at an investment boutique, buys from a new label called J. Hilburn, which customizes dress shirts for a much lower price - $120. As for his suits, he's turning to outlets.
"You don't get the service. They don't bring you coffee," he concedes. "It did have a bit of a stigma for me." But living through the Great Recession has made him reassess how he shops, he says.

How have you changed your shopping habits? Aside from giving up coffee, of course.

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Plenty of questions, no easy answers in Pipestone

Posted at 3:35 PM on November 3, 2010 by Bob Collins (1 Comments)
Filed under: Economy

If tax breaks and a "business friendly" atmosphere are what it takes to keep businesses in Minnesota, you sure can't tell by Pipestone, Minnesota.

Gov. Pawlenty's JOBZ program, which gives tax breaks to businesses in economically-distressed areas of the state, has always been controversial. It's also been a good laboratory to see to what extent tax breaks will keep big business satisfied.

This week, Suzlon, the India-based manufacturer of wind turbines announced it's shutting down what's left of its plant in Pipestone. The Worthington Daily Globe reports the action comes despite the fact local and state officials bent over backwards to keep the company happy:

The JOBZ program designation was for more than 80 acres of land, making Suzlon eligible for hundred of thousand of dollars in tax incentives such as no property, sales or state income tax, no corporate franchise tax and a tax credit for high-paying jobs.

More than $250,000 was invested in the land, and $1 million was put into the infrastructure. The land was sold back the Suzlon for $1. In October 2005, Gov. Tim Pawlenty was on hand to scoop a shovelful of dirt at the groundbreaking ceremony.

Then, in June 2009, half of the workforce at Suzlon was laid off, leaving the community shaken. At one time, there was a peak workforce of more than 500 employees. With Monday's notice, the plant will employee about 30 people by Jan. 1, 2011.

In the aftermath of the election, Pipestone may serve as a cautionary tale: It's a long way -- and a long time -- between a change in economic theory and the effect on the person who wants a job.

On CNBC this morning, curmudgeonly Mark Haines noted a conversation with small business owners, and said two of the three he talked to said "it doesn't matter what you do with my taxes, I don't have any demand for my product."

Suzlon's announcement comes not long after state and local officials in St. Paul made one last pitch to Ford to keep St. Paul's truck assembly plant open. They offered a blank check to Ford. Ford said "no thanks."

The rejection of Minnesota by two large industries is a perfect example of the economy of Minnesota being more complicated than political campaigns would have us believe.

If government can't create jobs, if tax incentives for Pipestone can't keep jobs, if nobody wants to buy a wind turbine in Minnesota or a small pickup in St. Paul, what are hundreds of people supposed to do for work, and how long should they wait?

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Home resale prices drop in Twin Cities

Posted at 8:53 AM on October 26, 2010 by Bob Collins (0 Comments)
Filed under: Economy

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Fed: Things are picking up

Posted at 2:23 PM on October 20, 2010 by Bob Collins (1 Comments)
Filed under: Economy

The Federal Reserve issued its "beige book" today, a "how are we doing economically" assessment of the country for September into early October. in the 9th District -- that's the Fed in Minneapolis -- the survey reads better than many other districts in the country. Wages are up, retail spending is up, and only commercial construction seems on the ropes.

No doubt the experts will find the "but" involved here, but the report sure sounds optimistic.

Here's the short version:

CONSUMER SPENDING

A major Minneapolis-based retailer reported that same-store sales in September were up about 1 percent compared with a year earlier. September traffic at a North Dakota mall was up over 10 percent from a year ago, which was a surprise following a slight decrease in August, according to the mall manager. Cooler fall weather seemed to attract shoppers.

TOURISM

Rooms sold at Montana hotels were up almost 11 percent in August from a year earlier, according to a state tourism research organization. A tourism official in the Upper Peninsula of Michigan noted that the summer season finished well ahead of a year ago and that fall traffic seems to be holding up. Minnesota lodging and campground operators noted increases in summer business from a year earlier and were more optimistic for fall tourism than a year ago.

CONSTRUCTION

The value of nonresidential permits in Sioux Falls, S.D., fell dramatically in September from a year earlier; in contrast, September commercial permits increased substantially in Rochester, Minn. Residential construction was mixed.

SERVICES

"We are swamped with great projects," commented a design and advertising firm. Information technology consulting firms noted solid interest from corporate clients.

MANUFACTURING

A September survey of purchasing managers by Creighton University (Omaha, Neb.) showed strong increases in manufacturing activity in Minnesota and South Dakota, and slight increases in North Dakota.

MINING

Most District mines were operating near capacity. Iron ore production in Minnesota increased in August compared with July.

AGRICULTURE

Widespread wet conditions delayed some farmers from harvesting their bountiful crops.

EMPLOYMENT

A department store chain with locations in Minnesota noted that it expects to increase seasonal hiring, while another large retailer will soon open a store in Minnesota with plans to hire about 130 employees.

Here's the entire survey.

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What do rich people pay for?

Posted at 2:07 PM on October 20, 2010 by Bob Collins (10 Comments)
Filed under: Economy

Courtesy of the TurboTax blog, here's a breakdown showing where the money goes that the top 1 percent of wage earners in the country pay in taxes:

Free Tax Filing, Efile Taxes, Income Tax Returns - TurboTax.com

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Outsourcing jobs: Economic chicken and egg

Posted at 2:11 PM on October 14, 2010 by Bob Collins (0 Comments)
Filed under: Economy

The head of a Bangladore-based company that specializes in outsourcing information technology had tough words for the U.S. educational system today. In the process, he recalibrated the debate over why the U.S. is losing jobs to overseas workers. Is it about the cost of doing business here? Or the lack of well-educated Americans?

Speaking on CNBC today, Azim Premji of WIPRO suggested if Americans are unhappy at the number of jobs being sent overseas, they need only blame insufficient education.

Premji was responding to a question about the Creating American Jobs and End Offshoring Act, which encourages businesses to create jobs domestically by relieving them from payroll tax payments on new employees who perform services in the U.S.

Premji has a way of getting around that. Instead of hiring many Americans, he brings better-educated I.T. specialists from India. "The advantage they give us is they're more transferable across the United States and across countries, which a local American has restrictions on, primarily because of family," he said.

He says the American workers he hires and the Indian workers he brings to the U.S. are "comparable," but the "U.S. has not invested enough in technical education, there's not enough inflow of talent with technical backgrounds or technical passion," he said. "That has to be corrected. More products are getting technology intensive. That's a fundamental gap we're facing, not only in the United States but also in Europe. That has to be corrected in the United States."

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Baseball and the economy

Posted at 2:12 PM on October 13, 2010 by Bob Collins (2 Comments)
Filed under: Economy

Baseball is a great game, but it's a terrible metaphor for economic principles.

American Public Media's Marketplace recently made a giant leap in an attempt to show how people adjust to certain conditions. Without much proof last Friday, it said that the reason baseball scoring has dropped is because a crackdown on steroids has forced teams to concentrate more on defense than pitching and offense.

Here's how Stephen Dubner, co-author of "Freakonomics" sees it:

Well it's a good lesson, something that economists can teach us. Whenever you change a rule, whether it's in baseball or banking, people are going to change their behavior in response to it. Some of the rules that have changed in baseball, especially having to do with steroids, have produced a lot more good gloves, defense. I have a feeling that with the banking regs that have changed in the past year or so, that I'm going to be hearing a lot from you in the next year, stories about how bankers' behaviors have changed. Bankers hiding their home runs, bankers bulking up on whatever kind of performance-enhancing drug they can find.

Dubner notes that scoring in baseball is back to what it was in 1990, and says defense now plays a bigger part in baseball.

Steroids are all about power, however, not necessarily runs scoring. When a player is juiced, his homer totals usually take a sudden turn north. And good defense can't stop a homerun. In the American League , homers haven't dropped off dramatically.

The statistics don't necessarily support Dubner's thesis. Over the last eight years, AL teams have scored an average of 10,929 runs. There was a big drop in that this year, but last year was exactly average.

Are fielders getting better? No. In this decade, the average number of balls in play converted to outs in the American League is 68%. In the just-concluded season, it was 69%.

So there's no real evidence that baseball has made a conscious decision to change its behavior by favoring the Nick Puntos of the world over the Justin Morneaus (and, no, I'm not suggesting Morneau used steroids, only that he's a power hitter and Marketplace suggested baseball is avoiding power hitters now). The entire phenomenon may just be the natural ebb and flow of baseball from one year to the next.

Kind of like the economy.

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The battle and the banks

Posted at 4:51 PM on October 8, 2010 by Bob Collins (6 Comments)
Filed under: Economy

(Nicolas Miranda, 52, who just lost his job, awaits for a loan modification for his Burbank, Calif. home, among thousands of people wait in line at the Los Angeles Convention Center on Thursday, Sept. 30, 2010. A nonprofit group called the Neighborhood Assistance Corporation of America offered the chance to restructure their home loans at lower rates. (AP Photo/Damian Dovarganes)

Now that Bank of America has frozen foreclosure proceedings in all 50 states, the pressure is on other banks to put a halt to foreclosures until someone figures out what's going on. Bank of America's action follows weeks of allegations that records were mishandled in the foreclosure process, leading to suspicions that mortgage lenders have been evicting homeowners that shouldn't have been evicted.

The bank's decision confirms what many homeowners could've told them months ago: They're not really sure what they're doing.

Vicki Hugen of Eden Prairie is one of those caught in the mortgage vortex. From the story she tells, it's not unreasonable to wonder whether some of the people evicted also gave up fighting out of sheer exhaustion from trying to get someone to listen.

Hugen and her husband separated in 2008, and he stopped paying a share of the $3,200-a-month mortgage when he lost his job in January 2009.

Hugen tried to get into Wells Fargo's loan modification program, called the Home Affordable Modification Plan.

"I went around and around with Wells Fargo in 2009 and finally I made a last-ditch effort and said 'is the reason I don't qualify that I haven't missed a payment yet?" she told me this afternoon. She said she was put on hold before a bank officer said "yes."

Late last year, she says, her soon-to-be ex-husband offered to give her his share of the house in exchange for not paying alimony. She didn't know whether to accept the deal because she didn't know whether she'd be responsible for $3,200 a month or a lower payment on a modified mortgage. Her bank refused to consider her for loan modification until she got a final divorce decree. She couldn't get a final divorce decree until she made a decision on whether to accept the house from her ex-husband, and she couldn't accept the house from her ex-husband until the bank modified her mortgage.

Shortly thereafter -- almost a year ago -- she was told the bank would modify her mortgage -- a 10-year, adjustable rate mortgage-- and she'd have to pay about $2,064 a month. But before the modification would be permanent, she'd have to pay the $2,064 a month for three months to prove that she could. In the meantime, the remaining amount would be considered unpaid.

But three months became four, then five, then six or more and still the bank did not finalize her mortgage's modification. The past-due amount, which would have been erased once the loan modification became final, added up.

"Every time I called they kept telling me it should only be another few weeks," she said. She made 50 phone calls from December 2009 to August 2010 asking the same question. She was also $13,000 in arrears.

At the end of July, she started getting foreclosure notices. She also was told she was no longer in the Home Affordable program at the direction of the "investor" in the mortgage, according to the bank. The "investor," it turned out, is Bank of America.

She filed a complaint with the bank and began working with another department at Wells Fargo, which told her to ignore the foreclosure letters. Two or three weeks ago, she says, the bank called with good news. "I got all excited" she said, and then she found out that with the principal and interest in a reworked mortgage, her payment would be $120 a month less than the original payment - $1,100 more than the amount she'd been paying.

She's now filed a complaint with Attorney General Lori Swanson's office, which is attempting to mediate the dispute. She says her bank is no longer returning her phone calls, and she doesn't know what effect -- if any -- today's announcement by Bank of America will have on her situation.

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Ten things you didn't know about the unemployment rate

Posted at 9:03 AM on October 8, 2010 by Bob Collins (0 Comments)
Filed under: Economy

The bottom line of the government's monthly unemployment report -- the overall unemployment rate -- gets all the headlines, but there are more details beyond the fact the unemployment rate stayed the same last month.

Here are a few:

-- The lowest unemployment rate in the U.S. is for Asians -- 6.4%. Five percent is considered full employment. The rate for Asians has dropped 1% in a year. But among minority groups, Asians stay unemployed longest.

-- The unemployment rate for 16- to 19-year-olds is 26%.

-- 2.5 million unemployed people, not included in the unemployment rate, haven't looked for work in at least the last four weeks.

-- The fastest-growing professional sector right now are jobs held by people who help people find jobs.

-- The unemployment rate for people who don't have a high school diploma or equivalent is 15.4%

-- The unemployment rate for those with a college degree (and over 25) is 4.4%. That rate has never been higher than 5% since 2000 except for last December and last February.

-- The unemployment rate for Iraq-war era veterans lower than for the labor force as a whole. But the unemployment rate for veterans from the first Gulf war era is higher than for the labor force as a whole.

-- More than half of the people who are presently unemployed, haven't had a job in more than 15 weeks.

-- 77% of the people employed in education and health services are women, the highest industry sector for employment of women. The lowest is construction (13%).

-- The average workweek of those in the leisure/hospitality sector is only 24 hours. Those in the mining industry have an average 44-hour workweek. The average number of overtime hours per week in manufacturing is 3 hours.

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Timewasters: The debt clock

Posted at 3:46 PM on September 28, 2010 by Bob Collins
Filed under: Economy

The Economist has unveiled the global debt clock, a country-by-country look at which countries are tapped out. In the image above, the darkest countries are the ones most in debt.

You can manipulate the data for the last decade. Did you know, for example, China's public debt is increasing at a 15% rate for 2011? That's lower than the United States' anticipated 12.7% increase. But the U.S. debt is about $27,000 per capita. It's about $800 per capita in China.

Home resale prices increase in Twin Cities

Posted at 8:34 AM on September 28, 2010 by Bob Collins (0 Comments)
Filed under: Economy

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Target to downtown St. Paul?

Posted at 3:26 PM on September 24, 2010 by Bob Collins (2 Comments)
Filed under: Economy

Anyone who works in downtown St. Paul knows: This is big news.

According to the Minneapolis St. Paul Business Journal:

Target Corp.'s downtown Seattle store, set to open in 2012, will be the debut of the Minneapolis retailer's new, smaller store format, with downtown St. Paul one market under consideration, the company said Friday.

St. Paul? Downtown St. Paul? Don't toy with us, Target.

The chances are pretty good that if you need something that you don't chew or drink, you won't find it in downtown St. Paul. The city is holding its breath that Macy's -- the last department store downtown -- won't turn the lights out when its agreement to stay open downtown expires at the end of next December.

Target announced last January it would test the smaller-store format. But what is it? The Dallas Business Journal reported in January...

Target says it will develop a smaller store format, limiting merchandise to what caters to the needs of shoppers in dense urban markets, and in stores that can fit into smaller, inner-city real estate.

What caters to the needs of shoppers in downtown St. Paul? A store with its lights on that will sell stuff to them.

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Who's not concerned about the economy?

Posted at 1:43 PM on September 20, 2010 by Bob Collins (3 Comments)
Filed under: Economy, Politics

President Obama went toe-to-toe with the business community today when CNBC hosted a Town Hall forum on business issues in Washington. NPR's politics blog reports the concerns of the little people didn't come up much when the opportunity presented itself, and it says Obama booted an opportunity to explain the difference between a government and a business.

In advance of the event, CNBC's online poll -- not scientific -- showed that by a margin of 2-to-1, most people think they're worse off now than they were two years ago.

And in another poll -- this one scientific -- 90 percent of the people say they're "worried" about the economy, which raises two questions: (1) Are people feeling worse off because they're worse off? Or are they feeling worse off because they're spending more time worrying about maybe being worse off soon? (2) Who are the 10 percent who aren't worried about the economy.

But most of the big economic news seems to be coming from a declaration that doesn't affect anyone but statistic geeks. The National Bureau of Economic Research says the recession ended more than a year ago. It's a good tidbit for winning a bet or comparing recessions, but it really doesn't mean that individuals are any better or worse off than they were during the "official" recession.

How the economy affects us often has more to do with emotional factors than statistical ones.

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The tax cut debate

Posted at 11:09 AM on September 17, 2010 by Bob Collins (8 Comments)
Filed under: Economy

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Roads to ruin

Posted at 7:57 AM on September 6, 2010 by Bob Collins (1 Comments)
Filed under: Economy

Are construction companies "fibbing" when they say a road project is "completed" in time to get a get-it-done-fast bonus?

Lazy Lightning has one example of questionable "completeness:" Burnsville Parkway. The contractor on the project was to get $10,000 a day for every day the roadway was open before the construction deadline, according to This Week in Burnsville. It said the road has opened.

But Bill Roehl at Lazy Lightning found the truth to be somewhat different:

Now, as you can see from the mobile phone photo taken on September 5th (30 days later) displayed at the top of this post, all lanes of Burnsville Parkway are certainly not open and thus in no way did the construction company make the minimum requirements as mentioned in the Thisweek article. If Burnsville Parkway still has to have two lanes closed (both of the eastbound lanes are closed at Nicollet as you can see above) to do any sort of work on that stretch of road then the City should not have ever have agreed that the job was done enough to grant a $100,000 bonus. If you're going to make a bonus for a quick end to construction then it better be completed in such a way that the road will not need to be closed during any time to finish the job. I mean, it's great and all that Thisweek chose to stuff the article with a picture of a closed BP station but perhaps they should have gone out and taken a photo of the actual roadway in question before they decided to publish such a ridiculous article

Projects like this dot the metro area. Technically the roads are open for local businesses, but very few people are interested in navigating the nonsense to get to them.

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The curse of writing a headline

Posted at 9:58 AM on August 26, 2010 by Bob Collins (6 Comments)
Filed under: Economy

Headlines can make or break the understanding of a problem.

Here's an Associated Press headline on a story out this morning:

One in 10 with a mortgage face foreclosure

What's missing is a list of definitions. What does it mean to "face foreclosure?" In this study from the Mortgage Bankers Association, the Associated Press has defined it as being late for a payment. One in 10 people, according to the story, wqw late. But that calls for another definition: What is "late?" Is it people who didn't make it at all? Is it people who made it but made it late?

Technically, I suppose, I am facing foreclosure. The only thing that can stop it, is me making a payment, which -- fortunately -- I did this month.

But deeper in the story is the real story. If you define "facing foreclosure" as people who have received a first notice of foreclosure, the number is actually 1 in 100.

And the percentage of loans receiving their first notice of foreclosure also dipped. That fell to 1.1 percent in the second quarter from 1.2 percent in the first quarter

Wait a second! It dipped?

Yes, according to the same story:

In a worrisome sign, the number of homeowners starting to have problems with their mortgages rose after trending downward last year. The number of homes in the foreclosure process fell slightly, the first drop in four years.

Are you following that? The number of homeowners starting to have problems is rising. The number of homes in the foreclosure process is falling.

It defies a simple headline.

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Touche

Posted at 10:32 AM on August 25, 2010 by Bob Collins (2 Comments)
Filed under: Economy

I love the Midmorning audience. They ask great questions and on a daily basis they show how smart they are.

This morning, Kerri Miller looked at the question of whether South Dakota is taking jobs from Minnesota.

It's a question without an answer, according to a story from MPR a week ago (ignore the misleading headline). "We really don't have good numbers on that," said Art Rolnick, a senior fellow at the Humphrey Institute and former official with the Minneapolis Federal Reserve.

In the absence of data, then, we're left with anecdotal evidence. A caller from Sioux Falls to Midmorning asked "where are all these jobs?"

We got this e-mail from listener David Frank of Canby, MN:

Here is a link to a story that might answer that question. You are free to use your own judgment as to the validity of the source.

The link goes to a 2008 story from MPR.

Well played, sir. Well played.

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Do tax cuts pay for themselves?

Posted at 10:58 AM on August 25, 2010 by Bob Collins (5 Comments)
Filed under: Economy

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Are we in another recession?

Posted at 9:05 AM on August 24, 2010 by Bob Collins (3 Comments)
Filed under: Economy

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Households getting a grip on loans

Posted at 10:49 AM on August 17, 2010 by Bob Collins (4 Comments)
Filed under: Economy

Good news/bad news in a study on household debt from the New York Federal Reserve Bank today:

For the first time since early 2006, the share of total household debt in some stage of delinquency declined, from 11.9 percent to 11.2 percent. However, the number of people with a new bankruptcy noted on their credit reports rose 34 percent during the second quarter, considerably higher than the 20 percent increase typical of the second quarter in recent years.

How are people cutting their debt? Check out this graph from the bank's report. This indicates the number of accounts by the type of account. Blue indicates credit cards.

But as a percentage of the balance of delinquent loans, credit card debt has increased while student loans have taken a big drop.

The report also charted the loan delinquency situation in several of the hardest-hit states. Minnesota wasn't one of them. You can find the full report here.

Is this consistent with your household finances? Are you total loans dropping, increasing, or staying the same over the last year?

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Are the unemployed to blame for high unemployment?

Posted at 11:02 AM on August 6, 2010 by Bob Collins (13 Comments)
Filed under: Economy

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A roadmap of debt

Posted at 1:56 PM on August 3, 2010 by Bob Collins (0 Comments)
Filed under: Economy

If you like playing with maps, and visualizing the extent of individuals' economic woes, this is your lucky day.

The Administrative Office of US Courts has released state-by-state maps showing consumer bankruptcy filings. Minnesota, as you can see, has more than its share of bankruptcy filings compared to its neighbors, and many other states, too. Click on map for a larger view.

In Minnesota, the mean debt is about $244,000. The mean assets is about $160,000. "These figures are total debt, the bulk of which will be mortgage and auto debt, which debtors must pay if they want to keep their homes and cars," the blog Credit Slips reports.

Auto loans? Here's a map from the NY Fed on auto loans that are more than 60 days past due. Note that in Minnesota, the most frequent occurrence of bad debt in auto loans is outstate (blue is the highest percentage).

The situation is most severe in Minnesota in Pope, Grant, Beltrami, and Lake counties.

The Fed has several categories of maps available, including student loans, mortgages, and bank cards. But what we most want to know on subjects like this is "is it getting better."

Here's a map showing the year-to-year change in mortgages that are more than 90 days in arrears. Red indicates a worsening. In Minnesota, it's worse.

In fact, for most every segment, things were worse in the 1st quarter of 2010 than in 2009. The exception seems to be bank cards. In particular, Grant County in far western Minnesota, is the one county that stands out for the severity of debt problems. Nearly 9 percent of the population there lives below the poverty level.

You can play with the maps here.

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Targeting politics

Posted at 5:02 PM on July 19, 2010 by Bob Collins (7 Comments)
Filed under: Economy, Politics

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Minnesota taxes by the numbers

Posted at 12:52 PM on July 15, 2010 by Bob Collins (1 Comments)
Filed under: Economy, Politics

Any discussion about taxes in Minnesota inevitably begins with a statement of where the state ranks compared to the rest of the nation. According to a report today from the Minnesota Taxpayers Association, Minnesota ranks 13th. And 21st. And 15th. And 32nd.

In its annual "How Does Minnesota Compare" study (available here), the MTA says the state has dropped from 12th to 13th in total state and local tax collections, based on data from fiscal year 2008.

On a per-thousand-dollars-of-personal-income basis, however, the state ranks 21st.

Minnesota ranks 15th in per capita spending, and 31st in spending on a per-thousand-dollar-of-income basis.

The report also compares areas of spending with other states. Minnesota spends about the same amount on K-12 as other states. It spends more on libraries, welfare, highways, and natural resources.

It spends less than the U.S. average on fire, corrections, sewer, health and hospitals, financial administration, justice, public buildings, and interest on general debt.

There are a few surprises for the non-financial follower. Minnesota, which some politicians claim has the highest corporate tax rate in the world, ranks 11th in per capita corporate income taxes. Alaska ranks #1.

And several states described as "business friendly," have a high sales tax burden for its residents. On a per-capita basis, Wyoming, Florida, Nevada, Arizona, New Mexico, and South Dakota -- all often mentioned as more desirable tax states -- have higher sales tax burdens than Minnesota, the report says.

But Minnesota's reputation as being a high welfare state also is confirmed by the report. It ranks sixth.

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Is the economy as good as it gets?

Posted at 1:49 PM on July 7, 2010 by Bob Collins (1 Comments)
Filed under: Economy

Is the declining -- however slightly -- unemployment rate only temporary?

The Big Picture has crunched some jobs data that shows the difference in percentage increase of people working for temp (temporary) services vs. those who are holding permanent jobs has never been bigger.

Temp jobs are up 19.6% over last year, the largest increase since the Bureau of Labor Statistics began tracking the category. Take temp jobs out of the private-sector category, and the number of jobs has fallen .7% from a year ago.

There's never been as big a gap before.

Historically -- and I'll admit going back only to 1990 isn't a particularly robust data set -- when temp jobs are up over 10% year over year, private sector jobs (less temp jobs) are running in the range, on average, of +2.4% YoY, not -0.7%. In the 20 year history of the series, never has the year over year gain been 10% or more while the private sector (ex-temp) has been negative. This is yet another variation on the theme of whether this may be As Good As It Gets.

Here's what it looks like (click image for a larger version):

Steve Hine, the research director in the Labor Market Information Office at the Minnesota Department of Employment and Economic Development, was good enough to break down the Minnesota figures for the same categories.

"I used employment services, about two-thirds of which is temp help, as we don't estimate at the same level of detail in many instances that the national figures are. But the story is indeed the same - we have 14.5% growth in employment services (through May - June data are out next week) with YoY losses in the rest of private employment," Dr. Hine says.

In Minnesota's case, however, it's not a first-time experience. In 1991, the gap between the two was higher. There was a 27.8% difference. The gap was also double-digits in 1992, 1994, 1999, 2004, and 2006.

And the '90s turned out to be pretty good for the economy. So perhaps the size of the gap doesn't mean this is as good as it's going to get, as the Big Picture suggests.

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Measuring desperation

Posted at 10:07 AM on July 2, 2010 by Bob Collins (0 Comments)
Filed under: Economy

Isn't it time to come up with another way of measuring unemployment than the unemployment rate?

Today, the government said the unemployment rate fell to 9.5 percent. Great news? No. Although the unemployment rate dropped to the lowest level since July 2009, it fell because 652,000 people gave up on their job searches and left the labor force.

People who are no longer looking for work aren't counted as unemployed, the Associated Press reported. But the problem with that rationale is obvious: they are unemployed.

So, what's the real unemployment rate? About 16.5%, the Wall Street Journal says. But even that rate dropped, though not by much.

The effect of the recession on workers, however, is much more significant, according to a new poll from Pew Research. Fifty-five percent of those surveyed say they've been negatively affected by the recession; they have suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers.

Sixty-two percent of people, however, believe their personal finances will get better.

"We're heading in the right direction," President Obama said this morning, shortly before leaving Washington for a vacation. It's a common presidential tactic. If you want people to think things are looking up, just say they are.

At the start of the year in which that iconic ad ran, unemployment was only 1.5% lower than it is now, although it was much lower than the high of 10.8% in 1982. In Minnesota, the current unemployment rate is only .2 percent higher than it was in 1984.

The chart of the U.S. unemployment rate now, however -- even with its statistical phoniness described above -- doesn't suggest that things are getting much better.

"It's going to be a slow recovery for unemployment," The Atlantic's David Indiviglio wrote today in his analysis. That much was obvious months ago.

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Commencement roundup

Posted at 4:08 PM on May 24, 2010 by Bob Collins (1 Comments)
Filed under: Economy

Every year at this time, News Cut begins posting commencement speeches. So far, this season, we have been generally underwhelmed by the speeches we've heard.

NBC's Brian Williams spoke at Notre Dame's commencement, warned students not to let the gulf oil spill "become a metaphor for our country."

The pick of Williams avoids last year's controversy over the commencement speaker at Notre Dame -- Barack Obama. Some in the Notre Dame community objected to his policies on abortion.

The most entertaining speech we've heard so far this year wasn't a commencement speech at all, but instructions on how to accept your diploma.

More commencement speeches as they happen.

Paralleling the commencement season are the stories about how difficult it will be for graduates to get a job.

But what about last year's graduates? We worried about them at this time last year. This year? Not much. If you were in the class of 2009, let us know whatever happened to you.

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The Employed: Thomas Schunk

Posted at 3:21 PM on May 20, 2010 by Bob Collins (1 Comments)
Filed under: Economy, The Unemployed series

We met software developer Thomas Schunk last year as part of News Cut's series "The Unemployed," when he lost his job at United HealthCare after 11 years. He looked forward to being the one who brought treats to his job-search support group, indicating he found work.

Presumably, he's ponied up for the snacks because we got this update from him today:

I wanted to follow up with you. I have been busy lately. About two months ago, I was offered a position with Trail Blazer Campaign Services, Inc. I am a Software Developer.

Originally it was meant to be a part-time position. However, a recent rapid increase in sales has kept my work schedule to nearly 40 hours per week. I have been so busy installing new customers and importing their data into the Trail Blazer software that I have spent less than a total of 20 hours programming.

I like my coworkers and love being productive again. Of course, having a regular paycheck again helps.

Again, thank you for meeting with me and publishing my story.

Who's next?

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Are taxes too high?

Posted at 2:45 PM on May 11, 2010 by Bob Collins (17 Comments)
Filed under: Economy

Today's fastest-moving story on the Internet is the study that purports to show that we really aren't paying the taxes we think we're paying, we're paying fewer taxes now than we have since 1950.

As with most swift-moving stories, there are some hard-to-fathom numbers, and truthiness depends on an individual's particular situation.

It started on the personal finance column on USA Today's Web site, citing a study from the Bureau of Economic Analysis:

Some conservative political movements such as the "Tea Party" have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels.

Federal, state and local taxes -- including income, property, sales and other taxes -- consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

According to USA Today -- there's nothing on the Bureau of Economic Analysis Web site to refer to -- the average household making the average income -- $102,000 -- paid over $3,000 less in taxes in 2009.

But the 9.2% figure is hard to swallow.

First, Social Security takes 6.2% of your income right off the top and you don't get it back until you retire, if the system is solvent at that point. The fact you may not get it back for several decades doesn't ease the bite.

That leaves 3% left to be consumed by all other taxes, if the report is to be believed, and we know that's simply not true.

The Medicare tax alone is 1.45% (the employee's share) of all wages, and it is soon to go up to 2.35%.

That leaves .75% to be consumed by all other taxes.

For an average family making $102,000. That's $765.

Do you drive a car? That's about $100, $35 of which you can deduct from your itemized deductions on your federal tax return (returning about $12 to you in all). And that doesn't include the "fees" Minnesota imposes on top of the registration "tax."

Even if we just take half of the average miles driven per year -- 7,500 -- and generously figure a car gets 30 miles per gallon. At a tax rate of 40.4 cents per gallon, that's $101 in gas taxes.

And there's still cigarette taxes, liquor taxes, homeland security taxes, and we haven't even started our federal or state income tax returns yet.

The USA Today story says one reason the tax bite is low, is because of the federal stimulus package. But that's part of the "we're taxed too much" complaint; that it's a bill that will come due in the future, not a handout without incurred debt. It also says we paid less sales tax in '09 because of the downturn in the economy.

But as with many statistical exercises like this , it's an average. A few weeks ago, we heard that over half of Americans don't pay any income taxes. Is that you? Probably not. It probably isn't the people who are complaining about high taxes, either.

As with every average, an individual's "mileage may vary."

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The Unemployed: When the stimulus doesn't stimulate

Posted at 1:51 PM on May 10, 2010 by Bob Collins (0 Comments)
Filed under: Economy, The Unemployed series

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The economy: Make up your mind

Posted at 1:41 PM on May 3, 2010 by Bob Collins (2 Comments)
Filed under: Economy

If people start feeling better about the economy, does that change the coming elections?

People are feeling better about the economy.

A New York Times/CBS News poll out this afternoon says 41 percent of those surveyed say the economy is getting better. That's an 8 percent jump from last month. Only 15 percent say things are getting worse.

President Obama got a 5-percent jump in ratings for his handling of the economy.

As usual, polls don't make a lot of sense.

Last Monday, a Harris Poll found that only 32 percent of those surveyed are optimistic about the economy. And President Obama got disapproval ratings from 19 percent more people than today's poll.

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Is parking keeping business away from downtown St. Paul?

Posted at 2:18 PM on April 27, 2010 by Bob Collins (4 Comments)
Filed under: Economy

The parking directives on signs in downtown St. Paul seem to often scream, "go away," and today a group of business interests called on the city to lighten up on the enforcement.

The St. Paul Area Chamber of Commerce said a recent survey of business owners and customers said parking enforcement is "overly aggressive," the signs are confusing, and the maximum time allowed at meters is too short.

"We have to stop pretending we have a rush hour out of downtown St. Paul," City Council member Dave Thune said, referring to signs (like the one above) that even prevents people from stopping, let alone park.

Brian Horst (above), who runs Details Salon on the Lowry Building said he often pays the parking tickets of customers, but fears many people don't bother trying to park.

Susan Kimberly (left, above), the interim director of the Chamber, said the group wants the time limit on parking meters extended to 90 minutes, and free parking at meters if they're broken. Thune indicated the city is considering computerized parking meters that will accept credit cards. They might be paid for with the money generated by fines on parking scofflaws, he said.

(Take the parking survey from the Capitol River Council.)

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Twin Cities housing prices: It's still getting worse

Posted at 10:32 AM on April 27, 2010 by Bob Collins (8 Comments)
Filed under: Economy

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Unemployment and the race for governor

Posted at 4:57 PM on April 23, 2010 by Bob Collins (0 Comments)
Filed under: Economy, Politics

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In defense of men

Posted at 9:54 AM on April 23, 2010 by Bob Collins (3 Comments)
Filed under: Economy

I am a working mom with a stay-at-home dad. The worst critics are other woman. My husband's ex-wife constantly calls my husband (father of 2) "unemployed." Female co-workers ask how can I "do it" and leave the kids each week. I work out of town 2-3 days a week. Woman are not supporting this dynamic. I make 2.5 times as much as my husband did and can only do it because of his sacrifice.

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Almost half of taxpayers pay no federal income tax, report says

Posted at 3:21 PM on April 7, 2010 by Bob Collins (5 Comments)
Filed under: Economy

Did you pay any federal income tax from the in 2009. If you did, you're very close to being in the minority, according to a new report from the Tax Policy Center.

The Associated Press combines that statistic with another report to conclude:

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

But the Tax Policy Center says 73% of us pay some form of federal tax, just not income tax.

They pay Social Security and Medicare taxes when they work, sales taxes when they buy things and property taxes on their homes. Drivers pay gasoline taxes, and smokers and drinkers pay excise taxes on tobacco and alcohol.

That includes 99.7 percent of people making over $1 million a year, the group says.

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Why do you pay fees?

Posted at 8:34 AM on April 7, 2010 by Bob Collins (9 Comments)
Filed under: Economy

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Politics at the gas pump

Posted at 11:11 AM on April 6, 2010 by Bob Collins (6 Comments)
Filed under: Economy, Politics

These signs have started sprouting at the pumps of some area gas stations. What's it all about? It's an attempt by the companies to get Congress involved in the credit card company practice of charging merchants every time a credit card purchase is processed.

The companies are making more money off the fees now that recent card card reform in Washington has limited some of the profits from high interest rates and fees charged to people who carry a balance.

Robert Shapiro, a former Clinton administration advisor and author of a study on swipe fees wrote on Forbes.com in February that the credit card legislation should've included limits on "swipe fees."

While free market competition tends to drive prices down, the kind of cartel-like competition that goes on between the handful of major credit card companies--Visa, MasterCard, American Express and Discover account for 85% of the market--drives up these fees. The credit card companies recruit banks to their networks by promising them higher fees paid by consumers and merchants, and the banks try to attract new, well-to-do subscribers by offering rewards that are then financed through these fees. All of these costs are hidden from consumers.

"Credit card fees are hidden to our customers and have increased at a double-digit annual compound growth rate during the past decade," Tony Kenney, the head of SuperAmerica Speedway said.

Shapiro's "report" said without the fees, up to 250,000 jobs could be created. Not everyone is buying that, including Mike Duff, writing on BNET.

Besides the inherently dubious nature of the assertion that X amount of money translates into Y number of jobs, the retailers ignore the other side of the transaction. To wit: If banks are deprived of profiting from credit-card transactions, which is what the study bases its numbers on, how many bank jobs will be lost?

The retail organizations face other problems if they want the government to intervene with the credit-card industry. First, the government is propping up the banking system. Taking money out of the finance system, as in reduction of credit card fees, could mean money out of the U.S. treasury system.

Plus there's the philosophical question in the wake of recent health care and banking legislation: Is there a compelling public interest for Congress to intervene? Or is it a matter between private businesses?

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Rebound in housing prices fades

Posted at 1:54 PM on March 30, 2010 by Bob Collins (0 Comments)
Filed under: Economy

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The Employed: Aja Halvorson

Posted at 11:47 AM on March 26, 2010 by Bob Collins (4 Comments)
Filed under: Economy, The Unemployed series

You may recall the story of Aja Halvorson from last year's News Cut mini-series on the stories of people who've become unemployed in the economic "downturn."

"Even if you don't know me, you know me," Aja Halvorson says. "I really do rub off on people." She's right. She's the poster child of many in her generation. She's looking to make a difference, she's gone back to school, but she's also struggling through the flotsam of foreclosure, unemployment, and bankruptcy.

Here's an update, based on an e-mail she sent today:

You did an unemployment piece on me earlier this year and asked me to follow up with you when I got a job. Well, I'm delinquent in notifying you, but I was hired by the U of MN this past December. It's only a 25-hour-a-week position, but I love it and it feels great to be working again. This summer my hours will go up to 30 per week since there appears to be enough money in our budget for next year (however I am only 1/3 of the workforce for my program. We're associated with the College of Continuing Education).

I'm still in school and doing very well. I'm working towards my teaching license. The new developments regarding financial aid are making me both excited and nervous to see what my educational future has in store. I think it's a good move to eliminate private subsidized loans, but at the same time I'm wondering if there will still be the same availability for aid. But that's a whole other matter which I'm sure you're already hard at work on.

All in all, things are headed in the right direction. Most of my unemployed friends have also found part-time or temporary work, just a few of them continue to struggle with employment issues.

On a day-to-day basis, it's hard to know how we're doing economy-wise. The Commerce Department released revised economic data today, for instance, that shows the economy is growing at only half the rate it did at the end of 2009, and nowhere near enough to bring the unemployment rate down.

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A letter that makes no census?

Posted at 10:47 AM on March 9, 2010 by Bob Collins (78 Comments)
Filed under: Economy

It says something about the glamorous life I lead that my heart skipped a beat last night when I went through the daily mail and found the census form had arrived. "Oh cool, the census," I actually said as my wife leaned in for acknowledgment that I was glad to see her, too.

Only it wasn't the census form. It was a letter saying the census form would be arriving in about a week.

Want to guess how much this little exercise cost? Hand me that napkin.

There were 105,480,101 households in 2000. At 500 sheets of paper per ream, that's 210,960 reams of paper for the letter. It's cheap paper, though. At $40 a case, Office Max has the cheapest price I could find online, so that's $843,000 for the paper.

Five-hundred envelopes go for $30. That's another $6.3 million (I'm rounding up and down here; it's the government afterall).

Finally, there's the cost of mailing. It's presorted first-class mail. According to the U.S. Postal Service Web site, pre-sorted mail costs .335, although a standard rate letter could be sent for 17 cents. But this was first-class. Total: $35,335,833.83.

Total: $42.5 million (although I remain somewhat skeptical about the postage) to send you a letter to tell you you're going to get another letter next week. Oh, and sending a postcard would've been $15.8 million cheaper.

The average person pays $13,000 in federal taxes per year. So it took the annual federal taxes of nearly 327 taxpayers to send you the letter.

(See "Why Use Advance Letters")

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The devil's in the data

Posted at 2:40 PM on March 8, 2010 by Bob Collins (1 Comments)
Filed under: Economy, Tech

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Retirement is a moving target

Posted at 8:07 AM on March 6, 2010 by Bob Collins (3 Comments)
Filed under: Economy

When you get into your 50s -- or so I've heard -- you start looking forward to retirement and fearing it at the same time. You look forward to it because .... do I really have to explain that? You fear it because there's always the danger of outliving the money you've put aside.

Today, the Economist fans the fear by noting that the time people are spending in retirement is increasing. That could lead politicians to change the rules of retirement to delay retirement benefits, which -- in turn -- fans the flame of fear that we'll never actually get to retire.

In practice many people in the rich-world OECD countries retire several years early, which lets them enjoy, on average, some 19 years in retirement before death. Spaniards should spare a thought for the previous generation; those who became pensioners in 1970 could expect to survive for less than a decade.

Coincidentally, US News reported this week, the push to delay retirement is gaining some favor at a time when many older workers are being forced into early retirement because they're losing their jobs.

(Paul) Skidmore is among a growing number of people who want to work into their 60s but are pushed into early retirement by the weak job market. The number of unemployed Americans ages 55 and older expressing interest in finding a job has grown by 60 percent since the end of 2007, according to the Bureau of Labor Statistics. But finding work has proved difficult. The unemployment rate for older job seekers has more than doubled since 2007 to 7.2 percent in December 2009, and the average duration of the job search for older workers was 36 weeks in November--far longer than the 28 weeks most younger workers remain unemployed. Some discouraged seniors eventually give up on finding a new job and start calling themselves retired.

This week, National Public Radio provided a three part series on the 50- and 60-somethings who are stuck in this spot. Find it here. Share your situation below.

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Wells Fargo execs raked in cash in 2009

Posted at 11:13 AM on March 4, 2010 by Bob Collins (1 Comments)
Filed under: Economy

The bank pays its top executives more than any other bank, it took $25 billion in bailout money, and it was one of the leaders in "relaxed" lending standards during the housing bubble. "So why does Wells Fargo bank escape negative headlines?" CNBC's David Faber wondered today.

The bank repaid its TARP money after President Barack Obama tied the money to limits on executive pay. Now we know why.

The country's 4th-largest bank rewarded CEO John Stumpf with $21.3 million in 2009, according to a filing with the Securities and Exchange Commission late on Wednesday. That's more than the CEOs of Goldman Sachs and J.P. Morgan, Faber notes.

The chief financial officer of Wells Fargo, Howard Atkins, made $11.6 million, up from a $4.9 million year in 2008. David Hoyt, the senior executive vice president of wholesale banking, was compensated with $13.5 million. The man in charge of home and consumer financing for the bank, Mark Oman, made $12.7 million -- four times what he was paid the previous year.

In each case, the compensation was well above their compensation in 2007, which was the height of bank profitability in the U.S.

Wells Fargo posted a $12 billion profit in 2009. The company is the country's biggest home lender.

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Linking jobs with politicians

Posted at 11:39 AM on March 3, 2010 by Bob Collins (3 Comments)
Filed under: Economy

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The appliance rebate program postscript

Posted at 8:48 AM on March 3, 2010 by Bob Collins (7 Comments)
Filed under: Economy, Energy

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Why aren't people buying new homes?

Posted at 11:24 AM on February 24, 2010 by Bob Collins (5 Comments)
Filed under: Economy

Today's hand-wringer-of-the day is this one:

New-home sales drop to record low in January.

It's dire, indeed. The economy depends on people wanting another house than the one they've already got, then buying all the junk they need to fill it up, running out of room, and then buying a bigger one, filling it with more stuff, and keeping the economy going.

New-home sales for all 2009 fell almost 23% to 374,000, worst year on record. The National Association of Home Builders is forecasting that sales will rise to more than 500,000 this year, an improvement from 2009 but still far below the boom years of 2003 through 2006, when builders posted more than 1 million new home sales each year.

The unexpectedly large drop in January activity will increase concern that the housing rebound could falter in coming months as the government withdraws the support it has used to try to bolster the housing market, which stood at the epicenter of the country's overall recession, the worst downturn since the 1930s.

That's the problem with most economics reporting. It's all numbers. And clearly there are people who need new and bigger, especially in the Midwest for some reason. But what if there's the beginning of a bigger sociological change going on? What if the recession has been -- in some small way -- a well-deserved slap upside the head? What if we realize we don't need a bigger house? What if we don't need to change school districts? What if we realized part of our problem isn't that we don't have a big enough house, it's that we have too much junk?

Last year, the Pew Center seemed to confirm this.

The question testing whether Americans judge specific consumer goods to be luxuries or necessities has been asked over many years by different polling organizations, beginning with the Roper Organization in 1973. A review of the results over time shows a noteworthy pattern: On many of the items tested, the public's current "necessity" judgments have retreated to levels not seen for a decade or more. And on virtually every item for which a trend is available, the 2006 results represented a high-water mark in the necessity rankings. (Perhaps not coincidentally, 2006 was also the year before the recession set in and marked the outer limits of America's housing bubble.)

For example, two-thirds (66%) of respondents in the latest survey consider a clothes dryer a necessity. That's down from 83% in 2006 but nearly identical to the 69% who said in a 1983 Roper survey that a clothes dryer was a necessity. Similarly, about one-in-five rated a dishwasher as a necessity in the latest survey (21%) and in 1983 (19%) -- a double-digit decline from the 35% who said three years ago that a dishwasher was essential.

Maybe economic reports are telling us we've learned to be happy with what we've got. If so, can an economy survive that mindset?

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Did the stimulus work?

Posted at 12:55 PM on February 23, 2010 by Bob Collins (4 Comments)
Filed under: Economy, Politics

The verdict is in: The stimulus plan created 1 - 2.1 million jobs through December 2009.

The report comes today from the Congressional Budget Office, a non-partisan office that is cited as reputable by both sides when it suits them. Here's the full report.

That's quite a wide range of numbers there. The CBO says while 600,000 jobs were reportedly created in the 4th quarter, the actual number might be higher or lower than that. Lower, because the jobs might've already existed, and higher because the reports measured only the jobs created by employers, not by subcontractors.

That's a nice way of saying that when Democrats say the stimulus has worked, and Republicans say it hasn't, both are just guessing and cherry-picking data.

For its part, the CBO reports tax cuts are going to be $7 billion more than it originally estimated because tax changes were carried out more quickly than it expected. It also said spending was lower -- albeit slightly lower -- than it had predicted.

Incidentally, here's a moment of serendipity in reading an otherwise dull government report. In a typically bland preface, the report credits various people who worked on it, including Lenny Skutnik who was in charge of printing it. Does that name sound familiar? Maybe this will help.

It's the answer to the "whatever happened to Lenny Skutnik?" question. A non-descript government employee who became internationally famous for jumping into the Potomac to rescue victims of a plane crash in a "rousing act of courage," then went back to being a non-descript government employee. It's too bad. He's not a guy who should be forgotten:

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Emotional barriers in U.S. history

Posted at 3:56 PM on February 8, 2010 by Bob Collins (1 Comments)
Filed under: Economy

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Happy days aren't here again

Posted at 3:58 PM on February 4, 2010 by Bob Collins (2 Comments)
Filed under: Economy

"Am I going to have to start watching the market again?" a friend on Twitter asked me a few minutes ago.

Apparently so. Reports of a recovery appear to have been premature. The stock market is about to drop below 10,000 again.

There is, of course, more to an economy than 30 stock prices. But economies are emotional things. Today's big drop was spurred by higher-than-expected jobless claims.

"The higher than expected (jobless claims) number indicates we're probably not in the job creation phase at this point," an analyst told Reuters. That's just the thing that makes people put their wallets back in their pocket, and begin to hunker down for another recession.

This Friday, according to a report today, the government will acknowledge that the number of jobs lost during the recession was much worse than previously thought. It will reportedly issue the biggest change in unemployment numbers in 30 years.

We know that unemployment data is a "lagging indicator," meaning that after a recession ends, it takes awhile before jobs start returning. Some economists have theorized that the recession actually ended last May. Others say it ended in November.

So how long will it take? Maybe longer than most baby boomers (in my case) have got.

During the Depression, the economy started growing in 1933, but unemployment stayed in the 15-percent range until the 1940s, when the economic impact of World War II began to be felt.

The Wall St. rally that started last spring was based on the assumption that the economy was no longer in a free fall. The market is down 4 percent so far in 2010 and some are predicting a full-blown market correction of 10 percent.

An economy needs optimism to recover. There's little to be found.

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Bill George: Obama has 'wasted' the financial crisis

Posted at 11:01 AM on January 6, 2010 by Bob Collins (7 Comments)
Filed under: Economy

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Financial Whack-A-Mole

Posted at 9:11 AM on January 3, 2010 by Bob Collins (5 Comments)
Filed under: Economy

Many of the nation's banks are still in business today, thanks to the generosity of the American taxpayer. Now they're about to give you a "thank you" gift, the Wall St. Journal reports. New fees and check charges.

In the financial version of Whack-A-Mole, the banks are jacking up charges to make up for the revenue lost with the government's crackdown on certain business practices, the newspaper said.

The changes come against a backdrop of rising anger at the nation's banks--having been largely supported by hundreds of billions of public bailout dollars in late 2008 and 2009. One recent survey by Chicago's Bank Administration Institute found that 43% of retail-bank executives feel that consumer trust in banks has eroded in the past six months.

To make up for lost overdraft revenue, banks are promoting greater use of debit cards, which can be more profitable for banks than processing paper checks, and new types of checking accounts.

If you think you can avoid the fees by cutting up the card, some banks may start charging customers who don't use active accounts.

Also expected to be a casualty of the revenue grab: Free checking. TCF Financial Corp., a bank that uses a "totally free checking" slogan, is re-thinking a plan to start charging a monthly fee on accounts that don't meet minimum balances, the paper said.

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Thoughts of home prices rebound were premature

Posted at 9:46 AM on December 29, 2009 by Bob Collins (1 Comments)
Filed under: Economy

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Unemployment numbers: Who are these people?

Posted at 11:30 AM on December 17, 2009 by Bob Collins (4 Comments)
Filed under: Economy

The Minnesota unemployment rate dropped 0.2 percent in November, with the state adding 2,000 jobs, officials reported today. It's good news, of course, but it falls short of "glass-half-full" status once you look beyond the headline.

First, more than 200,000 Minnesotans "officially" still can't find a job. But beyond that, the majority of business sectors are still bleeding jobs, statistics from the Minnesota Department of Employment and Economic Development appear to suggest.

Of 12 sectors listed in the department's estimate of current places of work, employment dropped in eight of them. These included goods-producing businesses, mining & logging, construction, manufacturing, information, professional and business services, leisure & hospitality, and "other services" (auto repair, for example).

Employment was flat in financial services. Only "trade, transportation & utilities," "education & health," and "government" showed increases.

In fact, it appears the fastest-growing "business" in Minnesota, is education, which increased 2.4% in one month. Can government lead us out of the recession at the same time calls are increasing for less spending by government? We'll see.

It's also worth noting that while the unemployment rate has gone down, the number of out-of-work people has dropped only slightly. Seasonally adjusted numbers show it's dropped by about 7,000 people, while the number of people holding jobs increased by 20,000.

This is a glimpse into the shadowy world of unemployment numbers that's difficult for mere mortals to understand. Where did these 13,000 people come from?

So I went to my economics expert, Paul Tosto, who writes the MinnEcon blog. He states that they might be people who "came back into the labor force."

We do know, for instance, that people get discouraged when they can't find work so they stop looking. Of course, that brings up another important question: Who are these people who can afford to stop looking for work?

He asked Louis Johnston, a professor of economics at the College of St. Benedict/St. John's University. He says the figures do not allow for determining the underlying causes of the various shifts in numbers.

Paul is in the process of sifting through the numbers and crunching them with Johnston and others. Look for his post soon.

In the meantime, tell me your story. If you're working, how do things "feel" at the workplace compared to recent months. Have things picked up? Are people's moods changing? Is the boss making eye contact with you again? If you're out of work, are you getting more interviews? Are you still looking? Is there any sign of employment life out there?

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Why live in rural Minnesota?

Posted at 10:33 AM on December 11, 2009 by Bob Collins (10 Comments)
Filed under: Economy

There's been a two-pronged approach today on Minnesota Public Radio to an old Minnesota problem: Keeping rural Minnesota vital in an era when young people, in particular, tend to move away. I'm not sure we've found answers.

First, MPR's Midmorning has been talking to Patrick Carr, an associate professor of sociology at Rutgers University and co-author of "Hollowing Out the Middle: The Rural Brain Drain and What it Means for America."

One of the most interesting things he said this morning -- and I'm paraphrasing -- is that schools make a mistake by identifying the best and the brightest, lavishing educational resources on them, pushing them off to college, the stepping stone to a life lived somewhere else.

He noted that in "the old days" the people who stayed behind could find a decent job and a live a good life, but those opportunities aren't in such abundance anymore.

What's a state to do? Gov. Pawlenty tried his JOBZ program to encourage businesses to locate in rural Minnesota, and that hasn't really worked that well. In many communities, the major employer is the school system and some would say the state isn't exactly friendly to that business these days. "I'm an achiever who moved away. I just can't move my kids back to the small town when the schools are underfunded and the older citizens continually ignore the schools in their rigid rejection of taxes," reader Chad wrote.

Meanwhile, Public Insight Network boss Michael Caputo has been hosting an online discussion with some experts around the state. Ben Winchester of the University of Minnesota Extension Center for Community Vitality, for example, disputed the notion of a brain drain, saying the age 30-49 migration to rural Minnesota is at record levels.

An online reader added:

I'm a 38-year-old who recently returned to my small town with my husband and kids after 20 years living in and nearer the Twin Cities. I wanted to come back years ago, but jobs are a big issue. My husband commutes to the Cities; we live about an hour west of Mpls. One thing that has helped him is DSL recently coming to our neighborhood, allowing him to work at home 2 days a week. Before that we had no good high-speed access.

A caller, who moved up from Chicago, said she moved back to rural Minnesota and she attempted publish a calendar of cultural happenings in outstate Minnesota, and now questions whether anyone cares.

Another reader wrote:

I'm 28, I used to live in an urban area and have moved to a smaller town 6 months ago. I was really worried about finding a job, especially in this recession, but because we have good broadband here, I was able to get a job from a company based in NYC.

What can one conclude from all of this? Here are some possibilities:

1) You can move to rural Minnesota if you make your living in some consulting field and can find a company to hire you without having you sit in a cubicle somewhere. But how many opportunities -- really -- are there for people like that? Still, listener Russell of Lake City proves it can be done. "My wife and I are in our mid twenties and just moved back to our hometown this summer immediately after completing our masters degrees. Our first child is due anyway now and we wanted to raise our kid in a small town and near family. I work for a large bank and was able to get a job that allowed me to work from home. My wife works in health care so she had plenty of options near Lake City. Being able to work from home really allowed this to happen," he said.

2) You can move to rural Minnesota if you make your money in the big city, and can afford to retire or otherwise "live down" economically. But how many people can do that?

3) You can move to rural Minnesota if you don't mind a long commute to your job in the Twin Cities.

4) You can move to Minnesota if you're self employed or have skills in fields that are in demand in rural Minnesota. What are those?

5) You can move to rural Minnesota if you're in the education or health care field.

Unquestionably, rural Minnesota is a great place. Small towns offer a quality of life that can't be found in cities.

But how can one make a living there? That's the question that seems to be the key to today's discussions. It also seems to be the one that hasn't yet been answered.

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Tracking the stimulus

Posted at 3:19 PM on December 10, 2009 by Bob Collins (3 Comments)
Filed under: Economy

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Small business survey

Posted at 10:50 AM on December 10, 2009 by Bob Collins (2 Comments)
Filed under: Economy

An advocacy group for small business is out with a report today showing Minnesota ranks 42nd in its calculations of business-friendly states.

Neighboring South Dakota ranks #1, according to the survey. The group favors lower personal income, corporate tax, and capital gains tax rates. It also objects to family leave policies, health insurance regulations, and a higher minimum wage.

There's not a lot new in the survey -- businesses have made the claim that these issues cost jobs for years. But it doesn't entirely track with other surveys.

For example, the highest percentage of start-up companies is in the West and while many of these states are among the top-ranked, South Dakota isn't one of them. Idaho, ranked 32nd in the small-business group's survey was among the top five states for start-ups in a 2000-2005 survey Kauffman Foundation; so was Montana (31st in the small business ranking). The lowest percentage of startups included Connecticut, Ohio, and Massachusetts. While Connecticut and Massachusetts are ranked close to Minnesota, Ohio's poor ranking conflicts with its #11 ranking by the Small Business and Entrepreneurship Council.

Meanwhile, a survey out today shows optimism by small business owners remains stuck in recession levels.

Let's hear from some small business owners.

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Do taxes kill jobs?

Posted at 10:02 AM on December 3, 2009 by Bob Collins (14 Comments)
Filed under: Economy, Politics