Roanoke College Economics: New unemployment poll

Roanoke College Economics: New unemployment poll: "A new poll was just started on this blog concerning the unemployment numbers to be released January 7, 2011. The Employment Situation Repor..."

Black Friday Spending Pegged at $45 Billion

This year’s Black Friday results were quite impressive. Black Friday has become sort of an American tradition, as a way of kick starting the Christmas holiday season the day after thanksgiving. Millions of shoppers hit the stores, chasing deals and burning calories put on the day before. The National Retail Federation estimated that shoppers spent about $45 billion on Black Friday. As the law of supply and demand shows, as prices decrease, demand increases. Black Friday shows this is an exaggerated model. With prices so low, people resorted to drastic measures, nearly a quarter of all Black Friday shoppers were out waiting by 4am. It is easy to understand why demand is so high on Black Friday considering the deals; both Target and Sears advertised 40 inch 1080p televisions for fewer than 500 dollars. With prices so low, demand rose even higher than ever before. The NRF said around 212 million shoppers hit the shelves on Friday spending an average of $365.34, compared to last year’s numbers of 195 million people who spent an average of $343.31. As the data shows, low prices led to a drastic increase in demand from previous years. The article talked about the factors playing into the rise in demand on black Friday, and clearly stated that consumer confidence was not really a contributor. People are still concerned with the economy and I think that with so many people tight on cash, they wanted to make the best of the sales as they could. NRF Chief Matthew Shay said it was important for retailers to keep the momentum going with incentives and sales that people just can’t pass up. It will be interesting to see what happens with both consumers and producers in need of a good deal. I think that given the current economic situation we can expect to see continued low prices in order to keep consumers jumping on deals. The CEA reported that the average consumer will spend $232 on electronics this year, which is five percent higher than last year, and the highest figure the study has even seen in its 17 years of service. I also found it interesting that with prices so low, and demand so high that shoppers were willing to leave their families behind on thanksgiving and hit the stores. Surveys show that 22.3 million people went shopping on thanksgiving this year, more than doubling over the past 5 years. With prices so low and the economy in such a bad state, people are willing to do anything in order to save money. An investigator from TVB narrowly escaped being caught up in a chaotic shopping scene that resembled a scene from death race 2000. It is impressive to see how many people go to such lengths to take advantage of the deals offered on Black Friday. I think we can continue to see further low prices in efforts to keep consumer demand high in the current economy.

http://www.televisionbroadcast.com/article/109880

Roanoke College Economics: And the winner is...

Roanoke College Economics: And the winner is...: "We have selected the winning title for RC Economics Program newsletter. As many of you know, we held a Newsletter Title Contest (entries co..."

Critique: Are Jobs Coming Back? Signs Point to Yes

Last Friday, the Department of Labor's monthly unemployment report came out. The report was very humbling for many politicians and job seekers who were predicting an increase in jobs and decrease in the unemployment rate. However, against many economists' predictions, who at the beginning of the month of November were anticipating a job increase of about 250,000 jobs, only 39,000 jobs were created over the period. However despite the incerase in gross jobs in November the unemployment rate actually jumped from 9.64% to 9.82%. The reason behind the unemployment jump despite the increase in jobs, is due to more indivuidauls joing the labor force, who had previously not been seeking employment. In order to be counted as a member of the labor force, a person must be actively seeking employment and be 16 years or older. The 9.82% mark is the highest the figure has been since April, after figures had remained steady throughout the previous months at 9.6%.
Unemployment can be broken down into three subdivisions: frictional unemployment, structural unemployment, and cyclical unemployment. As a rule, frictional unemployment hovers around 4.5%, as these are just the people who are in between jobs, recession or no recession. Structural unemployment arises when there is a mismatch in skills. However I do not believe structural unemployment is playing a major role, but cyclical unemployment is I believe. Cyclical unemployment is directly related to the current business cycle, and one can see that cyclical unemployment is in effect, due to the massive amount of layoffs employers are having to make.
I think that the main reason that we saw such an increase in the labor force in the month of November was because of the expiration of the Federal Extended Unemployment Benefits at the beginning of December. With the 99 week extended benefit plan coming to an end at the beginning of the month, I presume that the labor force will peak in the coming month. This could mean that if Congress cannot pass a temporary extension to the benefits, then the unemployment figure could go through the roof. This is because individuals are typically given benefits for up to 27 weeks in a normal economy, but due to the recession that the country has been fighting over the past two years, benefits were extended over 70 more weeks. to collect insurance the unemployed person must be actively seeking work, so these individuals will be counted in the labor force either way, however other family members will most likely be entering the labor force. This is the only practical option for families who need to bring home money, and have family members whose unemployment benefits have recently expired. So I would presume that teenagers and otherwise stay at home moms may be making an entrance into the labor force in the coming month at a greater rate than jobs are being handed out at, which means that another jump in unemployment may be likely.
However because it is December and with the holidays coming up, many temporary retail jobs will be opening up, which might mitigate a jump in unemployment, however last year the unemployment figure stayed the same at 10.0% between November and December.

Are Jobs Coming Back? Signs Point to Yes

Is the job market getting better? That is what is being suggested in this article. In the report from the Bureau of Labor Statistics for October stated that 151,000 new jobs had been created that month. The hope was that just as many jobs would be created during the month of November as well. One economist even suggested that there would be as many as 235,000 jobs added during November. The reason behind the thinking that the job market may be turning around is that monthly payroll numbers were up and less people have filed for unemployment. However, the increase in payroll numbers could simply be coming from an increase in temporary positions that have been created which will eventually end causing those people to become unemployed once again.

The article states that fewer people are relying on the benefits and that the four-week moving average has fallen to a two year low. Also, the people who are employed are on average working more during the week. If this trend continues then businesses may have to decide if they want to overwork their current employees or hire new ones. The hope is that the demand for new workers will soon rise high enough to really start making a dent in the unemployment rate.

Even though there has been an increase in the monthly payroll numbers, many jobs have still been cut, most of them from government agencies. In October almost 11,000 jobs were cut and they are predicting 48,711 job cuts during November. How can the job market be getting better if they are cutting almost 50,000 jobs in a month? With this many job cuts in a month it will only increase the unemployment rate causing the supply of workers for the labor force to increase drastically while the demand for workers will still be very low.

Ben Bernanke the Federal Reserve Chairman stated that the economy is not growing fast enough to really reduce the unemployment rate. Economists expect the unemployment rate to stay above 9% at least though 2009. Today the Bureau of Labor Statistics released its monthly report concerning the unemployment rate for the month of November and it showed that unfortunately the unemployment rate that had been holding steady for the past few months at 9.6% had in fact increased to 9.8%. Also, the number of new jobs that had been created was nowhere close to what was predicted for the month. Seeing the report shows that maybe the job market is not moving in the right direction after all.

http://money.cnn.com/2010/12/02/news/economy/november_jobs_report_lookahead/index.htm

Critique on Underwater Airplane

Critique on Underwater Airplane

I have chosen to critique the article about Richard Branson’s newest toy the Necker Nymph. Richard Branson is known for pushing the Virgin name to the limits. All of the stunts he partakes in is to create maximum publicity for his company. In order to get the Virgin name into every household Branson continues to push the limits. The extreme stunts he partakes in helps boost the amount of revenue his company is receiving because of the publicity it creates. Not many people haven’t heard of one of the more than 60 Virgin companies he has created.

Branson’s newest edition is adds to the already high profile vacation at Necker Island. I agree with the statement that renting out the Neckar Nymph may be hard due to the high prices, but anyone able to rent the Island for 300,000 dollars a week probably would not be worrying about an extra 25,000 for an underwater experience. Also, the Nymph is one of a kind for an easy underwater experience without having to rent out a submarine, which would be much more expensive than the Nymph rental. I believe the break even price even with the addition of all the variable costs such as the pilot, gas, repairs and insurance will not be difficult to reach. I believe that people who are renting out the island are looking for the ultimate beach and water experience and the Nymph greatly sweetens the deal. I believe Branson will be able to create much more profit for the rental of the island with this simple addition. If you follow Branson’s business moves they at times may be risky, but he is a very experienced entrepreneur and I believe that he has put much thought into the Nymph and its potential to easily increase the desire to rent out the Island.

As for Hawkes Ocean Technologies they have an extremely interesting product. I agree with the write that it will be hard for other companies to enter the market. They have a great product that can represent a status symbol such as a Bugatti or a Lamborghini. I agree with that there is low threat on other companies taking over this extremely hard market to enter. Even though the company has a monopoly on this particular product I believe that they will be able to increase revenue due to peoples desires for expensive status symbol products. Although there is only one underwater airplane as of now, they will not hold the monopoly for long. If the product creates large amounts of revenue there are always companies capable of competing in order to gain a share of the market.

With the addition of the Nymph Richard Branson continues to push the business world to the extreme. I believe that he will reap large rewards from this move due to the fact it greatly sweetens the deal to a millionaires dream island visit.

Critique

I am doing my critique on the underwater airplane. The article itself was very interesting to me. I agree with almost all of the reviewers key points on the article from CNN. There are not any other competitors for a business such as this. Their product being an underwater airplane is currently unmatched in the industry and is truly one of kind. The man that built it, Richard Branson, is a successful billionaire. He constructed this underwater bird of the sea. He believes that a ride in his plane should cost his guests 25,000 dollars. This is just where it starts. He then will charge his guests another 300,000 for staying on his privately owned island. These two costs along with miscellaneous ones run each guest a grand total of 400,000 dollars per stay. Clearly this does not appeal to everyone granted the cost is so high. The reviewer says that Branson will have a tough time coming out on top… I beg to differ. He is making the majority of his money from people simply staying at the island. He uses the plane as a tool to lure them there. Even though there are not hundreds of thousands of people with this amount of disposable income there are some that do. Of this smaller population of high income people they would be more interested in buying a product such as this. If there are only 100 people that visit his island every year that already puts him at 30,000,000 dollars. I have a hunch more than 100 people venture there every year.

The reason Branson is able to charge the prices he does is because he was able to use technology to get ahead of his competitors. Microsoft used this for a while to make all of their money. Since Branson’s underwater plane is one of a kind there are no substitutes for it that are out yet. By charging this high price in the beginning consumers have no choice but to spend if they want to experience it. These first years are when he will make his profit. I believe that once other competitors are in the market that his profit may stabilize and break even. This won’t be problematic granted his first couple years of income. The reviewer talks about variable costs being an issue but when you put things in perspective a pilots wages and filling up a large gasoline tank seem very minuscule.

I found this article very interesting to read and was surprised there is a thing such as an underwater airplane. The reviewer did a great job with this article and hit the key points; most importantly that this industry is indeed a monopoly.