Economy

Opinion | The People Who Actually Had a Pretty Great Year – The New York Times

by dldamore

Opinion | The People Who Actually Had a Pretty Great Year – The New York Times:

“With the ability to work from wherever, scores of college-educated middle class people are fleeing metropolitan congestion for calmer, more affordable pastures.”

 

According to the Pew Research Center, the number of adults ages 18 to 29 living with a parent has increased by 2.5 million since February — meaning that for the first time since the Great Depression, a majority of young adults are living with their parents.

Auto Industry Gripped by Fear of Impending Car-Price Collapse – Bloomberg

by dldamore

The auto industry — already fretting lengthy factory shutdowns and depressed new-vehicle demand — is starting to sound the alarm about a potential used-car price collapse that could have far-reaching consequences for manufacturers, lenders and rental companies.
— Read on www.bloomberg.com/news/articles/2020-04-13/fear-of-an-impending-car-price-collapse-grips-the-auto-industry

*How will consumers react? Huge incentives on manufacturers to move more new cars? If the values and prices for gently used cars drop people may feel better buying used rather than new. Many new people without regular income will lead to uncertainty and caution in household expenditures, especially large purchases like automobiles. Home price may also see a reset which could be rather significant. The home price reset may take time to become apparent. Look for a lengthening of days-on-market.

Apple Warns That Coronavirus Will Hurt Revenue – The New York Times

by dldamore

Apple Warns That Coronavirus Will Hurt Revenue – The New York Times:

“Apple also said that demand for its devices in China had been hurt by the outbreak; it closed all 42 of its stores in the country last month and most have yet to reopen.”

*How much will this cost and how widespread will this be economically? Will this be a black swan like event that starts small and flies under the radar until it is on top of us and has widespread impact?

Signs of a Growing Hush in China’s Economy – The New York Times

by dldamore

Signs of a Growing Hush in China’s Economy – The New York Times:

 

‘Of course car sales have not returned to normal levels — people are still very wary,’ Cui Dongshu, the secretary general of the China Passenger Car Association, which represents manufacturers, said on Friday. ‘They feel this spike in the stock market today is probably not sustainable.

Even with the rebound, $3.1 trillion in market value, much of it financed with borrowed money, has been erased since mid-June. Many experts worry about the damage to the Chinese economy, particularly if stocks continue to fall. Consumer confidence could suffer, weighing on the country’s growth and on economies elsewhere that depend on exports to China.

*Is Apple seeing fewer sales of the Apple Watch Edition (U.S. Apple Store pricing) in China? If yes, what is the degree of change in sales?

Wal-Mart Cutting Orders as Unsold Merchandise Piles Up – Bloomberg

by dldamore

Wal-Mart Cutting Orders as Unsold Merchandise Piles Up – Bloomberg:

“The pullbacks for this quarter and next imply Wal-Mart is expecting softer demand, Robin Sherk, a New York-based analyst at consulting and research firm Kantar Retail, said in an interview. “

*Why is Walmart expecting soft demand? What data are they looking at that indicates weaker sales in the near term?

Entrepreneur guru Michael Gerber: Businesses fail because of owners, not economy | MLive.com

by dldamore

Entrepreneur guru Michael Gerber: Businesses fail because of owners, not economy | MLive.com:

“‘We are born to create,’ he said. ‘The only reason our economy sucks is people have forgotten that. … All of you, if the entrepreneur were awakened in you, would transform the state of the economy.’”

Interesting observation. It would be an improvement if more people thought about how they could effectively create a product or service and deliver it to customers.

Ford Profit Sharing – The Role of Profit Sharing on the Michigan Economy

by dldamore

Ford, in reporting its biggest profit in more than a decade Friday, disappointed Wall Street but pleased UAW workers with bonuses averaging $5,000.

The profit-sharing bonus was two-thirds larger than the amount Ford was required to pay under its contract, said UAW President Bob King.

“What’s really important for our members to know is they didn’t have to do this,” King told the Free Press.

With about 20,000 Ford hourly workers living in Michigan, the checks, due in March, will help lift the state’s economy.

via Ford made $6.6 billion in 2010, workers get $5,000 profit-sharing checks | Detroit Free Press | freep.com.

Time for some quick math. If each of the 20,000 hourly Ford workers in Michigan gets a check for $5,000 how much might that boost the Michigan economy?

Let’s assume that the check is for the full amount and that each worker on average will spend 60% of it in the 30 days after they get it.

20,000 (checks) * $5,000 = $100,000,000

At a 60% spend, one hundred million dollars will generate $60,000,000 in economy boosting cash flow. It will be interesting to see how the Michigan economy does in the months of March, April and May. It would seem likely that dining out will increase and that fuller restaurants will equal more tips for servers. Will the general sense of optimism create a measurable up tick in consumer confidence? I for one believe it will and time will tell if that is an accurate prediction of what will occur.

Immigration, Michigan, Entrepreneurship and Job Creation

by dldamore

Global Detroit cites Duke University research indicating a third of Michigan’s high-tech startup companies founded between 1995 and 2005 had at least one immigrant founder. A U.S. Small Business Administration report found that 16 percent of all Michigan businesses started between 1996 and 2007 were started by an immigrant.

via Snyder: Foreign nationals could help Michigan economy – Crain’s Detroit Business – Detroit News and Information.

Creating an environment that is welcoming to people interested in starting their own business is critical. Having policies that attract and bring  talented people to Michigan from other nations and that are more likely to start-up a business enterprise could be a jobs engine.

There was a time when Detroit and Michigan were leaders in innovation and manufacturing. Manufacturing will probably not be a job engine for Michigan as it was in the past. technology and services are the areas that are poised to be fast growing and provide the most opportunity.