Global shares fall on China bank fears

In summary, this article is saying that global shares are falling because China plans to reduce lending from its banks. Chinese authorities have ordered China's commercial banks to stop lending for the rest of January, due to Chinese fears of their economy increasing in inflation and overheating. According to this article if China stops lending money, it will have an negative effect on global trade. The U.S. Dow jones lost 1.1%, the UK's FTSE dropped 1.7%, Germany Dax, and France's Cac lost 2%; due to China not lending to other countries. The Chinese economy has significantly grown, while other major economies are going through a recession.

This article illustrates how well the chinese economy is growing and doing. This article also shows how dependable other economies are on Chinese banks and its economy. This article can play into the fears of people, saying that"China is taking over the world" (over exaggeration). China has become the world's biggest exporter surpassing Germany, and many analyst believe that China has the second biggest economy in the world. This article just proves how the Chinese economy keeps growing and will continue to do well, however this article only takes into account GDP, but not GNP. Therefore, it is hard to indulge into my over exaggerating "fears" if other countries are investing or have companies in China because labor is cheaper.

2009 airline revenue: Worst drop ever

http://money.cnn.com/2010/01/20/news/economy/air_traffic_2009/index.htm

Influenced by the weak economy, the airline industry suffered. The total passenger revenue for the major U.S. carriers fell 18% (6% drop in passenger volume, and a 13% plunge in the average price paid to fly one mile) in 2009.

People save more and earn less due to the recession. The continuously rising unemployment rate makes people even more careful in money decisions. The total consumption decreased, and as a part of it, so did air traveling.

My prediction is that if passenger volume decreases or stays low over a long time, the airlines will slowly decrease the price of flight tickets (in the short-term price is sticky, but it's flexible in the long run), so that more people will choose air traveling. Although some people say the economy is recovering, I think it's recovering slowly at best. So this is likely to happen in the future.

Starbucks U.S. sales signal return to growth

The light at the end of the tunnel has just gotten brighter. Starbucks coffee has been a powerhouse within the world of coffee. Ever since Starbucks opened, it has attracted coffee drinkers by offering high class coffee drinks and a relaxing place to sit down, read the paper, and enjoy a beverage. Even so, since the recession, Starbucks has been experiencing declines in their business. It seems that people have cut back the small, day to day spending on items such as a $4 coffee in the morning to jump start their day.

Although now, Starbucks has just recorded their first quarterly rise since September 2007. This is a great indicator that our economy as we know it is finally beginning to rise. In addition, US restaurants that are open 12 months out of the year, have shown a 4% increase during the end of the quarter in December due to the new Via instant coffee, increased prices, and holiday specials. Starbucks also cut 900 stores within the US and and forecasted a range of $1.05-$1.08/share which is an increase in roughly 30%.

Having a business like Starbucks show an increase, allows for some hope that the end is near.

http://news.yahoo.com/s/nm/20100121/bs_nm/us_starbucks;_ylt=AhnDQNvIdYvE9EG6TzTglezv5rEF;_ylu=X3oDMTJqdmdjcGl0BGFzc2V0A25tLzIwMTAwMTIxL3VzX3N0YXJidWNrcwRwb3MDMTUEc2VjA3luX3BhZ2luYXRlX3N1bW1hcnlfbGlzdARzbGsDc3RhcmJ1Y2tzdXNz

Looking to Expand, but Fearing It, Too

http://www.nytimes.com/2010/01/21/business/smallbusiness/21sbiz.html?ref=business

With more kids going to college then ever before over the last 5 years, a new market for college standardized test preparation is booming. This article is focuses on Thinking Caps, a Manhattan based tutoring program for high school students. This business regularly employes about 30 tutors to help with all the clients they teach for standardized testing. With more parents and kids trying to get an edge on the next person, Thinking Caps has seen a larger number of people coming to them for tutoring. The founder Alexandra Mayzler has been looking to expand but she has found that she is lacking tutors and space. She is worried if she try's to take on more clients then her business will allow she will be less effective, thus hurting her name and the name of her business. With this problem she also finds that pricing would have to change as well to compete with the bigger firms, that she strives to be different from.

Surprise: Recessions don't spark business startups

By Elizabeth Montalbano, contributing writerJanuary 14, 2010: 12:17 PM ET

http://money.cnn.com/2010/01/14/smallbusiness/startup_growth_in_recessions/index.htm


In this article, according to a report of Kauffmann Foundation, the numbers of new businesses established annually in the U.S. are remarkably consistent over the years. Based on the data crunched by researchers Dane Stangler and Paul Kefrosky from the U.S. Census Bureau, the Small Business Administration and the Bureau of Labor Statistics, covering 1977 through March 2009, about 600,000 new businesses were formed each year. This is a surprising find, which contradicts to the prediction of some experts, like Rhonda Abrams, founder of entrepreneurial consulting firm The Planning Shop; he expected there would be more new business start-ups in 2009. Generally, experts believes that under the condition of recession, it would stimulate more people, who lost their jobs, to launch the entrepreneurial activities that have lingered in their minds for years. Another favorable condition to promote one’s own small business during a recession is the lower cost of entry of new companies, and recession also make customers more willing to explore less-expensive alternatives to products or services supplied by entrepreneurs.


In summary, so far, researchers have not found evident reasons to explain this surprising phenomenon and figure out how to make people feel confident enough to initiate their entrepreneurial activities. It is not sure that whether more people would notice this opportunity if given more time or there still exist other endogenous variables that constrain entrepreneurial activities.

Unemployment for Adults with children under the age of 18

The Census Bureau came to conclusion that the unemployment numbers for couples with children under the age of 18 has doubled since 2007. The Census Bureau reported that this increase was higher for two parents families than for single parents. In 2007, 67% of married couples both worked compared to 2009's 59%.

The decline was seen most among black and Hispanic couples.

Among the married couples who have children, 6% of husbands and 4% of wives were unemployed last year. In 2007 3% of hubands did not have a job while 2% of wives were unemployed.

2009's figures for unmarried parents was 16% of fathers and 8% of mothers.

Article:

http://www.nytimes.com/2010/01/17/us/17census.html?ref=economy

Budget ax falls on New York

http://money.cnn.com/2010/01/19/news/economy/New_York_budget_deficit/index.htm

The article focuses on the fiscal budget cuts and increased taxes to be made by New York governor, David Paterson. This includes cutting budgets for education, state agencies, and closing four prisons. The amount of money spent on health services and juvenile justice programs will also be reduced as well as cutting up to $79 million from the Environmental Protection Fund. Along with legalizing ultimate fighting in order to bring tax revenue, taxes and fees will be raised by $1 billion. The ultimate fighting will bring a supposed $2.1 million in tax revenue to New York. Cigarettes will be $1 more than usual, as well as one more penny per ounce for sugary drinks. Paterson refers to the cuts as “painful but necessary” in order to cut down the amount of spending by the state and veer away from more state deficit.

New York is at a disadvantage when compared with other states, due to its early start of the fiscal year (April) and New York has the fourth largest deficit in the county. Other states in debt will struggle in 2011 due to less federal stimulus money.

It seems as though Paterson is making the correct budget cuts in order to cope with lack of federal stimulus money as well as the major state deficit. Some reader’s commented on the article, explaining that New York could have been more careful with the budget money when the economy was stable in order to have money to balance the budget. Although this might be true, Paterson is trying to deal with a $7.4 billion gap – and these budget cuts and taxes might be the right answer.

Consumer prices driven higher by gasoline

By Ben Rooney, January 15, 2010

This article, by Ben Rooney, reports on the raise of consumer prices in 2009 due to rapidly increasing gasoline prices. According to the article, gasoline prices rose over 50% in 2009. Because of this increase, the Consumer Price Index rose 2.7% over the last twelve months. Economist's are not worried because the core CPI, an index they watch more closely because it does not include food and energy prices, only raised 1.8% over the last twelve months, which is the same increase experienced in 2008.

In the last month of December, the core CPI raised 0.1%, which is what economists expected for the month. They said the prices were "held in check" by the housing market, which by now everyone realizes is over-supplied. Besides housing, food and energy are raising in price at the highest rate since 1982, according to Mark Vitner, an economist at Wells-Fargo.

-Paul Murphey

http://money.cnn.com/2010/01/15/news/economy/consumer_prices_december/index.htm

Home Construction Down Sharply in December

http://www.nytimes.com/2010/01/21/business/economy/21econ.html?ref=business

Despite the pessimistic tone of the title of this article, it is actually an optimistic view on the Housing Construction Industry. Although the housing construction fell 4% from November to December, building permits were up 10.9%, which far surpassed expectations.

“We’re on the way to recovery,” said Patrick Newport, an economist for IHS Global Insight. “We can expect to see sustained increases and the pace picking up over the course of the year.

This optimism is great, but the actual housing market is still down, and the construction rates, although higher are still at record lows comparably.

Strong quarterly results at Intel

http://news.bbc.co.uk/2/hi/business/8460398.stm

This is a notable example of seasonal fluctuation of sales. It reported that Intel’s profits have soared up at the fourth quarter in 2009. According to the records,
Intel’s sales climbed 29% to $10.6bn, exceeding analysts’ prediction of $10.2bn. Further, its net income in the three months to 26 December was $2.3bn, compared with net income of $234m of 2008.

According to David Kanter, an analyst at Real World Technologies, thanks to the advantaged technology, Intel, as a major technology company, stands out by its chip prices. It concluded that chip makers are coming out of the industry’s worst downturn in decades and are predicted to continually make profits by increased technology in 2010.