TIME Economy

Economy Takes Biggest Hit Since End of Recession

Polar Vortex drops over United States and Canada
People bundling up in their coats walk outside in New York City, United States, January 7, 2014. Bilgin Sasmaz—Anadolu Agency/Getty Images

GDP contracted by 2.9% in the first quarter

The U.S. economy shrank by 2.9% in the first quarter of 2014, according to newly revised government data Wednesday, its biggest contraction since the end of the recession in 2009.

The revised figure was nearly one percentage point worse than previous estimates, taking into account a more complete set of data that revealed a sharp downturn in exports and a deceleration in consumer spending. Health care spending fell by 0.2%, reversing previous estimates that it would grow as the health care reform law took effect. Exports dropped off by 8.9%, down from 9.5% growth in the previous quarter.

The good news? This is the third and final revision to a quarter in which the economy was walloped by blizzards and crippling cold, and leading indicators point to a rebound in the second quarter.

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TIME climate change

Climate Change Report Warns of Economic Tidal Wave in U.S.

Climate Change And Global Pollution To Be Discussed At Copenhagen Summit
The coal fueled Ferrybridge power station as it generates electricity on November 17, 2009 in Ferrybridge, United Kingdom. Christopher Furlong—Getty Images

Study backed by former Treasury Secretary Hank Paulson and former New York mayor Michael Bloomberg warns that rising seas and extreme heat could cost billions in lost property, crops and labor productivity

Rising seas and extreme weather could lead to billions of dollars in economic losses, according to a new climate change report that strives to reframe the debate in economic terms.

The study was commissioned by the Risky Business Project, a research organization chaired by a bipartisan panel of former officials, including ex-Treasury Secretary Henry M. Paulson, former New York mayor Michael Bloomberg and hedge-fund billionaire turned climate change advocate Tom Steyer.

The study estimates that climate change will have a disparate impact across different regions and industries. Rising seas could swallow up an estimated $66 to $106 billion worth of coastal properties by 2050, the report estimates. Rising temperatures, particularly in the South, Southwest and Midwest, could reduce the productivity of outdoor workers by 3 percent. Absent a change in crops, yields could decline by 14 percent.

“We still live in a single integrated national economy,” Kate Gordon, Executive Director of the Risky Business Project, said in a statement, “so just because it’s not hot where you are, doesn’t mean you won’t feel the heat of climate change.”

 

TIME Food & Drink

Your Caffeine Fix at Starbucks Is About to Get Pricier

Customers will be paying more for their coffee starting this week

Starbucks coffee customers might have a hard time looking at the cup as half full after the company announced price hikes starting Tuesday.

The coffee giant said customers can expect to pay 5 to 20 cents more on some—but not all—drinks, and that the price of packaged coffee sold in grocery stores will increase by $1, from $8.99 to $9.99 for a 12 ounce bag.

A drought during the rainy season in Brazil—the world’s largest coffee producer—meant that many coffee companies raised prices this year. But a Starbucks’ spokesperson told Fortune that coffee costs historically account for less than 10% of operating costs, so other factors, like fuel, energy and labor costs, were considered in the price hike.

For caffeine lovers who just can’t stop grumbling about the onerous price of coffee, here’s another fresh brewed reason for you to complain.

 

TIME Money

Americans Still Aren’t Saving for a Rainy Day

Lesson from the recession not learned

Families in the U.S. still don’t have a substantial amount of cash tucked away for a rainy day despite the beating the economy took in the Great Recession, according to a new survey.

The Financial Security Index from Bankrate.com shows half of American families have no savings or less than three month’s worth of expenses saved for emergencies. The survey’s findings, analysts note, haven’t changed since 2011, when the company first began inquiring about the saving habits of American families.

“Americans continue to show a stunning lack of progress in accumulating sufficient emergency savings,” said Greg McBride, Bankrate’s chief financial analyst.

Analysts say the recession—during which Americans lost about $16.4 trillion in household wealth by 2011—should have been a learning experience, but the struggle of juggling household expenses has left many without extra funds to put away.

Not all Americans are failing to save. About 23% of those surveyed have savings that will last them six months or more in case of a financial emergency—the recommended stash amount. What’s more, the majority of those saving big have larger incomes, though only about 46% of those making $75,000 or more have over six months worth of expenses stored away.

The website notes that while three to six months worth of savings may sound like a lot, starting small and increasing the amount being put away over time can pay off quickly.

TIME stocks

Stocks Hit Record Highs

Dow Jones Industrial Average Approaches 17,000 Milestone
Traders work on the floor of the New York Stock Exchange (NYSE) on June 20, 2014 in New York City. Spencer Platt—Getty Images

The records cap a week of growth

Stock markets again hit record highs Friday, with the Dow Jones Industrial Average nearing 17,000 points and the S&P 500 above 1,960. Both indexes were up more than 1% in trading for the week.

Friday marked the third day in a row that the S&P 500 hit an all-time high, following gains earlier in the week. The index is up more than 6% this year. The Dow is up more than 2%.

The 17,000-mark would be an historic milestone for the Dow, which has seen a steady rise since it hit a 6,600 point nadir during the financial crisis.

TIME Economy

Bank Of America Wants Meeting With Attorney General Holder

It looks like Bank of America is looking for a deal.

Bank of America is apparently done talking to Justice Department attorneys and wants to go straight to the top dog. CEO Brian Moynihan has asked to meet with Attorney General Eric Holder to discuss a deal on mortgage fraud litigation, Reuters reports.

This type of request is unusual as meetings are usually brokered between law enforcement officials and company lawyers. It looks as if Bank of America is following in the footsteps of JPMorgan Chase, which settled a big case for $13 billion shortly after meeting with Holder.

 

TIME Auto

10 Cars Americans Simply Don’t Want to Buy

10 Cars Americans Don't Want To Buy
A Volvo S60 at the 2013 Geneva Motor Show in Geneva, Switzerland. Harold Cunningham—Getty Images

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This post is in partnership with 24/7 Wall Street. The article below was originally published on 247wallst.com.

The American auto industry nearly collapsed during the recession as car sales plummeted and companies struggled to stay afloat. Since then, U.S. car and light truck sales have steadily increased, reaching 1.6 million in May, up 11% from the year before.

Despite the general recovery, demand for some vehicles continues to underwhelm. According to figures from TrueCar, an auto industry information and technology platform, 15 models spent an average of at least 90 days on dealers’ lots before being sold. No car took longer to turn over than the Volvo S60, at an average of 155.5 days.

Click here to see the ten cars Americans don’t want to buy

Days to turn is useful metric for gauging inventory levels, Eric Lyman, vice president of industry insights at TrueCar, explained in an interview with 24/7 Wall St. “The clock starts when the car lands at the dealership,” Lyman said. This levels the playing field, he added, because production facilities for various carmakers are located at different points across the U.S. or even in foreign countries.

According to Lyman, several factors may contribute to rising inventory levels. Some of these are temporary factors, such as the switch to a new model year. Because TrueCar data for 2014 covers cars in their 2014 model years, it makes sense that turnover rates are lower for models such as the GM’s (NYSE: GM) GMC Yukon, Chevrolet Tahoe, and Cadillac Escalade, all of which have released newly overhauled 2015 models.

In other cases, Lyman added, “high inventory is going to be [due] to a disconnect between the sales goals of the manufacturer and the retail demand for those units.” In some instances, manufacturers overestimate demand for their brands and ship too many units to their dealers. This results in high inventory and turnover levels for the brands.

Many of the brands that take the longest to sell are unpopular with customers, Lyman explained. Both Mitsubishi and Scion have car models that take the most days to turn. Both were also two of the nation’s lowest rated car brands, according to J.D. Power’s 2013 Automotive Performance, Execution and Layout Study, which measures brands’ appeal with car buyers.

Cars from Cadillac, Ford’s (NYSE: F) Lincoln, Jaguar and Volvo, all of which ranked in the bottom half of premium brands, according to the study, also made the list. Only one of the cars with the highest days to turn, the Chevrolet Tahoe, was manufactured by one of the survey’s 10 highest rated non-premium brands.

Although there are differences in how brands are perceived, Lyman added that disparities in actual quality among various brands is often relatively small. Five of the 10 cars requiring the most days to sell were made by brands with above-average scores on J.D. Power’s 2013 Initial Quality Study. Leading these brands was GMC, maker of the Yukon, which trailed only Porsche for fewest problems per 100 cars, according to the Survey. Only three models belonged to brands with scores considerably below the industry average, although one of these, Scion, was the lowest-rated brand in J.D. Power’s survey.

Based on figures provided by TrueCar, 24/7 Wall St. reviewed the car models with the highest number of days to turn. TrueCar turnover and sales data for each model reference a particular model year — figures for 2013 apply to cars in their 2013 model year, while figures for 2014 count data for 2014 model year vehicles. TrueCar also provided sales data for each of these models. Manufacturer’s suggested retail price (MSRP) data are from manufacturer’s website, and refer to the newest model year. We also relied on information from J.D. Power and Consumer Reports surveys, and the American Customer Satisfaction Index (ACSI). Safety data are from the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS). Sales figures are from The Wall Street Journal, as well as various company press releases.

These are the cars Americans don’t want to buy.

3. Cadillac Escalade
> Days to turn: 115.5
> Jan.-May unit sales: 1,498
> MSRP: $71,695

The Cadillac Escalade is one of three full-size General Motors SUVs among the 10 cars with the longest days to turn, alongside Chevrolet’s Tahoe and GMC’s Yukon. It is also the slowest selling American manufactured car, taking an average of 115.5 days to turn in the first five months of 2014. This is up from 61.2 days to turn between January and May 2013, as sales have dropped 14.7% year-over-year. However, this may not necessarily be an issue of quality. General Motors recently released a new Escalade, which may affect sales and turnover for the 2014 model year. In fact, Cadillac was one of the top-ranked makes in J.D. Power’s 2014 Vehicle Dependability Study, behind only Lexus and Mercedes-Benz. Consumers were also happy with the brand, awarding it one of the industry’s highest ACSI scores.

2. Mitsubishi Outlander
> Days to turn: 117.1
> Jan.-May unit sales: 3,788
> MSRP: $22,995

The Mitsubishi Outlander took dealers an average of 117.1 days to turn so far this year. This was actually an improvement from last year, when it took dealers nearly 128 days to turn an Outlander. Sales of the Outlander have also been strong this year, up 37% in the first five months of 2014 versus the year before. Overall, sales of Mitsubishi cars rose nearly 34% in that time. However, the carmaker still holds just a 0.5% share of the U.S. car market. Mitsubishi’s model competes in a crowded field against some of the nation’s best selling cars, such as Toyota’s RAV4, Honda’s CR-V and Ford’s Escape.

ALSO READ: Ten States with the Fastest Growing Economies

1. Volvo S60
> Days to turn: 155.5
> Jan.-May unit sales: 1,777
> MSRP: $33,300

Volvo’s S60 had the longest average days to turn of any car model sold in the U.S., taking an average of 155.5 days to turn in the first five months of 2014. This was more than twice as long as it took to turn an S60 last year. Sales of the S60 have slid as well, with just 1,777 sold this year through May, down 13% from the same period in 2013. So far this year, total Volvo sales are down roughly 10% nationwide. As a brand, Volvo has long been considered a carmaker in need of a turnaround. Ford sold it to Chinese carmaker Geely in 2010. The brand still maintains a reputation for safety, and the S60 earned a five star safety rating from the NHTSA and was an IIHS Top Safety Pick+ last year.

For the rest of the list, go to 24/7Wall St.

Read more from 24/7 Wall St.:

Volkswagen’s Sales Disaster Continues

Americans Watch Only 17 TV Channel

What to Do If You Won the $149 Million Powerball Lottery

 

 

 

TIME U.S.

This Is How Much Money Americans Are Spending Every Second

Spoiler alert: it's a whole lot

Americans love to spend. We know this. But just how much are they spending every second of every day, and on what exactly? The folks over at Retale, a location-based app that aggregates weekly retail circulars, created a real-time graphic to visualize the answers to these questions. Watch the numbers tick swiftly upward, as more and more money is spent on everything from coffee to firearms to pet food to lottery tickets to doughnuts.

Via retale.com

References are listed below the graphic. Of course, keep in mind that these numbers are ultimately an estimate. And if the graphic looks familiar, that’s because it was inspired by the popular Internet in Real-Time chart.

MONEY Federal Reserve

WATCH: Will the Fed Raise Interest Rates?

Federal Reserve watchers are waiting to see if Janet Yellen will propose an interest rate increase.

TIME Iraq

Violence in Iraq Could Raise the Price at the Pumps

The global oil market is already responding to violence in Iraq, one of the world's biggest producers, as Sunni insurgents of the Islamic State of Iraq and Syria overrun northern towns with eyes on Baghdad, but it could get much worse

It’s not surprising that oil prices are at a three-month high, given the alarming unrest in Iraq. Oil traders do not react well to geopolitical instability, and that goes double when there’s an impending civil war in one of the world’s biggest producers of crude.

The Sunni insurgents of the Islamic State of Iraq and Syria (ISIS) overran the northern Iraqi city of Tikrit, which hosts a 300,000-barrel per day refinery, while Kurdish forces are now in control of the oil-rich city of Kirkuk after Iraqi troops abandoned their post. Repairs to the 250,000 barrel a day pipeline that runs from Kirkuk to the Turkish city of Ceyhan, offline since March due to sabotage, have been interrupted because of the fighting.

The good news, of sorts, is that Iraq’s biggest oil fields are in the far south, well away from the fighting in the north, as Robert McNally of the Rapidian Group told the Washington Post:

While not beyond [ISIS’] geographical reach, an effort to expand operations into southern Iraq would risk overextension and expose the militants to the more determined defenders of southern oil infrastructure as well as Shia militia.

It’s possible that the Iraqi government in Baghdad—potentially with American help—will beat back ISIS and retake the north. And crude will keep pumping in the south even if the war drags on. The international oil companies that have come to do business with Iraq in the wake of the U.S. invasion are used to working in unstable places. If a civil conflict could stop the global oil industry, we’d have reached peak oil a long time ago.

But even if Iraq doesn’t collapse, the unrest will take a long-term toll on the country’s ability to produce oil—and that toll will be felt by consumers in the future. Iraq has the world’s fifth-largest proven oil reserves, which means the country has a lot more crude left to pump. And because Iraq’s oil industry was artificially depressed by years of mismanagement under Saddam, international sanctions in the 1990s and the chaos of war and reconstruction, the country has a lot of room left to improve. In February, Iraq’s production hit an average of 3.6 million barrels a day—the highest level since Saddam seized power in 1979. And a 2012 report from the International Energy Agency (IEA) projected that Iraq could reach 8.3 million barrels a day of production by 2035. That would make Iraq by far the largest contributor to new oil growth, which in turn could help accommodate the still growing demand from developing nations like China.

But that sort of expansion would require tremendous amounts of investment and a steady hand from the central government. Prolonged civil war would imperil both. And if that leads to consistently higher oil prices, the global economy could be at risk too.

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