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

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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.

TIME Economy

We’ve All Got GM Problems

Insular management and lack of responsibility are hurting big firms around the world

General Motors CEO Mary Barra may have summed it up best when she described former U.S. Attorney Anton Valukas’ 325-page report on the company’s ignition-switch problems, which resulted in numerous deaths and millions of recalled vehicles, as “extremely thorough,” “brutally tough” and “deeply troubling.” It was all three and then some. But the report also illuminates a systemic problem in most big corporations as well as governments–insular management or, in the parlance of gurus, information silos.

Valukas found that GM didn’t fix its ignition-switch issues quickly or correctly because the company’s many departments and employees literally weren’t communicating with one another. The engineers who were looking into reports of cars’ stalling while moving didn’t know that engineers elsewhere in the company had designed air bags that would not deploy when cars were technically off. That meant engineers made different decisions about fixing the switch problems–decisions that ultimately led to over a dozen deaths.

But it was GM’s culture, in which silence and buck-passing were raised to a Kafkaesque art form, that kept these silos in place. Valukas’ report brings to light a number of tics that were unique to GM. There was the “GM nod,” for instance, in which everyone nods with respect to a certain course of action before leaving a meeting and then does nothing at all. And there was the “GM salute,” firmly crossed arms pointing outward toward others, signaling a steadfast refusal to take personal responsibility.

The problems of information not being readily shared and personal responsibility not being assumed are old ones. “Napoleon wanted to create a military without silos,” says Ranjay Gulati, a Harvard Business School professor who has spent 15 years studying silos. “Adam Smith spoke about the problem of labor silos. Events like 9/11 could have been prevented if there had been more sharing of information across organizational divisions.” Indeed, many of the biggest corporate debacles in recent years have been linked to information silos. The Rana Plaza disaster in Bangladesh, in which more than 1,100 garment workers were killed when a poorly built factory collapsed, was due in part to the fact that major Western retail brands didn’t know who their suppliers were or what they were doing.

Big, complex companies are typically structured so that decisionmaking is separated according to function, geography and product. That naturally creates silos. Indeed, McKinsey research shows that the most globalized firms pay an economic price for this. Examples of silos in blue-chip firms abound: Sony once had two separate divisions working on creating the same electrical plug without anyone realizing it. (It’s not just old-school companies that are at fault. I was once offered a job at a well-known tech firm where I would run around talking to C-suite executives about what they were doing and report back to other top people in the organization.)

So-called silo busting is already a hot topic in academic circles. Economists, for instance, are trying to do a better job of predicting market movements by calling on experts in areas like biology, psychology and the humanities. Major brain-science initiatives now routinely bring together researchers across many fields to share data. But in big corporations, silos are a problem that is becoming only more pressing as the world becomes more interconnected.

How can companies bust silos? according to Gulati, the best way is to create a set of core values or a core mission that everyone in the firm understands. A good example of this is IBM’s decision, under previous CEO Sam Palmisano, to create a safer and healthier society via its Smarter Planet initiative. That goal, says Gulati, helped facilitate cooperation across divisions. It’s also important for firms to consider issues from the point of view of customers rather than insiders. Consider longtime Cisco CEO John Chambers, who famously was 30 minutes late to his first board meeting because he felt it was more important to take a call from an irate customer than to meet the people who’d be deciding his salary. Another way to bring down silos: hire outsiders. Research shows that women and minorities often communicate better across divisions.

On that score, Barra is perhaps better placed than most to solve her company’s problems. During her announcement about the report, she set a communal goal for GM–“to set a new industry standard in safety”–and told employees to email her personally if they felt customers’ safety was ever in doubt. Silo busting starts at the top, and if Barra does it at GM, it could set an example for all large institutions.

TIME Economy

Sub-Saharan Africa Is the New Investment Frontier

The Victoria Island waterfront is seen from the Ikoyi neighbourhood in Lagos
Nigeria has attracted much attention from American and European multinationals, according to a new survey. Here is the Victoria Island waterfront in Lagos from June 3, 2014 Joe Penney—Reuters

Nigeria leads frontier markets in attracting attention from American and European companies, according to the latest Frontier Markets Sentiment Index

Nigeria, Africa’s largest economy, is the frontier market that attracts the most attention from American and European multinationals, according to an index commissioned by the Wall Street Journal.

Argentina, Vietnam and Saudi Arabia followed respectively.

But it was the sub-Saharan Africa countries that dominated the table, making up nine of the top 20 economies. Asia had three countries in the top tier.

The data found that one country in particular has seen multinationals’ interest wane dramatically. From 2013 to June 2014, corporate sentiment toward Ukraine dropped 12.5 points following a long period of violent protests and political instability.

The Frontier Markets Sentiment Index, developed by Frontier Strategy Group, based in Washington, D.C., provides insight into 200 multinationals’ sentiments toward markets regarded as the riskiest to invest in.

Matt Lasov, global head of advisory and analytics at Frontier Strategy Group, told the Wall Street Journal: “We collect data about which countries the companies are watching for potential future investment. Over time, that gives us a clear picture of their market priorities — which countries are they including in their future plans and which they are dropping.”

[WSJ]

TIME China

China’s Real Estate Downturn Spells Trouble for Global Economy

A sales assistant talks to visitors in front of models of apartments at a real estate exhibition in Shenyang
A sales assistant talks to visitors in front of models of apartments at a real estate exhibition in Shenyang, Liaoning province April 17, 2014. Sheng Li—Reuters

The world's largest trading nation's economic growth remains heavily dependent on property, meaning a sharp downturn in that sector would be felt across Asia and beyond

“Will the government save the market if housing prices fall?” That was the question being asked in China this week — not by stressed-out mortgage holders, but by the country’s most famous (and wealthy) property mogul, Pan Shiyi.

Pan, the chairman of giant real estate developer SOHO China, has made a series of pronouncements in recent weeks that reflect an increasingly bearish long-term outlook for China’s property sector.

At an industry forum in late May, Pan compared the nation’s real estate prospects to the Titanic. “It [the real estate industry] will soon hit the iceberg in front of it,” he declared.

Pan’s outlook may be bleak, but is borne out by statistics. According to Standard & Poor’s, residential housing prices in China will drop by 5% this year — a dramatic reversal from last year’s rise of 11.5%.

That’s bad news for China’s property holders, but potentially also a worrying sign for global investors. With Chinese economic growth heavily dependent on the real estate sector, which accounts for 20% of GDP by some estimates, a sharp slowdown in the property market would be felt far beyond China’s borders. (China is, after all, the world’s largest trading nation.)

After more than a decade of sizzling double-digit growth, the government is targeting 7% growth this year. But the potential for a real estate correction means that the actual number could be much lower.

There are already some signs that imports are being affected as consumer confidence weakens. The General Administration of Customs announced Sunday that imports in May declined 1.6% year on year — a drop that surprised industry analysts. That compared to an increase of 0.9% year on year in April.

With prices trending sharply downward, the president of the country’s largest residential real estate developer, Vanke, has declared that the “golden age” for property is over. “The period when everyone made money from property is gone,” Yu Liang was quoted as saying recently.

A conflagration of factors is driving the decrease in prices, not least repressive market policies that restrict the number of properties city dwellers can own. Markets in larger cities are also being flooded with knockdown properties being dumped by overextended investors or government officials looking to rid themselves of any undeclared assets in light of a recent and severe government crackdown on corruption.

Chinese media reported Monday that one coal-mining magnate was attempting to offload 100 apartments in a coveted location along Beijing’s Second Ring Road.

Little wonder, then, that the property mogul Pan is on the lookout for the visible hand of the government. But, for now at least, state intervention seems unlikely. In a report late last month, the Ministry of Housing and Urban-Rural Development declared that it would stay on the sidelines and “respect the adjustment role of the laws of the market in the real estate sector.”

TIME Economy

The Economy Is Back—Barely

Jobs have recovered, but wages aren't growing

Let’s get the good news out there first: Yes, the U.S. has finally, after four years of recovery, exceeded its pre-recession jobs peak of 138.4 million new jobs. There are now more jobs out there in the economy than ever before, though it’s worth saying there are also a lot more people in the labor market than there were back then, even given the historically low workforce participation rate of 62.8 percent (the lowest since 1979).

The big question is “who are those jobs for?” That’s where the May jobs report, the fourth strong report in a row, gets more interesting. Unlike previous reports, the gains have been broad based—there were new jobs created in many sectors, including higher paying and important ones like manufacturing and construction. But 50% of all the jobs being created in this country are still in the low-wage category—retail clerk positions, home heath aids, waitresses and the like. And more importantly, pay isn’t going up much—only a little more than 2% month on month, compared to an average of 3.5% to 4.5% before the recession. If you aren’t jumping up and down about this report, that’s probably why—a lot of us just don’t feel the recovery in our pocketbooks.

Screen Shot 2014-06-06 at 1.13.13 PM

That’s underscores the key difference in the pre-2008 economy versus now. Yes, the jobs debate has officially shifted from quantity, to quality. But, as the McKinsey Global Institute has been pointing out for some time now, that shift has taken longer than in any recovery of the past. From the period between World War II and the 1980s, “there was a fairly predictable pace for recoveries,” says MGI director and economist Susan Lund. It took roughly six months 
for U.S. employment levels to recover after each post-war recession 
through the 1980s. Then, things changed. It took 15 months after the 1990–91 recession for employment to reach its pre-crisis levels, and
 39 months after the 2001 recession. This time around, it’s taken 40 months, and $4 trillion of Federal Reserve stimulus to boot.

What’s more, while we’ve created as many jobs as we had before, the nature of the work has changed—the labor market is bifurcated, with people at the top doing quite well and those in the middle and bottom, not so much. Another fascinating tidbit from MGI that reflects this shift: employment for people with a bachelor’s degree or more has actually been growing since the crisis in 2008. It never stopped growing. But work for those with a high school degree or less has been shrinking, and only just began to rebound. “For those people, it still feels like a jobless recovery.”

Screen Shot 2014-06-06 at 1.13.25 PM

Increasingly, though, the question is whether it will be a wage-less recovery. It usually takes several months of job growth for income to start to pick up, and once it does, it’s possible that a broader range of companies will start adding more employees higher up the food chain. The National Association of Business Economists is bullish on the next six months. But I tend to think that even as jobs will grow, these key trends— the shrinking of the middle labor market, and flat wages—will continue. One of the main reasons could be that technology related job destruction is continuing in blue chip America, and it’s going higher up the food chain. I recently sat in on a conference with a high level group of C-suite employers, and all were planning to spend on technology that would displace more white-collar workers. Research shows the only way to shift that trend is to increase levels of education in society faster than technology change—and given the speed at which the latter is advancing, that will be a tough assignment indeed.

TIME

The Single Most Depressing Thing About the Recession Has Just Been Put Out of Its Misery

The most depressing jobs graph in more than 60 years has finally kicked the bucket thanks to the latest jobs report

The economy gained 217,000 jobs in May, bringing the total number of workers back to its pre-recession peak and finally putting one of the glummest graphs of job creation out of its misery. The graph created by Calculated Risk, below, shows that jobs in our current recession (the red line) took a longer and deeper dive than at any other point since WWII.

EmployRecMay2014

Now, with total employment 98,000 jobs higher than pre-recession levels, the red line is officially history, and hopefully won’t return any time soon.

Not that total employment is the final measure of workforce well-being. After all, the population has grown alongside the job market. The percentage of the working age population in the workforce is still at a decades-long low-point, as Calculated Risk shows compliments of another worrisome graph. There are still plenty of dipping lines to worry about yet.

EmployPopMay2014

Source: Calculated Risk

TIME Economy

U.S. Adds 217,000 Jobs, Unemployment Remains at 6.3%

May marks the fourth straight month of jobs growth in 2014

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The U.S. added 217,000 jobs in May, according to the federal jobs report released Friday, but the unemployment rate held steady at 6.3%. That rate matches April’s figure, the lowest seen in five years.

May marks the fourth straight month of jobs growth in 2014, with the economy adding on average about 214,000 jobs per month this year. The Bureau of Labor statistics report aligns with analysts’ predictions that the May report would reflect moderate growth following April’s strong report.

Private-sector employment rose by 179,000 jobs in May, payroll service firm ADP reported Wednesday.

April’s jobs numbers were adjusted to show 282,000 jobs were added last month, down 6,000 from the 288,000 additional jobs previously reported.

TIME Economy

Job Market Dropouts May Be Rejoining the Workforce

People who had given up on looking for a job may be re-entering the the job market, an encouraging sign for the recovery.

Even as unemployment rates have inched towards pre-recession levels, recovery skeptics have pointed to the high number of people who have given up looking for a job and are, as a result, left out of official employment numbers.

Now, there’s some evidence to show even that trend is reversing, Reuters reports.

The share of people who have a job or are looking for one rose in a majority of U.S. states in the six months leading up to April of this year, according to a Reuters analysis of government data, marking the first upswing in those numbers in six years.

The rising participation rate likely means that people who had given up on looking are now confident enough to re-enter the job market, an encouraging sign for the economic recovery.

The data is not conclusive, according to Reuters. But participation rates appeared to have risen in a diverse set of states, including Texas, Florida and West Virginia. The 32 states where the figures rose also represent a majority of the U.S. population.

[Reuters]

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