THE CHAMBER PRESENTS NEWS AND INFORMATION FROM A VARIETY OF SOURCES ON THE ECONOMY, LOCAL ITEMS OF INTEREST AND THOUGHT-PROVOKING OPINION. THE STORIES ARE CULLED FROM SOURCES AROUND THE WORLD INCLUDING THE NEW YORK TIMES,WALL STREET JOURNAL, PASADENA STAR-NEWS, LOS ANGELES TIMES, ATLANTIC MAGAZINE, THE TIMES OF LONDON AND MORE.
We present the headline and a brief introduction to the story. The full story can be accessed by clicking on the headline. News items are bolded. Comments and introduction by Chamber staff are not so emboldened.
IT HAS NOT BEEN A GOOD WEEK
The LA TIMES reports that unemployment in California remained at 12.3:
California jobless rate remains 12.3% in July
Private-sector employers add some positions, but payrolls shrink by 9,400 as the Census and federal stimulus spending wind down.
By Alana Semuels, Los Angeles Times
August 21, 2010
California’s labor market showed troubling signs of weakness in July as employers cut positions, offering little hope to the state’s 2.25 million jobless workers.
Golden State employers slashed 9,400 net jobs from payrolls, according to data released Friday by the Employment Development Department, marking the second straight month of losses. While the state’s unemployment rate remained constant at 12.3%, the jobless rate in the Inland Empire metropolitan area reached a new high of 15.1%, and the rate in Los Angeles County grew to 12.4% from 12.2% in June.
According to the Star-News Pasadena’s unemployment rate is hovering close to 9.5% :
Employment sector continues to struggle
As the nation continues to climb out of its worst downturn since the Great Depression, economic signals are mixed.
But one thing is clear – the U.S. employment sector is struggling. And figures released Thursday by the Labor Department bear that out.
New applications for unemployment benefits hit a nine-month high last week, rising by 12,000 to 500,000 – the highest level since November and the third straight increase.
The spike suggests that private employers may shed jobs this month for the first time this year.
“It’s definitely a possibility,” said Jack Kyser, chief economic advisor to the Southern California Association of Governments. “You have a lot of concern about the economy because growth has slowed down dramatically and companies have sort of gotten back into that foxhole.”
And:
San Gabriel Valley cities post increases as jobless rate hits 12.4%
To make matters worse, every San Gabriel Valley city saw its numbers rise – many by a full percentage point or more.
El Monte’s unemployment rate jumped to 16.4 percent in July compared with 15.1 percent in June. Irwindale’s rose to 13.8 percent compared with 12.7 percent in June.
All told, 10 San Gabriel Valley cities posted hikes of more than 1 percent, while six other communities saw their rates rise 1 percent, EDD figures show.
“It’s such a devastating blow to the direction so many of us hoped we were headed in,” El Monte Mayor Andre Quintero said Friday. “I wonder to what extent those temporary census jobs lowered our unemployment rate over the last couple months, giving us the idea that maybe we were doing better than we really were.”
El Monte has suffered the loss of several auto dealerships as well as the closure of Gregg Industries, an iron foundry that employed 240 workers.
Civilian employment in Los Angeles County declined by 17,000 to 4.3 million in July, while unemployment rose by 12,000 to 605,000 over the month.
California’s jobless rate fared slightly better, holding steady at 12.3 percent last month, although it was still up from 11.8 percent a year earlier.
In L.A. County, government weathered the biggest losses in July, with 29,300 jobs lost over the month. Most were in government education (down 21,500), followed by federal government jobs (down 4,200) and state government jobs (down 3,600).
Educational and health services posted the second biggest decline, with a total loss of 7,100 jobs.
Nancy D. Sidhu, chief economist with the Los Angeles County Economic Development Corp., said the latest numbers aren’t as bad as some might think.
“The unemployment rate is always higher in July than in June, and the biggest impact is because of the decline in employment at elementary schools, high schools, state education and private education,” she said. “We have a collection of teachers on the one hand, but just as important are the staff people.”
Even in this downturn some are starting businesses (even restaurants). Some helpful advice from some who have been there before:
Start-up lessons learned the hard way
Business owners offer prospective entrepreneurs advice on how to avoid the painful mistakes they made.
 Richard Giorla, owner of Cardio Barre fitness in Studio City, tracks every detail after workers handed out unauthorized freebies in his first business. (Anne Cusack / Los Angeles Times / July 21, 2010) |
August 21, 2010|3:13 p.m.
With corporate jobs in short supply, out-of-work Americans are going into business for themselves like never before.
But starting a business can be a perilous journey that most of us — even those who seem to be born entrepreneurs — can have difficulty navigating.
No matter how much planning people do, pitfalls lurk. It’s here that the real entrepreneurs show their spirit, experts say — by learning from their mistakes and moving forward. Some retool their companies, others shut down a failed business, only to open another.
New entrepreneurs make many of the same mistakes, said Ethan Mollick, a professor who specializes in entrepreneurship at the University of Pennsylvania‘s Wharton School. They fail to fully develop a business plan. They neglect important market research. They get into trouble by making poor hiring choices.
It’s hard to anticipate everything that could go wrong, Mollick said. “Your big problem is probably going to be something that you don’t expect.”
Those who succeed keep trying — studying their mistakes and moving on.
Mentoring programs offer minorities a chance to grow
The programs help minority-owned companies polish their business skills and give them exposure to corporations that might be seeking new suppliers for materials and services.
Small-business owner Patricia Watts recently graduated from a two-year mentorship program for minority-owned companies.
But Watts, who is chief executive of FCI Management Consultants in Long Beach, didn’t get just know-how out of the program. She also scored a job for her energy services company from one of the corporate mentors, sports and entertainment giant AEG.
It’s a small job for Watts’ company, but it opens the door to possibly do more work for AEG, which owns Staples Center and other major facilities.
“The bottom line is, people do business with people they know,” said Watts, who started her business in 1998 after working at Southern California Edison. She manages 75 employees who design and implement energy-efficiency initiatives for companies.
U.S. restaurants starved for business
The number of restaurants operating nationwide dropped this year for the first time in more than a decade, a survey shows, with California accounting for almost a third of the losses.
Business has dropped precipitously at Zach’s Cafe in Studio City and the 20-year-old restaurant is in “survival mode,” according to co-owner Matt DeMasi. (Mariah Tauger, Los Angeles Times / August 5, 2010) |
By Sharon Bernstein, Los Angeles Times
August 21, 2010
With consumers and businesses keeping a lid on expenses, more and more small and mid-size restaurants are throwing in their dish towels and closing up shop. Southern California lost nearly a thousand more restaurants than it gained during the 12 months that ended in March, representing a net 2% drop that was twice the national average, according to the New York research firm NPD Group. Nearly all the closings were among independently owned restaurants: small, family businesses that just couldn’t hold on as customers held back. Earlier in the year restaurants reported modest increases in business, but the jumps in sales were too little too late for many.
“We were going in reverse,” said Ken Rausch, who last month made the wrenching decision to close his family’s 65-year-old San Gabriel Valley restaurant, Edward’s Steakhouse. The restaurant had weathered previous recessions, but this downturn drained the family’s resources — and showed few signs of letting up, Rausch said.
Other well-known haunts have also succumbed: Orso on 3rd Street near Robertson Boulevard, a trattoria popular with the entertainment crowd, closed last winter after a nearby movie studio laid off a big chunk of its employees; across the nation, Koo Koo Roo, Bennigan’s, Bakers Square, Tony Roma’s and other chains have shut dozens of locations.
Even in good times, the restaurant business is a difficult one. Many close simply because they fall out of fashion or favor, and most run on slim margins. But this downturn seems especially brutal.
If you enjoy a favorite restaurant patronize it to help ensure it is here for you to enjoy next year.The Washington Post reports that one resort town used discounts and special offers to get visitors (and spending at local attractions) back.
Ocean City deals helped bring back visitors after 2009 slump
Monday, August 23, 2010
OCEAN CITY, MD. — The aroma of cotton candy wafted through the air of this resort city last Tuesday afternoon, as crowds of visitors stopped at stores, tried their luck at games or stuffed their faces with funnel cake. The boardwalk was packed, creating at least the appearance of good times even if the local economy is still in recovery mode.
“There’s been swings and fluctuations in sales, but they’re up across the board from last year, which was pretty bad,” said Christopher Maxa, the general manager at the Kite Loft in downtown Ocean City.
A few doors down from Maxa and his outdoor display of fluttering kites, sales associate Caleigh Wooten said she has been ringing up more sales at the Quiet Storm surf shop where she works. “We might see 40 or 50 customers during the day. But at night, like 100 to 200 people stop in between all of the events on the beach,” she said.
All along the 10-mile stretch of Ocean City, retailers, restaurateurs and hotel operators noted an uptick in business from the slumping sales of 2009. Like a lot of resort communities, this coastal city has benefited from good seasonal weather and a general resurgence in vacation travel.
But families are increasingly booking shorter trips at the last minute, creating pockets of downtime for merchants. Ocean City’s local government and trade associations have tried to compensate by bolstering advertising and crafting promotions aimed at drawing visitors from a wider geographical area and giving people reason to stay longer.
The results have been promising. Room tax revenue, for instance, rose nearly 5 percent in June from a year earlier, while the intake from food and beverage taxes grew roughly 10 percent, according to the most recent data from the Greater Ocean City Chamber of Commerce. That revenue is certainly stronger than that for 2009, but it was still off a few percentage points from 2008. The number of visitors per week has slipped by 10 or 20 people this year compared with last, but those who come are spending more.
Maybe we need to reconsider real estate as an investment, even or homes. From the New York Times:
Housing Fades as a Means to Build Wealth, Analysts Say
By DAVID STREITFELD
Published: August 22, 2010
Sally Ryan for The New York Times
Adam and Allison Lyons plan to rent their condo in Chicago until the housing market recovers.
The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.
More than likely, that era is gone for good.
“There is no iron law that real estate must appreciate,” said Stan Humphries, chief economist for the real estate site Zillow. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”
Instead, Mr. Humphries and other economists say, housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.
Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up.
“People shouldn’t look at a home as a way to make money because it won’t,” Mr. Baker said.
Oh, the stock market? Seems nobody has a handle on that (yet):
Stock Swing Still Baffles, Ominously
By GRAHAM BOWLEY
Published: August 22, 2010
It sounds like “Wall Street” meets “The X-Files.”
Sally Ryan for The New York Times
Eric Scott Hunsader founded Nanex, whose charts inspired theories on the May 6 market swing.
The stock market mysteriously plunges 600 points — and then, more mysteriously, recovers within minutes. Over the next few weeks, analysts at Nanex, an obscure data company in the suburbs of Chicago, examine trading charts from the day and are stunned to find some oddly compelling shapes and patterns in the data.
To the Nanex analysts, these are crop circles of the financial kind, containing clues to the mystery of what happened in the markets on May 6 and what might have caused the still-unexplained flash crash.
The charts — which are visual representations of bid prices, ask prices, order sizes and other trading activity — are inspiring many theories on Wall Street, some of them based on hard-nosed financial analysis and others of the black-helicopter variety.
To some people, like Eric Scott Hunsader, the founder of Nanex, they suggest that the specialized computers responsible for so much of today’s stock trading simply overloaded the exchanges.
He and others are tempted to go further, hypothesizing that the bizarre patterns might have been the result of a Wall Street version of cyberwarfare. They say high-speed traders could have been trying to outwit one another’s computers with blizzards of buy and sell orders that were never meant to be filled. These superfast traders might even have been trying to clog exchanges to outflank other investors.
Jeffrey Donovan, a Nanex developer, first noticed the apparent anomalies. “Something is not right,” he said as he reviewed the charts.
Mr. Donovan, a man with a runaway chuckle who works alone out of the company’s office in Santa Barbara, Calif., poses a theory that a small group of high-frequency traders was trying to introduce delays into the nation’s fractured stock-market trading system to profit at the expense of others. Clogging exchanges or otherwise disrupting markets to gain an advantage may be illegal.
Mr. Donovan indulges Wall Street’s increasing fascination with the charts by christening more of them each day, with names like Continental Crust, Broken Highway and Twilight.
There is also the Bandsaw, a zigzag pattern of prices that appear and then abruptly vanish. There is the Knife, a sharp, narrowing price sequence. There is the Crystal Triangle, the Bar Code, the Mountain Range, each one stranger than the last.
And they wonder why small investors are very wary of stocks:
In Striking Shift, Small Investors Flee Stock Market
By GRAHAM BOWLEY
Published: August 21, 2010
Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market.
Multimedia
Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.
If that pace continues, more money will be pulled out of these mutual funds in 2010 than in any year since the 1980s, with the exception of 2008, when the global financial crisis peaked.
Small investors are “losing their appetite for risk,” a Credit Suisse analyst, Doug Cliggott, said in a report to investors on Friday.
For myself, until things settle out and stabilize, my money stays in fixed return investments, gaining 2% is way better than losing 15%.
From the Toronto Star by way of the Washington Post, word that Goldman Sachs is changing the stock offering game by cutting prices it bid to do the GM offering.
Cure for excessive Wall Street compensation: price wars
WASHINGTON — Normally, the big investment banks would be salivating over the prospect of a $15 billion (U.S.) stock offering by General Motors, which by rights would generate $450 million in fees. But a funny thing happened on the way to this bonanza. Goldman Sachs — convinced it was never going to be named lead underwriter because of its legal problems and its close ties to Ford — decided to have some fun at its rivals’ expense. Tossing aside Wall Street’s most sacred commandment — Thou Shall Not Undercut the Fee Structure — Goldman offered to do the job for 0.75 per cent of the stock sale, a quarter of the normal fee.
Sure enough, Goldman rivals Morgan Stanley and J.P. Morgan were offered the business. But the U.S. Treasury, which owns most of the stock that will be sold through the offering, insisted that the winners do it at the Goldman price. Given that the deal would almost certainly give them bragging rights as the top underwriters for the year, and given the public outcry that would have ensued if they had balked at giving a discount to the very same taxpayers who had just bailed them out, the Morgan twins decided this was an offer they could not refuse.
This story, first reported by Bloomberg News and confirmed by several government and Wall Street sources, goes a long way in explaining why so many people on Wall Street get paid so much more than everyone else.
If costs to offer stock go down, will investors start seeing better returns? Or maybe more stock offerings.
Now Playing: Night of the Living Tech
By STEVE LOHR
John Hersey
Last week, Wired magazine proclaimed, “The Web Is Dead.” Yet evolution — not extinction — has always been the primary rule of media ecology, even if the rate of change is speeding up.
Crime (Sex) and Punishment (Stoning)
By ROBERT F. WORTH
A particularly hard-to-grasp form of execution speaks to the distance between societies. And why we may see more of it.
Tall Tales, Truth and My Twitter Diet
By BRIAN STELTER
How to lose 75 pounds in 6 months, 140 characters at a time.
Over Time, a Gay Marriage Groundswell
By ANDREW GELMAN, JEFFREY LAX and JUSTIN PHILLIPS
A poll this month found that a narrow majority of Americans supported same-sex marriage. Here’s a look what that means, state by state.
Graphic: Support for Same-Sex MarriageDisaster Strategy: The Soft Heart and the Hard Sell
By DONALD G. McNEIL Jr.
When disaster strikes a country that doesn’t like America — as with the floods in Pakistan — foreign aid can be a public relations tactic.
Income Inequality and Financial Crises
By LOUISE STORY
New research raises a question: Do widening gaps between rich and poor necessarily lead to financial crises?
Lobbying Often Yields Nothing
August 20, 2010
The New Urban Era
August 19, 2010
Did the App Kill the Web?
August 18, 2010
It’s a Shark’s World After All
August 17, 2010
Ike, J.F.K. and Today
August 16, 2010
Interactive Feature Quick Hits
Laugh Lines
Jokes from TV comedy show monologues.
Prime Number
51: The median age of viewers of the big four broadcast networks, Fox, CBS, NBC, and ABC.
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