Tag Archives: future

The Big Economic Unknowns of 2015, From Unemployment to Oil

Source : http://www.nytimes.com/2014/12/28/upshot/the-big-economic-unknowns-of-2015-from-unemployment-to-oil.html

I wish I knew where the economy will be heading next year. If I did, I might become rich. But, alas, I don’t — and even if we don’t always acknowledge it, no economists do.

Too much uncertainty clouds the crystal ball to be confident that any particular course of events will play out in the real world. But we do know something about the sources of that uncertainty, and in a season for sharing, I’d like to offer six questions whose eventual resolution will shape the economic year ahead:

■How much slack really remains in the labor market?

The unemployment rate stands at 5.8 percent. If it continues on its current trajectory, it will have fallen an additional half a percentage point by mid-2015, putting it at a level that some economists see as effectively full employment.

Yet much of the reduction in unemployment reflects a decline in the share of the population in the work force. If a stronger economy were to induce these people to return to work, the recovery would still have a long way to run before we got to full employment. Moreover, millions of those who are counted as employed remain stuck in part-time jobs but want full-time work.

Credit Minh Uong/The New York TimesPhoto by: Minh Uong/The New York Times

Further improvements in the labor market also depend on whether thelong-term unemployed — those who have been out of work six months or longer — will successfully transition into new jobs. Pessimists emphasizethat high levels of long-term unemployment proved to be an intractable problem through much of Europe over the last 40 years. Yet more recent evidence from the United States — particularly from the early stages of this recovery — makes me more optimistic that we can get the long-term jobless back to work.

All of this means we really don’t know how far unemployment could fall without prompting inflation. Get ready for a debate premised on artificial precision about whether the economy can sustain unemployment of 5 or 5.5 percent. That’s the consensus range. But the best research on this question suggests that the lowest sustainable rate could easily differ from our best estimates by a full percentage point or more. Indeed, the Clinton-era boom pushed unemployment below 4 percent without setting off an inflationary surge.

Will the Federal Reserve treat its target for 2 percent inflation as a goal or a ceiling?

Officially, the Fed says it is as willing to tolerate the risk that inflation may rise above this level as it has been about inflation undershooting its goalover the last few years. Yet its actions suggest otherwise. Plans to normalize policy — a euphemism for raising interest rates — are already underway, even as the Fed’s own projections suggest that inflation will not breach 2 percent in the next few years.

Higher interest rates could slow the economy. That leads to my third question:

How fast does the economy need to grow to stay healthy?

Many commentators assume that a healthy economy grows at an annual rate of at least 3 percent. Yet economic growth in the United States has averaged only 1.9 percent since 2000, and average growth of 2.3 percent during the current expansion has been enough to yield large drops in unemployment. To an important extent, this lower rate has been caused by demographic factors: slower population growth, the end of the transition of women into the work force, and baby boomers retiring.

All told, the work force is growing nearly a full percentage point slower than it was in the 1990s, and this is why 2 percent growth is the new 3 percent. Likewise, much as the economy once needed to generate 150,000 jobs a month just to keep up with new entrants to the labor force, that “break-even” number may now be as low as 50,000.

Can the American economy keep motoring without help from the rest of the world?

Among the world’s major economies, the United States had the strongest economic growth in 2014. The picture elsewhere is grim. Japan has lurched from optimism about Abenomics — Prime Minister Shinzo Abe’s program to kick-start the economy — to pessimism as the economy hasshrunk over the last two quarters. And Europe hovers on the edge of a double- or triple-dip recession, depending on your definition. China has slowed, with economic growth moving below 8 percent a year from an extraordinary 10 percent. And the Russian economy is on the cusp of a full-fledged crisis. It’s not just that foreign buyers have less money to spend; their weakness has become the dollar’s strength, which also makes our exports more expensive. These global headwinds could easily knock a fragile recovery off course.

What will be the consequences of lower oil prices, which have fallen by about half since June?

Typically, an oil price decline is like a tax cut, leaving more money in consumers’ pockets to spend elsewhere. That should spur growth. But since the shale boom, the United States is not only a leading oil consumer but also a leading producer. So lower oil prices also spell smaller revenue for some of our energy companies. And our producers have particularly high costs, so further investment in them may become unprofitable if prices fall too far.

This leads us back to the inherent uncertainty afflicting economics:

What, as Donald H. Rumsfeld, the former defense secretary, asked, are the unknown unknowns?

More often than not, the shocks that buffet the economy come out of the blue. Few predicted the huge swings in oil prices over recent years, and the same goes for the financial crisis and many other disruptive events. A few years ago, for example, the weakness in Greece’s fiscal situation was successfully disguised, until it catalyzed the eurozone crisis. In 2011, the tsunami that brought huge damage to Japan also caused global economic tremors. And while we have often seen political gridlock in Congress, the extreme brinkmanship over financing the federal debt in recent years has been a form of economic self-sabotage that was once unimaginable.

I wish I could offer clearer guidance about next year, but an honest account focuses on the limits of our knowledge. We’re not sure how much further the economy can improve next year, or even if it will actually do so, and we don’t know what might drive it off course.

So instead of a forecast, I’ll offer advice: Prepare for the worst, hope for the best and count on being surprised.

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Amazon and Google have been throwing around ideas of new same-day delivery

FedEx is one of the largest courier services in the US. It benefited hugely by the increasing trend of e-commerce which greatly increased the demand for courier packages. With the expansion it benefits not only with larger sales revenue but also Economies of Scale which result in a greater profit percentage. However this might end soon, much to the apprehension of FedEx. 

 

Tech giants Amazon (AMZN) and Google(GOOGL) have been throwing around ideas of new same-day delivery technologies including driverless cars and automated drone shipments. This deeply threatens the postal industry FedEx operates in. This is likely to reshape the logistics industry sometime in the foreseeable future.


At the end of its 4th fiscal quarter of 2014, shares of FedEx shot 6% higher in response to the higher earnings. However this was not distributed evenly in every segment. 
 
FedEx has three major segments; Sales, Ground and Freight. While Sales grew only marginally from $6.98 billion to $7.00 billion, FedEx Ground showed a better performance. Its revenue increased 8% and the Ground segment’s daily delivery volume was up 8%, boosted largely due to growth in e-commerce. Freight, showed the largest relative revenue increase, a 12% increase. 
 
Recently the expectations from FedEx have increased even more.  Estimize is forecasting that FedEx will report a 2 year best improvement, with earnings per share rising by 28%. Also revenue will match a 6 quarter best yoy growth rate of 4%.
 
A lot of it depends on Alibaba too.  If the Chinese e-commerce giant can quickly gain a foothold in the United States and outside mainland China, there will be a spike in the demand for delivery logistics which FedEx and other courier services may capitalize on.  
 
It is safe to assume FedEx will be profitable. However, questions begin to arise when one considers the potential for Amazon, Google, and other tech companies to go after the logistics business 5 to 10 years from now. However, for now, Amazon and Google will rely on couriers for high scale logistics support, at least until they release autopilot enabled cargo planes, driverless electrics trucks, teleportation or the likes. 

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DESIGNER, DEVELOPER, DATA SCIENTIST ARE ALL PREDICTED TO BE IN-DEMAND JOBS IN THE COMING YEAR. HOW TO LAND ONE? NOT THE WAY YOU THINK.

Two years ago, I asked a college-bound 18-year-old what kind of job she’d like to have after earning her degree. “I don’t know,” she told me, adding, “I don’t think it’s been invented yet.”

Turns out, she was probably right. Though the Bureau of Labor Statistics expects health care and construction jobs to grow as baby boomers age in greater numbers and the economic rebound gives people the confidence to build new homes, the jobs of the future aren’t so easily defined.

According to a recent study by online job matching service TheLadders, the fastest growing jobs are in user experience design, iOS and Android development, andbusiness intelligence–some of which didn’t exist before 2007.

The study, which gathered key word search data from among its 6 million members, also found that middle management jobs are being phased out. Among the top 10% of growing jobs, less than 2% of titles contain the word “manager” or “director,” which points to a trend that you can still be a professional in a high-paying position, but the end game isn’t a gold plaque with a management title tacked to your name.

Mark Newman, CEO of digital interviewing service HireVue, says the company is witnessing similar trends as it helps place people with companies such as Hilton, GE, Chipotle, and others. “Overall, HireVue is seeing that jobs of the future are design and data scientist jobs,” he says.

WHEN YOUR COLLEGE MAJOR TAKES YOU SOMEWHERE COMPLETELY DIFFERENT

As it turns out, the path to these in-demand positions is as new as the jobs themselves. Though plenty of design jobs are filled by those with graphic design skills, Newman points out, “HireVue has seen that those with backgrounds in psychology and anthropology are also very successful, as they have skill sets that serve them very well in the field, including attention to detail, user empathy and visual design skills.

http://www.fastcompany.com/3034871/the-future-of-work/jobs-of-the-future-where-they-are-how-to-get-them

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Future of Music Is a Love Story

Where will the music industry be in 20 years, 30 years, 50 years?

Before I tell you my thoughts on the matter, you should know that you’re reading the opinion of an enthusiastic optimist: one of the few living souls in the music industry who still believes that the music industry is not dying…it’s just coming alive.

There are many (many) people who predict the downfall of music sales and the irrelevancy of the album as an economic entity. I am not one of them. In my opinion, the value of an album is, and will continue to be, based on the amount of heart and soul an artist has bled into a body of work, and the financial value that artists (and their labels) place on their music when it goes out into the marketplace. Piracy, file sharing and streaming have shrunk the numbers of paid album sales drastically, and every artist has handled this blow differently.

In recent years, you’ve probably read the articles about major recording artists who have decided to practically give their music away, for this promotion or that exclusive deal. My hope for the future, not just in the music industry, but in every young girl I meet…is that they all realize their worth and ask for it.

Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is. I hope they don’t underestimate themselves or undervalue their art.

http://online.wsj.com/

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What Television Will Look Like in 2025, According to Netflix

In the future, Netflix will know exactly what you want to watch, even before you do. You won’t have to spend all that time browsing through endless lists of shows on your television.

That’s according to Neil Hunt, Netflix’s chief product officer. It’s just one of many predictions for the future of TV that the forward-thinking executive laid out on stage today at New York City’s Internet Week conference, and no one would be surprised if all that came to fruition. If there’s one company that knows about changing the way we watch TV shows and movies, it’s Netflix. From its humble origins as a DVD-by-mail outfit back in 1997 to its current status as a video streaming powerhouse and original content creator, Netflix has already overturned the status quo more than once.

As a slew of other tech companies, from Amazon to Yahoo, compete with Netflix to move television online–and traditional broadcasters fight to protect their old business models–Hunt has a clear vision for how the war for our attention will play out by the year 2025. Here are a few of his predictions:

You’ll Have 48 Million TV Channels

People have traditionally discovered new shows by tuning into the channels that were most aligned with their interests. Love news? Then CNN might be the channel for you. If it’s children’s programming you want, Nickelodeon has you covered. And yet, none of these channels can serve 100 percent of their customers what they want to watch 100 percent of the time.

Netflix's Neil Hunt. Image: Netflix

According to Hunt, this will change with internet TV. He said Netflix is now working to perfect its personalization technology to the point where users will no longer have to choose what they want to watch from a grid of shows and movies. Instead, the recommendation engine will be so finely tuned that it will show users “one or two suggestions that perfectly fit what they want to watch now.”

“I think this vision is possible,” Hunt said. “We’ve come a long way towards it, and we have a ways to go still.” He said Netflix is now devoting as much time and energy to building out that personalization technology as the company put into building the infrastructure for delivering that content in the first place.

Url : http://www.wired.com/2014/05/neil-hunt/

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Forget ‘the Cloud’; ‘the Fog’ Is Tech’s Future

I’m as big a believer in the transformational power of cloud computing as anyone you’ll meet. Smartphones, which are constantly seeking and retrieving data, don’t make sense without the cloud, and any business that isn’t racing to push its data and software into someone else’s data center is, in my view, setting itself up for disruption by a competitor who is. 

….

Stop focusing on the cloud, and start figuring out how to store and process the torrent of data being generated by the Internet of Things (also known as the industrial Internet) on the things themselves, or on devices that sit between our things and the Internet.

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