Tag Archives: Economy

New York Economy Showing Signs of Rebound

When 25-year-old entrepreneur Neil Hershman decided last year to open a flagship branch of Dippin’ Dots/Doc Popcorn in midtown Manhattan, he made the decision with a generous dose of nostalgia.

“I grew up like many others eating Dippin’ Dots exclusively at an amusement park or sports game,” Hershman told QSR Magazine, a journal covering the food service industry. “I wanted to bring that same experience to the millions of young adults and families traveling through Manhattan daily.”

Nostalgia aside, however, the decision to invest time and money in the city was a business call and a vote of confidence that the city’s economy will soon begin to bounce back from the downturn that accompanied the coronavirus last year.

The new store, which is scheduled to open in early April at 1 Madison Avenue, adjacent to Madison Square Park, is not the only indication that things are looking up for New York. The real estate sector, too, is showing more signs of vitality than it has in years.

“It is a reach to say the city’s property markets are roaring back,” the Financial Times reported in early March. “But the beast is certainly stirring. The first two months of 2021 have been the strongest opening to a year in Manhattan since 2015, the height of the market. February alone saw more new deals than any single month since May 2013.”

Even more significant, said the FT, is the fact that the economic growth appears to be led by wealthy New Yorkers eager to get back to museums, Broadway, sporting events, ballet performances and more.

“I’m optimistic on the eventual return of normalcy to New York City within the next 24 months,” concluded Neil Hershman.

GDP Sets Record for Growth During Q3

The annualized rate for the growth of the Gross Domestic Product (GDP) reached a record of 33.1% during July, August, and September. The historic growth came immediately after one of the worst slumps in history, the second quarter’s annualized shrinkage of 33.4%.

The see-saw like behavior of the US economy can be accounted for by the ravages of the coronavirus pandemic, which forced a lockdown during the second quarter which shuttered many businesses, causing widespread job loss and business closures. In June stay-at-home orders lifted and the economy began to re-open, accounting for the rapid rebound of the economy in Q3.

Yet, even such a strong rebound has not resulted in a full recovery, which some analysts believe could take years, especially since the rate of GDP growth is expected to significantly slow down during Q4 of 2020.

Much of the growth is attributed to money set loose into the economy via the CARES Act, which distributed $2.2 trillion to every eligible American.

“Not only was the US economy enjoying the immediate bounce as a result of economic re-openings, but it was basking in significant fiscal stimulus support schemes,” said Seema Shah, the chief strategist at Principal Global Investors. “Now, the path forward will inevitably be an uphill struggle.”

Americans on a Shopping Spree Rebound As Corona Lockdown Eases

Courtesy Jernej Furman

The month of May posted a record increase in-store buying as people begin to come out of their homes where they were under lockdown for the better part of two months.

Retailers saw an increase in shopping by 17.7% in May as compared to April, helping revitalize a devastated economy that saw an 8.3% and 14.7% drop in spending in March and April, respectively. The renaissance has not completely reversed the negative trend, however. Spending is still down by 6.1% since this time last year.

Other indicators show a slow recovery from the mayhem the coronavirus caused to the US economy. Two and a half million jobs were added to the economy in May, but it is not clear if the trend is upward, or the economy will reach a low steady-state that becomes the country’s new normal.

“This may very well be the shortest, but still deepest, recession ever,” said Jennifer Lee, a senior economist at BMO Capital Markets. But she added that it’s “not likely that we’ll see a repeat in June as this is pent-up demand unleashed in one month.”

The surge in buying was fueled in large part by the $3 trillion the government sent out to individuals and businesses as a rescue package to keep the economy and households from complete ruin.

The possibility of a real recovery during the reality of a worldwide pandemic will depend on how willing people will be to shop, travel, mingle in crowds, and how many businesses stay open and hire or rehire workers.

“While the big increase in retail sales in May is encouraging, there is still a huge amount of uncertainty about the strength of the rebound,” said Gus Faucher, chief economist at PNC Financial Services. “It depends on a lot of factors outside of the economics.”

Doug Band of Teneo Discusses the Empowerment of Women in the Business World

President of the global strategic advisory firm Teneo, Doug Brand examines the great potential and opportunity empowering women has for the world economy.

Citing a study by Care International, Band asserts that although women are doing 66% of the world’s work (formal and informal) and producing half the world’s food, they are only earning 10% of the world’s income, and own only 1% of the world’s property. Instead of feeling hopeless or helpless about these figures, Band says numbers like this should inspire us to provide more opportunities for the girls and women of the world, not just to improve their lives, but to stimulate entire economies that will benefit all the citizens of the world. The Booz & Co’s Third Billion Index shows that if the employment rates for women were similar to that of men, economic growth around the world could reach an astounding 34%.

In 2005 Band worked with the Clinton administration to create the Clinton Global Initiative. Part of the initiative included women’s issues which are included in the core strategies of a broad range of businesses. Two such ideas prompted by the initiative are WEConnect International and Vital Voices. These programs are designed to bring together an assortment of participants to incorporate more women-owned businesses into corporate supply chains. The goal of the initiative is to increase spending on women-owned businesses by a minimum of $1.5 billion per year by 2018. Such a result would make a great difference on families and economies all over the world.

Band says that efforts to help women attain economic empowerment have been  implemented for decades, and we are now beginning to see some of the positive outcomes. In at least 45 countries around the world there are more girls in secondary school than there are boys. In college women outnumber men in 60 countries worldwide. In the past three decades over 500 million women have entered the workforce, adding significantly to the number of women doing paid work.

Band points out that there is still a lot to do to meet the world economy’s ultimate potential. He believes society is more prepared to meet this challenge now than ever before. We should continue to implement the programs that work, and change the beliefs and attitudes that hold women’s empowerment back.

Unexpected Slowing of US Economy Worries Wall Street

June showed a marked slowdown in business activity in the US private sector, bringing worry to some analysts and investors.

Market research group ISH Markit published a report saying that its flash services purchasing managers’ index (PMI) dropped to 53.0 during June. May’s PMI was 53.6. June’s figure was a three-month low.

Analyst had been expecting a services PMI of 53.7, an indication of a stronger economy.
Since the service sector comprises about 80% of the US economy the services PMI data is a key for understanding economic growth.

The manufacturing PMI, according to Markit, also fell in June, from 52.7 in May to 52.1 this past month. Analysts were also expecting that PMI to be 53.0.

PMI values above 50 represent a growing economy, while figures below 50 indicate a shrinking economy. The overall PMI of services and manufacturing together fell to 53.0 in June from May’s value of 53.6. However, new orders climbed at their fastest rate in five months, leaving room for optimism about the US economy.

Chris Williamson of HIS Markit said that although it is likely that growth will be higher in the second quarter than it was in the first, “the relatively subdued PMI readings suggest there are some downside risks to the extent to which GDP will rebound.”