Up Front
Edited by Robert McNatt
Talk Show
"Out of the top 100 companies on Nasdaq, half of them will not be around five years from now." --Cisco Systems CEO John Chambers, at a business conference in Tokyo
HARD TIMES
Where the Jobs Are
Since Jan. 1, Silicon Valley's 2.2% unemployment rate has doubled, the manufacturing slump has hiked Detroit's jobless rate to 10%, and 13 million first-time unemployment claims have been filed. But job creation is not all doom and gloom in this downturn. In fact, in many Sunbelt regions--especially those where tourism and farming are big--job growth is coming along quite nicely.
Out-of-work dot-commers may not yet be willing to pick fruit, but the No. 1 region for job growth is now California's Visalia-Tulare-Porterville region in the Central Valley, with 5.36% job growth between July, 2000, and July, 2001, according to the U.S. Bureau of Labor Statistics. Benefiting from strong agricultural prices, the region is the top U.S. dairy producer and a major fruit and vegetable grower.
The second-largest job creation area is Tampa-St. Petersburg-Clearwater, where an influx of affluent retirees and tourism have spurred job growth by 4.53%. Las Vegas, thanks to tourism and conventions, is No. 4 at 4.08%. In fact, tourism helped land 15 Sunbelt spots in the top 20 job-creation areas. "Domestic tourism has held up despite the job market softness," says Mark Zandi, chief economist at Economy.com. Maybe Americans figure that they had better take that vacation while they still have a job.
By Ann Therese Palmer
THE BIG PICTURE
Still Gotta Have It
Despite a slumping economy, consumers are still eager to get their hands on the latest audio and video gear. And why not? It's mostly cheaper now.
PERCENT PERCENT
2001 CHANGE 2001 AVERAGE CHANGE
CATEGORY UNIT SALES* FROM 2000 SELLING PRICE FROM 2000
DIGITAL TELEVISION 325,000 230% $2,477 -31%
DVD 3,450,000 94 205 -25
DIGITAL CAMERA 3,500,000 66 286 -19
MP3/DIGITAL MUSIC PLAYER 125,000 59 212 -2
HOME THEATER SYSTEM 425,000 49 483 +22
HOME CD BURNER 125,000 47 374 -20
DIGITAL CAMCORDER 475,000 43 808 -16
* PROJECTED ESTIMATE
Data: Industry estimates, NPD Intelect Market Tracking
HARD TIMES
Help Wanted
Thanks to tourism, farming, and retirees, many areas in the Sun Belt had high job growth rates from July, 2000, to July, 2001:
1 VISALIA-TULARE-PORTERVILLE, CALIF.
JOB GROWTH: 5.27%
Agricultural output is among the strongest in nation
2 TAMPA REGION, FLA.
JOB GROWTH: 4.53%
Business travel, tourism booms
3 KENOSHA, WIS.
JOB GROWTH: 4.18%
Migrating Chicago businesses find lower costs
4 LAS VEGAS
JOB GROWTH: 4.08%
Tourism strong
5 SAN LUIS OBISPO AREA, CALIF.
JOB GROWTH: 3.81%
Wineries, a university, and a prison are hiring
6 LAREDO, TEX.
JOB GROWTH: 3.71%
NAFTA-related traffic means federal agencies are expanding
7 WEST PALM BEACH-BOCA RATON, FLA.
JOB GROWTH: 3.69%
Health-care companies get federal dollars
8 FORT MYERS-CAPE CORAL, FLA.
JOB GROWTH: 3.6%
Influx of wealthy retirees prompts job growth
9 SHEBOYGAN, WIS.
JOB GROWTH: 3.56%
Major employer Kohler Co. is booming
10 DALLAS
JOB GROWTH: 3.46%
International shipments through Dallas boost jobs
THE GREAT TAX REBATE
Greenspan: I Told You So--in 1950
When the commerce dept. said on Aug. 30 that consumer spending barely rose in July, despite the tax rebate, stock prices swooned as investors fretted that the much-hyped refund wouldn't be enough to jump-start the sagging economy. At the Federal Reserve, however, Chairman Alan Greenspan wasn't surprised. Consumers were acting just the way he had predicted--in research carried out way back in 1950.
Fresh out of graduate school and working at the Conference Board, a consulting outfit, Greenspan sought to gauge the economic impact of $2.8 billion in insurance dividends Uncle Sam was paying to Second World War veterans. He concluded, correctly as it turned out, that the cash would not have a big immediate impact. Instead, the effect would be, in his words, "diffused over a longer period...(with) from one third to one half spent at stores within six months."
A lot has changed in 51 years, but Greenspan thinks his earlier work shows that spending habits haven't. That means that the $40 billion rebate should indeed boost growth--just not as fast or as much as some investors would like.
By Rich Miller
MED SCHOOL BLUES
Is There a Doctor in the Web?
More than 35,000 applicants for U.S. medical schools have found that the admissions process needs emergency surgery: A new, mandatory Web-based application system collapsed this summer, forcing many applicants to print and mail applications. The applicants sent forms to an average of 11 schools each, which costs $450--for a system that didn't work.
Because of Web crashes, "it took 40 hours to fill out the application, when it should have taken eight," says one applicant, who didn't want her name used for fear of ruining her chances. She still doesn't know whether any schools have received her applications. The system is working better now, says Pamela Cranston of the American Association of Medical Colleges, which oversees it. The AAMC vows to mail all completed applications to med schools.
And what about refunds to applicants, who will spend about $14 million on their applications? They "may have not gotten all the services they paid for," Cranston says. Refunds are under consideration, "but no decision has been made."
By Paul Raeburn
AS THE DOWNTURN TURNS
The Great Shopping-Cart Roundup
In an economic slump, business costs that were once low priority take on new importance for the bottom line. In this case, it's shopping carts. An average cart costs $100, and the National Grocers Assn. says retailers worldwide lose $800 million annually to cart theft.
Some retailers are taking action. At a Wal-Mart Stores (WMT
) Supercenter in Nashville, posters encourage customers to return carts for a chance to win a TV. "You bring back 30 carts, you can get 30 entries," says Assistant Manager Ben Bennett. Now, the usual 300 carts left outside daily are down to 100. And, in true Wal-Mart fashion, "it's lowering payroll," says Bennett, who reports scheduling 100 fewer hours per week for $8-per-hour cart-roundup jobs. The television costs Wal-Mart just $169.88.
Some retailers and even cities are hiring private companies as cart shepherds. Last month, Hernandez Cart Service in Anaheim, Calif., signed a $48,000 annual contract with the city. It says it rounds up 7,000 carts a day. California Shopping Cart Retrieval (CSCR), a nonprofit formed by 73 retailers such as Albertson's (ABS
) and Rite Aid (RAD
), estimates that major chains from Fresno to the Mexican border spend $8 million annually to corral carts. CSCR expects to rustle up 6.1 million this year.
Aiming to eliminate the problem altogether, Kroger, the nation's largest grocer, has installed new devices at 100 stores--invisible electric fences at the parking-lot perimeter that zap the cart, not you, freezing the front wheels. At $17,000, the electric zapper is a one-time cost. "Some companies are seeing a return on investment within 60 days," says Barry Gallace of fencemaker Carttronics. That's nice, but could somebody now figure out how to fix all those wobbly wheels?
By Brian Grow
CHANGING CHINA
Fending Off Those Killer TVs
A scare campaign in the Chinese media has Shanghai newspapers reporting that appliances such as computers and TVs may emit harmful radiation. So mothers-to-be are snapping up expensive radiation-proof clothing. At $165 for a simple smock, the clothes cost half the average white-collar monthly salary. But many say it's worth it. "Maybe the clothes won't make that much difference, but it will put my heart at ease," says Sarah Ge, 26, eyeing the tan-and-olive-green industrial-strength items at an upscale shopping center on Nanjing Street.
Made with metal ions, the clothes resemble those in Dickens' workhouses. Shanghai Lion, which started making them in 1999, is the most popular brand. Its sales are forecast to rise 10% this year, to $870,000. And four more companies have jumped in. Office workers and college students who spend hours in front of computers are also buying the clothes, says Shanghai Lion saleswoman Yang Beizhen.
Despite public concerns, doctors are skeptical. Says Dr. Wang Yonghong of Shanghai Children's Hospital: "The radiation in our daily lives is always within safe limits." Chalk up the scare to the rapid pace of change in China.
By Alysha Webb
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Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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