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NOVEMBER 10, 2003
By Gene Koretz Those Heavy Americans Many experts believe that one of the biggest health problems facing the U.S. today is the growing prevalence of obesity. Some 65% of adult Americans are overweight, and nearly a third are medically obese. By contrast, obesity in other industrial nations is far lower, averaging 10% to 12% in Continental Europe. What's behind the nation's fatness epidemic? A new study by economists David M. Cutler, Edward L. Glaeser, and Jesse M. Shapiro of Harvard University rejects the usual explanations, which stress the falling price of food relative to other purchases and a shift toward sedentary occupations. The authors note that these shifts actually slowed down in the past two decades -- just as Americans began putting on extreme weight (chart). 
For example, food prices have risen only 3% less than other prices since 1980, so that can't explain Americans' weight gain. Similarly, the major shift out of highly active jobs such as farm work and other manual labor occurred before 1980, as did the surge in TV watching and commuting to work by car. Indeed, using time-diary studies, the authors estimate that the daily energy expended by the average person -- i.e., calories burned for all activities -- has hardly changed in recent decades.What has changed is a rise in calorie consumption. Surprisingly, the study finds that people are not consuming more calories at regular meals, even though they are eating out more at fast-food restaurants. The big jump has come from eating between meals, with the average number of daily snacks rising by 60% since the late 1970s. Why are Americans snacking more? The study points to the impact of technology on the "time cost" of food -- that is, to a sharp drop in the time needed for food preparation because of ongoing advances in food processing, packaging, and the use of home devices such as microwave ovens. This "cost decline" has spurred people to demand more food of greater variety from tech-savvy suppliers, and the rise in consumption has been channeled into snacking because of the satiating effect of meals. In line with their thesis, the authors note that those population groups that "benefited" most from technological advances -- such as married women, who formerly spent a lot of time preparing food -- have had the biggest weight gains in recent decades. By the same token, nations with regulations supporting traditional agriculture and food-delivery systems have lower obesity levels. The food-technology juggernaut doesn't bode well for curbing obesity. For most problem overeaters, eating has the addictive quality of smoking (and people can't simply quit eating). The average American has gained 10 to 15 pounds in the past 20 years -- a rise, the study notes, that is the caloric equivalent of just three extra Oreo cookies or one can of soda a day. Are Factories Set To Hum? Don't be surprised if manufacturing output, which grew at a 2.8% annual clip in the third quarter, really picks up steam in coming months, says economist Paul Kasriel of Chicago's Northern Trust Corp. The Federal Reserve Bank of Philadelphia reported a sharp rise in local industrial activity in October, and the Manufacturers Alliance/MAPI, a nationwide research group, recently found its members' optimism at a three-year high. Because inventories have been at near-historic lows, factories are ramping up production both to meet rising orders and to build up stock levels. But an added catalyst, Kasriel says, will come from the recent surge in industrial materials prices, such as metals. As this begins to reverberate through the manufacturing pipeline, companies will have a strong incentive to boost output today to avoid having to pay higher input prices tomorrow. This is especially true because the interest cost of financing inventories is likely to remain in the low single digits. "In sum," says Kasriel, "U.S. manufacturing appears to be headed for a double-barreled boost."   Applause For Japan's Pickup Japan's economic revival, combined with dollar weakness against the yen, could spell a nice earnings gain for U.S. corporations, says Joseph Quinlan of Banc of America Capital Management LLC. But not because it will boost U.S. exports to Japan.  Rather, Quinlan notes that despite Japan's reputation as being hostile to foreign investment, U.S. direct investment there on a cumulative basis now exceeds $66 billion. As a result, sales by U.S.-Japanese affiliates -- including joint ventures and subsidiaries -- have been rising rapidly and now run at more than twice the pace of U.S. exports to Japan. And U.S. foreign-affiliate income in Japan has grown from $3.5 billion in 1997 to $6.8 billion last year. Indeed, U.S. foreign affiliates earned more in Japan in 2002 than in Germany and France combined.The bottom line, says Quinlan, is that U.S. multinationals with stakes in Japan could really cash in -- especially if a stronger yen amplifies the earnings kick provided by its reviving economy.
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