- Rick Newman at The Exchange1 day ago
“America’s claims to being a democratic society are seriously threatened.” That’s the startling claim in a provocative new study by Martin Gilens of Princeton University and Benjamin I. Page of Northwestern University. Many of us like to believe that popular opinion influences policymakers, at least indirectly. But that doesn’t seem to be the case. “The general public has little or no independent influence” on policymaking, the two political scientists found. Instead, Gilens and Page found that “economic elites” have a “quite substantial, highly significant, independent impact on policy.” Groups representing business interests are the next most powerful influence on policymakers. Sometimes, those two groups are aligned on an issue—they both tend to prefer low taxes, for instance--which generates the highest likelihood of government action. The complex study examined 1,779 public policy issues between 1981 and 2002, including the policy preferences of middle-income people, the wealthy, and interest groups such as lobbying organizations, unions, and membership associations like AARP. The researchers then isolated instances when a policy change actually took place, to figure out who, essentially, got their way.
- Rick Newman at The Exchange2 days ago
You can point out how rich the 1% are, or pound home how hard it is to keep up these days. But whatever you do, don’t act like there’s a “recovery.”
That’s the advice from a prominent public-policy firm to Democratic politicians running for reelection this year. Democracy Corps, founded by Democratic strategists James Carville and Stan Greenberg, recently conducted a series of polls to determine how candidates can best connect with voters as they campaign for the 2014 midterm elections in November. The results show just how disheartened many Americans are about their economic prospects, even though the recovery is technically entering its fifth year.
By some measures, the economy is getting back to normal. The unemployment rate is down from a peak of 10% in 2010 to 6.7% today. In aggregate, Americans have regained all the wealth lost during the twin housing and stock-market busts, and then some. After six years of extraordinary intervention, the Federal Reserve is beginning to back away from the super-easy monetary policies it adopted to nurse the economy through dark times.
- Aaron Pressman at The Exchange2 days ago
Controversial Internet television service Aereo is much like other popular high-tech entertainment products that courts have found to be legal, the company’s chief executive, Chet Kanojia, maintains.
The service, available in 11 cities so far, lets customers watch over-the-air broadcast channels via the Internet for $8 to $12 a month. Broadcasters have sued, saying Aereo is distributing their programming without paying the licensing fees required by copyright law.
But Kanojia, in an interview with Yahoo Global Anchor Katie Couric, explains that Aereo dedicates a tiny television antenna to each customer and then streams the signal over the Internet to the customer’s phone, computer or TV set.
- Aaron Pressman at The Exchange3 days ago
The theory was that the big companies would weather any difficult times, perhaps brought on by the Fed, better than smaller upstarts. But as the giants have reported first quarter earnings, it’s become apparent these lumbering behemoths were out of favor for a reason. There’s not much growth, and profits, while still sizable, may be under threat.
On Wednesday IBM reported first quarter revenue of $22.5 billion, well below the $22.9 billion Wall Street expected, as hardware sales took a hit. Sales at the overall systems and technology unit declined 23%, including a 40% drop in sales of “Z” mainframes and a 22% drop in the “Power” server line. IBM said its sales related to cloud computing jumped 50% but the company didn’t actually disclose the dollar figure of those sales in its earnings reports.
- Chris Nichols at The Exchange3 days ago
Editor's note: On Thursday, April 17, Chipotle reported its first-quarter earnings before the bell. While the company missed Wall Street expectations on earnings per share, coming in at $2.64 vs. a consensus of $2.86, revenue came in at $904.2 million, exceeding expectations of $873 million. Same-store sales were up a very healthy 13.4%, which beat last quarter's 9.3% gain. On its earnings call, Chipotle CEO Jack Hartung also noted the company would be passing on some of its increased costs to customers for the first time since 2011. The stock was up as much as 5% early Thursday but ended the day down close to 6%.
As the nation's restaurant chains prepare to report their quarterly results in the weeks ahead, sales on the whole are expected to continue growing modestly. However, a few notable standouts should emerge, with Chipotle (CMG), Buffalo Wild Wings (BWLD) and Starbucks (SBUX) among them.
- Chris Nichols at The Exchange3 days ago
For McDonald's (MCD), 2014 may well end up as one of the most pivotal in its nearly 60-year history: Either it succeeds in powering past its recent setbacks, or it becomes further viewed as a faltering giant in retreat.
McDonald's, to be clear, isn't going anywhere anytime soon. It's too large and entrenched, with $89 billion in system-wide sales and 35,000 locations globally, to suffer serious damage quickly. In the U.S. alone, its 14,000-plus units, the majority of them franchises, had sales in excess of $35 billion last year. Should its demise ever come, it will be in a far distant future.
But cracks in the structure are there. McDonald's has mended them before, as with ongoing restaurant remodels meant to improve the perception of stores by offering fresh looks and cleanliness. Its menu additions, both the permanent and limited-time offers, regularly nod to changing consumer interests. Even after the "Super Size Me" era, it thrived.
- Rick Newman at The Exchange4 days ago
You can be excused for thinking economists are crazy. With food prices rising, how can they be worried inflation is too low?
The latest data confirm what many consumers already know: Certain types of food are getting considerably more expensive, with beef prices up 7.4% during the past year and eggs up 9.9%. The household pain doesn’t end there: Electricity costs rose 5.3% during the past 12 months and natural gas soared by 16.4%. The typical paycheck, meanwhile, has risen by just 2% or so.
Economists aren’t particularly worried about rising prices, however. Food and energy prices are notoriously volatile, and they’ve risen largely because of temporary factors. A bigger concern: Prices that are barely rising or falling, which can signal pernicious stagnation or worse.
- Rick Newman at The Exchange5 days ago
Taxes get no respect. Everybody hates paying them, and Americans think roughly half their tax money gets wasted. No wonder the Internal Revenue Service is less popular than poison ivy.
As Americans finalize their 2013 income tax returns, however, there’s some upbeat news about taxes. Government tax receipts have soared during the past 18 months, putting Washington on sounder financial footing and easing strains in many state capitals. Higher tax rates have a bit to do with that, but a bigger factor is the improving economy and the 2.9 million people who have gone back to work since the end of 2012.
Federal revenue from individual income taxes in fiscal year 2013 (which ended last September) rose by 16%, to $1.3 trillion. For the first half of fiscal 2014, tax receipts are up another 6% or so, according to the Congressional Budget Office. The agency estimates such revenue will rise by about 5% for all of 2014, and by nearly 12% in 2015.
- Aaron Pressman at The Exchange5 days ago
T-Mobile (TMUS) announced Monday it was ending monthly overage fees, with outspoken chief executive John Legere forcefully pounding the message that the fourth-largest U.S. carrier will continue making war on its larger rivals for the rest of 2014.
“We need to reassert our position that we will never stop,” Legere said in a phone interview. “It’s almost endless.”
On Monday T-Mobile said it would eliminate overage fees, those surprise charges that pop up on monthly bills after a customer uses more minutes, texts or data than their plan allowed. Instead, T-Mobile said it would allow unlimited voice and text on most plans and shift customers to slower downloads when they used up their data allotments. Customers can also go to T-Mobile’s website and purchase additional high-speed data at $10 per 2 gigabytes. The change takes effect in May for bills arriving in June.
- Aaron Pressman at The Exchange8 days ago
On first hearing, it sounds almost insane – every year, Amazon (AMZN) offers workers in its distribution warehouses up to $5,000 to quit. Why would a company ask employees to quit and why in the world would it pay them to do so?
But like many of the unusual practices adopted under Amazon CEO Jeff Bezos, the pay-to-quit policy is grounded in data. The goal of the offer is to encourage unmotivated and disaffected employees to leave on their own, while making employees who reject the offer feel more dedicated to the job.
Delivered with the headline “Please Don’t Take This Offer,” the pay-to-quit offers start at $2,000 for an employee’s first year and rise by $1,000 a year up to a maximum of $5,000.
“The goal is to encourage folks to take a moment and think about what they really want,” CEO Bezos explained in a letter to shareholders this week. “In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”
Creating a positive work culture