Positive Signs In The U.S. Economy

Tying a four-year low, fewer people sought unemployment benefits this past week of March. This has added confidence the job-market is showing signs of growth and strengthening. Applications for unemployment aid were down 14,000 to a seasonally-adjusted 351,000 according to a report released by the Labor Department. This has been a positive trend over the past six months as the average has declined 14% since October 2011.

Following this steady decline in unemployment benefits, employers have added an average 245,000 jobs a month between December and February. This amounts to the best three months of hiring in the past two years. The unemployment rate has also declined to 8.3%, the lowest in the past three years. This trend is expected to follow for March, with an additional 200,000+ jobs being added. This indicates the labor market is steadily growing, slowly indeed, but improving none the less.

February's rise in gas prices did drive U.S. wholesale prices up last month, but excluding this, inflation did not change significantly. The producer price index rose 0.4% and the core index (which excludes food and gas prices) increased 0.2%. In the past year, wholesale prices have increased 3.3%, and this represents the smallest year-over-year gain since August 2010.

All things considered, the job growth is driven by a stronger economy, which grew at an annual rate of 3% in the last three months of 2011. Consumers show more confidence and have added additional spending to the market. Auto sales and the stock market have both shown positive growth over this same period.

Manufacturing has also expanded in February. Manufacturing conditions rose in March to 12.5 on the index of manufacturing conditions, a measure used by the Federal Reserve Bank to measure the strength of the manufacturing sector. The Labor Dept. reports that in the last week of February, manufacturing jobs have grew by 31,000, and over the past year, jobs had increased by 227,000.

While these signs of growth are during an election year and the U.S. economy is still on a long path to full recovery since the 2007 recession began, these positive signs re-enforce my view America is back on the right track.

Sources: AP.

http://www.google.com/hostednews/ap/article/ALeqM5hWdSXd8-vuWc0f14K6w4cW5iAqyw?docId=d1017724a4be4014934f945248bc1fe9

http://www.google.com/hostednews/ap/article/ALeqM5izcL8QJnJ9nKdqi3U_pQTqh4JZTA?docId=ee0f8ae4921341669a1002e60ab269f5

Netflix's TV Show Focus

Many of us love watching tv shows and movies on Netflix. I personally love their vast selection of documentaries, many of which I never seem to be able to find elsewhere. Additionally, I love being able to search through tv shows to watch a quick 50 minute of so episode. I rarely watch full length movies. Maybe its because the movies aren't some of my favorites, or that really, maybe I am not a huge movie buff. I might not be alone. According to a NY Times article, a majority of Netflix subscribers watch tv shows. Netflix currently has 21.7 million streaming subscribers, and this accounts for one in every four households in America who have access to broadband.

While Netflix has not released an exact number of people who watch tv shows, some executives have alluded to the number being between 50% and 60%. Some analysts also speculate this could grow to even 80% in the coming year. Netflix refers to these tv shows as "26-hour films", probably because of tv show abilities to lock viewers in over a period of time, watching every episode of a season.

As a business model, I think this is a great position to be in. If Netflix desires to retain customers for a longer period of time, offering tv shows is a brilliant way to lock customers in to a product that is not readily available elsewhere (at the same marginal cost per viewing) and requires repeat activity. Not to mention, tv shows are significantly less expensive for Netflix to obtain rights to over a major motion picture. This is the unique position Netflix is in. Being able to provide low cost entertainment, all the while retaining as many customers and attracting more.

I would like to see Netflix change their online interface from Microsoft Silverlight, but that is just a personal techie opinion of mine. Nevertheless, Netflix is a great way for me to watch tv shows and the occasional documentary whenever I please, and sometimes it seems like I wonder where this was years ago.

For more, visit this NY Times article: http://www.nytimes.com/2012/02/28/business/media/once-film-focused-netflix-shifts-to-tv-shows.html?pagewanted=2&src=se

Brand Loyalty: What Do You Buy?

Image from: http://iplot.typepad.com/iplot/fashion/

When I studied abroad in Europe this past fall, I was consistently pestered by street venders. Whether I was in Paris, Rome, Brussels, I constantly either saw a vender peddling something to a tourist, or was trying the shy away from one offering a Louis Vuitton purse for just 30 Euros, a steal right? Of course this was not a legitimate purse (as if I really wanted it in the first place), it was a counterfeit. Amazingly however, I saw these counterfeit goods in so many locations, not just with street venders, but in small business stores. Some were so closely detailed, it was really hard to tell the difference between a real and a fake. Further, their relatively high levels of supply gave me the guess that there is some form of demand from either locals or tourists for these items. These items are so close to the real thing that the average passerby just would think a person carrying one, may have in fact just really purchased one at a legitimate dealership. But then I asked myself, why would someone be willing to carry around a counterfeit bag, knowing its diminished workmanship, and the threat of having a friend expose one's great plan to disguise yourself as one able to purchase such an item?

To me its much more than just having a good looking Louis Vuitton purse, I think its the idea of having one that makes people willing to buy these items. That may seem rather easy to guess, but what about people who are absolutely obsessed with brands? We all have our favorite brands, for me I love Apple, North Face, REI to name a few, others may love other very specific brands, and their willingness to try another item from another brand is minimal. Those of us with our favorite brands spend considerably larger sums of money to continue our habits, all the while there may be a good on the market from another competitor of even higher quality and utility. Just think of the economic benefits of being one of these brands that people are obsessed with.

This is all very well known in marketing as brand loyalty. The concept of the consumer to subconsciously or consciously repurchase goods of the same brand. Big brands like Apple, North Face, Coca Cola, they hold a considerable value just with their brand name. It has taken a lot of advertising costs and or production costs to reach this value, but once this point is reached, the long run benefits are substantially higher.

That all makes sense, but now think about how you purchase goods? Go into your home, your closets, backpacks, wherever you keep your stuff, count up your items that have the same brand. I am willing to bet, that you'll really start to see a pattern. As I said above, I have a ton of North Face gear and Apple devices, and my willingness to try another brand is pretty low. I'll admit it. For me though it has a lot to do with my personal preference on usefulness, quality, and among of use value over a period of time. Try asking yourself why you buy what you buy. Do you buy goods because of their quality, looks, feel, etc.?Are you a person who likes to allocate your purchases based on your income and their respective price?

I am curious if you do have brands that you have a distinct loyalty towards and why do you have such a loyalty? Try to think deeper into your purchases and eventually you may see a pattern, and from that pattern you can understand your demand for goods. Economists use indifference curves, budge constraints, and all the tools of rational consumer choice to determine your habits, but try it out for yourself, it may be interesting to see what you find out... The results may shock you..

Join the discussion, leave a comment bellow, share what you like to purchase, what motivations do you have to purchase these items, and do you find it interesting why you have the same items? What do you think this says about you as a consumer?