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That “Kodak Moment” Could Be a Thing of the Past

Tuesday, January 17th, 2012

An American icon is on the verge of bankruptcy. The 131-year-old Eastman Kodak Company — long-time manufacturer of cameras and film — whose highly recognizable “K” logo is a universal symbol around the world, is preparing to seek bankruptcy protection in the next weeks.

The venerable firm could be saved if it sells its valuable digital patents very quickly, but Kodak officials are preparing for the worst, and talking to banks about the possibility of borrowing $1 billion to keep the company in business during bankruptcy proceedings.  Their plan is to sell some 1,100 patents through a court-supervised auction.

Kodak is estimated to employ 18,800 people. Benefits and pensions are of great concern to retirees and employees.   George Conboy of Kodak tweeted, “In bankruptcy, Kodak will cut all costs possible. My opinion: health care goes.” Robert Kravetz, senior vice president and financial adviser, explained: “Most likely the health insurance will just go away. This is common in the United States, based on the rising cost of health care and the squeezing economic cycle and the profitability of large corporations.”  For those with pensions, Conboy tweeted, “Pension is slightly underfunded but our opinion is that gets fixed in bankruptcy.  No losses for Kodak retirees.”

Kodak, which has seen its stock value tumble as digital imagery fast replaced film, is selling off its patents to avoid a Chapter 11 filing.  Once the unchallenged manufacturer of photographic film, Kodak helped invent the digital camera in 1975 but could not capitalize on the technology, especially when compared with Canon or Nikon.  Foreign competitors and the popularity of cell phones with built-in cameras and sharing capabilities also harmed the company.  Kodak tried to compensate with a printing business, bringing in former HP printing chief Antonio Perez to head the company, but it was unable to pull off a turnaround.

“Chapter 11 is not the end of the world at all. It’s not uncommon for companies in financial distress to sell off assets to try to raise some money. They could be talking to major lenders and saying, ‘We want to restructure’ and talking about options such as extending debts or giving stock to lenders,” John A.E. Pottow, professor of law and a bankruptcy expert at the University of Michigan, said.  Without a viable business plan or innovative idea about how to assure investors that with a little time and money, the company will be back to its old self, Pottow believes that it’s possible it could face a future closer to that of Borders.

Rochester, NY-based Kodak lost an astonishing 88 percent of its market value last year. Five-year credit-default swaps related to Kodak’s debt climbed 2.9 percent to 70.4 percent upfront, according to data provider CMA. That means it would cost $7.04 million initially and $500,000 annually to protect $10 million of Kodak’s debt.  Single-year protection soared adding a record 8.2 percent to 66.2 percent, according to CMA, which compiles prices quoted by dealers in the privately negotiated market.  Credit-default swaps pay the buyer face value if a borrower is unable to meet its obligations, minus the value of the defaulted debt. The contracts, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, climb as investor confidence deteriorates.

Several board members resigned last month, including Laura D. Tyson, a director since 1997, Tyson said that her 2012 schedule made it “virtually impossible” to continue to serve, and she resigned to help the company reach an “optimal” board size.  “It’s not a statement about the firm’s strategy or the firm’s leadership,” Tyson said. “I was part of the board for a long time, I was part of the strategy to transform the company, then part of the strategy of choosing the company CEO, I’ve worked closely with him and with the other members of the board.”

Tyson, a professor at University of California Berkeley’s Haas School of Business, declined to comment on what Kodak will do next.  She has advised Presidents Barack Obama and Bill Clinton and sits on the boards of at least five companies, including Morgan Stanley and AT&T, Inc.

Writing in Forbes, contributor Larry Magid says that “Like a silent movie star who never quite made the transition to talkies, the once venerable Eastman Kodak company could fade from the picture. There was also a time when I purchased a lot of Kodak film and developing services.  As a kid I even bought flashbulbs from Kodak.  But the glory days of Kodak’s supply business are long gone.  When people buy a Kodak digital camera, they have little reason to return for additional supplies.  Sure Kodak sells paper and even printers and that highly profitable printer ink, but —despite some valiant efforts and a pledge to turn inkjet sales into a profitable business, — they haven’t been able to make a serious dent in that market.”

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Santa Brings More Than 200,000 New Jobs in December

Monday, January 16th, 2012

The United States added more than 200,000 jobs in December of 2011, building on a strengthening employment market that dominated the second half of the year.  This brought the unemployment rate down to 8.5 percent from the revised 8.7 percent, which had been predicted in November.  The primary growth was in transportation — primarily courier services that hired for the holidays — healthcare and manufacturing, according to the U.S. Bureau of Labor Statistics.

“It would have been even better without the drag from Europe,” said John Canally, economic strategist at LPL Financial, a stock brokerage firm. “The Europe situation created uncertainty, and uncertainty was used as a reason not to hire until now.”  The year ended even more strongly than economists had predicted.  They had forecast that employers would add a net 150,000 jobs in December, according to a survey by Factset. They also had predicted that the unemployment rate would tick up to 8.7 percent from November’s 8.6 percent; this is the lowest rate since March 2009.

In the end, November’s unemployment rate was revised up in this report, to 8.7 percent.  The better-than-expected monthly gain of 219,000 private-sector jobs means American businesses have replaced more than three million of the 4.2 million private-sector jobs that were lost the past 13 months. The private-sector jobs gained since employment bottomed in February of 2010 marks the strongest recovery since the 1990-1992 recession, when U.S. businesses added 4.2 million jobs in the same amount of time.

The new job numbers highlight the fact that the U.S. economy is on its way to recovery even as strains in Europe persist,” said David Watt, senior currency strategist at RBC Capital in Toronto. The fact that the labor market is gaining traction should be good news to the Obama administration, whose economic policies are relentlessly attacked by the political opposition.

This string of better-than-anticipated economic indicators has highlighted the stark contrast between the recovery in the world’s biggest economy and Europe, which faces bad times for months or even years.  Even with the good news, the American economy needs an even faster pace of job growth over a sustained period to make a noticeable dent in the pool of the 23.7 million people who remain out of work or underemployed in the wake of the 2007-09 recession.

December marked the 15th consecutive month that employment numbers have risen. Marcus Bullus, trading director at MB Capital, said: “That’s one hell of a number. Such an impressive fall in both the number of jobless Americans and the unemployment rate will cheer everyone bar Republican spin doctors.  The Obama administration could be forgiven for showboating over this convincing evidence that America’s economy is pulling away from Europe’s.  From a market perspective, strong US data like this will add to optimism, but nobody doubts the considerable downward pressure the Eurozone will continue to place on the global marketplace during 2012.”

Automatic Data Processing’s (ADP) numbers for December are even more impressive, saying the government added 325,000 jobs in December.  ADP’s figures do not always match the government’s, and economists warned that seasonal factors could have boosted the figures. Even so, all the major measures of the job market appear to be on the upswing.

Lasting payroll gains are needed to chip away at joblessness and support household spending, which accounts for approximately 70 percent of the world’s largest economy. The labor market figures come on the heels of recent data showing increased manufacturing and a rebound in consumer sentiment that show the U.S. is barely impacted by Europe’s debt crisis.  “You got the trifecta — more people working, wages up and the average work week up,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc., who accurately forecast the December payroll gains.  “You can’t really argue that that isn’t a sign of significant improvement in the job market.”

Yearly benchmark revisions showed the unemployment rate averaged 8.9 percent in 2011, down from 9.6 percent and 9.3 percent in the previous two years. It still ranks as the worst three-year period since 1939 to 1941.

Writing in the Wall Street Journal, Phil Izzo says the increase is “for real.” According to Izzo, “While the unemployment rate has been falling in part due to people leaving the labor force, a large portion of this month’s number appears to come from people finding jobs.

“The unemployment rate is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks. The actively looking for work’ definition is fairly broad, including people who contacted an employer, employment agency, job center or friends; sent out resumes or filled out applications; or answered or placed ads, among other things. The rate is calculated by dividing that number by the total number of people in the labor force.

“The key to the drop in the broader unemployment rate was due to a 371,000 drop in the number of people employed part time but who would prefer full-time work, that comes on top of big drops in that category over the past two months. That number could reflect people having their hours increased or part-time workers moving on to full time work,” Izzo concluded.

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Job Creation Strengthens, But Unemployment Increases?

Wednesday, January 11th, 2012

American companies added 244,000 jobs to the economy in April, the fastest pace in five years.  In an ironic twist, however, the unemployment rate climbed to nine percent, according to the Department of Labor.  The unemployment rate fell to 8.8 percent in March after dropping continuously since November’s rate of 9.8 percent rate. Economists had predicted that just 186,000 jobs would be added, so the numbers show that the economy is gaining strength.  “What we’re seeing is a sustained pick-up in hiring and it suggests that businesses have gained enough confidence to look past short-term fluctuations in demand,” said Aaron Smith, a senior economist at Moody’s Analytics.

“Headwinds remain, but not enough to derail the recovery or set us back momentarily,” said Diane Swonk, chief economist at Mesirow Financial in Chicago, although she remains cautious about the outlook.  According to Swonk, the increase in new unemployment claims were reported in the weeks after the April jobs surveys.  Job losses in the public sector could intensify, with more teachers getting laid off as the school year ends and local governments deal with budget shortfalls.

The number of officially unemployed Americans totaled 13.75 million in April, an increase over the 205,000 reported in March, according to the Labor Department.  “At this point, coming out of a recession this deep, we should be getting unambiguously huge growth, of 300,000 to 400,000 (new jobs) a month,” said Heidi Shierholz, a labor economist at the Economic Policy Institute.  “And it’s just nowhere near that.  We’re still in a rocky place.”

April’s job growth was in multiple sectors.  For example, the retail industry added 57,100, approximately half at general merchandise stores.  Manufacturing added 29,000 more workers in April.  Since December 2009, factory payrolls have risen by 250,000, according to the Labor Department.  Business and professional services, whose wages tend to be higher than average, grew by 51,000, with consulting businesses, computer services and architectural firms experiencing growth.  Educational and health services, and the leisure industry, each also added nearly as many jobs.  Even the construction industry saw a small gain in April.  Government was the sole employment group that declined; its payrolls contracted by 24,000, primarily due to cuts at state and public agencies.

According to Austan Goolsbee, Chairman of the White House Council of Economic Advisers, “The last three months we’ve added more than a quarter million jobs, on average, every month.  That’s very heartening and the fact that it was, really, across a whole lot of industries.”

According to Heather Boushey, an economist at the Center for American Progress, a non-profit think tank in Washington, D.C., “We need to see job growth break above 300,000 a month and stay at that level for many months before the unemployment rate will begin to come back down.  Today’s report provides a number of data points that point toward caution in interpreting the data positively in anticipation of that level of jobs growth returning anytime soon.  The average hours worked for production and nonsupervisory employees was 33.6 hours per week in April, the same as in March.  This remains below the 2000s recovery peak of 33.9 hours per week, and far below the late 1990s peak of 34.6 hours per week.  At the same time, employers shed 2,300 temporary workers, which either means they are hiring permanent employees or they are no longer seeing an increase in demand.

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Economic Indicators Showing Signs of Life

Wednesday, January 11th, 2012

Leading economic indicators (LEI) rose 0.9 percent in October, a sign that the U.S. economy is likely to see accelerated growth and not slip into a feared double-dip recession.  According to The Conference Board, its index of leading economic indicators rose significantly faster than the revised 0.1 percent rise in September and the 0.3 percent increase in August.  After growing at an anemic pace of just 0.9 percent in the first six months of 2011, the economy grew 2.5 percent in the July – September quarter.  Some analysts are looking for even stronger growth in the 4th quarter.

Economists said the October gain and other positive reports recently should ease fears that the nation is in danger of slipping into a double-dip recession.  According to Conference Board economist Ken Goldstein, the latest leading indicators report was pointing “to continued growth this winter, possibly even gaining a little momentum by spring.”

The leading economic indicators is a subjective gauge of 10 indicators designed to signal business cycle highs and lows.  Among the 10 indicators, nine made positive contributions in October, led by building permits, the interest-rate spread, and average weekly manufacturing hours.  The sole negative contribution came from faster supplier deliveries.

Increases in consumer spending, manufacturing and homebuilding — along with fewer job losses – highlight an economy that is weathering the turbulence in financial markets caused by the European debt crisis.  Even so, a nine percent unemployment rate and political gridlock over deficit-cutting are hurting confidence, which may hamper a further pickup in the pace of growth.  “The economy looks to be getting better despite the continued drumbeat of negativity in financial markets,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc., who accurately forecast the gain.  “That speaks to U.S. resiliency.  If we can put some of these fiscal issues behind us, even for a short period of time, we might be able to come back.”

Another positive sign can be found in the University of Michigan’s six-month index of consumer expectations which rose to 56.2 in November, a five-month high, compared with 51.8 in October.  A word of caution — the measure remains below the 80.5 average of the previous expansion that ended in December 2007.

October’s results suggest strong ongoing economic activity, said Millan Mulraine, TD Securities’ economics strategist.  “On the whole, this report underscores the positive tone of the recent flow of economic reports pointing to a meaningful pick-up in overall economic activity during the quarter,” Mulraine said.  “And while the economy remains vulnerable to missteps in Europe and Washington, there is every indication that the recovery is slowly moving into the clear, building on the momentum from the last quarter.”

According to Ataman Ozyildirim, an economist at The Conference Board, “The October rebound of the LEI — largely due to the sharp pick-up in housing permits — suggests that the risk of an economic downturn has receded. Improving consumer expectations, stock markets, and labor market indicators also contributed to this month’s gain in the LEI as did the continuing positive contributions from the interest rate spread.  The Coincident Economic Index also rose somewhat, led by higher industrial production and employment.”

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Craig Wortmann on Being an Entrepreneur

Tuesday, January 10th, 2012

Virtually anyone can be an entrepreneur, although starting one’s own business is a giant leap.  Many people look at becoming an entrepreneur as a cause and effect – the academic term being “causal logic”.  That may not be the optimal way to view entrepreneurship, however.  Rather, the world’s most successful entrepreneurs use effectual logic.  According to Craig Wortmann, Clinical Associate Professor of Entrepreneurship at the University of Chicago Booth School of Business, “It goes like this:  I’m an entrepreneur, I’ve got this idea, I’ve got this limited set of resources and I’m just going to begin, and I’m not exactly sure what the effect will be.”  Wortmann has more than 20 years of experience in entrepreneurial sales and marketing strategy experience.

According to Wortmann, this is a powerful way to think about entrepreneurship because the concept has such an underlying vibe of optimism.  This notion of entrepreneurship is just start the business, anyone can do it.  They are all personality types; they don’t have to be deep in domain knowledge.  Anyone can start a business.  The research suggests that as long as people are not rigid about reaching a certain outcome, they will be successful.

Wortmann asks budding entrepreneurs to think about the idea they have and ask what is the relative value to the idea.  He believes that many people get stuck as entrepreneurs because they say “I can’t be an entrepreneur because I don’t have the next Google.  I’m not waking up in the middle of the night with the next idea for Facebook.”  Any idea that will change the focus of people or get them to do something better or a bit different – you have a potential business.

Would-be entrepreneurs need to begin taking action.  They need to talk to potential customers and partners, and start to formulate a product or service to offer to people.  Chances are the fledgling entrepreneur will be rejected; there is no question about that.  But if they keep embracing that chaos and making contact with the market, things will begin to take shape.  They need to get out there and realize that they are the structure and the process.

The challenge for entrepreneurs can be maintaining momentum.  If it’s the product, stay close to the product.  If it’s the people, get out into the market, meet people and maintain energy.  According to Wortmann, “One of the things I like to talk to students about:  is shutting down a business failure?  It is in a way, but we’re all on a journey and that’s just a chapter.  In a microcosm, it is a failure.  But is it really a failure if you take those lessons and start something new or go back to a big company and leverage all those things you learned?  That looks like success to me.”

To listen to Craig Wortmann’s full interview on entrepreneurship, click here.

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Hungary’s Debt Downgraded to Junk

Wednesday, January 4th, 2012

Yet another European nation – and one not in the Eurozone – is facing a financial crisis now that Standard & Poor’s (S&P) has downgraded its credit rating to junk status. The nation is Hungary, whose status was changed as a result of concerns about proposed policy changes regarding the country’s central bank.  S&P cut its rating on Hungary’s debt to the non-investment grade of BB+ and warned that there could be additional adjustments.  Its negative outlook on the Hungarian front means there is at least a 33 percent likelihood of another downgrade over the next year if Hungary’s fiscal performance worsens.

The lower rating could mean that Hungary has more difficulty borrowing, and may have to pay higher rates on its debt.  Moody’s Investor Service, a rival credit-ratings agency, had already reduced Hungary’s rating to junk status in late November.  According to S&P, policy changes related to Hungary’s central bank will curtail its independence; these changes by necessity complicate the scene for investors.  They’re likely to negatively impact investment and fiscal planning, which will weigh on Hungary’s medium-term growth prospects.  “The downgrade reflects our opinion that the predictability and credibility of Hungary’s policy framework continues to weaken,” S&P said.

Not surprisingly, the European Central Bank (ECB) is concerned about Hungary’s draft law that it says would undermine the independence of the country’s central bank. The government recently introduced proposals to merge Magyar Nemzeti Bank (MNB) with the Financial Supervisory Authority, name a new president who will outrank the current central bank governor and increase the number of members of the governing council.  All of this would be “to the detriment of central bank independence,” the ECB said.  “In particular, by appointing a new president with authority over the Governor of the MNB, who would become the vice-president of the new institution, the personal independence of the MNB’s Governor would be impaired and Article 14.2 of the Statute of the European System of Central Banks concerning the possible reasons for dismissing the Governor of a national central bank would be breached,” the ECB said.  “The Governing Council of the ECB has requested the Hungarian authorities to bring their consultation practice into line with the requirements of European Union law and to respect the obligation to consult the ECB.  Three major revisions of the central bank law in 18 months are incompatible with the principle of legal certainty.”

The independence of the central banks in European nations is enshrined in European Union treaties. However, Hungarian Prime Minister Viktor Orban wants to use his two-thirds majority in parliament to push through changes in the make-up of the decision-making entities of the MNB, with whom he has frequently disagreed over policy.

According to Business Week, “Hungary will probably overshoot its budget-deficit target next year, the central bank said.  The shortfall may be 3.7 percent of gross domestic product, compared with the government’s 2.5 percent goal, the Magyar Nemzeti Bank said.  The gap may be reduced to 2.6 percent with the ‘complete cancellation’ of budget reserves and assuming no unexpected spending and no shortfall in revenue in 2012.  A decline in risk premium may allow keeping the benchmark interest rate unchanged at seven percent, the highest in the European Union, or its ‘cautious reduction’, the central bank said, citing the rate-setting Monetary Council.  The rate may have to be ‘permanently’ higher if the pace of disinflation is slower than the bank’s forecast.”

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New Housing Market Showing Some Strength

Tuesday, January 3rd, 2012

Confidence in American homebuilders rose in December for the third consecutive month, a sign that the housing market is finally stabilizing.  The National Association of Home Builders/Wells Fargo (NAHB) Housing Market Index (HMI) of builder confidence climbed to 21 — the highest level since May 2010 — from a revised 19 in November.   Economists had projected an index of 20, according to a Bloomberg News survey.  Readings below 50 mean the majority of respondents believe that conditions are poor.

Mortgage rates near record lows are attracting prospective homebuyers.  At the same time, a new wave of foreclosures means a sustained housing recovery could take years.  “We’re just seeing some incremental improvement,” John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston, said.  “It’s too early to say that the worst is over.  It’s too early to say that we’re pulling ourselves out of the morass of housing.”

Builders in the South had the biggest increase, with the index jumping four points to 25 this month.  The West reported a gain to 16 from 15, while the Midwest held steady at 24.  Confidence in the Northeast fell to 15 from 16.

“This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend,” NAHB Chief Economist David Crowe said.  “While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months.”

Low-ball appraisals are spoiling some deals, even after contracts have been signed.  As a result, some buyers are waiting to buy a new house because they can’t sell their home.  Those positioned to purchase are benefiting from lower prices and rates.  30-year fixed mortgages are 3.94 percent — a record low.  So far, those factors have not boosted new home sales.

The seasonally adjusted index, which parallels closely with single-family housing starts, is designed so that readings over 50 are considered “good.”  This hasn’t been the case since April 2006.

According to NAHB Chairman Bob Nielsen, “While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets.”

Each of the HMI’s three component indexes registered a third consecutive month of improvement in December.  The component gauging current sales conditions rose two points in the latest month to 22, while the component gauging sales expectations in the next six months edged up one point to 26.  The component gauging traffic of prospective buyers gained three points and is now at 18, which is its highest level since May of 2008.

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Grape Expectations

Wednesday, December 28th, 2011

The English wine industry – once something of a national joke – is coming into its own as climate change has raised temperatures in southern Britain an average of three degrees Fahrenheit between 1961 and 2006.  Today, Britain has approximately 400 commercial vineyards.  Sparkling wines are beating their French rivals in international competitions.  “We’ve noticed the climate has improved consistently. The weather has improved, the ripening period has become longer, and year after year we’re getting quality fruit,” said Chris White, the general manager of the Denbies Wine Estate in Dorking, England’s largest vineyard at 265 acres.  Denbies anticipates an even warmer future and last year planted seven acres of Sauvignon Blanc vines, a grape originating from France’s significantly warmer Bordeaux region.

Scientists have been analyzing the effects of climate and weather on wine since before global warming became an issue.  Over the past 20 years, studies have analyzed the emerging impacts of warming temperatures on vineyards in Europe, the Americas, Australia and elsewhere, and modeled the possible effects over the next century.  They see accelerating change that the earth has previously not experienced.  “If we look at the best data we have — there’s some data that goes back 500 or so years, and some paleoclimate stuff going back much further — on balance, changes underway today are as big or bigger than anything in those records,” said Gregory V. Jones, a climatologist at the University of Southern Oregon who specializes in climate’s impact on wine.

To date, rising temperatures have had a mostly favorable impact on wine.  Jones led a study that found the average growing-season temperature in 27 prime wine-producing regions had risen 2.3 degrees Fahrenheit in the previous 50 years.  In the vineyards of Spain, Portugal, southern France, and parts of California and Washington state, it rose 4.5 degrees.  Jones also found that wine quality ratings rose with the temperature.

According to an article on the Environmental Research website, the world’s vineyards need to alter some of their practices to cope with climate change.  “The diversity of wine production depends on subtle differences in microclimate and is therefore especially sensitive to climate change.  A warmer climate will impact directly on wine-grapes through over-ripening, drying out, rising acidity levels, and greater vulnerability to pests and disease, resulting in changes in wine quality (e.g. complexity, balance and structure) or potentially the style of wine that can be produced.  The growing scientific evidence for significant climate change in the coming decades means that adaptation will be of critical importance to the multi-billion dollar global wine-industry in general, and to quality wine producers in particular.  Adaptation is understood as an adjustment in natural or human systems in response to actual or expected environmental change, which moderates harm or exploits beneficial opportunities.”

There is also the potential for a critical decline in grape production in the United States. “If current trends continue, the (premium-wine-grape production area (in the United States)…could decline by up to 81 percent by the late 21st century,” a team of scientists wrote in a study published in the Proceedings of the National Academy of Sciences. The culprit was not so much the rise in average temperatures but an increased frequency of extremely hot days, defined as above 35 degrees Celsius (95 degrees Fahrenheit).  If no adaptation measures were taken, these increased heat spikes would “eliminate wine-grape production in many areas of the United States,” the scientists wrote.

Winemakers in California’s celebrated Napa Valley naturally worry that their reason for being might become untenable.  Napa growers will adapt to climate change and continue making fine wines, Steve Matthiasson of Premiere Viticulture and Matthiasson Wines, said.  He does not anticipate extreme changes anytime soon.  “I don’t doubt any of their data or modeling, and I appreciate them tackling the important issue of climate change,” he said.  “But I think we are much more resilient here in Napa, and we’ll be able to adapt to the changing climate and continue to make world-class wine without losing land to production.”

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Fewer Couples Are Going to the Chapel

Tuesday, December 27th, 2011

The number of American couples marching down the aisle to get married is in decline, with just 51 percent of adults reporting that they are married, according to the Pew Research Center and the Census Bureau.

The Pew Center’s study determined that new marriages in the United States fell five percent between 2009 and 2010; the slow economy likely was a contributing factor.  Compare the current record low of 51 percent of married adults with the 72 percent who were in wedded unions in 1960, according to the Pew Center.  The median age at first marriage for brides stands at 26.5 and for grooms it is 28.7.  That is the oldest Americans have ever been when they first married.

Researchers noted the United States is not alone in seeing a significant decline in marriage rates; other advanced, post-industrial societies are seeing the same long-term declines.  The Pew Center said that it is “beyond the scope” of the group’s analysis to “explain why marriage has declined.”

Some respondents just don’t like the idea of marriage. Nearly 40 percent of respondents believe that marriage is becoming an archaic institution.  They also report that in 2010, approximately 61 percent of adults who have never been married would like to be one day.

“The most dramatic statistics to me are when you look at the share of younger adults who are married now compared with in the past,” report author D’Vera Cohn, a senior writer at Pew Research Center, said.  “That’s really been where you’ve seen the big decline.”  Pew researchers analyzed U.S. Census data from 1960 and data from the American Community Surveys from 2008 – 2010.

Flat wages are another factor. “The incentive to get married – because you could rely on a man whose real wages would continue to rise, who would get a pension at the end of it – has been undermined as well,” Cohn said.

According to Census Bureau statistics, 7.5 million couples lived together without being married in 2010, a 13 per cent increase when compared with the previous year.  The financial crisis has forced people to move in with partners.  Marriage rates are highest among college graduates (approximately two-thirds).  Less than half of high school graduates are married.

Not surprisingly, divorce is a factor impacting the ranks of the currently married, although it is unclear how important it has been.  Divorce rates rose in the 1960s and 1970s, but have leveled off in the past 20 years.  Approximately 72 percent of adults have been married at least once, down from 85 percent in 1960.

“If current trends continue, the share of adults who are currently married will drop to below half within a few years,” according to the Pew report.  “Other adult living arrangements-including cohabitation, single-person households and single parenthood-have all grown more prevalent in recent decades.”

“Well, it does not mean that marriage is dead,”  said Stephanie Coontz, a historian on family life at Evergreen State College in Washington state.  Many of those 20-somethings will sooner or later tie the knot.  “But what it does bring home to us is that we can no longer pretend that marriage is the central organizing principle of society. We have to take account of the many, many social networks and relationships that people cycle through, marriage being just one of them,” Coontz said.

“This marks a continuation of a long term trend,” said Paul Taylor, executive vice president of the Pew Research Center.  “If this trend continues, we are approaching a turning point where fewer than half of all adults in this country will be married.”

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We Deliver – More Slowly – For You

Wednesday, December 21st, 2011

First-class mail is likely the next casualty as the United States Postal Service (USPS) looks for ways to stave off bankruptcy. The USPS is planning to shutter 252 mail processing centers nationally and slow first-class delivery as soon as spring, citing steadily declining mail volume.

According to USPS vice president David Williams, the agency wants to effectively eliminate the likelihood that stamped letters will arrive at their destination the next day.  Williams says the postal service is not “writing off first class mail”; rather, it must respond to changing market realities in which people are turning more to the Internet for email communications and bill payment.  After peaking in 2006, first-class mail volume is now at 78 million.  It is projected to drop by approximately 50 percent by 2020.

The estimated $3 billion in reductions are part of a wide-ranging effort by the cash-strapped USPS to cut costs without receiving any help from Congress.  Although the changes would provide short-term relief, they ultimately could prove counterproductive by moving more business onto the Internet.  The move has the potential to slow everything from check payments to Netflix’s DVDs-by-mail, add costs to mail-order prescription drugs, and threaten the existence of newspapers and time-sensitive magazines.

Ideally, first-class mail would be delivered in two to three days, a change from the current one to three days in the 48 contiguous United States.  But, the postal service said mailers “who properly prepare and enter mail at the processing facility prior to the day’s critical entry time” could have their mail delivered the following delivery day.”  Magazine delivery could take two to nine days.

“It’s a potentially major change, but I don’t think consumers are focused on it and it won’t register until the service goes away,” said Jim Corridore, an analyst with S&P Capital IQ, who tracks the shipping industry.  “Over time, to the extent the customer service experience gets worse, it will only increase the shift away from mail to alternatives.  There’s almost nothing you can’t do online that you can do by mail.”

The post office already has announced a penny increase in first-class mail to 45 cents, whch goes into effect on January 22.  “We have a business model that is failing.  You can’t continue to run red ink and not make changes,” said Patrick Donahoe, Postmaster General.  “We know our business, and we listen to our customers. Customers are looking for affordable and consistent mail service, and they do not want us to take tax money.”

According to Donahoe, “We are in a deep financial crisis today because we have a business model that is tied to the past.  We are expected to operate like a business, but we do not have the flexibility to do so.  Our business model is fundamentally inflexible.  It prevents the postal service from solving problems and being effective in the way a business would.”

Senator Susan Collins, (R-ME), the ranking Republican of the Senate Homeland Security and Governmental Affairs Committee, was unhappy with the USPS’ plans.  “Time and time again in the face of more red ink, the Postal Service puts forward ideas that could well accelerate its death spiral,” Collins said.  “Closing thousands of rural post offices, eliminating Saturday delivery, and slowing first-class mail delivery could harm many businesses and their customers.”

Writing in the Washington Post’s Federal Eye column, Ed O’Keefe commiserates with postal customers, but offers no quick fixes. “And what about those customers who rely on first-class mail to get letters delivered the next day?  Donahoe and other officials hope those customers will switch to Priority or Express Mail, a more expensive option that can guarantee deliveries by a certain date.”

If the plan is approved by the Postal Regulatory Commission, the changes have the potential to save about $3 billion, and allow the Postal Service to cut approximately 28,000 jobs.

According to USPS spokesman Dave Partenheimer, the changes allow increased time between deliveries, clearing the way to close or consolidate mail processing centers across the country.  “It’s no longer a challenge of growth — it’s a challenge of staying ahead of the cost curve,” Partenheimer said.  “The fact of the matter is, our network is too big.”

Sally Davidow, a spokeswoman for the American Postal Workers Union, said the changes will hurt communities and take the Postal Service in the wrong direction.  “They should be trying to speed up and modernize the mail, not slow it down and make it less relevant in the digital age,” she said.

Davidow said the retirement payment mandate and overpayment into the Postal Service’s pension accounts are the main culprits.  She believes that USPS leadership should focus on pressuring Congress to fix them instead of cutting service and jobs.  “Addressing those two things would go a very long way toward resolving the crisis and giving the Postal Service the breathing room and the capital it needs to modernize and to be relevant in the digital age,” Davidow said.

The postmaster general offered his opinion on that.  “The American public pays bills online,” Donahoe concluded.  “We can’t sit back for another five, or six, or 10 years and wait for these changes.”

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