Monday, January 08, 2007
Consumer as Agency of the Year, Jobs, Trade, and a Terabyte disk for only $400?
...big agencies -- great companies that once cast long shadows over corporate America -- are losing more of their control within a marketing process that for decades they have dominated. They're already being squeezed by procurement departments and jostled by media companies and nibbled at by a host of other kinds of agencies that grew in importance as TV ceased to be the only game in town. "Traditional agencies have never had to think about distribution because they'd been told what media to color in," says Nick Law, North American chief creative officer at digital shop R/GA, New York. "Creatively, it's all been about creating punch lines. For years, there's been a guild mentality. Clients came because agencies created the magic behind the screen. The new environment has blown open the idea of being an expert, so you can be very good and working in a bedroom in Dundee, and the world can be seeing your work."
Excellent jobs report Friday, confounding the experts. ADP had issued a report earlier in the week that payrolls would be down by 40,000. So the fact that this was good must be really confusing to them. :)
1) October and November revisions added 29,000 payroll jobs
2) December payroll jobs were up 167,000
3) The household survey was up by 303,000
4) The civilian employed workforce is at a record 152.7 million+
The unemployment rate stayed at 4.5%. Why? Because 23,000 more people decided to join the employable work force. Because unemployment is calculated on the basis of people who are seeking jobs, when the economy grows the unemployment rate can actually go up because more workers are attracted to the workforce, increasing the denominator of the formula. When the economy declines, the unemployment rate can actually improve as workers shun the workplace and no longer seek jobs, decreasing the denominator of the formula. So the fact that it stayed at 4.5% is good news in light of new workers being willing to enter the workforce. It's amazing how little news coverage this report is getting, but why should we be surprised. The newspaper business is downsizing, so in their minds, a good employment report must be a lie.
Economist Gene Epstein ("Econospinning" is his excellent book) had a good article in Barrons about the jobs report
What's amazing to me is how few people actually read the jobs report. Economists who should know better often complain about the unemployment report not counting certain discouraged workers and others who are no longer part of the work force... but they do. Epstein explains...
The fall in the labor-force participation rate -- the share of the eligible population either working or looking for work -- has spawned a cottage industry of critics who cite it as "proof" that the unemployment rate is no longer a reliable measure of either the economy's ability to use its workers or workers' ability to get jobs. The participation rate ran 66.2% in 2006, down from its peak of 67.1% from 1997 through 2000.
Critics figure this extra 1% that used to participate in the labor force would be doing so if only the jobs were available. From there it is an easy leap to say that the unemployment rate is seriously understating the extent of unemployment... But the critics ignore overwhelming evidence to the contrary. In fact, the BLS has kept comprehensive data on the "hidden unemployed" that are meant to address this very issue. Are people not looking for work for "reasons of discouragement"? Are they not looking for work because they might have difficulty getting child-care or adequate transportation? Are there people who work part time and therefore would be counted in the labor force, but would like full-time work and can't get it (the "involuntary part time")? ... The agency uses these categories to supplement its count of the official unemployed. People are considered unemployed if they did not work in the past week and made at least some effort to look work over the past month. But the hidden unemployed have always been present in large numbers -- even in 2000, when the official unemployment rate was at a 30-year low, and jobs were going begging. Were they present in unusual numbers over the past few years? No... The BLS keeps three other measures of the unemployment rate that incorporate the "discouraged," "marginally attached," and the "involuntary part time." All three confirm that hidden unemployment has been no greater over the past few years than it was in the late-Nineties.
Speaking of Epstein, he was on booktv.org (division of C-Span) this weekend. I taped it and found it to be good. But then, I'm an economics geek. I was surprised to see someone still using transparencies and not projectors, etc. Struck me as odd. Epstein is astoundingly well-read is the impression I got. I enjoyed the book and have linked to it many times.
Magazine consultant Marty Walker has some insights into the magazine market in this interview
Hitachi's terabyte drive: $400. Watch for a number of product intros in this area. Terabyte drives are already available. Note also that there are people selling Linux O/S with applications on USB flash drives. It will not be long before your desktop computer will have only flash memory for the O/S and applications.
The stock market does better when Congress is not in session; a funny, but true article
"Letter to Lou Dobbs" in the Christian Science Monitor explains the purpose of trade... but Lou's not about to listen. Maybe we should have him read the jobs report above.
If you're still skeptical that America's trade deficit is no cause for concern, perhaps you'll be persuaded by Adam Smith, who wrote that "Nothing, however, can be more absurd than this whole doctrine of the balance of trade."... Smith correctly understood that with free trade, the economy becomes larger than any one nation - a fact that brings more human creativity, more savings, more capital, more specialization, more opportunity, more competition, and a higher standard of living to all those who can freely trade.
While everyone is focusing on Bob Nardelli's severence from Home Depot, WSJ looks at it also as a blemish on the "Six Sigma" quality improvement movement
It's a reminder that companies can make themselves very efficient at the wrong things
Industry editor Earl Wilken died on January 4, 2007. I first knew Earl when he was at Graphic Arts Monthly as their technology editor, and would see him at NYU Graphics Center events. He worked in the industry well into his 70s. I remember Dick Vinocur telling me how he "discovered" Earl laboring in obscurity at Datamation and brought him over to GAM. Both were part of Technical Publishing, owned by D&B at the time. My comments are at the article on WhatTheyThink.