THE ENTERPRISE
REVISIONS? HOW ABOUT JUST PLAIN WRONG?
Does it concern anyone else that these government statistics that form the basis for Wall Street's big reactions are never right the first time? Does it make you wonder if they are right after the revisions? Check these phrases from Economic Week in Review below:
The annual rate of growth in 1Q non farm productivity was revised upward from of 3.2% to 3.7%. In addition, 1Q growth in unit labor costs was revised downward from an annualized 2.5% to 1.6%. More dramatically, growth in 4Q unit labor costs was revised downward from an annualized 3.0% increase to a 0.6% decline—a revision described by one analyst as "enormous." What the hell is that all about?
How about that it says we have "no idea" about the accuracy of what the initial report might say. Decisions--big decisions--are being made on this erratic and flawed reporting. Worst of all, these decisions are being guided by the "expectations of the analysts." That makes it even worse because now systemic mathematical and statistical error is being compounded by human reaction errors of analysts. I have begun taking these reports as "possibly, directionally indicative of something"....and nothing more. It might be wise if Wall Street (although it is infested with "analysts") would do the same thing. Meanwhile, I still worry about how everyone and everything reacts to our government's obsolete, misstated and constantly revised reports. Does anyone else worry about this? (Like leaders of the agencies that produce them?)
Regarding the government and it's actions, the naming Henry Paulsen as Treasury Secretary, this seems to be one of a string of improved moves by the Bush Administration. Could it be that someone in the White House is listening? Perhaps!
CHINA—FOULING ITS OWN NEST
A small article on p. A6 of Wed. Wall Street Journal could have big implications. In it, China leading environmental experts are reporting that the Yangtze River, the world's 3rd longest and China's most prominent waterway is massively polluted. Not only is the river "dying" but it is no longer a viable source for drinking water for some 300 million Chinese living in the 186 cities if flows through before dumping into the sea at Shanghai. China's other major rivers are also fouled with industrial and agricultural waste, promising a critical clean-water shortage in coming years.
US, CHINA & INDIA ON GRADUATES
We keep reading about how poorly US is doing compared to China and India in college graduation rates. No one ever calculates what impact the huge population differences have on this fact. In raw numbers, the Number of Degrees awarded in 2004 are: China 351,500; US 137,400; India 112,000. Advantage China--lots of people to educate. When converted to per-capita information, the picture changes: (degrees per million citizens) US 468; China 271; India 104. Perhaps the reports of our academic demise are a bit premature. (Although our primary and secondary schools are still fouled up.) No one has yet put an index how the quality of the graduates and degrees vary from country to country, but that is the big (unanswered) question.
IT DEPENDS ON WHOSE OPINION YOU ASK--BUT PERCEPTIONS ARE REALITY
When asked what was the determining factor in granting salary increases, a recent study showed that there was a very different perception between managers and non-managers. A Mar. 20-26, 2006 Hudson study of 10,000 employees came out this way:
--Employees who do a better job get paid more: Managers agree 48%; Non-managers agree 31%
--My last raise was based on performance: Managers agree 46%; Non-managers agree 29%
I wonder who sees things more clearly? Remember, people's perceptions are their reality.
FAT PEOPLE--A BIG PROBLEM AND A BIG OPPORTUNITY
I am technically obese. My body mass index is too high and my waist measurement is too big. Too many Americans are like me--victims of a sedentary lifestyle and too-large portions of too-rich foods. Part of the health problem in America is caused by this--perhaps a big part of it. Of course, every dark cloud has a silver lining. Fat people are a big market that is growing. There are 60 million Americans that fall into the Obese class. That is up from 23 million in 1980. That is a whopping 260% increase in 25 years. Another 28 million are expected to join us in the ranks of the obese in the next 7 years (by 2013). (Who comes up with these numbers, and how do they know?) Markets for large size clothing, wider chairs, larger beds, and yes, airline seat belt extenders, are growing like American's waistlines.
I know I'm no "skinny minnie" to sit next to in an airplane, but at least I still fit in the seat and within the armrest. If you have had the bad fortune to sit next to a 300+ pounder who used all of their seat and 1/4 of yours, you know the problem well. The airlines have recently increased their assumption about average weights of passengers for calculation fuel load and take off factors. I don't think they raised them enough based on my visual observations as a traveler.
There is a big flap coming (pun intended) if airlines ever really start cracking down on people who won't fit in one seat, and require them to buy TWO. (They can't even crack down on excessively large carry-on bags so they won't do this either.)
Meanwhile, all you marketers out there, listen up. Reduce the mix of Small and Medium in your assortments and increase the XL, XXL and XXXL. It may not be good health, but it is good business. By the way, on some airlines, you can pay more to upgrade into a coach seating section that has more leg room, but the width of the seats are unchanged, so that solution doesn't "fit" this problem either.
ANYTHING CAN BE REINVENTED WITH SOME CREATIVITY & TECHNOLOGY
If you don't believe this you have not seen or worn CROCs. These are the comfy, simple, ugly molded shoes that are taking hold like wildfire. Technology plus common sense paid off for "Duke" Hanson and his partners from Niwot, CO when they found a synthetic molding compound (from a Canadian plastics company) that both molds to the foot, and resists moisture, mildew, bacteria, fungus, etc. Not only have CROCs grown into a $100 million business in less than 5 years, but it is line-extending the products into more than the one original configuration. Who sez innovation isn't the best solution?
There's lots more to talk about, but these few tidbits should start your week with an "aha!" or two. Find the opportunities that are right under your nose. As Apple's ad campaign of a few years ago said, "Think Different." It isn't just fun, it's profitable too.
Best, John
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