Let’s hope the austerity crisis is holding back business spending

Posted by Neil Irwin on November 27, 2012 at 10:18 am

Can they reach a deal? Business investment spending may hang in the balance.

There are new signs that businesses are pulling back on their investment spending in advance of the looming austerity crisis. And that’s the good news.

Shipments of core capital goods, a measure that excludes defense spending and aircraft — a common measure of business investment — fell 0.4 percent in October, the Commerce Department said Tuesday. There is an obvious and likely explanation: Firms were becoming all the more wary of what might happen with the “fiscal cliff,” the wave of tax hikes and spending cuts scheduled to take effect on Jan. 1 absent a new agreement. If you are a corporate executive weighing the purchase of a piece of industrial equipment or a truck for your delivery fleet, you may well decide “I’ll just wait to see how all this shakes out.”

Tobacco companies ordered to admit they lied over smoking danger

Reuters in Washington guardian.co.uk, Wednesday 28 November 2012 04.59 GMT

US judge says tobacco firms must spend their own money on a public campaign admitting deception about the risks of smoking

The public advertisements are to be published in various media for as long as two years. Photograph: Alex Segre/Alamy

 

Major tobacco companies who spent decades denying they lied to the US public about the dangers of cigarettes must spend their own money on a public advertising campaign saying they did lie, a federal judge ruled on Tuesday. 

The ruling sets out what might be the harshest sanction to come out of a historic case that the justice department brought in 1999 accusing the tobacco companies of racketeering.

Market access in global and regional trade

José de Sousa, Thierry Mayer, Soledad Zignago , 20 November 2012

Do trade costs still matter in a modern era characterised by a fall in transaction costs? This column argues that there is a dearth of good analysis in the debate around market access difficulties. Complaining about restrictions in accessing foreign markets is political leaders’ current favourite hobby yet. In light of stalled WTO negotiations, shouldn’t rigour, not rhetoric, lead this debate?

Change in Negotiators Shakes Up U.S.-China Trade Policy

By KEITH BRADSHER

Published: November 18, 2012 

BEIJING — The rare congruity of the political calendars in the United States and China, with both countries choosing leaders this month, is about to produce an equally rare replacement of most of each side’s senior trade negotiators, with unpredictable results for bilateral economic relations.

The Tablet Market Grows Cluttered

The new market of keyboardless computers is quickly becoming as confusing as that of the old-school PC.

By CLAIRE CAIN MILLER and BRIAN X. CHEN

Published: November 18, 2012

Holiday shoppers with a tablet computer on their gift list this year might be forgiven for feeling a little panicked

Look at the tablets available online or at a consumer electronics store and it can be dizzying to choose from among the dozens of slim rectangles with touch screens — each with various sizes, features, prices and applications

Poor October prompts Christmas retail sales concern

Shoppers shunned the high streets in October as retailers reported one of the largest declines in monthly total sales since January.

The latest Scottish Retail Consortium (SRC) survey indicated sales fell by 1.3% from October 2011.

With shop price inflation factored in, the fall was 2.8% in real terms.

Retail experts warned the latest figures sent out a "worrying signal" ahead of the crucial Christmas sales period.

The fall in sales was worse than that seen across the UK - where total sales rose by 1.1% in October.

Total food sales were up by 2.3% from October last year, with shoppers stocking up on Christmas goods and buying comfort food such as traditional puddings, custard and slow-cooked meats.

While total non-food sales were down 4.7%, sales of clothing were described as positive. Stores on Edinburgh's Princes Street said they noticed business picking up after the street re-opened to buses in the summer after 18 months of tram works.

Cold weather at the start of October may have encouraged people to buy new boots, but electrical sales were described as "subdued".

'Worrying signal'

David McCorquodale, head of retail for KPMG, said the figures sent "a worrying signal" about the festive season ahead for retailers in Scotland.

He said that apart from April - when Easter had an impact - the October figures showed the largest decline in total sales since January.

Mr McCorquodale said: "Food and drink sales failed to track inflation and, therefore, reflected a decline in volumes.

"Despite the cold temperatures in October, clothing and footwear sales had good growth in the first week but then faded in the latter half of the month.

"This shows consumers may have bought into autumn and winter collections but are still too nervous to fill their wardrobes with them."

He added: "The recession may officially be over but it will take a little longer for consumers to feel they can spend freely again."

SRC director Fiona Moriarty said the latest figures were "not the result retailers wanted".

She added: "September's modest sales boost offered some cause for cautious optimism, but continuing concerns about the economy led many customers to batten down the hatches again in October.

"With consumer confidence at a six-month low, hopes of sales picking up in the run-up to Christmas will hinge on retailers reading the market closely - that means offering customers opportunities for seasonal spending at competitive prices."

 

The recession may officially be over but it will take a little longer for consumers to feel they can spend freely again”

End Quote David McCorquodale Head of retail, KPMG

Reference

Toyota to recall 2.7 million cars worldwide

Toyota has said it will recall 2.7 million cars worldwide because of problems with the steering wheel and water pump system.

The recall affects nine models, including the Toyota Corolla and the second-generation Prius.

It comes four weeks after the firm recalled more than seven million vehicles worldwide, including some Corolla and Camry models, over faulty window switches.

Toyota is Japan's biggest carmaker.

Joichi Tachikawa, a spokesman for Toyota, told the BBC that the problem with the steering wheel was to do with "insufficient hardness of the steering shaft".

He explained that due to this, the splines which connect the extension shaft to the gearbox may deform if the steering wheel is "frequently and forcefully turned to the full lock position while driving at a very slow speed".

"This may create an increased backlash and the splines may eventually wear out over time, which could result in loss of steering ability," he added.

However, Mr Tachikawa said that no accidents due to this fault had been reported so far.

'Nobody is perfect'

The latest recall, which includes nearly 75,000 vehicles in the UK, is the latest in a spate of such moves in recent years.

Toyota's reputation was damaged in 2009 by a recall that ended up involving 12 million vehicles and fines from US regulators.

The Japanese carmaker is still trying to rebuild its reputation and regain customer trust after that fiasco, which saw the firm's head apologising to consumers.

Its efforts to do so have been dealt a blow over the past few weeks, as it has announced recalls totalling nearly 10 million vehicles.

However, some analysts said that while the latest recalls, which are voluntary, were a setback, they might not cause as much damage to its reputation as the ones in 2009.

"Nobody is perfect. Vehicles nowadays are very complicated," said Koichi Sugimoto, an auto analyst with BNP Paribas in Tokyo.

"The company is taking appropriate measures to fix the problems, so I don't think this will cause significant damage to Toyota's reputation."

Analysis

Jorn Madslien Business reporter, BBC News: Toyota's latest announcement pushes the number of recalls this year to more than 10 million, not far short of the number recalled in 2009 and 2010 over floormat and accelerator pedal issues.
At that time, Toyota's reputation and sales suffered badly, largely because the problems in question were claimed to be linked to deadly accidents.
This year's recalls are precautionary. There have been no accidents. The consumer response should be less severe.
But Toyota's image as a producer of high quality cars has nevertheless been dented once again.