Entries in Recession (33)


Euro Zone Sees End to Six Quarters of Recession

iStockphoto/Thinkstock(NEW YORK) -- After six consecutive quarters of economic contraction, the European Union's combined gross domestic product rose in the most recent quarter.

According to the Wall Street Journal, the combined GDP of the European Union's 17 members was 0.3 percent higher than the first three months of this year. While the numbers were still less than the second quarter last year, this quarter saw the fastest quarterly expansion since 2011.

The figures mark an end to the longest European recession on record.

Portugal saw the greatest degree of expansion, 1.1 percent, the first economic expansion since 2010. Austria, Belgium, Estonia, France, Finland and Slovakia also saw economic growth, says the Journal.

Italy, Spain and the Netherlands saw economic declines, but by a smaller amount than last quarter. Cyprus saw the largest decline.

Copyright 2013 ABC News Radio


Is Japan Headed for a Recession?

Stockbyte/Thinkstock(TOKYO) -- New economic data out Monday suggests Japan may be inching toward a recession yet again.

The government reported that the country's economy shrank 0.9 percent between July and September, while its gross domestic product fell at an annualized rate of 3.5 percent.

It's a sharp reversal from the first half of the year, when Japan outperformed other G-7 countries.  Since then, the world's third largest economy's been plagued by a decline in exports, stemming from Europe's financial woes.

Japan's territorial spat with China has also hurt trade relations with its largest trading partner, forcing Japanese companies to reconsider its economic outlook.

Copyright 2012 ABC News Radio


Obama Stadium Speech Puts Bank Battle in Spotlight

MANDEL NGAN/AFP/Getty Images(CHARLOTTE, N.C.) -- When President Obama takes the stage in Charlotte, N.C., on Thursday inside the 75,000-seat Bank of America Stadium, he and the venue's namesake will become forever intertwined in the annals of political history.

Obama will become the first sitting American president to give an acceptance speech in an outdoor pro-sports arena with tickets available to the general public.

It's also the first time an incumbent will make a primetime convention appeal in the shadow of a major bank he battled during his first term.

While the Charlotte-based Bank of America does not own the stadium or have a sponsorship role in the Democratic National Convention, its name is everywhere, from glowing letters on the stadium's facade to logos plastered near the end zone Jumbotron.

Each reference is a reminder of the bank's high-profile role in the financial crisis that triggered the Great Recession, a $45 billion government bailout and what has been its, at times, contentious relationship with Obama over the past three and a half years.

At the height of the financial crisis in 2009, the president publicly shamed Bank of America and its peers for the financial practices that contributed to the recession.  And he lobbied them to boost lending and back regulatory reform.

"I think that the 'bully pulpit' can be a powerful thing," White House press secretary Robert Gibbs said in 2009 after Bank of America executives met with Obama.

Amid heated populist debate last year over Bank of America's planned $5 monthly debit card fee, Obama made the bank a poster child of profit-seeking at the expense of the average consumer.

He called the fee "not a good practice" and blasted the bank's unwillingness to "take a little bit less of a profit" during an interview with ABC News.

Earlier this year, the Obama Justice Department squeezed millions from the bank as part of a $25 billion federal settlement over abusive mortgage practices and assurances it would cease the practice of so-called "robo-signing," which helped push thousands of homeowners into vulnerable financial positions and into foreclosure.

"America's biggest banks, banks that were rescued by taxpayer dollars, will be required to right these wrongs," Obama said at the time.  "They will deliver some measure of justice for families that have already been victims of abusive practices."

The juxtaposition of Bank of America and Obama's nomination -- more coincidence than choice -- may be awkward for Democrats, who have seemed eager to distance themselves from the ties during their big convention week.

Several early, official, DNC-related communications referred to the final night's venue as "Panther's Stadium," suggesting an attempt to drop the Bank of America reference -- a motive Democratic officials have denied.

Meanwhile, the Democratic National Committee in August quietly announced it was transferring all of its accounts and financial business from Bank of America to the union-owned Amalgamated Bank.  One credit line has already moved and other accounts are underway, sources said.

Copyright 2012 ABC News Radio


Evolution Drives 'Lipstick Effect' During Recessions, Researchers Say

iStockphoto/Thinkstock(NEW YORK) -- A group of psychologists have added a twist to the so-called "lipstick effect" -- the idea that women will buy less-expensive luxury goods in hard economic times -- saying women spend more on beauty products to increase their attractiveness when there are fewer "high-quality men in a woman's mating pool."

But at least one economist questions whether the finding has less to do with human nature and more with over-generalizing gender stereotypes.

The researchers, which included professors from Texas Christian University, University of Minnesota, University of Texas at San Antonio and Arizona State University, presented five studies in the paper.  It's entitled "Boosting Beauty in an Economic Decline: Mating, Spending, and the Lipstick Effect" and was published last month in the Journal of Personality and Social Psychology.

Guided by evolutionary theories, the group hypothesized in the paper, "Because economic recessions are reasoned to prompt women to expend more effort on mate attraction, is it possible that they may spur women to spend more on products that make them more attractive?"

In one study, the researchers had 154 university students, including 82 women and 72 men, read fictitious news articles describing harsh economic conditions, including staggering unemployment with no end in sight.  The participants were then asked if the reading material caused them to think there were fewer people in their social circle with a good job, steady income, a lot of money, who are physically attractive, "have a sexy body" and a "nice-looking face."

As the researchers expected, the article "led people to perceive that there are fewer people in their local environment who have good jobs, a steady income and a lot of money."  However, the two articles did not alter people's perceptions of the numbers of people who are physically attractive, have a sexy body, or have a nice face.

The participants were then asked based on their gender about their desire to purchase six products.  Three products enhance physical appearance: form-fitting jeans for both genders, form-fitting black dress for women or form-fitting polo shirt for men, and lipstick for women and facial cream for men.  The other three products were a wireless mouse, stapler and headphones.

While the researchers found no main effect of product type on purchasing desires for the men, they found a "significant interaction between priming condition and product type" for women.

"As predicted, women in the recession condition reported a significantly greater desire to purchase products that could enhance appearance compared with women in the control condition," the paper stated.

Julie A. Nelson, chairwoman of the economics department at the University of Massachusetts, Boston, questioned the study's hypothesis.

"It claims to find that spending more on beauty-enhancing products during recessions is an aspect of "women's psychology," and strongly suggests that this is an evolved response to competition for mates in hard times," she told ABC News.  "The first part of this is a gross over-generalization, while the second is speculative."

Nelson said the "findings come from study of only a narrow sub-class of women," young university students within the U.S.

In another study, the researchers hoped to study "general feelings of uncertainty" and predicted that feelings related to a recession "would lead women to report being more concerned with their physical attractiveness."

The researchers asked 36 unmarried female university students to view a slideshow summarizing a news story about the dire state of U.S. unemployment.  Another 40 participants were shown a slideshow summarizing "stringent academic requirements imposed by college administrators" as a control for the experiment.  The women were then asked a series of questions.

The recession slideshow led women to report wanting members of the opposite sex to think that they are pretty, to report that it is important to look good, and to report caring more about how attractive they look.  But the two groups did not differ in the degree to which they made women feel that the future is out of their hands, that the world is an unpredictable place, or that they feel uncertain about what tomorrow may bring.

Nelson said it is "plausible" that the purchase of beauty products is an evolutionary outcome of competition for mates, "but an explanation being plausible is a far cry from it being scientifically demonstrated."

Copyright 2012 ABC News Radio


A Quarter of Young Adults Lived with Parents During Great Recession Peak

Stockbyte/Thinkstock(COLUMBUS, Ohio) -- The first thing young adults usually want to do is leave the nest, but sometimes life has other plans.

An analysis by Ohio State University reveals that 24 percent of people ages 20 to 34 lived at home with their parents during the peak years of the Great Recession from 2007 through 2009.  That’s substantially higher than the 17 percent in 1980 who didn’t move out of the house.

The OSU study also shows that 43 percent of people under 25 were home dwellers during the Great Recession compared to 32 percent of that age group 30 years ago.

Times were so tough from 2007 to 2009 that one in ten people ages 30 to 34 also found it necessary to live off the kindness of mom and dad.  And of this group, 20 percent did so because of divorce.

Overall, more men than women shacked up with their parents, often because they marry later, but also because their parents don’t pressure them into cooking and cleaning.

The main reasons for the migration back home, the study found, had to do with high unemployment, massive student loan debt and general financial insecurity.  One group that didn't change their living habits was graduate students, with 8 percent living at home in 1980 and the same percentage during the worst of the economic downturn.

Copyright 2012 ABC News Radio


Is a New Recession Ahead?

Comstock Images/Thinkstock(NEW YORK) -- New cracks may be appearing in the economy’s fragile recovery.

The number to watch this week will be Friday’s first estimate of GDP growth for the second quarter.  It may drop to under 1.5 percent, after a weak 1.9 percent growth for the first three months of this year.

In recent days, Wall Street economists have dropped their estimates of annual growth and some say the risk of a recession is rising.

“We’re worried about growth slowing down everywhere, and about it being self-reinforcing,” Peter Fisher, global head of fixed income for Black Rock, the world’s largest asset manager, told USA Today.  “I’m less worried about whether growth is slowing, and more worried about how much farther we have to go.”

Copyright 2012 ABC News Radio


Moviegoers Going to the Movies Less Now than Before Recession

Stockbyte/Thinkstock(NEW YORK) -- Don’t tell the people behind the upcoming Academy Awards, but a new survey finds Americans not going to the movies as often as they did before the recession hit.  According to a new survey, 55 percent of respondents who go to the movies report that they are going less frequently now than they did before the economy went south.  In addition, 61 percent of U.S. adults said they rarely or never go out to the movies.

One factor may be the cost.  According to the National Association of Theatre Owners, the average movie ticket price rose to a new record high in 2011 -- $7.93.  For a family of four, that’s nearly $32, not counting snacks.

The survey found moviegoers coming up with a variety of tactics to save money at the theater:

  • Go to a matinee instead of an evening show – 62 percent
  • Bring my own snacks and/or drinks – 38 percent
  • Use coupons to save on ticket costs and/or concession stand purchases  - 32 percent
  • Pay for one movie, but sneak into additional movies – 6 percent

Additional survey findings:

  • 51 percent of respondents said they rent or buy movies on DVD or Blu-ray.
  • 34 percent said they stream movies, with 25 percent of those streaming with a paid online provider such as Netflix or Amazon and 18 percent streaming online for free. An additional 30 percent said they watch movies on demand from a cable or satellite provider.

The survey was conducted by Harris Interactive, and involved 2,217 U.S. adults.

Copyright 2012 ABC News Radio


'Worse Off': US Poverty Rate Soars 27 Percent During Great Recession

Pixland/Thinkstock(BLOOMINGTON, Ind.) -- While many headlines are touting an economy in recovery, stunning new numbers are turning that perception on its head. At least 10 million Americans can say they are much worse off now than they were before the Great Recession struck in late 2007.

An Indiana University study released Wednesday reveals that the number of people living in poverty in the U.S. jumped from 36.5 million in 2006 to 46.2 million in 2010.  That's a 27 percent increase during a time when the general population only grew by 3.3 percent.

The current poverty line for a family of four in the U.S. is $22,113 annually.

The researchers said they got their figures from the 2010 Census Bureau data as well as from other government agencies.

While there have been some signs that the economy is starting to turn around, it wasn't quick enough to keep others from falling into poverty in 2011 due to the tepid recovery, high rate of unemployment and number of Americans who've been out of work for a long time or have just given up looking for a job.

Copyright 2012 ABC News Radio


Looking Ahead: 2012 US Economy Forecast

Comstock Images/Thinkstock(NEW YORK) -- With U.S. financial markets closed Monday for the New Year holiday, it’s a good time to look ahead to America’s prospects for 2012. The economy might be headed for a stronger growth track, but there are least three potential obstacles to watch for: Europe, China and political gridlock.

First the positive signs, of which there are plenty: the jobs market is looking up, housing sales and construction have been showing recent signs of improvement, business sales and profits are rising, and even many consumers are in better shape today than they were in 2010.

“Households have actually made a lot of progress in terms of working down that debt,” says Greg Ip, U.S economics editor of the Economist magazine. Credit card companies in December reported the lowest delinquency rates in years.

“One of the reasons that I don’t think the risks of a recession is extraordinarily high is that the parts of the economy that normally push us into a recession such as housing, automobile sales and business inventories; they’re all actually still quite depressed,” Ip says. “They never actually recovered much from their recessionary levels.”

Brian Hamilton, CEO of financial information firm Sageworks, said, “The jobs numbers are getting better.” Surveys of privately owned business sales show “the numbers are looking good.”

This week’s economic reports might offer fresh clues on whether the recovery really is picking up. The Institute for Supply Management comes out with findings on manufacturing and services-oriented companies. The government releases monthly reports on factory orders, construction and monthly employment.

While all the numbers could point to growth, the U.S. economy faces potentially severe headwinds from Europe. “Next year will no doubt be more difficult than 2011,” Germany’s Chancellor Angela Merkel said on New Year’s Eve. Europe is facing “its harshest test in decades.”

Slower growth in China is another potential negative, while Washington political gridlock and a fierce election campaign might also take a toll. “Our political system is getting worse, not better,” the Economist’s Ip says. “Every economist that you talk to says we should have short-term fiscal stimulus and long-term deficit reduction. And because of the battles in Washington, we seem to be getting the opposite.”

Copyright 2012 ABC News Radio´╗┐


High Heels for a Down Economy?

Comstock/Thinkstock(NEW YORK) -- When the economy heads south women’s heels go north.

A look back at decades of shoe fashion research reveals that high heels soared during the worst recessions. “Usually in an economic downturn, heels go up and stay up as consumers turn to more flamboyant fashions as a means of fantasy and escape,” says Dr. Trevor Davis, a consumer products expert with IBM Global Services.

From the depression in the 1930s to the oil crisis in the 70s, and the dot com crash in 2000, high heels replaced flats and low, thick heels.

But once again, this recession is different.

A computer-based analysis of the last four years of social media posts shows discussions of increasing heel height peeked near the end of 2009, and declined after that. “Key trend-watching bloggers between 2008 and 2009 wrote consistently about heels from five to eight inches,” says an IBM summary of its research.  “By mid 2011 they were writing about the return of the kitchen heel and the perfect flat from Jimmy Choo and Louboutin.”

While heels on many women’s shoes are still high, the social networking analysis suggests a change in trend.

“This time something different is happening,” says Dr. Davis about the current economic problems many shoppers face. “Perhaps a mood of long term austerity is evolving among consumers sparking a desire to reduce ostentation in everyday settings.”

IBM says its new research, “highlights the predictive capacities of social media analysis as a source of valuable insights” for businesses interested in market trends and planning future products.

Copyright 2011 ABC News Radio

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