Economic Overview

This week, The Economist published an overview of the previous weeks economic headlines. Here are the overviews:

Economic and financial indicators
America's businesses (excluding farms) added 128,000 workers to the payrolls in August. The unemployment rate fell slightly, to 4.7%. Unit labour costs are also rising faster than previously thought. In the second quarter they increased at an annual pace of 4.9% (in the non-farm business sector), compared with earlier estimates of 4.2%; in the first quarter they rose by a revised 9%.

America's house prices increased by just 1.2% in the second quarter, according to the Office of Federal Housing Enterprise Oversight, which publishes the most reliable, but least timely, house-price figures. This was the smallest quarterly gain since 1999 and a marked slowdown from the 2.2% increase recorded in the first quarter.

In Japan companies raised their investment spending by 16.6% in the year to the second quarter. The figures were stronger than expected and helped to lift the yen, which had been languishing.

In the euro area the volume of retail trade grew by 2.5% in the year to July. But surveys of purchasing managers a month later revealed a slowdown in both services and manufacturing. The index for services fell to 57.1 in August from 57.9 in July; the index for manufacturing fell to 56.5 from 57.4.

Britain's industrial production in the three months to July was only 0.1% higher than in the previous three months.

Emerging-market indicators
Thailand's GDP growth slowed to 4.9% in the year to the second quarter, down from 6.1% in the first. Brazil's growth fell from 3.3% to 1.2% over the same period—the slowest growth of any economy in our table.

In August the inflation rate fell in several Asian economies, including Taiwan, Thailand and Indonesia. Turkey's rate also eased to 10.3%, from 11.7% in July. But Argentina's inflation edged up to 10.7%.

Earth's Velocity Through Space

"Confused About Your Direction?"
September 2006 -- By Bob Berman, Discover

If you lack a sense of personal trajectory, astronomers can help.

Throughout most of history, humanity hasn't had a clue about where it's going. The idea that we're all being whisked through space aboard a spinning Earth was alien even to brilliant thinkers like Aristotle and Pythagoras. The first to argue that our planet is in motion was Heracleides, who in 350 B.C. maintained that Earth turns on an axis. A century later, Aristarchus of Samos earned a lot of laughs for saying that we go around the sun, not the other way round.

Not until the Renaissance did educated people accept that Earth rotates daily, spinning us all steadily eastward. If you've got a calculator handy, you can quickly determine your speed: Multiply the cosine of your latitude by 1,038. For instance, if you live in Denver, latitude 40, punch in "40," hit the cosine key, and multiply. Answer: 795 miles per hour. You are breaking the sound barrier just by sitting on your couch.

That's only the beginning of your astronomical movements. As Earth orbits the sun, it plows through space at 18.5 miles per second, or about 67,000 mph. At sunrise, the direction of Earth's travel is pretty close to straight overhead. The velocity is not constant, though, because Earth follows an elliptical path and accelerates as it moves closer to the sun. Counterintuitively, the top speed occurs in early January, the minimum in July.

Nearly a century ago, American astronomer Harlow Shapley enlarged the perspective on our motion. He discovered that we're not sitting at the center of our galaxy, the Milky Way. Instead, we're about two-thirds of the way to the edge, making a huge loop around the galactic core every 250 million years or so. Astronomers before Shapley had already determined that the sun and its planets are moving toward the constellation Hercules at about 12 miles per second. Today we know that this is just a sideways drift superimposed on our main forward speed around the Milky Way—a brisk 144 miles per second, about one-thousandth the speed of light. That motion carries us toward the bright star Deneb, which is high overhead this month. We will be where Deneb is now, 1,600 light-years away, in a million and a half years.

Still, we're not finished. Our entire galaxy rushes toward the Andromeda galaxy at 80 miles per second. Zoom out farther and our local group of galaxies is yanked toward "the Great Attractor," a mysterious concentration of mass beyond the constellation Virgo. Even big telescopes can't really spot the source of the pull.

On the largest scale, everything is flying apart, a cosmic divorce dictated by the expansion of the universe in all directions. Measuring the exact value of that expansion yields hints about whether the universe will keep growing forever or will someday halt and then contract. Current studies say the expansion rate is around 14 miles per second for each million light-years of distance. Alien astronomers in a galaxy 100 million light-years away would see us whizzing in the opposite direction at 1,400 miles per second.

Or are they moving away from us? The usual interpretation is that the space between us is increasing, so everybody is moving and yet nobody is actually moving. That's another way of saying that there is no center to the Big Bang. It happened everywhere and nowhere. Perhaps all we can say for sure is that we've come a long way, yet we're still going nowhere—fast.

Wal-Mart, Light Bulbs, & Conscientious Consumption

Excerpts from:
"How Many Lightbulbs Does it Take to Change the World? One. And You're Looking At It"
September 2006 -- By Charles Fishman, FastCompany.com

For years, compact fluorescent bulbs have promised dramatic energy savings--yet they remain a mere curiosity. That's about to change.

Compact fluorescents emit the same light as classic incandescents but use 75% or 80% less electricity.

What that means is that if every one of 110 million American households bought just one ice-cream-cone bulb, took it home, and screwed it in the place of an ordinary 60-watt bulb, the energy saved would be enough to power a city of 1.5 million people. One bulb swapped out, enough electricity saved to power all the homes in Delaware and Rhode Island. In terms of oil not burned, or greenhouse gases not exhausted into the atmosphere, one bulb is equivalent to taking 1.3 million cars off the roads.

That's the law of large numbers--a small action, multiplied by 110 million.

The single greatest source of greenhouse gases in the United States is power plants--half our electricity comes from coal plants. One bulb swapped out: enough electricity saved to turn off two entire power plants--or skip building the next two.

Just one swirl per home. The typical U.S. house has between 50 and 100 "sockets" (astonish yourself: Go count the bulbs in your house). So what if we all bought and installed two ice-cream-cone bulbs? Five? Fifteen?

Says David Goldstein, a PhD physicist, MacArthur "genius" fellow, and senior energy scientist with the Natural Resources Defense Council: "This could be just what the world's been waiting for, for the last 20 years."

Swirl bulbs don't just work, they pay for themselves. They use so little power compared with old reliable bulbs, a $3 swirl pays for itself in lower electric bills in about five months. Screw one in, turn it on, and it's not just lighting your living room, it's dropping quarters in your pocket. The advantages pile up in a way to almost make one giddy. Compact fluorescents, even in heavy use, last 5, 7, 10 years. Years. Install one on your 30th birthday; it may be around to help illuminate your 40th.

In an era when political leaders and companies are too fainthearted to ask Americans to sacrifice anything for the greater good, the modern ice-cream swirl bulb requires no sacrifice. Buying and using it helps save the world--and also saves the customer money--with no compromise on quality. Selflessness and self-satisfaction, twirled into a single $3 purchase.

So far, the impact of compact fluorescents has been trivial, for a simple reason: We haven't bought them. In our outdated experience, they don't work well and they cost too much. Last year, U.S. consumers spent about $1 billion to buy about 2 billion lightbulbs--5.5 million every day. Just 5%, 100 million, were compact fluorescents. First introduced on March 28, 1980, swirls remain a niche product, more curiosity than revolution.

But that's about to change. It will change before our very eyes. A year from now, chances are that you yourself will have installed a swirl or two, and will likely be quite happy with them. In the name of conservation and good corporate citizenship, not to mention economics, one unlikely company is about haul us to the lightbulb aisle, reeducate us, and sell us a swirl: Wal-Mart.

In the next 12 months, starting with a major push this month, Wal-Mart wants to sell every one of its regular customers--100 million in all--one swirl bulb. In the process, Wal-Mart wants to change energy consumption in the United States, and energy consciousness, too. It also aims to change its own reputation, to use swirls to make clear how seriously Wal-Mart takes its new positioning as an environmental activist.

It's a bold goal, a remarkable declaration of Wal-Mart's intention to modernize and green up a whole line of business using market oomph. Teaming up with General Electric, which owns about 60% of the residential lightbulb market in the United States, Wal-Mart wants to single-handedly double U.S. sales for CFLs in a year, and it wants demand to surge forward after that.
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Which presents a daunting challenge: Wal-Mart's push into swirls won't just help consumers and the environment; it will shatter a business--its own lightbulb business, and that of every lightbulb manufacturer. Because swirls last so long, every one that's sold represents the loss of 6 or 8 or 10 incandescent bulb sales. Swirls will remake the lightbulb industry--dominated by familiar names GE, Philips, Sylvania--the way digital-music downloads have remade selling albums on CD, the way digital cameras revolutionized selling film and envelopes of snapshots. CFLs are a classic example of creative destruction.
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Incandescent lightbulbs and spiral lightbulbs make light in entirely different ways, and it is that difference that makes spirals so potent. In a classic 60-watt incandescent bulb, light comes from the little metal filament quivering inside the sealed glass bulb. Electricity passes through the metal thread, heating it to 2,300 degrees Celsius, and the filament glows with the heat and throws off light. Electricity creates heat, heat creates light. It's why incandescent bulbs are so hot--the glass is often 300 degrees. In the trade, incandescents are sometimes known as "a hot wire in a bottle."

Compact fluorescents are something else again. In a fluorescent bulb, the glass tube is filled with gas and a tiny dot of mercury. Electricity leaps off electrodes on either end of the tube and excites the mercury molecules, which have a special property: When so excited, they emit ultraviolet light. That invisible UV light strikes the bulb's phosphor coating, which itself gets excited and emits visible light, which shines out through the tube. Heat is much less of a factor--CFLs run at about 100 degrees.

Making the ionized fog bottled inside a CFL dance to the same steady tune as an incandescent has required a lot of research, and an electronics revolution. Early CFLs cost $25 per bulb (and still paid for themselves in electricity savings). The light they produced was bluish or pinkish, or varied; the phosphor coating had to be refined. The ballast--built into the bulb rather than in a separate fixture, as with traditional fluorescent tubes--hummed and didn't cycle the electricity quickly enough; it had to be made electronic and miniaturized. Costs came down, as did size. The same wizardry that gives us Hallmark birthday cards that play "Love and Happiness" makes possible CFLs at $2.60 instead of $25.

It is this--the way swirls make light--that saves so much energy. In an incandescent, only 5% to 10% of the electricity passing through the wire becomes visible light; the rest becomes heat and invisible UV light. The vibrating mercury vapor atoms in a fluorescent bulb produce light more efficiently than a tungsten filament. You get more photons for every watt of electricity pumped in. An old-fashioned incandescent makes 15 lumens per watt; a 60-watt bulb shines with 900 lumens. In a CFL, you get 60 lumens per watt. To get 900 lumens--to get the light you expect from a 60-watt bulb--you need only 15 watts.

A 60-watt classic bulb and a 15-watt swirl are identically bright--the swirl just uses 45 fewer watts.

The Swirl Cascade

What really revolutionizes the lightbulb experience, and the business itself, is a second quality of swirls, beyond their ability to squeeze more light from a kilowatt: their longevity.

The compact fluorescents that GE, Philips, and Sylvania are putting on shelves are rated to run for 8,000, 10,000, or 12,000 hours. Few bulbs in a home are lit more than four hours a day; at that rate, an 8,000-hour bulb lasts five-and-a-half years; a 12,000-hour bulb lasts eight years and three months. As swirls take hold, it will be a surprise, a novel event, when a lightbulb goes dark. Imagine all those hard-to-reach bulbs that need to be replaced every three months. From four times a year, to once a decade.

And the impact of swirls cascades outward. Since every CFL has the life span of 6, or 8, or 10 equivalent incandescent bulbs, if Wal-Mart alone sells 100 million swirls in the next year, it does away with the need for 100 million old-fashioned bulbs to be manufactured, packaged, shipped, bought, and discarded next year--and every year until 2012 or beyond.
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"It's certainly possible to see a day when a cartoonist will draw a cartoon with a character having an idea," says Kerby, "you know, with the traditional-shaped incandescent lightbulb going on over the character's head--and my grandchildren will look at that and not know what it means. And that's not a bad thing, because we'll be living in a much better world."

Biofuels Strain Food Supplies

"Biofuels Could Strain U.N. Goals of Ending Hunger"
August 24, 2006 — By Alister Doyle, Reuters via ENN

STOCKHOLM--Rising production of biofuels from crops might complicate U.N. goals of ending hunger in developing countries, where 850 million people do not have enough to eat, a senior U.N. official said on Wednesday.

"There's a huge potential for biofuels but we have to look at ... competition with food production," said Alexander Mueller, assistant Director General of the U.N. Food and Agriculture Organization (FAO).

Production of fuels from sugar, maize, soybeans and other corps is surging, spurred by oil prices above $70 a barrel and a drive for more environmentally friendly fuels from renewable sources.

"This is a completely new issue, we only know that this has impact on the question of feeding the world," he told a news conference during a meeting of 1,500 water experts in Stockholm.

Still, he said that a surge in biofuels production in the past year or two had not hampered food supplies. "We have to find out what the situation will be in 5 to 10 years ... a lot of research has to be done," he said.

Biofuels now make up only a fraction of a percent of world energy use but have an economic potential to rise to perhaps 6 percent by 2050, according to rough FAO estimates.

"This is an emerging issue with no clear figures and no guidelines," Mueller said. The rise of biofuels could also strain world water supplies -- about one in three people live in areas where water is scarce, he said.

He also said that the world would need better management of fresh water to "feed all the people and to produce energy for the world."

Mueller said biofuels presented one of three major challenges for farming, alongside climate change and a rising world population.

Food output would have to rise by 40 percent in the next 25 years to keep pace with a rise in the world population to nine billion people. That in turn will strain demand for irrigation with one in three people living in regions with water shortages.

And climate change might bring more droughts, floods, heat waves and erosion. Most scientists say that emissions of greenhouse gases, largely from burning fossil fuels in power plants, factories and cars, are warming the planet.

Expedia & TerraPass Partnership

Excerpts from:
"Expedia.com Offers Travelers a Greener Way to Fly"
August 28, 2006 -- Forbes.com

Expedia.com(R), the world's leading online travel provider, today became the first online travel agency to offer travelers the ability to purchase carbon offsets -- carbon dioxide reduction measures used to help cancel out the greenhouse gas emissions that lead to global warming. Expedia(R) is offering the service through TerraPass, the leading retailer of greenhouse gas reduction projects in the U.S.
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Airline travel currently accounts for about 13 percent of U.S.- transportation-based emissions of carbon dioxide, the primary greenhouse gas responsible for global warming. To help address this, Expedia is partnering with TerraPass to make it simple for environmentally conscious travelers to be carbon-balanced travelers by purchasing a TerraPass from Expedia as part of their trip.

Expedia travelers can now pay a small fee to sponsor a measured, verified reduction in greenhouse gas emissions directly proportional to the emissions created by their plane flight. TerraPass funds domestic clean energy projects, such as wind farms, innovative "cow power" methane capture plants on American dairies, and the retirement of carbon offsets on the Chicago Climate Exchange.

"Expedia is the pioneer for responsible tourism in the travel industry, and TerraPass is a pioneer in the market for simple, affordable tools to fight climate change," said Tom Arnold, Chief Environmental Officer, TerraPass. "One year ago Expedia formed the World Heritage Alliance in partnership with the United Nations Foundation to support sustainable tourism to World Heritage sites. We're thrilled to join with Expedia in this latest initiative to raise awareness of simple options for environmentally friendly travel."

"The voluntary market for greenhouse gas reductions has tremendous potential and this is an innovative initiative enabling consumers to reduce their greenhouse gas impact. It is a market we want to support and help to develop by providing certainty for consumers through our verification process," said Lars Kvale, Center for Resource Solutions measurement and verification services analyst.

Expedia.com travelers can choose from three levels of TerraPass to purchase during the process of booking a flight or package, or as a standalone component on Expedia's Activities page (www.expedia.com/activities). Prior to checkout, Expedia customers will be offered a chance to purchase a TerraPass that funds enough clean energy to balance out the CO2 emissions caused by their flights.

For example, a typical flight from New York to Los Angeles creates about 2,000 lbs. per passenger of carbon dioxide (CO2), the principal greenhouse gas. Pricing starts at $5.99 to offset about 1,000 lbs of CO2, the approximate amount per passenger emitted by a 2,200 mile round-trip flight. A TerraPass to cover cross-country and international flights is $16.99 for up to 6,500 flight miles, and $29.99 for up to 13,000 flight miles. Travelers who purchase a TerraPass for cross-country or international flights will receive a luggage tag that indicates their contribution to green travel. Travelers who purchase a TerraPass for short-haul flights will receive a decal.

Expedia is offering TerraPass to its customers at cost, so all proceeds will go towards TerraPass' greenhouse gas reduction efforts. All TerraPass sales and support of clean energy projects are independently audited by the Center for Resource Solutions, a San Francisco non-profit that runs market surveillance and certification programs in the green power industry. For more information, visit www.expedia.com/activities and search in any destination, or click on this link: http://www.expedia.com/pub/agent.dll?qscr=tsdt&stat=5&ofid=6779

Economics Overview

This week, The Economist published an overview of the previous weeks economic headlines. Here are the overviews:

Economic and financial indicators
America's businesses (excluding farms) added 128,000 workers to the payrolls in August. The unemployment rate fell slightly, to 4.7%. Unit labour costs are also rising faster than previously thought. In the second quarter they increased at an annual pace of 4.9% (in the non-farm business sector), compared with earlier estimates of 4.2%; in the first quarter they rose by a revised 9%.

America's house prices increased by just 1.2% in the second quarter, according to the Office of Federal Housing Enterprise Oversight, which publishes the most reliable, but least timely, house-price figures. This was the smallest quarterly gain since 1999 and a marked slowdown from the 2.2% increase recorded in the first quarter.

In Japan companies raised their investment spending by 16.6% in the year to the second quarter. The figures were stronger than expected and helped to lift the yen, which had been languishing.

In the euro area the volume of retail trade grew by 2.5% in the year to July. But surveys of purchasing managers a month later revealed a slowdown in both services and manufacturing. The index for services fell to 57.1 in August from 57.9 in July; the index for manufacturing fell to 56.5 from 57.4.

Britain's industrial production in the three months to July was only 0.1% higher than in the previous three months.

Emerging-market indicators
Thailand's GDP growth slowed to 4.9% in the year to the second quarter, down from 6.1% in the first. Brazil's growth fell from 3.3% to 1.2% over the same period—the slowest growth of any economy in our table.

In August the inflation rate fell in several Asian economies, including Taiwan, Thailand and Indonesia. Turkey's rate also eased to 10.3%, from 11.7% in July. But Argentina's inflation edged up to 10.7%.

Are Hybrids Cheaper?

"Some Hybrid Vehicles Becoming Sensible Purchases, According to Edmunds.com"
August 22, 2006 — Edmunds.com

SANTA MONICA, Calif. — Edmunds.com latest hybrid study shows that despite higher sales prices, purchasing some — though not all — of today's hybrids can make good financial sense.

For the latest installment of its Fuel Economy Guide, Edmunds.com compared the sales prices and annual gas expenses of hybrid vehicles and their non-hybrid counterparts.

"Our study revealed that high gas prices and generous tax credits now offset the high sales prices of some hybrids, assuming owners keep their hybrids for a few years," said Alex Rosten, Manager of Pricing and Market Analysis for Edmunds.com.

Edmunds.com's study indicates that the higher purchase price is completely recovered for the Ford Escape Hybrid and Toyota Prius within three years of ownership, while buyers of the Honda Civic Hybrid, Saturn VUE Green Line and Toyota Camry Hybrid reach break-even within six years of ownership, in each case assuming the vehicle is driven 15,000 miles per year.

Chart available here.

Full tax credits are only provided to consumers until shortly after each manufacturer has sold 60,000 hybrids. After that threshold is reached, the tax credit gets cut in half. For Toyota and Lexus buyers, that threshold has been reached — so anyone who buys a Toyota or Lexus hybrid after September 30, 2006 will only qualify for half the tax credit. The credit for these models will drop to 25% in April 2007 and then to zero in October 2007.

"If you're in the market for a hybrid, right now is the best time to buy," said Joanne Helperin, Senior Editor of Edmunds.com's Fuel Economy Guide. "It will take buyers much longer to break-even if their tax credit is halved."

This hybrid study assumed the vehicles were sold at the Edmunds.com True Market Value® price and achieved the Environmental Protection Agency's recorded mileage for combined city and highway driving. The 2006 federal tax credit was applied when appropriate. Figures were calculated based on the assumption that one gallon of gasoline costs $3.00 (which was the nation's average price for regular unleaded fuel on Aug. 14, 2006).

For more information about this study, please visit here.