Whoever the next United States president is, he or she may have to deal with a recession. The declining unemployment rate could be because people are dropping out of the workforce, says a new report. Republican frontrunner Donald Trump is in hot water over his "wonderful" eminent domain remarks. Your iPhone battery is being drained because of Facebook. And flexibility is a perk that’s just as important as how much you earn.
These are the five global business headlines from last week.
1. Odds of a U.S. Recession Grows
A recession transpires every five to eight years, and since it’s been several years since the Great Recession, we’re due for another one.
Bloomberg News released a new poll of economists that found the odds of another recession occurring in the United States next year to be growing. As the Federal Reserve debates raising interest rates and the U.S. faces a number of weak economic data points, the poll of economists may prove to be very important to the central bank
The poll, which took place between Oct. 2 and Oct. 7, found that the chances of a recession happening in the U.S. within the next 12 months increased to 15 percent, up from the 10 percent that it was 13 months ago.
One of the reasons why financial experts present the case that another economic downturn could unfold is because the crisis in China could very well spill into the U.S. and other world markets. This is something the Federal Open Market Committee (FOMC) has delved into during its last policy meeting in September.
“Although U.S. economic data releases generally met market expectations, domestic financial conditions tightened modestly as concerns about prospects for global economic growth, centered on China, prompted an increase in financial market volatility and a deterioration in risk sentiment during the intermeeting period.”
Critics of the Fed argue that the central bank won’t raise rates because it doesn’t want to risk the president leaving office in the middle of a recession. Whatever the case, President Obama’s successor will have to deal with a recession.
2. Low Jobless Rate Because People Dropping Out of Workforce
The U.S. labor market has improved significantly since the financial crisis. Due to the Federal Reserve pumping money into segments of the U.S. economy, the boom phase is in full gear and only areas that rely on government transfer payments are booming.
Because of this, the unemployment rate has fallen all the way down to just over five percent.
A new report suggests that the reason why the jobless rate has fallen substantially is because American workers are exiting the labor market. In fact, according to the Goldman Sachs Group, the unemployment rate will dip to 4.5 percent as more and more workers drop out of the workforce.
The labor force participation rate, otherwise known as a share of the working population (over 16 or looking for a job), stands at a 37-year low with 62.4 percent. Goldman Sachs analysts purport that a declining workforce participation rate is part of a long-term, economic shift, and such a trend will not be reversed. Why’s this happening? Baby Boomers are retiring.
The report suggests that the labor force participation rate will drop every year by a quarter of a percent for the next several years. At the same time, the unemployment rate will benefit from this because it’ll continue to experience a downward trend during the same timeframe.
“The downward revision to our participation forecast has directionally hawkish implications for monetary policy,” according to Goldman. “At the margin, this is consistent with the greater desire to start normalizing the funds rate that many Fed officials have recently expressed. It is also worth keeping in mind that our results still show a considerable amount of remaining labor market slack, which is consistent with the continued softness of wage and price inflation.”
3. Donald Trump in Hot Water Over Eminent Domain
The Donald thinks eminent domain is "a wonderful thing." However, his GOP opponents and victims of eminent domain would beg to differ.
Speaking in an interview with Fox News, Trump defended the policy of eminent domain, which enforces the power of a state or a national government to take private property for public or private use. Trump has personally benefited from eminent domain for years now.
The billionaire real estate mogul and GOP frontrunner averred that eminent domain is "wonderful" because it helps create jobs, roads and hospitals, and most of all, it does great things for the general public. He noted that there’s a misconception that developers are "taking property," but instead "you’re paying a fortune for that property," even as high as 10 times what the land is worth. Essentially, what’s touted as fact is actually a myth, says Trump.
He added that eminent domain for massive projects leads to the creation of thousands of jobs. Unfortunately, he says, you’ll always have that one person holding out for far more, but obtaining their property is imperative to the construction of a factory or massive development that will employ many people.
The reason why the topic of eminent domain, something that’s quite obscure, came to light is because the Club for Growth ran attack ads on Trump in relation to eminent domain. Trump defended himself by saying the conservative group wanted a donation, but he wouldn’t provide cash to the group.
But Trump’s affair with eminent domain goes back as far as 1994. More than 20 years, Trump partnered with Atlantic City authorities to seize the home of a senior, which would be used to build a limousine parking lot for his Trump Plaza hotel and casino.
4. Facebook is Draining Your iPhone Battery
In the past couple of years, Facebook has seen its mobile share soar. More people are using the social network on their mobile phones than ever before. But this is coming at a cost: dying batteries.
Facebook users assert that the company’s iPhone app is eating up huge amounts of battery charge, even when it isn’t open. Users allege that the app records long periods of background activity, even if the background refresh is disabled.
Industry experts note that the "ridiculous amount of analytics alone in Facebook should be enough to drain your battery, never mind location sharing." Indeed, it’s a mix of location tracking of users and the power of the app that is hurting the iPhone battery.
Facebook confirmed that it’s "looking into this and hope to have a fix in place soon."
Just how does the Facebook iPhone app work? Well, it logs a user’s specific location to initiate a history of places the user visited. Also, a record is created for an array of location services built into both the Facebook app and its Messenger and Instagram apps.
Researchers note that this is just another case of "bad software engineering in the App Store."
5. Flexibility as Important as Salary: Poll
For those professionals who maintain in-demand skills - sorry, millennials, your degree in 10th century drama doesn’t count - they want one perk that, to them, is just as important as their earnings: flexibility.
That’s right. Flexibility, the ability to telecommute or work certain hours while still completing your hourly obligations. CNBC likens this trend as the "show me the flexibility" labor market.
According to a new survey by Modis, a technology staffing firm, discovered that "flexible work hours" is the most desired benefit among today’s generation of workers. The results of the survey found that more than half of the respondents selected flexible hours as their top perk.
Other perks that respondents chose were unlimited vacation time, on-site child care and free food.
Jack Cullen, president of Modis, said in a statement that individuals are happier when they have the opportunity to solve problems when they arise. Cullen believes employers are already seeing flexible hours as a real want, and even need, for workers. And if an employer wants to attract and retain the best and brightest then this may be a necessary policy.
"Gone are the days when you just put out a foosball table," Cullen said. "We know that in high-demand skill areas, there’s pent-up demand and there aren’t enough resources out there. I don’t think you can just continue to pay more and more. At some point, you’ve got to be creative."
These types of perks are already being seen in the startup and tech fields, where there is a war for labor occurring. One startup is trying to invoke a "fun" atmosphere, while another established company is giving workers unlimited maternity leave. Although this may change once the bubble in these areas of the economy burst, they may prove to be a challenge for large businesses that will be around for years to come.
Donald Trump or Hillary Clinton, the next U.S. president in 2016 may have face a recession in their first year in office. The falling jobless rate is because workers are exiting the labor force. Trump is facing flack from his GOP opponents over his stance on eminent domain. Facebook’s tracking could be the cause of your iPhone battery dying so quickly. And employees want flexibility at the office.
What is your opinion on these news items? Let us know in the comments section.