Author Archives: schultka

First State to Enact GMO Food-Labeling Law

In the U.S., genetically modified food-labeling is optional. The Food and Drug Administration only makes sure that the food consumers consume is safe and wholesome, it does not consider the fact that the sources of GM foods are genetically engineered. Considering the FDA is responsible for protecting and promoting public health, you would think that the labeling of GMO foods would be a requirement by now. Altering crops’ genes can not only be harmful to the environment by causing a greater use of pesticides, but it can also potentially be harmful to human health. With this in mind, it is no surprise that more and more states are proposing bills to require GMO labeling. As of Wednesday, Vermont could likely be the first state in the country to require labels on genetically modified foods.

“The vast majority of corn and soybeans grown in the U.S. are GMOs, and food companies estimate that about 80% of U.S. packaged-food products contain GMO ingredients in some form.” With many people being aware that the use of genetically modified plants and animals has already become commonplace in today’s society, the lack of consumer consent in the choice to eat these foods creates an ethical dilemma. With nearly 80% of all prepackaged food in a normal grocery store containing GMOs, it is a bit concerning of whether or not these foods are safe. Similar to the way that drugs have to be tested to be put on the market and need to have the ingredients and side effects clearly labeled on the package, it should be the same case for food. Consumers should have the right to know what exactly they are eating. With very little testing having been done on genetically modified foods and long-term results being unclear, many other countries have already put much stricter regulations on GMOs. In the European Union, for example, the introduction of labeling requirements led to the virtual extinction of GMOs in food. Gov. Peter Shumlin of Vermont says, “I am proud of Vermont for being the first state in the nation to ensure that Vermonters will know what is in their food.”

However, the labeling of foods containing genetically modified ingredients will come with a cost to Vermont. Farmers, food manufacturers, distributors, and grocers will have to spend more on record keeping and compliance. Could this result in products being assigned a higher price than what a consumer would see them priced at in another part of the country? Considering the bill’s two-year timetable, it should give farmers and companies plenty of time to adjust. “There is no reason this would put a real burden on farmers, food makers or consumers,” according to the Wall Street Journal.

Save Money By Booking Early

The harsh, long winter that many people have faced this year has encouraged millions of travelers to book their summer trips early—people just want to get out and get to some place warm. With an increase in demand for summer travel, it is no wonder that summer travel prices are already on the rise. But besides this desire to escape the cold, could there also be something else behind this pent-up demand? Travelers are tending to travel farther away and stay for a longer duration of time. Could this possibly be caused by pent-up demand still from the recession? As we came out of the recession with a slow recovery, people tended to stay close to home and scale back summer trips.

Evidence for this comes from the Bureau of Labor Statistics, showing that travel expenditures during the period of 2005-2011 actually slowed. In response to the recent recession, expenditures on travel for pleasure declined sharply and still had not yet fully recovered by 2011. In 2008, the first full year of the recession, consumers reported expenditures that were almost 3.5% lower than those reported in 2007. Reported expenditures declined another 9.8% in 2009, the year the recession officially ended. Although expenditures increased modestly in 2010, they were still lower than their 2007 peak. In this period of a financial crisis accompanied by high unemployment, it is no wonder that people cut back on traveling. Now, however, more people may be feeling more financially secure and may be feeling that this is the summer to go.

Given our winter, and as you might expect, beach destinations are finding to be the most popular. Right now, the number one destination worldwide for summer travel on Orbitz is Cancun, Mexico. While this may not seem as a surprise, the summertime is actually usually the slow season in Cancun, due to the really high temperatures and it being hurricane season. A few of the other popular trending destinations have shown to be Hawaii, the Caribbean, and trans-Atlantic trips to Europe. Compared to last year during this time, U.S.-to-Europe bookings for summer trips are up 9%, according to Airlines Reporting Corp.

As the airline industry has consolidated through both mergers and joint ventures, it has resulted in this big increase in trans-Atlantic fares. On the other hand, multiple joint ventures will have 90% market share on flights between the U.S. and Europe, up from 80% last summer, which will take away some price competition.

Seeing that an increased demand for summer travel has led to an increase in prices, the advice that travel companies give in regards about when to buy summer airfare is simply that “earlier is better”. Chief executive of CheapAir.com says, “European airfares have already gone up an average of $100 since mid-January, and as planes fill up, fares go for remaining seats.” On the other hand, with domestic fares being so volatile, simply flying domestically on a Tuesday or Wednesday can yield great savings.

Coca-Cola’s Global Drop in Sales

It has been well-known that the consumption of soda has been linked with numerous adverse health effects: weight gain, poor dental health, diabetes and cardiovascular disease are just to name a few. Despite these known risks, however, Coca-Cola has remained the world’s largest beverage maker, with the average American typically consuming 45 gallons of soda per year. Health experts believe that this excessive consumption of soda in the U.S. has helped to heighten the obesity epidemic, with more than 69% of adults being considered overweight or obese.

With obesity being one of America’s most serious health problems, leading to diabetes and cardiovascular disease which can ultimately lead to heart attacks, it is no wonder why we continue to see an increase in health care spending year after year. “The main thing is excess calories,” says Dr. Christopher Ochner. “If everything else in their diet is equal, a person who has a can of Coke a day adds an extra 14.5 pounds to their weight per year, just from the calories alone.” One of the problems with sugary beverages such as soda is the method of consumption. When you consume a lot of calories through drinking, your body doesn’t register fullness as quickly as it does when you eat; thus leading to overconsumption of drinking.

Due to the overwhelming health effects associated with drinking too much soda, it is recommended that people should drop soda completely from their diet. And, as global sales volume shows, Americans may have started to take this into consideration. For the first time in 15 years, since 1999, Coca-Cola’s global sales dropped by 1%. As more consumers fret about health concerns and competition grows from “healthier” drinks, soda sales are beginning to fall in some of Coke’s largest markets. And, not only that, now Diet Coke, which helped to once offset declines in sales, is also losing drinkers as Americans start to turn away from artificial sweeteners as well. With declining sales, Coca-Cola is facing a tough time trying to meet its long-term goals of a 3-4% beverage volume growth and a 5-6% annual revenue growth.

But this setback is not putting a damper on the company. Coca-Cola is fully confident that growth rates will return to positive numbers again. Coke said in February that it would increase its advertising budget by $1 billion over the next three years, from $3.3 billion in 2013. But will advertising be the solution to their decline in sales or will Americans continue to shift their drinking habits away from this carbonated drink? As more and more people become aware of the importance of living a healthy life, Coca-Cola very well may continue to see declines in sales in the quarters to come.

“Mouse Infestation” Only a Minor Setback for Cronut Bakery

Barneys New York Invites You To Meet Chef Dominique Ansel And Experience CronutCronut Bakery, the New York City bakery that quickly became famous for their delicious croissant-doughnut hybrid treats, faced closure last week after receiving an inspection that was termed to be a “severe mouse infestation.” Regular customers who arrived at the bakery to find a closed sign hanging from the door were in dismay. During its 2013 inspection, the bakery actually received an A rating according to the health department’s website; so this infestation that would require professional pest control services was quite of a setback to the business.

The temporary closure was prompted by a video that was posted online, filmed by a customer, which showed a mouse scurrying across the bakery. Health officials were notified of the video and closed the bakery for further inspection.

Although customers were setback with the closure, the so-called mouse infestation did not show to have an effect on business as you might expect. It re-opened just a few days later and business was back, booming as before with lines starting to form outside the door ­­hours before it even opened the next morning. While in the short-run, Cronut Bakery faced a loss of profit from being temporarily closed and had to face costs of extermination and re-cementing of the building, in the long-run, the bakery fortunately has not seemed to experience any losses in customer sales. Customers continue to be just as eager as before to buy “the most virally talked about desert item in history.” The New York Post even reported that line-sitters were charging people who were too busy to wait in line up to $50 for the $5 pastry!

While nothing can kill a business more quickly than negative publicity, this was not the case for Cronut’s mouse infestation. Judging that Cronut has been open since 2011 and has had nothing but good reviews, faithful customers are not letting a video of a mouse running across the floor for three seconds deter their decision on choosing to buy pastries from this famous New York bakery. The bakery’s owner is taking this setback as an opportunity to keep moving forward and come back stronger. In Cronut Bakery, the pastry chefs cook in completely opened kitchens so everything they do is in full view. They are confident that they run a good, clean operation but since they were targeted, they plan to rise to the occasion to be even better.

Seeing that fans have shown support for the bakery and faithful customers are still willing to wait in line as opposed to taking their business elsewhere where other bakeries have attempted to create their own versions of the pastry, it does not seem that this temporary closure issued by the health department has affected business.  

Post-Recession Trend in Household Income

Despite the improving economy since the recession of 2008-2009 and although household income has begun to recover, the median household income in the United States still remains about 6% below the level that it was at when the recession began. As you can see from the graph generated using FRED, since the end of the recession, real household income has declined for nearly all population groups.

FRED

That is, for all but the most highly educated and affluent Americans, incomes have stagnated. In fact, the figures reveal that the income of the median American household today, adjusted for inflation, is no higher than it was for the equivalent household in the late 1980s. At the end of 2007, the real median household income was nearly $54,000. Five years later, in 2012, it was now just over $51,000.

Since the recession ended in 2009, those that have experienced income gains are almost entirely the top percent of earners. Those at the bottom percentage, on the other hand, have been affected by factors such as high rates of unemployment and nonexistent wage growth; thus seeing a decline in their household income. If minimum wage were to increase, this could help out households with lower incomes, especially those that are below the median.

An increase in minimum wages would also lead to an increase in purchasing power for these middle class and lower class households. While a little income inequality could be a good thing, too much income inequality does not allow for the middle class to get anywhere, no matter how hard they work. This can contribute to the slow recovery of the economy in that there is not enough purchasing power in the middle class and thus not enough demand for the goods and services available. So, if productivity rises and wages do not, we have an oversupply and the economy can’t function.

Not only did we see a drop in household income, but the share of people living in poverty hit 15.1%, the highest level since 1993, and a staggering 2.6 million more people moved into poverty, the most since Census began keeping track in 1959. Just think about all the high school graduates who were looking to go straight into the workforce or even college graduates looking for their first full-time job. The poverty level would even be higher if so many 20-30 year olds were not living at home with their parents. “It’s premature to say this is a permanent change, however,” says economist Michael Pakko. “We’re still dealing with a severe recession and a slow recovery.”

Italy’s “Disneyland of Food” (Revised)

When you think of a theme park, generally you think of roller coasters, waterparks, zoos, aquariums, and other attractions of the sort. In 2015, Italy plans to ditch the traditional theme park style and open up what will become the “Disneyland of Food”. With Italy being famous for its cuisine and culture, the theme park will feature nearly 125 restaurants, grocery stores, food courts, and learning labs. There will even be “live trees” where customers can pick their produce, as well as spaces for kids to play with food.

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The graph above shows Italy’s gross domestic product growth rate for the past few years. As you can see, GDP expanded 0.1% in the fourth quarter of 2013, which was its first increase in 10 quarters. With this economic downturn that Italy has been facing, creating the world’s largest theme park dedicated to Italian food might just be what the economy needs. Despite the large funds that will go into the development of this project, revenues are expected to be around 86 million euros ($118 million). With revenues like this, the theme park could easily help Italy’s economy start to emerge.

The development of a theme park has different effects and consequences on the economy of the host region. For example, Italy’s “Disneyland of Food” is more aimed towards the potential benefit of creating jobs to ultimately spur consumer spending, creating an educational opportunity for children, and promoting their culture and cuisine. Not only will the park provide a fun way for tourists to get a taste of Italy, but it will also provide a learning experience for young children. With all these goals in mind, Italy has the hopes of attracting some of its yearly tourists to the city of Bologna as a way to boost GDP growth. The theme park isn’t necessarily something that a tourist would visit Italy specifically for; however, if you were already planning to visit Italy, it would be a great addition to the city of Bologna in terms of bringing in extra revenue from tourists looking to experience the culture and cuisine of Italy.

On the other hand, other theme parks such as Cedar Point are solely focused on bringing in revenue for their host city. Sandusky isn’t exactly a city that would attract tourists on its own so building what has become the roller coaster capital of the world was one way to boost consumer spending. Each year, millions of people from all over the world travel to Sandusky specifically to experience the thrill of Cedar Point. After a successful season last year, Cedar Point revenues went up 6%, reaching nearly a billion dollars in revenue. With revenues like this year after year, you can see why Cedar Point is such a huge asset to the economy.

Not only will Italy’s “Disneyland of Food” create thousands of new jobs, providing income to customers which will ultimately spur consumer spending and result in GDP growth, but as the president of the city of Eataly states, “It is an opportunity to show off Italy’s extraordinary biodiversity of resources.” “And to help push us towards our economic potential.” With a little bit of advertising, I think Italy’s theme park of food will be a great effort to harness tourism in Italy to kick-start the economy by creating jobs and spurring consumer spending.

Will Cardiac Rehab Programs Actually Decrease Health Care Expenditures?

Since 1950, the developed world has experienced a continual increase in life expectancy at birth as well as a decline in fertility rates. Together, these trends imply that the population of the developed world is aging. This means that the age demographics of society as a whole are shifting towards a higher and higher share of elderly people. But why has life expectancy been increasing steadily for centuries? A big part of the reason is the gigantic strides that have been made in both medical understanding and medical technology.

In modern times, the leading causes of death include heart disease and lung cancer. And while medical advances continue to be made to help prevent and slow these diseases, it comes with a cost: an increase in health expenditures. Heart failure is a chronic condition in which the heart can’t pump a sufficient supply of blood to deliver oxygen to other organs in the body. Some 6.5 million Americans are living with heart failure and an additional 650,000 new cases are diagnosed each year, according to the American Heart Association, though Medicare data suggest the number is higher. As a result, heart failure is the single most common reason why Medicare beneficiaries end up in the hospital.

To counteract this high rate of hospital admissions due to chronic heart failure along with its hefty contribution towards health care expenditures, cardiac rehabilitation programs are beginning to open up for patients to attend regularly. With chronic heart failure being one of medicine’s most debilitating and costly illnesses, the goal for these programs is to give patients a chance to improve their functional capacity and quality of life and keep them out of the hospital by offering supervised exercising and counseling.

But will this decrease in hospital admissions actually reduce health care expenditures? The problem with assuming that a particular disease will greatly reduce expenditures is that it does not take into consideration competing risks, or the inevitable rise in hospitalization and mortality from other causes. For example, say that these cardiac rehab programs could actually help to completely prevent heart failure in the future. In this case, the rate of mortality and morbidity from all other diseases would just increase. These programs would be keeping the elderly alive long enough just for them to end up in the hospital due to some other degenerative disease. As a result, we would end up with elderly people living longer, thus contributing to our aging population, and eventually they would all end up in the hospital one way or another. Instead, maybe an increase in the age of when a person is eligible for Medicare would be a better solution to try to lower health care expenditures.

Amazon’s New Fire TV

Consumers not only want products that are cost-effective, but they want products that are convenient and are going to perform a given task with minimal effort. The days of the VHS are long gone and although many people still buy and use DVDs, it has become more common to stream movies and TV shows On Demand. However, we shouldn’t have to jump through hoops just to watch our favorite TV show. Personally, I find it a little inconvenient having to dig through apps or tediously type in searches one letter at a time via an onscreen keyboard in order to find what I want to watch.

To make the TV-watching experience that much more user-friendly, Amazon recently came out with the new Fire TV internet streaming box. It is the only set-top box that allows you to quickly search a world of videos, games, and even apps with only your voice. Besides having a remote with a built-in microphone to use your voice to search and navigate, the other feature that sets it apart from other video-streaming devices, such as Apple TV, Roku, and Google’s Chromecast, is its library of video games that you can play with the optional $40 controller. Many of the games that it offers are either free or priced at just a couple of bucks, allowing you to download a bunch of games without spending too much money. If you’re not looking to shell out a few hundred dollars on a gaming console, Fire TV could be a neat substitute.

However, there are a few pitfalls that make Amazon’s streaming device a bit of a setback. The convenience of Fire TV comes with a price: your devotion to Amazon. The search results are Amazon-centric, putting Amazon’s content of movies and TV shows front and center. Many of these you either have to pay to watch or you can only get them by paying the $99 per year fee for Amazon’s Prime service. By simply typing in a search, it may appear that you can buy it from Amazon or stream it for free if you are a Prime member, but it fails to mention that you could watch it for free if you have a Netflix account.

While Amazon may be headed in the right direction of providing a way to deliver the entertainment you want as quickly and as conveniently as possible, it still looks like it has a bit of improving to do if it wants to win customers over. On the other hand, if you’re already a committed Amazon customer and are a Prime member, Fire TV may be a worthwhile addition to your home.

The Mouse Is Still King

While touchscreen and the trackpad may have entered the market in an attempt to advance to the next wave of technology, the computer mouse still reigns king. Even as laptops and tablets have replaced the old desktops, mice sales have proved to remain pretty constant over the years, dropping just three percent according to research firm NPD. Not only are mice used for the latest desktop computers, but now more and more laptop users are adding mice to their productivity ensembles. A touch-screen monitor on a desktop or laptop sounds good, but it invites what some call “gorilla-arm” fatigue. Geoffrey Fowler of the Wall Street Journal shares his attempt in giving up his mouse for a trackpad:

“A few weeks in, I was missing my mouse. Moving a folder across a 27-inch iMac screen with the trackpad was like lugging a grand piano across the Sahara,” he says. “Thirty years after the Macintosh took the mouse mainstream, I couldn’t find anything more precise or comfortable for operating a computer. That fondness for the simplicity of the mouse remains.”

It’s surprising to see how much the mouse has improved. The figure below shows only a handful of the many mice that have evolved. Some, like the Apple Magic Mouse, have integrated some trackpad technologies into a regular mouse so you can move things left and right with the flick of your fingers without having to move your mouse with your fingers or click a button. Others, like the Penclic Mouse, allow you to hold it like a regular pen. It is described as a “really tiny mouse with a pen attached to it.” Mouse designers have also made leaps in ergonomics. Many are now more vertical, better mimicking the posture of a hand in its natural resting state, such as the Evoluent VerticalMouse which rotates your hand all the way on its side.

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The best part of the evolution of the mouse is that it is being designed to mimic the shape that your hand takes naturally at rest, to prevent you from straining your hand while also giving you enough control to be more efficient. At the end of the day, most people are still sitting in a chair at their desk and staring at a computer screen. For this purpose, clicking and moving a mouse with your hand has proven to be the most efficient method.

While today’s mice look far different than the old corded ones, adaptability has kept the mouse alive, though in a different form. Touchscreen or trackpad just can’t compete with the comfort, simplicity, and effectiveness of the hand-held mouse. Even as the mouse continues to transform its shape, some even taking on the form of a pen, it’s hard to imagine any type of new technology that will put the mouse in the grave.

Climate Change Damaging Global Economy

Global warming is a long-term problem and the impacts of climate change are slowly beginning to take a greater and greater toll on the economy in terms of economic output and growth. Climate change is having a widespread impact on everything from water resources to food production and weather patterns. Sea-level rise, floods, droughts, wildfires, and extreme storms not only cause great damage to property and infrastructure which calls for unforeseen government expenses towards extensive repair, but they also disrupt everyday life which can result in lost productivity. For example, sudden climate changes can mean lost work or school days as well as an impairment to transportation, agriculture, fisheries, and even tourism. To put things into perspectives, a report released by the United Nations Intergovernmental Panel on Climate Change said that a global temperature rise of just 2.5 degrees Celsius above preindustrial levels could lead to global economic losses between 0.2% and 2.0% of income. By the end of the century, it said that climate change could reduce labor productivity by 11% to 27% in humid, tropical areas.

Changing precipitation and melting ice are altering hydrological systems, affecting water resources in terms of quality and quantity. In addition, many marine species have shifted their geographic ranges, seasonal activities, and migration patterns to adapt to these changes. The largest impact, however, has been on crops, with negative impacts outweighing the positive impacts.

There are large differences between and within countries, however, impacts are being felt most heavily in developing countries. In Bangladesh, for instance, climate change has resulted in total losses of about 3-4% of GDP. Sheikh Hasina, Bangladesh’s prime minister, states that “A 1C rise in temperature is associated with 10% productivity loss in farming.” It is the equivalent of losing 4 million tons of food grain, amounting to about $2.5 billion in addition to adding up the damages to property and other losses. It is estimated that by 2030, the cost of climate change and air pollution combined will rise to 3.2% of global GDP with the world’s least developed countries suffering losses up to 11% of their GDP.

For countries at all levels of development, these impacts are consistent with a significant lack of preparedness for current climate variability. Throughout the 21st century, climate-change impacts are projected to slow down economic growth, make poverty reduction more difficult, and prolong existing and create new poverty traps. With losses possibly accelerating with greater warming, a call for swift actions on greenhouse gas emissions is a step in the right direction.