Economy

Advance Estimate of GDP for the Third Quarter of 2014

10/30/14

Economic growth in the third quarter was strong, consistent with a broad range of other indicators showing improvement in the labor market, rising consumer sentiment, increasing domestic energy security, and continued low health cost growth. Since the financial crisis, the U.S. economy has bounced back more strongly than most others around the world, and the recent data highlight that the United States is continuing to lead the global recovery. Nevertheless, more must still be done to boost growth both in the United States and around the world by investing in infrastructure, manufacturing, and innovation; and to ensure that workers are feeling the benefits of that growth, by pushing to raise the minimum wage and supporting equal pay.

FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF ECONOMIC ANALYSIS

1. Real gross domestic product (GDP) grew 3.5 percent at an annual rate in the third quarter of 2014, according to the advance estimate from the Bureau of Economic Analysis. The strong growth recorded in each of the last two quarters suggests that the economy has bounced back strongly from the first-quarter decline in GDP, which largely reflected transitory factors like unusually severe winter weather and a sharp slowdown in inventory investment. In the third quarter, net exports made a large positive contribution to growth, while consumer spending and business investment grew at a somewhat slower pace than the previous quarter.

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Accelerating Advanced Manufacturing in America

10/28/14

On Monday, we had the privilege of participating alongside the President in a meeting with his American Manufacturing Partnership (AMP) Steering Committee.

AMP -- led by its co-chairs, Dow’s Andrew Liveris and MIT’s Rafael Reif -- presented its final report with a set of new recommendations, and we discussed additional policy steps we’re taking to respond to them.

The President created AMP -- a working group of 19 leaders in industry, academia, and labor -- in June 2011 as part of his continuing effort to maintain the competitive edge on emerging technologies and invest in the future of our manufacturing sector. We’ve come a long way since then, and the policies fueled by AMP’s recommendations have been a big contributor to that progress.

When the President first launched AMP, unemployment was at 9.1 percent. We were just starting to see some fragile signs of life in the manufacturing sector after more than a decade of erosion. But not many shared our view that together we could build a foundation to revitalize American manufacturing or that manufacturing could continue to play a central role in our economy and our ability to innovate.

Contrast that picture to today. Growth has steadily strengthened and recently accelerated, with GDP rising 2.6 percent over the past year, faster than the 2.0 percent annualized pace of the preceding two years. Job growth is accelerating too. Unemployment is now down to 5.9 percent, falling 1.3 percentage points in the last year.

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Chart of the Week: Catching Up with the Competition on Infrastructure Investment

10/24/14

In the United States of America, we invest less than 1 percent of our GDP in transportation infrastructure. We rank 28th in the world among advanced nations. We rank 28th in the world. The greatest country in the world ranks 28th in the world. And it costs in every way.

– Vice President Joe Biden

The Vice President has been traveling across the country, making the case that we need to invest in American infrastructure. Since 2009, the Obama administration has improved over 350,000 miles of roads, more than 6,000 miles of rail, and repaired or replaced over 20,000 bridges. As the Vice President says, “These are long-term investments in the health, the might and the dynamism of this country.”

But right now, 65 percent of our major roads are still rated in less than good condition, and 25 percent of our bridges require significant repair.

The world is not waiting, and the U.S. is lagging behind other advanced countries when it comes to total transportation investment.

Take a look at this chart to see where the U.S. ranks when it comes to investment in our basic infrastructure:

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What USDA Did This Week to Help Rural America:

10/24/14

This post is the first in a new series that will highlight the work happening across the President's cabinet on any given week. Check back each week -- we guarantee you'll learn something that surprises you.

Those of us who call rural America home know that there’s more to the rural economy than just farms and ranches. From bio-based products to rural manufacturing, the potential to grow and make innovative products in rural America is limitless. Most rural businesses are small ones -- and they support one in three jobs in rural America. Our loans and grants are helping those businesses thrive -- supporting reliable services like water, housing and broadband to make these same communities attract and retain a talented workforce. Collectively, these investments support the businesses and families that call America’s rural areas “home.” That's because we know that the better we equip those communities with the resources they need to succeed, the stronger our entire country's economy will be as a result.

I'm proud to report that the Department of Agriculture did several really important things to help rural communities across the country this week. Here's a run down on what we've been up to. Take a look, and if you learned something new -- pass it on.

Want to stay up to date with USDA? Follow along with us on Twitter at @USDA.

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West Wing Week 10/24/14 or, "A Chip and PIN"

10/23/14

This week, the President took action to make consumers' credit card transactions more secure, voted early at the Martin Luther King Jr. Community Service Center in Chicago, welcomed the new Ebola Response Coordinator on his first day on the job, and talked science and tech with some of his top advisors. That's October 17 to October 23 or, "A Chip and PIN."

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A Small Business Owner's Perspective: "A High Road on the Minimum Wage"

10/20/14
President Barack Obama and Rep. Gary Peters, D-Mich. stop for lunch at Zingerman's Delicatessen in Ann Arbor, Mich., April 2, 2014.

President Barack Obama and Rep. Gary Peters, D-Mich. stop for lunch at Zingerman's Delicatessen in Ann Arbor, Mich., April 2, 2014. (Official White House Photo by Chuck Kennedy)

My partner, Ari Weinzweig, and I never subscribed to the conservative economic theory of Milton Friedman, that “the business of business is business.” To us, the right to conduct business is earned by being a good corporate citizen — by producing products and delivering services responsibly, hiring responsibly, generating profits responsibly, and finally, sharing profits with those who help produce them and with the wider community from which the revenues are drawn.

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Foreign investors aren’t deterred by Burma’s haphazard trademark system

10/16/14

On Tuesday, the newly formed Licensing Association of Thailand (LAT) wrapped up its inaugural meeting in Bangkok, where intellectual property (IP) professionals discussed some of the challenges faced by companies seeking to license their patents, trademarks, and copyrights in Southeast Asia.

A key sponsor of the event was Tilleke & Gibbins, a law firm that opened its first office in Bangkok in 1890 and recently opened an office in Rangoon. After the LAT meeting, DVB spoke with Michael Ramirez, a senior consultant at Tilleke & Gibbins, who now spends most of his time at the firm’s office in Rangoon. Mr. Ramirez indicated that while Burma’s lack of a robust IP legal regime is a major issue for foreign companies seeking to invest in the country, it’s not necessarily the most important factor driving investment decisions.

“Serious investors; that is, those investors who are viewing Myanmar [Burma] as a long-term investment, are not dissuaded by the lack of a fully developed IP regime. It’s certainly an issue—it’s an issue that needs to be addressed – but it is not the determining factor for most of our clients in making that decision to enter the marketplace. Those broader decisions tend to be made based on a number of different inputs,” said Ramirez.

Currently, Burma does not have laws that recognise foreign patents or trademarks, and it’s not party to international treaties which obligate signatories to protect patents or trademarks registered in other signatory countries. Burma also lacks a single, comprehensive trademark law, so trademarks in the country are protected by a hodgepodge of laws, some of which date back to the colonial era.

This mix of various laws has created a unique trademark system whereby anyone can obtain a degree of protection over any trademark by either using the mark in trade or filing a “declaration of ownership”. Filing such a declaration is the equivalent of registering a trademark in other countries, and filing a “declaration of ownership” is considered as Burma’s way of “registering” a trademark. In Burma, however, trademark “registration” does not provide the same protection as trademark registration does in other counties.

One distinct feature of Burma’s trademark “registration” system is that multiple people can actually file a “declaration of ownership” for the same trademark. As a consequence, anyone can obtain a degree of ownership over famous brands such as “KFC,” simply by filing a “declaration of ownership”.

Moreover, prior use of a trademark trumps any rights obtained by filing a “declaration of ownership”. Thus, foreign trademark owners who think they can protect their trademark simply by filing a “declaration of ownership” without actually doing business—perhaps because they want to do market research first or wait until investment conditions are more suitable—can still lose out to local players who are using the brand in their business.

This might explain why Burma had its own version of Walmart and a fast-food company called “ICFC”. Burma’s “ICFC” sold the same products and had a logo similar to the original KFC, which recently decided to enter Burma—a decision which, in part, might have been made to protect its trademark in the country.

As Ramirez puts it: “A first user can complicate or muddy the waters” for a foreign trademark owner, whose only remedy is to file a lawsuit. This is because Burma’s lack of a specific trademark law means that there aren’t any special trademark infringement procedures available to fast-track an original trademark owner’s claim against alleged infringers. Instead, original trademark owners must use Burma’s uncertain and slow-moving judicial system.

Upon signing the World Trade Organization’s TRIPs agreement, Burma became obligated to modify its haphazard trademark regime by enacting a single, comprehensive trademark law that comports with a body of international standards that has developed over the years and now constitutes a uniform legal framework, often referred to as international trademark law.

Until Burma adopts a new trademark law, however, more than one person can declare ownership over the same trademark—so even if a foreign company tries to beat erstwhile trademark bandits by quickly filing a “declaration of ownership”, another person can use that foreign company’s trademark.

Two Tilleke & Gibbins trademark experts who helped organize the LAT meeting, Alan Adcock and Darani Vachanavuttivong, told DVB that until a new trademark law is passed, they typically advise companies to file a “declaration of ownership” in Burma as soon as possible if they’re interested in entering the market at some point. Otherwise, they run the risk of being sued by a person who has already used or registered the trademark.

Yet despite Burma’s efforts to obtain help drafting a new trademark law from international IP associations (e.g. WIPO and INTA) and a series of pronouncements that a new trademark law would soon be passed, the law still hasn’t made it through parliament.

Currently, the draft version of Burma’s new trademark law provides a mechanism by which a “declaration of ownership” can be converted into a trademark certificate similar to those issued in other countries with “regular” trademark registration systems—but only if the trademark owner asks the trademark office to examine and issue a proper trademark certificate within three years of the date upon which the law becomes effective.

During their interview with DVB, Adcock and Vachanavuttivong said that foreign companies can potentially strengthen their claim to a certain trademark if a dispute arises by publishing a “cautionary notice” in a daily newspaper to notify the public of the company’s trademark rights. Publishing such a notice is advised in order to further inform the public that a trademark has been declared as owned, and that any unauthorized use of that trademark could amount to infringement.

Adcock and Vachanavuttivong also made sure to emphasise that if a dispute arises over the ownership of a trademark, foreign companies can file lawsuits in Burmese courts and actually have a good chance of winning.

The problem with resorting to litigation, however, is that court cases in Burma can be very lengthy and the outcome can be uncertain—not to mention the fact that even if a judgment is obtained it might be difficult to enforce. Ramirez explains that foreign investors usually aren’t willing to bear these risks, so they often wind up settling with alleged infringers instead of going to court.

“The reality is [that Burma’s] judicial system is uncertain and it’s very lengthy—not unlike Thailand, where it can take a great length of time before you get a final judgement after exhausting all levels of appeal—so you end up having someone who wants to enter the market, wants to clean up the issues with regard to possible infringement, and get moving. That usually means you have to engage the other entity and maybe even work out a settlement,” said Ramirez.

“Just because you don’t happen to be first in Myanmar doesn’t mean you are devoid of the opportunity to try to prove that you are indeed the brand owner. Of course, it can be complicated [to obtain a judgement from a Burmese court], and often times this results in legitimate brand owners having to deal with illegitimate users by purchasing rights or otherwise settling disputes— sometimes by licensing.”

On a positive note, Ramirez underscored that given the government’s desire to attract foreign investment, trademark infringement will become “less and less common, because it isn’t good for international investment [for the government or judicial system] to support this kind of illicit use of brands”.

At the moment, however, it seems that foreign investors are still willing to enter Burma’s potentially lucrative market despite the lack of a comprehensive trademark regime—particularly Asian investors from countries such as Thailand, which still hasn’t given up its dream of accessing the Bay of Bengal by developing the long-delayed Dawei special economic zone and deep sea port.

Although critics have said that Dawei only stands to benefit Thailand, one Thai banker who spoke with DVB on the condition of anonymity insisted the project will benefit all three countries involved—Burma, Japan and Thailand—and that it’s only a matter of time before a syndicated loan is arranged to finance the ambitious project.

Why are Americans still gloomy about the economy?

10/15/14

For more What in the World watch Sundays at 10 a.m. & 1 p.m. ET on CNN

By Global Public Square staff

The American economy is back. Last week, the IMF projected that the United States will be one of the very fastest growing advanced economies in the world in 2015. In fact, the American economy is just about the great exception in a world that is showing signs of economic stagnation.

Good news keeps piling on. The Congressional Budget Office just announced that the U.S. deficit fell by nearly a third during the fiscal year, which marks a 6-year low. Meanwhile, the Dow Jones Industrial Average and the S&P 500 both surged to record highs over the last month. And the most recent economic snapshot from the Labor Department says that private sector employment grew in September for a 55th month in a row, a record, and that the unemployment rate is now at 5.9 percent, the lowest level it's been since July 2008.

But, and here is the paradox, despite a relatively robust recovery now, Americans aren't feeling more prosperous. In fact, 56 percent of Americans told the Pew Research Center in August that they are "'falling behind' financially." That's pretty much the same percentage as in October 2008, during the heat of the Wall Street financial crisis.

So, why are so many despondent over the economy when the statistics say it's doing pretty well?

For some insight, listen to a recent interview that President Obama granted CBS News's 60 Minutes:

Obama: Ronald Reagan used to ask the question, "Are you better off than you were four years ago?" In this case, are you better off than you were in six? And the answer is the country is definitely better off than we were when I came into office. But now we have to make sure…

Steve Kroft: Do you think people will feel that?

Obama: They don't feel it. And the reason they don’t feel is because incomes and wages are not going up.

Well, the President is right. The one number that isn't up is the average American's pay check.

Look at the data from The Economist, which in turn cites Census Bureau and Sentier Research data. They show that during the first six years of Ronald Reagan's Presidency, the U.S. economy grew by 22 percent and the median household income also shot up by 6 percent.

Fast forward to Bill Clinton's first six years in the Oval Office and the nation's GDP grew by 24 percent, while median income increased 11 percent.

Then, it starts to turn. The first six years of George W. Bush's Presidency saw 16 percent GDP growth but a 2 percent decrease in median incomes. Likewise, the first six years of Obama's presidency have seen 8 percent GDP growth coupled with a decline in median incomes – a 4 percent decline, again according to the research in The Economist.

Indeed, when you adjust for inflation, census data shows that the American middle class is actually 1 percent poorer today than it was in 1989, when Reagan left office. That's also probably why Obama's job approval rating is about 20 percent lower than Reagan's was by the second October after his re-election, according to Gallup.

And guess what? The new employment report sees that trend continuing: the average hourly wage for Americans working in the private sector actually decreased by one penny last month.

Why are wages stagnating (or, even, falling)?

Nobody is actually sure. Generally, when unemployment drops, workers can demand better wages. That's not happening. And no one quite knows why. It could be globalization, with its endless supply of cheaper labor from around the world. It could be technology, which replaces people with machines and software. It could be other, more technical factors.

But we think we can confidently say that until all this changes – and until the majority of Americans who do have jobs see some improvement in their wages – they will feel gloomy. And that will have economic consequences in the years ahead but also political consequences in the weeks ahead.


Chart of the Week: The Deficit Falls to Its Lowest Level Since 2007

10/15/14

A cornerstone of America’s 21st century foundation requires that we get our fiscal house in order for the long run, so we can afford to make investments that strengthen the middle class. That is why President Obama has made it a priority to enact policies that ensure our deficit, or the amount we spend that exceeds our revenues, doesn’t undercut our future.

Thanks to a growing economy, prudent spending cuts, and asking the wealthiest Americans to pay a little bit more on their taxes, we’ve cut our deficits by two-thirds over the last five years. In fact, the Office of Management and Budget and the Treasury Department announced today that the deficit has fallen to 2.8 percent of GDP, the lowest level since 2007 and less than the average of the last 40 years. 

Take a look at the chart of the week to see how the deficit has declined at the fastest sustained pace since World War II:

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What You Need to Know: Our Push To Get Long-Term Unemployed Americans Back to Work

10/15/14

Thanks to the grit and resilience of American workers and business owners, our economy is getting stronger every day. Over the last 55 months, we've added 10.3 million jobs -- the longest streak of private-sector job growth on record -- and the number of job openings rose to its highest level in more than 13 years. We've put more people back to work than Japan, Europe, and every other advanced economy combined and the unemployment rate is falling at a faster pace than predicted

But one of the greatest challenges from the recession was the rise in long-term unemployment. The Great Recession left too many Americans out of a job through no fault of their own and many continue to search for work. Our strong economic growth is beginning to help.

Since December 2013, the number of long-term unemployed has fallen by 900,000, accounting for about 90 percent of the total drop in unemployment in the past 10 months.

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