It's WNYC's Financial 411, our take on the economic news of the day. Markets were mixed today. The Dow fell 58 points to close at 10,214, down nearly 1 percent for the week. The S&P 500 fell 4 points, while the Nasdaq gained a point.
The Treasury Department says nearly half of the homeowners who sought government help to avoid foreclosure have fallen out of the program. Of the 1.3 million homeowners who enrolled in the mortgage modification program since March of last year, about 48 percent had dropped out through July. Many borrowers have complained that the program is a bureaucratic nightmare.
Today, Bloomberg is reporting that Bank of America will start testing a new payment system in New York that lets consumers use their phones, instead of their plastic credit and debit cards, to pay merchants, including New York City taxis, Walgreens drugstores, Home Depot and McDonald’s. The program is expected to start next month. Mobile payments are already being used in the U.K., Japan, Turkey and South Korea.
Air travelers will soon be able to skip the greasy french fries and go right to the filet mignon at LaGuardia Airport. Following a national trend, Delta Air Lines is swapping out fast-food joints for sit-down restaurants at its terminal there. The airline is opening four restaurants tomorrow, and another nine next summer. Delta is trying to accommodate passengers who are dealing with another trend: longer wait times because of security checks and flight delays.
The Weekly Business Review
Greg David, director of the Business & Economics Reporting program at the CUNY Graduate School of Journalism, reviews some of this week's local business news.
So new job figures were out yesterday, showing that New York City's unemployment rate fell for the seventh month in a row, and now stands at 9.4 percent. So are we out of the woods?
The listeners to this show know that I am the one sunny optimist in a sea of gloom. The numbers were extraordinarily strong. Eleven-thousand jobs created last month. Do you know that 20 percent of all the jobs created in the nation in July were created in New York? I mean that's pretty startling, right? Look, I've said it before: The New York economy is strong, the tourists are here, Wall Street wasn't hurt as badly as we expected, it's starting to do better. We've got strength in many different areas. If we really go into another bad recession, of course that will be bad news, but I think the economy here is going to remain pretty good.
New figures also showed that in the past year, investment banks lost about 9,000 jobs. That's the same number that restaurants and bars picked up. So as the city has lost high-paying finance jobs, and gained lower-paying hospitality jobs, what does this all mean for the tax base?
That wouldn't be good if it continues, and you have to make a decision about what you think is going to happen on Wall Street. I think those jobs are coming back. If they don't come back right we're going to have trouble.
Two big retailers in New York - Barnes & Noble and American Apparel -- are both in trouble. Barnes & Nobles' business has been eaten away by digital books. And American Apparel is drowning in debt. What do you make of this -- that two well-known companies, with a real visible presence in New York, could, at some point, be gone from the landscape entirely?
I think they're separate stories. American Apparel is an incredibly competitive business. Enormous numbers of apparel companies, they are in a lot of debt. This is a story about a company that's managed itself badly. Barnes & Noble is about technological change. You know you just started today with -- soon we're going to be using our smart phones to pay credit cards? Well how are we going to buy books? In the last year, e-book sales tripled. They now account for ten percent of all sales. Some people think in four years they'll account for 50 percent of all sales. Well, Barnes & Noble, which came to dominate the book business, can't survive if that happens. They know it, they have their own e-book product called the Nook. But that's going to be really significant here. There are 58 Barnes & Noble superstores in the New York area, they're anchors of neighborhoods, I don't know what's going to happen if they go out of business. The American Apparel stores, somebody will take them over, probably another apparel company. But if there are no big book stores, what will happen? I don't know. The good news? It's not going to happen tomorrow.
Finally, a yearlong city investigation found this week that 700 supermarkets have been overcharging and misleading customers. John Mintz, of the city's Department of Consumer Affairs, said inspections found a number of violations, including missing price tags, inaccurate scanners, taxes charged on non-taxable items, and no scales for weighing produce. "When New Yorkers go into a supermarket," he said, "they don't expect to be taken to the cleaners." A few weeks ago, we discussed the new grading system that the health department adopted for all restaurants in the city. Should the city give out letter grades to supermarkets now, too?
I think they have to do something. The violations were egregious. The law says you have to put a sticker on every can, they didn't. We all want the scanners to work, and we all want food that's gone past the expiration date not to be sold. The worst news was that the worst supermarkets were in poor neighborhoods. So what are we going to do about that? Some people say regulation is the answer. I think what we have is we have a tremendous lack of supermarkets in poor neighborhoods. There's no competition, therefore the managements get sloppy, the workers get sloppy. The Bloomberg administration wants to put in more supermarkets. We desperately need stronger city policies to figure out how to do that.