If Consumers Don’t Open Their Wallets, We’re In for Another Recession
Apple [stckqut]AAPL[/stckqut], the totemic icon of high-tech’s promise of eternal growth, reports its first revenue decline in 13 years. The Eurozone is back from the brink. The U.S. economy may not be.
And let’s not forget the dollar, which just finished its worst week against the yen since 2008. Or the Dow Jones industrial average, which turned in its worst performance since “the February freakout,” as CNNMoney artfully put it.
Optimists like Gavyn Davies acknowledge that the world economy is underperforming its long-term average for the third year running, but Davies wrote in the Financial Times on Sunday, “Global growth is somewhat better, especially in the emerging economies.” He headlined his blog, “Fading risks of global recession.”
And Robert Shiller, a Yale economics professor, says what you and I think matters. “Recessions aren’t caused merely by concrete changes in the markets,” Shiller argued in The New York Times on Sunday. “Beliefs and stories passed on by thousands of individuals are important factors, maybe even the main ones, in determining big shifts in the economy.”
Shiller suggests there’s more to economic wisdom than statistics will ever give us. If he’s right, we had better pay attention to what we see and what we hear.
I doubt anyone can say with certainty whether or not we’re in for another global recession. But it seems perfectly certain that it will depend on decisions taken soon.
The global economy has been given all there is to get out of low to negative interest rates, and it’s necessary to stimulate one way or another. Now the moment’s upon us: It’s time to stop talking and take the steps.
Economists, policy planners, and politicians will all have something to say. It’s the last we should worry about most, given that ideological preconceptions have been so prominently on display in Washington, London, Brussels, and nearly everywhere you look.
Source: If Consumers Don’t Open Their Wallets, We’re In for Another Recession | The Fiscal Times
Cloud Unit Pushes Amazon ($AMZN) to Record Profit
Amazon.com Inc. [stckqut]AMZN[/stckqut] delivered its most profitable quarter ever, topping last year’s record holiday period, thanks to surging sales from its lucrative cloud-computing business.
Despite a persistent reputation as a profit miser, Amazon turned in its fourth straight moneymaking quarter and expanded margins in its core retail business, as well as the Amazon Web Services division that rents computing power to other companies.
Superlatives abound: Its 28% sales growth was the highest since the second quarter of 2012, while its operating margin of 3.7% was its best in more than five years.
The cash cow driving these figures is AWS, a decade-old operation that pioneered the business of hosting computer servers for companies like Netflix Inc. [stckqut]NFLX[/stckqut] and the Central Intelligence Agency. AWS has become the go-to provider for a generation of startups, government agencies and other corporations seeking to offload computing power to Amazon’s thousands of servers.
The cloud division’s sales rose 64% to $2.57 billion. While that is less than one-tenth of Amazon’s overall revenue, AWS generated about 67% of the company’s operating income in the quarter.
In other words, AWS is supporting Amazon’s sprawling, 20-year-old business that spends billions of dollars in an effort to upend traditional brick-and-mortar retail by providing customers nearly everything imaginable in as quickly as one hour.