Thursday, August 24, 2006


Emphasis on Supplier Diversity May Help, Not Hamper, Your Bottom Line

This via IndustryWeek:

Connecting with women- and minority-owned suppliers is often perceived as a costly, administrative hassle that doesn't offer any return on investment. A recent study conducted by the Hackett Group gives this perception the lie: their research shows that top-quality procurement organizations using diverse suppliers generate $3.6 million in revenue for every $1 million spent. The companies that earned the highest returns from diverse supply connections did so by trumpeting the fact that they use diverse suppliers. Apparently the good PR appealed to consumers and investors with a sense of social responsibility, driving revenues up. Sounds like good business all around to us.

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Monday, August 21, 2006


Monday Roundup: August 21

We begin the week, as always, with a look at the big-picture economy.

First, it's late August, and the various committees, finance bodies, and wonk councils that analyze trends and provide us with economic indicators are apparently just as susceptible to the dog days as the rest of us. All we'll get this week are the durable-goods orders and the July housing numbers. The housing numbers are probably not going to be great, according to the folks at MarketWatch. Experts anticipate a drop of up to 3% in new-home sales, which would bring sales to the lowest level in two years.

Couple slower housing sales with lower consumer confidence: the University of Michigan measures consumer sentiment, and its index reading for the month of August (so far) is the lowest number since right after Hurricane Katrina. Further completing the picture of consumer reluctance, the Wall Street Journal reports that "upscale" spending is finally getting pinched by higher energy costs: families with incomes as high as $75,000 a year are reporting plans to cut back on buying clothes, fashion accessories, home decor, and restaurant meals.

People are also planning to cut back on their summer vacations this year. According to the New York Times, 43% of people who responded to a Gallup poll said they had no plans to take vacations in the next six months. That is probably due as much to changing cultural trends-- anecdotal evidence suggests it's harder to leave work for more than a few days anymore-- but read the NY Times article and you will see plenty of people citing the cost of gasoline as the party pooper for their summer fun.

Speaking of the cost of gasoline, oil prices hit a two-month low last week after the Israel-Lebanon ceasefire. Also helping drop the cost of a barrel o' crude was the revised hurricane season forecast: it will be nowhere near as bad as last year's record-breaking season (which we had already been told would be the case), and won't be as bad as originally thought. Meteorologists are only expecting three major storms now, instead of five to seven.

Is the drop in oil prices the start of a trend? Since oil costs are the number one negative drag on US manufacturing at the moment, we would love to hear that oil prices are indeed expected to slide for a while.

However, whether a few days of falling prices constitutes a trend is debatable, and economy wonks love a good debate. Some would like to argue that there's actually an oil-price bubble, and that when it pops we could see oil fall back to as low as $25 a barrel. The Wall Street Journal examines the oil bubble argument here (or here at South Africa's MoneyWeb, if you don't subscribe to the WSJ). We'll encapsulate it for you if you don't have time to read up just now: analyists who buy into the bubble argument say that high crude prices have more to do with oil investment tactics than with classic supply-and-demand issues like politics, weather, or increased need for fuel.

While we wait to see who's right, we will note that oil prices rose slightly today in international trading, largely because Iran tested some short-range missiles over the weekend. The Iranians are also expected to give their formal answer to the UN next week in regards to suspending their uranium enrichment program. How do you say "No" in Persian? Because that's what they're going to say.

Finally, while this week's Roundup probably hasn't put a smile on your face, we do want to note this: The US economy is still growing, and doing so at a decent clip. It's just not growing as fast as it was earlier in the year.

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