These 6 Powerful Signals Reveal the Future Direction of Financial Markets


This post is by Jeff Desjardins from Visual Capitalist

Powerful signals reveal the future direction of financial markets

Every day, the Information Age bombards us with massive amounts of data.

Experts now estimate that there are 40 times more bytes of data in existence than there are stars in the whole observable universe.

And like the universe, our datasphere is also rapidly expanding—and every few years, there is actually more new data created than in all prior years of human history combined.

Searching for Signals

On a practical level, this dense wall of impenetrable data creates a multitude of challenges for investors and decision makers alike:

  • It’s mentally taxing to process all the available information out there
  • Too much data can lead to “analysis paralysis”—an inability to make decisions
  • Misinformation and media slant add another layer for our brains to process
  • Our personal biases get reinforced by news algorithms and filter bubbles
  • Data sources—even quality ones—can sometimes conflict with one another

As a result, it’s clear that people don’t want more data—they want more understanding. And for this reason, our team at Visual Capitalist has spent most of 2020 sifting through the noise to find the underlying trends that will transform society and markets over the coming years.

The end result of this effort is our new hardcover book “SIGNALS: Charting the New Direction of the Global Economy” (hardcover, ebook) which beautifully illustrates 27 clear signals in fields ranging from investing to geopolitics.

The 6 Signals Shaping the Future of Finance

What clear and simple trends will shape the future of markets?

Below, we show you a small selection of the hundreds of charts found in the book with a focus on global finance and investing:

#1: 700 Years of Falling Interest Rates

The first signal we’ll showcase here is from an incredible dataset from the Bank of England, which reconstructs global real interest rates going back all the way to the 14th century.

Falling real interest rates over 700 years

Some of the first data points in this series represent well-documented municipal debt issued in early Italian banking centers like Genoa, Florence, or Venice, during the beginning stages of the Italian Renaissance.

The early data sets of loans to noblemen, merchants, and kingdoms eventually merge with more contemporary data from central banks, and over the centuries it’s clear that falling interest rates are not a new phenomenon. In fact, on average, real rates have decreased by 1.6 basis points (0.016%) per year since the 14th century.

This same spectacle can also be seen in more modern time stretches:

Contemporary interest rates by country

And as the world reels from the COVID-19 crisis, governments are taking advantage of record-low rates to issue more debt and stimulate the economy.

This brings us to our next signal.

#2: Global Debt: To $258 Trillion and Beyond

The ongoing pandemic certainly made analysis trickier for some signals, but easier for others.

The accumulation of global debt falls into the latter category: as of Q1 2020, global debt sits at a record $258 trillion or 331% of world GDP, and it’s projected to rise sharply as a result of fiscal stimulus, falling tax revenues, and increasing budget deficits.

Rising Global Debt

The above chart takes into consideration consumer, corporate, and government debt—but let’s just zoom in on government debt for a moment.

The below data, which is from early 2020, shows government debt ballooning between 2007 and early 2020 as a percentage of GDP.

Ballooning government debt

This chart does not include intragovernmental debt or new debt taken on after the start of the pandemic. Despite this, the percentage increase in debt held by some of these governments is in the triple digits over a period of only 13 years, including the 233% increase in the United States.

But it’s not just governments going on a borrowing spree. The following chart shows consumer debt over a recent four-year span, sorted by generation:

Average household debt by generation

While Baby Boomers and the Silent Generation are successfully winding down some of their debt, younger generations are just getting aboard the debt train.

Between 2015-2019, Millennials added 58% to household debt, while Gen Xers find themselves (in the middle of their mortgage-paying years) as the most indebted generation with $135,841 of debt per household.

#3: Blue Chips and the Circle of Life

There was a time when it seemed absolutely unfathomable that large, entrenched companies could see their corporate advantages slide away.

But as the recent collapses of Blockbuster, Lehman Brothers, Kodak, or various retailers have taught us, there are no longer any guarantees around corporate longevity.

Average company lifespan on S&P 500

In 1964, the average tenure of a company on the S&P 500 was 33 years, but this is projected to fall to an average of just 12 years by the year 2027 according to consulting firm Innosight.

At this churn rate, it’s expected that 50% of the S&P 500 could turnover between 2018-2027.

Churn of S&P 500 companies

For established companies, this is a sign of the times. Between the rapid acceleration in the speed of innovation and continuously falling barriers to market entry, the traditional corporate world finds itself playing defense.

For investors and startups, this is an interesting prospect to consider, as disruption now appears to be the status quo. Could the next big company to dominate global markets be found in someone’s garage in India today?

If you like this post, find hundreds of charts
like this in our new book “Signals”:

Signals: Book

#4: ESG is the New Status Quo

The investment universe has reached an interesting tipping point.

Historically, performance was all the mattered to most investors—but going forward, considering ESG criteria (environment, social, and governance) is expected to become a default component of investment strategy as well.

Esg assets as percentage of total

By the year 2030, it’s expected that a whopping 95% of all assets will incorporate ESG factors.

While this still seems far away, it’s clear that change is already happening in the investment sphere. As you can see in the following graphic, the percentage of ESG assets has already been rising by trillions of dollars per year globally:

Sustainable investing assets esg

If you think this is a powerful trend now, wait until Millennials and Gen Z investors sink in their teeth. Both generations show a higher interest in sustainable investing, and both are already more likely to incorporate ESG factors into existing portfolios.

Projected aggregate income by generation

Companies are getting in front of the ESG investing trend, as well.

In 2011, just 20% of companies on the S&P 500 provided sustainability reports to investors. In 2019, that percentage rose to 90%—and with the world’s biggest asset managers already on board with ESG, there’s pressure for that to hit 100% in the coming years.

#5: Stock Market Concentration

In the last 40 years, the U.S. market has never been so concentrated as it is now.

Big tech five stocks as a percentage of S&P 500

The top five stocks in the S&P 500 have historically made up less than 15% of the market capitalization of the index, but this year the percentage has skyrocketed to 23%.

Not surprisingly, it’s the same companies—led by Apple and Microsoft—that propelled market performance the previous year.

Tech stocks by percentage of 2019 stock market return

Looking back at the top five companies in the S&P 500 over time helps reveal an important component of this signal, which is that it’s only a recent phenomenon for tech stocks to dominate the market so heavily.

Tech stocks each year

#6: Central Banks: Between a Rock and a Hard Place

Since the financial crisis, central banks have found themselves to be in a tricky situation.

As interest rates close in on the zero bound, their usual toolkit of conventional policy options has dried up. Traditionally, lowering rates has encouraged borrowing and spending to prop up the economy, but once rates get ultra-low this effect disappears or even reverses.

Treasury yields vs. household spending

The pandemic has forced the hand of central banks to act in less conventional ways.

Quantitative easing (QE)—first used extensively by the Federal Reserve and European Central Bank after the financial crisis—has now become the go-to tool for central banks. By buying long-term securities on the open market, the goal is to increase money supply and encourage lending and investment.

In Japan, where QE has been a mainstay since the late-1990s, the Bank of Japan now owns 80% of ETF assets and roughly 8% of the domestic equity market.

Central bank assets rising

As banks “print money” to buy more assets, their balance sheets rise concurrently. This year, the Fed has already added over $3.5 trillion to the U.S. money supply (M2) as a result of the COVID-19 crisis, and there’s still likely much more to be done.

Regardless of how the monetary policy experiment turns out, it’s clear that this and many of the other aforementioned signals will be key drivers for the future of markets and investing.

If you like this post, find hundreds of charts
like this in our new book “Signals”:

The post These 6 Powerful Signals Reveal the Future Direction of Financial Markets appeared first on Visual Capitalist.

Mapped: The Top Export in Every Country


This post is by Dorothy Neufeld from Visual Capitalist

Click to view a larger version of this infographic

Mapped: The Top Export in Every Country

Mapped: The Top Export in Every Country

View the high resolution of this infographic by clicking here.

Today, exports make up roughly 25% of total global production.

One of the common influences on these exports, unsurprisingly, is oil. In fact, petroleum is the top export across over 50 nations, and along with many other resource-driven materials makes up a sizable share of the global export market. Since 2000, the total value of all exported global trade of goods and services has tripled to $19.5 trillion.

This infographic from HowMuch.net shows the top export in every country by value, according to the most recent global data from 2018.

Top Exports, by Region

Let’s dive into some particular regions, to see how top exports can vary:

Editor’s note: for even larger versions of each regional infographic below, visit HowMuch.net. All export data is from 2018 and comes from CEPII, a leading French center of economic analysis.

North America

Top exports North America

In the U.S. petroleum outpaces all other exports, with crude oil accounting for 35% of total petroleum exports. Canada too, lists petroleum at the top.

Country Top Export
Canada Petroleum
Greenland Fish
Mexico Cars
Saint Pierre and Quelon Crustaceans
U.S. Petroleum

With a market valued at $50.7 billion, Mexico’s top export is cars—making it the fourth largest exporter worldwide.

Africa

Top exports Africa

From Egypt to Senegal, Africa has a diverse spectrum of exports. Primarily, these are resource-driven, with the top five exports being petroleum, gold, diamonds, natural gas, and coal.

Country Top Export
Algeria Petroleum
Angola Petroleum
Benin Cotton
Burkina Faso Gold
Burundi Gold
Cabo Verde Fish
Cameroon Petroleum
Central African Republic Wood
Chad Petroleum
Comoros Cloves
Congo Petroleum
Cote D’Ivoire Cocoa Beans
Dijibouti Sheep and goats
DR Congo Copper
Egypt Petroleum
Eritrea Zinc
Ethiopia Coffee
Gambia Nuts
Ghana Gold
Guinea Gold
Guinea-Bissau Nuts
Kenya Tea
Liberia Gold
Libya Petroleum
Madagascar Vanilla
Malawi Tobacco
Mali Gold
Mauritania Iron
Mauritus Fish
Morocco Cars
Mozambique Cloves
Niger Gold
Nigeria Petroleum
Rwanda Gold
Senegal Gold
Seychelles Fish
Sierra Leone Titanium
Somalia Sheep and goats
South African Customs Union Gold
South Sudan Petroleum
St. Helena Blood
Sudan Petroleum
Tanzana Gold
Togo Petroleum
Tunisia Wires
Uganda Gold
Zambia Copper
Zimbabwe Gold

Meanwhile, Ethiopia’s top export is coffee, shipping nearly $1 billion alone in 2018. Similarly, off the east coast, Madagascar is the world’s largest producer of vanilla.

Asia

Top Exports Asia

While petroleum is also a dominant export across many countries in Asia, the region’s export landscape is a lot more tech-focused.

In South Korea, electronic circuits are the largest export. Samsung, headquartered in Seoul, is a major supplier to Apple for multiple electronic components. With one of the highest export ratios in Asia, 40% of South Korea’s economic output is derived from its export market.

Here are the top exports across other Asian countries.

Country Top Export
Afghanistan Grapes
Armenia Copper
Azerbaijan Petroleum
Bahrain Petroleum
Bangladesh Suits
Bhutan Ferro-alloys
Br. Indian Ocean Terr. Fish
Brunei Darussalam Petroleum
Cambodia Jerseys
China Transmission apparatus
DPR Korea Watches
Georgia Copper
Hong Kong SAR Gold
Indonesia Coals
Iran Petroleum
Iraq Petroleum
Israel Diamonds
Japan Cars
Jordan Fertilizers
Kazakhstan Petroleum
Kuwait Petroleum
Kyrgyzstan Gold
Laos Electrical energy
Lebanon Gold
Macao SAR Watches
Malaysia Electronic circuits
Maldives Fish
Mongolia Coals
Myanmar Petroleum
Nepal Yarn
Oman Petroleum
Pakistan Bed linen
Philippines Electronic circuits
Qatar Petroleum
Saudi Arabia Petroleum
Singapore Electronic circuits
South Korea Electronic circuits
Sri Lanka Tea
State of Palestine Stones
Syria Olive oil
Tajikistan Gold
Thailand Machinery
Turkmenistan Petroleum
Turkey Cars
UAE Petroleum
Uzbekistan Gold
Vietnam Transmission apparatus
Yemen Petroleum

In Afghanistan, grapes are the top export, valued at $237 million. Almost one-fifth of Afghanistan’s exports come from the grape industry.

Europe

top exports europe

Across the European continent, the automotive industry stands out as a primary driver of exports, with 14 countries having cars or vehicles as their most exported good.

In fact, in 2019, the European Union exported a total of 5.6 million motor vehicles. Of these, 28% were shipped to the U.S. and 16.5% to China.

Country Top Export
Albania Footwear
Andorra Electronic circults
Austria Cars
Belarus Petroleum
Belgium Cars
Bosnia Herzegovina Electrical energy
Bulgaria Petroleum
Croatia Petroleum
Cyprus Petroleum
Czech Republic Cars
Denmark Drugs
Estonia Transmission apparatus
Finland Petroleum
France Airplanes
Germany Cars
Gibraltar Petroleum
Greece Petroleum
Hungary Cars
Iceland Aluminium
Ireland Blood
Italy Drugs
Latvia Wood
Lithuania Petroleum
Luxembourg Cars
Malta Petroleum
Moldova Wires
Montenegro Aluminium
Netherlands Petroleum
Norway Petroleum
Poland Vehicles
Portugal Cars
Romania Vehicles
Russia Petroleum
San Marino Machines
Serbia Wires
Slovakia Cars
Slovenia Cars
Spain Cars
Sweden Cars
Switzerland Gold
TFYR of Macedonia Reaction initiators
U.K. Cars
Ukraine Sun-Flower Seed

The Balkan nation of Albania has footwear as its top export. Overall, nearly 80% of the nation’s GDP relies on goods and services exports.

France, on the other hand, has airplanes as its highest export while Italy and Denmark’s highest are drugs. Italy is the top producer of pharmaceuticals in Europe, an industry which employs 66,500 across the country. Globally, it makes up 2.8% of pharmaceutical sales.

Due to its cheap electricity prices, companies have flocked to Iceland to produce aluminum. Iceland’s dams, which generate power from glacial water, produce electricity as much as 30% cheaper than in America.

Latin America & the Caribbean Islands

top export latin america

Like other regions, petroleum stands out as a key export in countries across Latin America.

Take Venezuela. With the largest oil reserves in the world, its oil exports were valued at $90 billion annually ten years ago. Since the pandemic, however, earnings are projected to reach just a fraction of this total—only $2.3 billion this year.

Along with this, the U.S. has imposed sanctions on president Nicolás Maduro and Venezuela’s state oil company, PDVSA, causing oil exports to slump to their lowest point in nearly 80 years.

Country Top Export
Anguilla Ethyl alcohol
Antigua and Barbuda Cruise ships
Argentina Oil
Aruba Airplanes
Bahamas Cruise ships
Barbados Ethyl alcohol
Belize Cane sugar
Bolivia Petroleum
Bonaire Petroleum
Brazil Soya beans
British Virgin Islands Yachts
Cayman Islands Yachts
Chile Copper
Colombia Petroleum
Costa Rica Medical instruments
Cuba Cigars
Curacao Petroleum
Dominica Medical instruments
Dominican Republic Gold
Ecuador Petroleum
El Salvador T-shirts
Falkland Is. (Malvinas) Molluscs
Grenada Nutmeg
Guatemala Bananas
Guyana Gold
Haiti T-shirts
Honduras T-shirts
Jamaica Aluminium
Montserrat Sand
Neth. Antilles Cars
Nicaragua T-shirts
Panama Petroleum
Paraguay Soya beans
Peru Copper
Saint Barthelemy Cosmetics
Saint Kitts and Nevis Transmission apparatus
Saint Lucia Petroleum
Saint Maarten Jewellery
Saint Vincent and the Grenadines
Petroleum
Suriname Gold
Trinidad and Tobago Petroleum
Turks and Caicos Is. Petroleum
Uruguay Wood pulp
Venezuela Petroleum

For Caribbean nations, unsurprisingly, many top exports in this region are linked to tourism.

Cruise ships stood out as a primary export in the Bahamas, while yachts were most significant in the Cayman Islands. However, due to the pandemic, many of these national economies are at heightened risk, with some economies across the region projected to contract 10% in 2020.

Oceania

Top Exports Australia

Finally, in Oceania, Australia has its top export as coal, while New Zealand sends milk abroad.

For many of the smaller islands throughout the Pacific, it can be seen that fish, cruise ships, water, and yachts are key exports.

The Future of Trade

Now, COVID-19 and a host of other factors are changing the way the world trades. Unexpected shocks, trade wars, the carbon footprint, and labor standards are influencing firms to build more resilient supply chains.

According to The Economist, it’s estimated that over the next five years that 16-26% of exported goods production could shift locations.

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The post Mapped: The Top Export in Every Country appeared first on Visual Capitalist.

The Soaring Value of Intangible Assets in the S&P 500


This post is by Aran Ali from Visual Capitalist

Tangible vs intangible assets in the S&P 500

The Briefing

  • Intangibles as a portion of total assets in the S&P 500 have reached unprecedented levels.
  • As of 2020, 90% of all assets in the S&P 500 are now intangible.

The Soaring Value of Intangible Assets in the S&P 500

When it comes to the S&P 500’s market value, abstract is in.

Intangible assets currently account for 90% of the index’s total assets. Not only is this a historical high—it’s a nod to just how prevalent technology has become in our lives.

Intangible assets are holdings that don’t carry any physical or financial embodiment. This includes R&D, intellectual property, and computerized information such as data and software. While they’re often difficult to value due to certain accounting practices, today, intangibles are worth over $21 trillion.

Year Value of Intangibles in S&P 500
1975 $122 Billion
1985 $428 Billion
1995 $3.12 Trillion
2005 $9.28 Trillion
2018 $21.03 Trillion

The value of intangible assets in dollar terms has risen from $122 billion in 1975, eventually soaring past the $1 trillion mark in the coming decades.

The 1990s ushered society into an era of tech, where intangible assets first began to take majority status. The timeline was hardly linear and smooth transition, and some serious bumps took place along the way including two market crashes in 2000 and 2008.

There are reasons to suggest that influence of tech and thus intangible assets has more steam in its engine. The looming 5G revolution, more internet users on the horizon, and the powerful potential of new technologies are all supporting considerations.

Where does this data come from?

Source: Ocean Tomo Intellectual Capital Equity and IP CloseUp.
Notes: Certain accounting practices can lead to difficulties in valuing an intangible asset and at times must be estimated based on transactions or the difference between company book and market value.


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Visualizing the Evolution of Global Advertising Spend (1980-2020)


This post is curated by Keith Teare. It was written by Therese Wood. The original is [linked here]

Visualizing the Evolution of Global Advertising Spend (1980-2020)

The Evolution of Global Advertising Spend (1980-2020)

Marketers may still “sell the sizzle” and not the steak, but shifts in the media landscape and consumer behavior mean that advertisers must constantly adapt their media strategies.

In the above infographic from Raconteur, we can take a closer look at how global advertising spend has evolved over recent decades across the media sphere.

The Media Landscape Shapes the Ad World

In advertising, dollars go where the eyeballs are.

Recently, all eyes have been on the digital realm—a trend that coincided with the disastrous fall of the print industry. As people mass-migrated to digital platforms in the 2010s, marketers were hot on their heels, and the fall of print media began.

In 2014, TV ad spend met a similar fate, peaking at nearly $250 billion. However, despite its rather sharp decline, TV still remains the largest in terms of global advertising spending.

The demise of the newspaper is shown dramatically in the above graphic, beginning in 2007 before the financial crisis, and correlating with the ascent of search engine ad spend. Peaking at $125 billion before the social media boom, newspaper advertising has never recovered.

Winners in a Digital World

In less than five years, internet ad spend nearly doubled: $299 billion was spent on global internet advertising in 2019 compared to $156 billion in 2015.

Reaching $160 billion in one year, digital display advertising—a broad category including banner ads, rich media, advertorial and sponsorship, online video and social media—accounted for the largest global ad expenditure in 2019.

Comparing all digital display ad spend in isolation with TV and newspaper, we can see the continued significance of the shift to digital, and how it’s projected to continue.

global advertising spend

Looking at the main visualization, it’s clear that budgets have shifted, with digital channels now accounting for more than half of total advertising spend.

Although digital spending is up across the board, search engine ad spend began to plateau in the late 2010s, while social and ecommerce mediums both continue to rise. Impressively, between 2012 to 2020, the percentage of U.S. senior marketing budgets allocated to social media more than doubled, ballooning from almost 9% to nearly 21%.

“People share, read and generally engage more with any type of content when it’s surfaced through friends and people they know and trust”

– Malorie Lucich, Head of Product & Tech Communications, Pinterest

Advertisers aren’t the only ones spending money online. More than $183 billion is expected to be spent online by consumers as a result of the 2020 pandemic.

Screen Life: Time is Ad Money

It’s not only that people have shifted their focus from analog to digital. They are also spending many of their waking hours in front of a screen.

  • Adults in the U.S. spend an average of 11 hours a day in front of a screen, and the ad dollars that vie for our digital attention are also rising.
  • Globally, the daily average of time spent online was almost 7 hours during the pandemic, up from 3.2 hours at the beginning of lockdowns.

As a result of COVID-19 lifestyle shifts, time spent watching digital video is expected to increase. According to eMarketer, digital video spiked among UK adults during the pandemic—to 2.75 hours, and almost by 30 minutes daily in total video and TV screen time.

Smartphone Boom: From Big Screens to Small

Social media and digital ad spend also corresponds with a steady uptick in global smartphone ownership and usage.

In February of 2019, for instance, 81% of U.S. residents owned a smartphone. By 2024, it’s expected that 291 million Americans (almost 90%) will be using a smartphone.

us smartphone users

In China, smartphone usage has almost doubled in 5 years—and is predicted to surpass 3.4 hours a day by 2022. Statista estimates there will be 1.13 billion smartphone users in China by 2025, making up nearly 14% of the world’s population by 2025.

As billions of users spend hundreds of hours with their small screens every year, it’s possible that mobile-based ad spend—including uber-popular apps like TikTok—will become even more commonplace.

The Digital Future is Now

As a result of the pandemic, it is projected that global advertising spending could fall by 8.1% this year. However, 53% of all global ad spend is expected to flow online. And the rise of search, social media, video, ecommerce—in contrast to TV and print—becomes clearer.

Although search ad spend recently plateaued, its rise over the last decade has been dramatic. With digital content consumption doubling since the pandemic began, the growth of social, e-commerce, and search ad spend are likely to continue.

If these trajectories are any indication, advertising budgets will only be getting more digital.

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Visualizing the Evolution of Global Advertising Spend (1980-2020)


This post is by Therese Wood from Visual Capitalist

Visualizing the Evolution of Global Advertising Spend (1980-2020)

The Evolution of Global Advertising Spend (1980-2020)

Marketers may still “sell the sizzle” and not the steak, but shifts in the media landscape and consumer behavior mean that advertisers must constantly adapt their media strategies.

In the above infographic from Raconteur, we can take a closer look at how global advertising spend has evolved over recent decades across the media sphere.

The Media Landscape Shapes the Ad World

In advertising, dollars go where the eyeballs are.

Recently, all eyes have been on the digital realm—a trend that coincided with the disastrous fall of the print industry. As people mass-migrated to digital platforms in the 2010s, marketers were hot on their heels, and the fall of print media began.

In 2014, TV ad spend met a similar fate, peaking at nearly $250 billion. However, despite its rather sharp decline, TV still remains the largest in terms of global advertising spending.

The demise of the newspaper is shown dramatically in the above graphic, beginning in 2007 before the financial crisis, and correlating with the ascent of search engine ad spend. Peaking at $125 billion before the social media boom, newspaper advertising has never recovered.

Winners in a Digital World

In less than five years, internet ad spend nearly doubled: $299 billion was spent on global internet advertising in 2019 compared to $156 billion in 2015.

Reaching $160 billion in one year, digital display advertising—a broad category including banner ads, rich media, advertorial and sponsorship, online video and social media—accounted for the largest global ad expenditure in 2019.

Comparing all digital display ad spend in isolation with TV and newspaper, we can see the continued significance of the shift to digital, and how it’s projected to continue.

global advertising spend

Looking at the main visualization, it’s clear that budgets have shifted, with digital channels now accounting for more than half of total advertising spend.

Although digital spending is up across the board, search engine ad spend began to plateau in the late 2010s, while social and ecommerce mediums both continue to rise. Impressively, between 2012 to 2020, the percentage of U.S. senior marketing budgets allocated to social media more than doubled, ballooning from almost 9% to nearly 21%.

“People share, read and generally engage more with any type of content when it’s surfaced through friends and people they know and trust”

– Malorie Lucich, Head of Product & Tech Communications, Pinterest

Advertisers aren’t the only ones spending money online. More than $183 billion is expected to be spent online by consumers as a result of the 2020 pandemic.

Screen Life: Time is Ad Money

It’s not only that people have shifted their focus from analog to digital. They are also spending many of their waking hours in front of a screen.

  • Adults in the U.S. spend an average of 11 hours a day in front of a screen, and the ad dollars that vie for our digital attention are also rising.
  • Globally, the daily average of time spent online was almost 7 hours during the pandemic, up from 3.2 hours at the beginning of lockdowns.

As a result of COVID-19 lifestyle shifts, time spent watching digital video is expected to increase. According to eMarketer, digital video spiked among UK adults during the pandemic—to 2.75 hours, and almost by 30 minutes daily in total video and TV screen time.

Smartphone Boom: From Big Screens to Small

Social media and digital ad spend also corresponds with a steady uptick in global smartphone ownership and usage.

In February of 2019, for instance, 81% of U.S. residents owned a smartphone. By 2024, it’s expected that 291 million Americans (almost 90%) will be using a smartphone.

us smartphone users

In China, smartphone usage has almost doubled in 5 years—and is predicted to surpass 3.4 hours a day by 2022. Statista estimates there will be 1.13 billion smartphone users in China by 2025, making up nearly 14% of the world’s population by 2025.

As billions of users spend hundreds of hours with their small screens every year, it’s possible that mobile-based ad spend—including uber-popular apps like TikTok—will become even more commonplace.

The Digital Future is Now

As a result of the pandemic, it is projected that global advertising spending could fall by 8.1% this year. However, 53% of all global ad spend is expected to flow online. And the rise of search, social media, video, ecommerce—in contrast to TV and print—becomes clearer.

Although search ad spend recently plateaued, its rise over the last decade has been dramatic. With digital content consumption doubling since the pandemic began, the growth of social, e-commerce, and search ad spend are likely to continue.

If these trajectories are any indication, advertising budgets will only be getting more digital.

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Understanding the Enduring Consequences of Covid-19


This post is by HBR.org from HBR.org

Yale professor Nicholas Christakis maps society’s long-term recovery from the pandemic.

What does a Biden presidency mean for tech?


This post is curated by Keith Teare. It was written by Kevin McAllister. The original is [linked here]

Gary Shapiro

President & CEO at Consumer Technology Association

This election divided us and now it is time to accept the result and support President-elect Biden. Part of what separates us from other nations is a history of peaceful transitions of leadership. National unity won’t be easy, but all Americans can unite around creating a better life for our children and keeping our nation the global innovation and technology leader.

A Biden administration can help by focusing on jobs, skills, training and apprenticeships. Our annual Future of Work Study found that three in four technology companies face difficulty finding candidates with the right skills and abilities. Filling American tech jobs also requires a fresh look at immigration reform, with an emphasis on high-skilled immigration policy. Smart, motivated immigrants create new companies and American jobs!

Biden can also help our competitiveness by stabilizing trade relationships and promoting — and protecting — innovation in our best companies. This includes a fact-based look at Section 230, the cornerstone of free speech online, and ensuring it continues to provide protections to companies both large and small. Imagine if Facebook, Nextdoor and Yelp have to start charging everyone to fight lawsuits for things people post!

Despite the protests and depressing headlines, we can emerge from this election as a strong, united country. It’s time to show the world that America is still the nation of diversity, freedom and innovation.

Victoria Espinel

President & CEO at BSA | The Software Alliance

First, an immediate and primary focus for the Biden administration will be inclusive economic recovery. Software technology has a major role to play here as a job creator and a job supporter. Many businesses, workers and students have been relying on software technology to operate their businesses, work and learn remotely, connect with loved ones, and access essential services through the pandemic. We as a nation have an opportunity to increase access to economic opportunity by focusing on education, worker training and reskilling programs, promoting high-speed internet access across the country, and expanding access to technology for underserved communities.

Second, I expect that the Biden administration will raise concerns about Big Tech, its power and accountability, and its use of data. We look forward to working with the administration on solutions that encourage the responsible use of technology and data. We also expect to see, and welcome, renewed attention on privacy by the administration, both in support for strong privacy legislation and for protections for consumers.

Third, looking beyond our borders, the administration will begin to work on rebuilding foreign alliances. There is potential to make progress on a range of issues important to tech including climate change, digital trade, surveillance norms, digital tax rules, international data transfers, and shared concerns with autocratic technology policies that are not in keeping with U.S. values. The administration’s commitment to investing in research and development will support U.S. leadership in technology.

The Biden administration and Congress have important work ahead as they aim to respond to the pandemic and move forward on economic recovery. That work should include ensuring that everyone can benefit from the digital economy by supporting job creation, expanding access to training programs, and investing in research and development. The software industry is enthusiastic to join this effort.

Berin Szóka

Senior Fellow and Founder at TechFreedom

Trump called "Sleepy Joe" a tool of the "radical, socialist left." Biden insisted his primary victory was a mandate for centrist pragmatism. Perhaps nowhere will Biden’s leadership be tested more than in tech policy.

Congress hasn’t passed substantial tech legislation since 1996 — and even that overhaul of the Communications Act (of 1934!) mostly reflected pre-internet assumptions and fears. Congress used to make regular course-corrections through biennial reauthorization of federal agencies — but stopped in 1998, the year Congress became pure political spectacle. The Federal Communications Commission and Federal Trade Commission have since been left to improvise. The FCC’s long been a "junior varsity Congress": same political baggage, no electoral accountability. The more serious FTC is trending that way. Each change of the White House means increasingly large shifts in tech policy.

These problems are as thorny as our broken judicial nomination process — and equally unlikely to be corrected through our broken legislative process. If Biden wants to be remembered for resolving them, he’ll need to do for tech what he’s proposed for the courts: convene an expert bipartisan commission with a clear mandate to develop once-in-a-century legislation, and then get ‘er done.

Biden’s nominations for FCC and FTC chairs will reveal whether he’s genuinely interested in leading on tech or on content, like Trump and Obama, to exploit tech issues to excite his base. Strong chairs could build congressional consensus for significant, but viable and therefore moderate, legislation. But if he picks bomb-throwers over problem-solvers, we’ll have four more years of the same digital culture wars — and creating a stable digital-era regulatory framework may have to wait several more presidencies.

Bruce Mehlman

Executive Director at Technology CEO Council

President-elect Biden will face the same challenges as President Trump has with respect to technology: The accelerating fourth industrial revolution will be solving immense global and national challenges while at the same time failing to protect consumers, accelerating inequality, reshaping geopolitics and often undermining competition. The core technology policy objective of Congress and the next several presidents this decade will be ensuring that the U.S. remains the global leader in innovation and entrepreneurship while also developing smart and well-targeted new policy approaches that maximize inclusive growth while minimizing externalities from businesses inclined to move too fast and break too many things.

We expect focus in 2021 on competition policy such as modernizing antitrust; digital consumer protections such as privacy, content moderation and algorithmic fairness; national security imperatives including 5G, updated export controls, cybersecurity and supply chain resilience; and new societal paradigms, such as supporting the gig economy, STEM education and lifelong learning platforms.

Nicol Turner Lee

Senior Fellow and Director, Center for Technology Innovation at the Brookings Institution

President-elect Joe Biden and Vice President-elect Kamala Harris will inherit a host of unsettled technology policy issues, including the governance of internet and artificial intelligence systems, mounting calls for stronger antitrust enforcement and platform regulation, the lack of a federal privacy standard, and an ambiguous (and often impulsive) approach to international tech issues, especially with China. The Biden administration means that these and other issues will shape the technology agenda at least for the first year of the new administration. But tech policies will not supersede the administration’s immediate focus on the never-ending pandemic and the resulting economic fractures, as well as growing racial polarization.

These realities will consume the administration’s time and may foreclose opportunities to leverage technology as part of the cure of these immediate concerns. If the Biden administration leveraged the transformational capabilities of technology to support the public good or prioritized closing the digital divide, these topics would add the potential reform of the nation’s Universal Service Fund to the list of tech policy priorities, ensuring more ubiquitous broadband access for rural, urban and tribal communities.

COVID-19 revealed the unfortunate alignment of the lack of digital access with a host of systemic inequalities, like poverty or geographic isolation. Consequently, citizens are constrained in commerce, workforce, housing and other essential services. Since the thrust of the Biden-Harris campaign was centered around equity, their presidency means that closing the digital divide, ensuring viable jobs and careers in tech-related industries, and instituting measures for fairness and equal access among tech industries should be on top of the other outstanding issues.

Jason Oxman

President & CEO at Information Technology Industry Council (ITI)

As the world continues to grapple with COVID-19 and the economic fallout from the pandemic, revitalizing and growing the U.S. economy will be a top priority in a Biden-Harris administration. The tech industry can be a partner to the new administration on this all-important effort, as well as on policies that maintain America’s global leadership and foster greater opportunity across all communities.

We anticipate and welcome the Biden-Harris administration having a more robust federal role in encouraging domestic innovation, including investment in research and development. This is critical to helping curb the current crisis through the development of therapeutics and vaccines, as well as essential to ensuring the U.S. continues to lead its global competitors in creating transformative technologies like AI and quantum computing.

President-elect Biden has also identified education and workforce development reform as top priorities. We anticipate his administration will expand on efforts to diversify the workforce by providing STEM education, closing skills and opportunity gaps, and supporting high-skilled immigration. We also anticipate the administration to seek long-awaited certainty for DACA recipients through pushing for quick passage of the DREAM Act, legislation our industry strongly supports.

On an international stage, the tech industry supports Biden’s multilateral approach to trade policy and a renewed collaboration with allies to achieve U.S. trade and economic objectives, including with respect to China. Such an approach — one that encourages open markets, reduces barriers to trade, and promotes a competitive tax system — is crucial to supporting American businesses and innovation.

The tech industry is committed to working constructively with the next administration to ensure that the United States adopts policies that support the well-being of all Americans.

Matthew T. Cornelius

Executive Director at the Alliance for Digital Innovation

President-elect Biden’s tech priorities will almost assuredly be tied to his top campaign issue: crushing coronavirus and restoring the health of Americans and the American economy. We can expect his first focus will be on a massive fiscal stimulus package that, among other items, will include substantial increases in technology investments to combat COVID-19, such as contact tracing, advanced data analytics and high-performance computing.

But Biden will also focus on ensuring that the government can acquire and leverage the best commercial technology capabilities American companies have to offer (as his campaign has consistently focused on supporting American companies and American workers). Federal agencies, as well as state and local offices, will be at the front lines of delivering benefits, services and program outcomes to combat the coronavirus, prop up the economy, support families and address critical issues such as continued high unemployment. Doing this effectively means overcoming years of legacy IT in government with a burst of modern technology products and digital services that will enable federal agencies to deliver better results quickly and effectively.

More broadly, a Biden administration is likely to focus on scaling research and development funding to support America’s leadership in the technologies of the future, such as artificial intelligence, quantum computing, and hyper automation, with an additional, targeted focus on ensuring we have a skilled and able workforce to understand and make maximum use of these emerging capabilities.

See who’s who in Protocol’s Braintrust (updated Nov. 4, 2020).

Questions, comments or suggestions? Email braintrust@protocol.com

The 25 Largest Private Equity Firms in One Chart


This post is by Omri Wallach from Visual Capitalist

The 25 Largest Private Equity Firms in One Chart

The 25 Largest Private Equity Firms Since 2015

Frequent the business section of your favorite newspaper long enough, and you’ll see mentions of private equity (PE).

Maybe it’s because a struggling company got bought out and taken private, just as Toys “R” Us did in 2005 for $6.6 billion.

Otherwise, it’s likely a mention of a major investment (or payout) that a PE firm scored through venture or growth capital. For example, after Airbnb had to postpone its original plans for a 2020 initial public offering (IPO) in light of the pandemic, the company raised more than $1 billion in PE funding to plan for a new listing later this year.

Yet many people don’t fully understand the size and scope of private equity. To demonstrate the impact of PE, we break down the funds raised by the top 25 firms over the last five years.

How Private Equity Firms Operate

First, we need to differentiate between private equity and other forms of investment.

A PE firm makes investments and provides financial backing to startups and non-public companies (or public companies that are being taken private).

Each firm raises a PE fund by pooling capital from investors, which it then uses to carry out transactions such as leveraged buyouts, venture and growth capital, distressed investments, and mezzanine capital.

Unlike other investment firms such as hedge funds, private equity firms take a direct role in managing their assets. In order to maximize value, that can mean asset stripping, lay-offs, and other significant restructuring.

Traditionally, PE investments are held on a longer-term basis, with the goal of maximizing the target company’s value through an IPO, merger, recapitalization, or sale.

The List: The Most PE Funds Raised in Five Years

So which names should you know in private equity?

Here are the largest 25 private equity firms by their five-year PE fundraising total over the last five years, with data on funds and investments from respective firms and Private Equity International.

They include well-known private equity houses like The Blackstone Group and KKR (Kohlberg Kravis Roberts), as well as investment managers with private equity divisions like BlackRock.

Rank Private Equity Firm 5-Year Funds Raised ($B) Notable Current Investments
1 The Blackstone Group 95.95 Refinitiv, Merlin Entertainments
2 The Carlyle Group 61.72 ZoomInfo, PPD
3 Kohlberg Kravis Roberts & Co.  54.76 Axel Springer SE, Epic Games
4 TPG Capital 38.68 Cirque du Soleil, Cushman & Wakefield
5 Warburg Pincus 37.59 Airtel, Sundyne
6 Neuberger Berman 36.51 Marquee Brands, Telxius
7 CVC Capital Partners 35.88 Petco, Premiership Rugby
8 EQT Partners 34.46 Dunlop Protective Footwear, SUSE
9 Advent International 33.49 Cobham, Serta Simmons Bedding,
10 Vista Equity Partners 32.1 Finastra, Mindbody
11 Leonard Green & Partners 26.31 Lucky Brand, Signet Jewelers
12 Cinven 26.15 Kurt Geiger, Hotelbeds
13 Bain Capital 25.74 Virgin Voyages, Canada Goose
14 Apollo Global Management 25.42 ADT, Chuck E Cheese’s
15 Thoma Bravo 25.29 Dynatrace, McAfee
16 Insight Partners 22.74 Monday.com, HelloFresh
17 BlackRock 22.46 Authentic Brands Group, Qumulo
18 General Atlantic 22.42 Airbnb, Vox Media
19 Permira 22.21 Dr. Martens, Informatica
20 Brookfield Asset Management 21.69 Multiplex, Westinghouse Electric
21 EnCap Investments 21.33 Pegasus Resources, Lotus Midstream
22 Francisco Partners 19.13 Verifone, GoodRx
23 Platinum Equity 18.00 Livingston International, Palace Sports & Entertainment
24 Hillhouse Capital Group 17.89 Miniso, Belle International
25 Partners Group 17.87 Civica, KinderCare Education 

Most of the world’s top PE firms, including TPG Capital (which invested in Ducati Motorcycles, J. Crew, and Del Monte Foods) and Advent International (an early investor in Lululemon Athletica) are headquartered in the U.S.

In fact, of the largest 25 private equity firms in the last five years, just four are headquartered in Europe (CVC, EQT, Cinven, and Permira) and one in Asia (Hillhouse).

Another name that might be recognizable is Bain Capital, which was co-founded by Utah Senator and former Republican Presidential nominee Mitt Romney and found success with investments in AMC Theatres, Domino’s Pizza, and iHeartMedia.

Famous Private Equity Investments

One of the most surprising things investors discover about private equity is how many large organizations have been funded through the PE world.

More well-known investments include KKR’s $31.1 billion takeover of food and tobacco conglomerate RJR Nabisco in 1989, and Blackstone’s $26 billion buyout of Hilton Hotels Corporation in 2007.

But other well-known companies have been funded, saved, or restructured through private equity. That list includes grocery chain Safeway, fast food chain Burger King, international racing operator Formula One Group, and hotel and casino company Caesars Entertainment (then called Harrah’s Entertainment).

Many other notable investments could soon pay off for private equity. With IPOs back in season, tech companies like Airbnb and Epic Games are ripe for payouts. At the same time, restructuring companies like J. Crew and Chuck E Cheese’s always offers a chance to recapitalize.

With the COVID-19 economic downturn resulting in newly distressed companies and potential takeover targets, expect the private equity world to be very active in the foreseeable future.

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Charting America’s Debt: $27 Trillion and Counting


This post is by Marcus Lu from Visual Capitalist

America's Debt Infographic

Why America’s Debt Doesn’t Stop Growing

Public sector debt has been a contentious topic for many years. While some believe that excessive government borrowing can be harmful over the long term, others have argued that it acts as a powerful tool for stimulating growth.

In the U.S., the latter view appears to have taken hold. Since 2008, America’s national debt has surged nearly 200%, reaching $27 trillion as of October 2020. To gain a better understanding of this ever-growing debt, this infographic takes a closer look at various U.S. budgetary datasets including the 2019 fiscal balance.

America’s Debt vs. GDP

Government debts are often represented by incredibly large numbers, making them hard to comprehend. By comparing America’s debt to its annual GDP, we can get a better grasp on the relative size of the country’s financial obligations.

Year Total Public Debt (USD) GDP (USD) Debt as % of GDP
1994 $4.5T $7.1T 63%
1995 $4.8T $7.5T 64%
1996 $5.0T $7.9T 63%
1997 $5.3T $8.4T 63%
1998 $5.5T $8.9T 62%
1999 $5.6T $9.4T 60%
2000 $5.8T $10.0T 58%
2001 $5.7T $10.5T 54%
2002 $5.9T $10.8T 55%
2003 $6.4T $11.2T 57%
2004 $7.0T $11.9T 59%
2005 $7.6T $12.8T 59%
2006 $8.2T $13.6T 60%
2007 $8.7T $14.2T 61%
2008 $9.2T $14.7T 63%
2009 $10.6T $14.4T 74%
2010 $12.3T $14.7T 84%
2011 $14.0T $15.3T 92%
2012 $15.2T $16.0T 95%
2013 $16.4T $16.6T 99%
2014 $17.3T $17.1T 101%
2015 $18.1T $18.0T 101%
2016 $18.9T $18.5T 102%
2017 $19.9T $19.2T 104%
2018 $20.5T $20.2T 101%
2019 $21.9T $21.1T 104%
2020 $23.2T $21.6T 107%
April 2020 $23.7T $19.5T 122%

Source: Federal Reserve, U.S. Treasury

In this context, U.S. debt was relatively moderate between 1994 to 2007, averaging 60% of GDP over the timeframe. This took a drastic turn during the Global Financial Crisis, with debt climbing to 95% of GDP by 2012.

Since then, America’s debt has only increased in relative size. In April 2020, with the COVID-19 pandemic in full force, it reached a record 122% of GDP. This may sound troubling at first, but there are a few caveats.

For starters, there are many other advanced economies that have also surpassed the 100% debt-to-GDP milestone. The most noteworthy is Japan, where the debt-to-GDP ratio has climbed beyond 200%. Furthermore, this is not the first time America has found itself in this situation—by the end of World War II, debt-to-GDP peaked at 106% before declining to historic lows in the 1970s.

What’s Preventing the Debt From Shrinking?

Although the U.S. continuously pays off portions of its debt, the total amount it owes has increased each year since 2001. That’s because the federal government runs consistent budget deficits, meaning it spends more than it earns. During economic crises, these deficits can become incredibly large.

Fiscal Year (Sept 30) Budget Surplus or Deficit (USD billions)
2000 +$236B
2001 +$128B
2002 -$158B
2003 -$378B
2004 -$418B
2005 -$318B
2006 -$248B
2007 -$161B
2008 -$458B
2009 -$1,412B
2010 -$1,294B
2011 -$1,299B
2012 -$1,076B
2013 -$680B
2014 -$485B
2015 -$441B
2016 -$585B
2017 -$665B
2018 -$779B
2019 -$984B
2020 -$3,131B

Source: Federal Reserve

In the aftermath of the Global Financial Crisis, the U.S. recorded an annual deficit of $1.4 trillion in FY2009. This was largely due to the $787 billion American Recovery and Reinvestment Act of 2009, which provided tax rebates and other economic relief.

In the economic battle against COVID-19’s impacts, the boundaries have been pushed even further. The annual deficit for FY2020 weighs in at a staggering $3.1 trillion, the largest ever. Contributing to this historic deficit was the $2 trillion CARES Act, which provided wide-ranging support to the entire U.S. economy.

Breaking Down the 2019 Fiscal Balance

Even in the years between these two economic crises, government spending still outpaced revenues. To find out more, we’ve broken down the 2019 fiscal balance into its various components.

Federal Spending

Total spending in FY2019 was roughly $4.4 trillion, and can be broken out into three components.

The first component is Mandatory Spending, which accounted for 62% of the total. Mandatory spending is required by law, and includes funding for important programs such as social security.

Category Amount (USD billions) Percent of Total Federal Spending
Health programs $1,121B 25.5%
Social security $1,039B 23.6%
Income security $301B 6.8%
Federal civilian and military retirement $164B 3.7%
Other $109B 2.5%
Total mandatory spending $2,735B 62.2%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

The largest category here was Health, with $1.1 trillion in funding for programs such as Medicare and Medicaid. Social security, which provides payments to retirees, was the second largest at $1.0 trillion.

The second component is Discretionary Spending, which accounted for 30% of the total. Discretionary spending is determined on an annual basis by Congress and the President.

Discretionary Spending Amount (USD) Share of Total Federal Spending
Defense $677B 15.4%
Transportation $100B 2.3%
Veteran’s benefits & services $85B 1.9%
Education $72B 1.6%
Health $66B 1.5%
Administration of justice $59B 1.3%
International affairs $52B 1.2%
General government $51B 1.2%
Housing assistance $49B 1.1%
Natural resources and environment $44B 1.0%
General science, space, and technology $32B 0.7%
Community and regional development $27B 0.6%
Training, employment, and social services $23B 0.5%

Total discretionary spending

$1,338B

30.4%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

At $677 billion, the Defense category represents over half of total discretionary spending. These funds are spread across the five branches of the U.S. military: the Army, Marine Corps, Navy, Air Force, and Space Force.

The third component of spending is the net interest costs on existing government debt. For FY2019, this was approximately $327 billion.

Federal Revenues

Revenues in FY2019 fell short of total spending, coming in at approximately $3.5 trillion. These inflows can be traced back to six categories.

Category Amount (USD billions) Percent of Total Revenues
Individual income taxes $1,732B 50.0%
Payroll taxes $1,247B 36.0%
Corporate income taxes $242B 7.0%
Other $104B 3.0%
Excise taxes $104B 3.0%
Customs duties $69B 2.0%
Total revenues $3,464B 100.0%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

Revenues overwhelmingly relied on individual income and payroll taxes, which together, accounted for 86% of the total. Corporate income taxes, on the other hand, accounted for just 7%.

Is America’s Debt a Cause for Concern?

The general consensus following the events of 2008 is that large fiscal stimulus (supported by government borrowing) was effective in speeding up the consequent recovery.

Now facing a pandemic, it’s likely that many Americans would support the idea of running large deficits to boost the economy. Surveys released in July 2020, for example, found that 82% of Americans wanted federal relief measures to be extended.

Looking beyond COVID-19, however, does reveal some warning signs. One frequent criticism of the ever-growing national debt is its associated interest costs, which could cannibalize investment in other areas. In fact, the effects of this dilemma are already becoming apparent. Over the past decade, the U.S. has spent more on interest than it has on programs such as veterans benefits and education.

us federal net interest costs chart

With low interest rates expected for the foreseeable future, the federal government is likely to continue running its large annual deficits—at least until the effects of COVID-19 have fully subsided. Perhaps after this crisis is over, it will be time to assess the long-term sustainability of America’s rising national debt.

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The post Charting America’s Debt: $27 Trillion and Counting appeared first on Visual Capitalist.

Charting America’s Debt: $27 Trillion and Counting


This post is by Marcus Lu from Visual Capitalist

America's Debt Infographic

Why America’s Debt Doesn’t Stop Growing

Public sector debt has been a contentious topic for many years. While some believe that excessive government borrowing can be harmful over the long term, others have argued that it acts as a powerful tool for stimulating growth.

In the U.S., the latter view appears to have taken hold. Since 2008, America’s national debt has surged nearly 200%, reaching $27 trillion as of October 2020. To gain a better understanding of this ever-growing debt, this infographic takes a closer look at various U.S. budgetary datasets including the 2019 fiscal balance.

America’s Debt vs. GDP

Government debts are often represented by incredibly large numbers, making them hard to comprehend. By comparing America’s debt to its annual GDP, we can get a better grasp on the relative size of the country’s financial obligations.

Year Total Public Debt (USD) GDP (USD) Debt as % of GDP
1994 $4.5T $7.1T 63%
1995 $4.8T $7.5T 64%
1996 $5.0T $7.9T 63%
1997 $5.3T $8.4T 63%
1998 $5.5T $8.9T 62%
1999 $5.6T $9.4T 60%
2000 $5.8T $10.0T 58%
2001 $5.7T $10.5T 54%
2002 $5.9T $10.8T 55%
2003 $6.4T $11.2T 57%
2004 $7.0T $11.9T 59%
2005 $7.6T $12.8T 59%
2006 $8.2T $13.6T 60%
2007 $8.7T $14.2T 61%
2008 $9.2T $14.7T 63%
2009 $10.6T $14.4T 74%
2010 $12.3T $14.7T 84%
2011 $14.0T $15.3T 92%
2012 $15.2T $16.0T 95%
2013 $16.4T $16.6T 99%
2014 $17.3T $17.1T 101%
2015 $18.1T $18.0T 101%
2016 $18.9T $18.5T 102%
2017 $19.9T $19.2T 104%
2018 $20.5T $20.2T 101%
2019 $21.9T $21.1T 104%
2020 $23.2T $21.6T 107%
April 2020 $23.7T $19.5T 122%

Source: Federal Reserve, U.S. Treasury

In this context, U.S. debt was relatively moderate between 1994 to 2007, averaging 60% of GDP over the timeframe. This took a drastic turn during the Global Financial Crisis, with debt climbing to 95% of GDP by 2012.

Since then, America’s debt has only increased in relative size. In April 2020, with the COVID-19 pandemic in full force, it reached a record 122% of GDP. This may sound troubling at first, but there are a few caveats.

For starters, there are many other advanced economies that have also surpassed the 100% debt-to-GDP milestone. The most noteworthy is Japan, where the debt-to-GDP ratio has climbed beyond 200%. Furthermore, this is not the first time America has found itself in this situation—by the end of World War II, debt-to-GDP peaked at 106% before declining to historic lows in the 1970s.

What’s Preventing the Debt From Shrinking?

Although the U.S. continuously pays off portions of its debt, the total amount it owes has increased each year since 2001. That’s because the federal government runs consistent budget deficits, meaning it spends more than it earns. During economic crises, these deficits can become incredibly large.

Fiscal Year (Sept 30) Budget Surplus or Deficit (USD billions)
2000 +$236B
2001 +$128B
2002 -$158B
2003 -$378B
2004 -$418B
2005 -$318B
2006 -$248B
2007 -$161B
2008 -$458B
2009 -$1,412B
2010 -$1,294B
2011 -$1,299B
2012 -$1,076B
2013 -$680B
2014 -$485B
2015 -$441B
2016 -$585B
2017 -$665B
2018 -$779B
2019 -$984B
2020 -$3,131B

Source: Federal Reserve

In the aftermath of the Global Financial Crisis, the U.S. recorded an annual deficit of $1.4 trillion in FY2009. This was largely due to the $787 billion American Recovery and Reinvestment Act of 2009, which provided tax rebates and other economic relief.

In the economic battle against COVID-19’s impacts, the boundaries have been pushed even further. The annual deficit for FY2020 weighs in at a staggering $3.1 trillion, the largest ever. Contributing to this historic deficit was the $2 trillion CARES Act, which provided wide-ranging support to the entire U.S. economy.

Breaking Down the 2019 Fiscal Balance

Even in the years between these two economic crises, government spending still outpaced revenues. To find out more, we’ve broken down the 2019 fiscal balance into its various components.

Federal Spending

Total spending in FY2019 was roughly $4.4 trillion, and can be broken out into three components.

The first component is Mandatory Spending, which accounted for 62% of the total. Mandatory spending is required by law, and includes funding for important programs such as social security.

Category Amount (USD billions) Percent of Total Federal Spending
Health programs $1,121B 25.5%
Social security $1,039B 23.6%
Income security $301B 6.8%
Federal civilian and military retirement $164B 3.7%
Other $109B 2.5%
Total mandatory spending $2,735B 62.2%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

The largest category here was Health, with $1.1 trillion in funding for programs such as Medicare and Medicaid. Social security, which provides payments to retirees, was the second largest at $1.0 trillion.

The second component is Discretionary Spending, which accounted for 30% of the total. Discretionary spending is determined on an annual basis by Congress and the President.

Discretionary Spending Amount (USD) Share of Total Federal Spending
Defense $677B 15.4%
Transportation $100B 2.3%
Veteran’s benefits & services $85B 1.9%
Education $72B 1.6%
Health $66B 1.5%
Administration of justice $59B 1.3%
International affairs $52B 1.2%
General government $51B 1.2%
Housing assistance $49B 1.1%
Natural resources and environment $44B 1.0%
General science, space, and technology $32B 0.7%
Community and regional development $27B 0.6%
Training, employment, and social services $23B 0.5%

Total discretionary spending

$1,338B

30.4%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

At $677 billion, the Defense category represents over half of total discretionary spending. These funds are spread across the five branches of the U.S. military: the Army, Marine Corps, Navy, Air Force, and Space Force.

The third component of spending is the net interest costs on existing government debt. For FY2019, this was approximately $327 billion.

Federal Revenues

Revenues in FY2019 fell short of total spending, coming in at approximately $3.5 trillion. These inflows can be traced back to six categories.

Category Amount (USD billions) Percent of Total Revenues
Individual income taxes $1,732B 50.0%
Payroll taxes $1,247B 36.0%
Corporate income taxes $242B 7.0%
Other $104B 3.0%
Excise taxes $104B 3.0%
Customs duties $69B 2.0%
Total revenues $3,464B 100.0%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

Revenues overwhelmingly relied on individual income and payroll taxes, which together, accounted for 86% of the total. Corporate income taxes, on the other hand, accounted for just 7%.

Is America’s Debt a Cause for Concern?

The general consensus following the events of 2008 is that large fiscal stimulus (supported by government borrowing) was effective in speeding up the consequent recovery.

Now facing a pandemic, it’s likely that many Americans would support the idea of running large deficits to boost the economy. Surveys released in July 2020, for example, found that 82% of Americans wanted federal relief measures to be extended.

Looking beyond COVID-19, however, does reveal some warning signs. One frequent criticism of the ever-growing national debt is its associated interest costs, which could cannibalize investment in other areas. In fact, the effects of this dilemma are already becoming apparent. Over the past decade, the U.S. has spent more on interest than it has on programs such as veterans benefits and education.

us federal net interest costs chart

With low interest rates expected for the foreseeable future, the federal government is likely to continue running its large annual deficits—at least until the effects of COVID-19 have fully subsided. Perhaps after this crisis is over, it will be time to assess the long-term sustainability of America’s rising national debt.

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The Economics of Coffee in One Chart


This post is by Omri Wallach from Visual Capitalist

The Economics of Coffee in One Chart

Breaking Down the Economics of Coffee

What goes into your morning cup of coffee, and what makes it possible?

The obvious answer might be coffee beans, but when you start to account for additional costs, the scope of a massive $200+ billion coffee supply chain becomes clear.

From the labor of growing, exporting, and roasting the coffee plants to the materials like packaging, cups, and even stir sticks, there are many underlying costs that factor into every cup of coffee consumed.

The above graphic breaks down the costs incurred by retail coffee production for one pound of coffee, equivalent to about 15 cups of 16 ounce brewed coffee.

The Difficulty of Pricing Coffee

Measuring and averaging out a global industry is a complicated ordeal.

Not only do global coffee prices constantly fluctuate, but each country also has differences in availability, relative costs, and the final price of a finished product.

That’s why a cup of 16 oz brewed coffee in the U.S. doesn’t cost the same in the U.K., or Japan, or anywhere else in the world. Even within countries, the differences of a company’s access to wholesale beans will dictate the final price.

To counteract these discrepancies, today’s infographic above uses figures sourced from the Specialty Coffee Association which are illustrative but based on the organization’s Benchmarking Report and Coffee Price Report.

What they end up with is an estimated set price of $2.80 for a brewed cup of coffee at a specialty coffee store. Each store and indeed each country will see a different price, but that gives us the foundation to start backtracking and breaking down the total costs.

From Growing Beans to Exporting Bags

To make coffee, you must have the right conditions to grow it.

The two major types of coffee, Arabica and Robusta, are produced primarily in subequatorial countries. The plants originated in Ethiopia, were first grown in Yemen in the 1600s, then spread around the world by way of European colonialism.

Today, Brazil is far and away the largest producer and exporter of coffee, with Vietnam the only other country accounting for a double-digit percentage of global production.

Country Coffee Production (60kg bags) Share of Global Coffee Production
Brazil 64,875,000 37.5%
Vietnam 30,024,000 17.4%
Colombia 13,858,000 8.0%
Indonesia 9,618,000 5.6%
Ethiopia 7,541,000 4.4%
Honduras 7,328,000 4.2%
India 6,002,000 3.5%
Uganda 4,704,000 2.7%
Peru 4,263,000 2.5%
Other 24,629,000 14.2%

How much money do growers make on green coffee beans? With prices constantly fluctuating each year, they can range from below $0.50/lb in 2001 to above $2.10/lb in 2011.

But if you’re looking for the money in coffee, you won’t find it at the source. Fairtrade estimates that 125 million people worldwide depend on coffee for their livelihoods, but many of them are unable to earn a reliable living from it.

Instead, one of the biggest profit margins is made by the companies exporting the coffee. In 2018 the ICO Composite price (which tracks both Arabica and Robusta coffee prices) averaged $1.09/lb, while the SCA lists exporters as charging a price of $3.24/lb for green coffee.

Roasting Economics

Roasters might be charged $3.24/lb for green coffee beans from exporters, but that’s far from the final price they pay.

First, beans have to be imported, adding shipping and importer fees that add $0.31/lb. Once the actual roasting begins, the cost of labor and certification and the inevitable losses along the way add an additional $1.86/lb before general business expenses.

By the end of it, roasters see a total illustrated cost of $8.73/lb.

Roaster Economics ($/lb)
Sales Price $9.40
Total Cost $8.73
Pre-tax Profit $0.67
Taxes $0.23
Net Profit $0.44
Net Profit (%) 7.1%

When it comes time for their profit margin, roasters quote a selling price of around $9.40/lb. After taxes, roasters see a net profit of roughly $0.44/lb or 7.1%.

Retail Margins

For consumers purchasing quality, roasted coffee beans directly through distributors, seeing a 1lb bag of roasted whole coffee for $14.99 and higher is standard. Retailers, however, are able to access coffee closer to the stated wholesale prices and add their own costs to the equation.

One pound of roasted coffee beans will translate into about 15 cups of 16 ounce (475 ml) brewed coffee for a store. At a price of $2.80/cup, that translates into a yield of $42.00/lb of coffee.

That doesn’t sound half bad until you start to factor in the costs. Material costs include the coffee itself, the cups and lids (often charged separately), the stir sticks and even the condiments. After all, containers of half-and-half and ground cinnamon don’t pay for themselves.

Factoring them all together equals a retail material cost of $13.00/lb. That still leaves a healthy gross profit of $29.00/lb, but running a retail store is an expensive business. Add to that the costs of operations, including labor, leasing, marketing, and administrative costs, and the total costs quickly ramp up to $35.47/lb.

In fact, when accounting for additional costs for interest and taxes, the SCA figures give retailers a net profit of $2.90/lb or 6.9%, slightly less than that of roasters.

A Massive Global Industry

Coffee production is a big industry for one reason: coffee consumption is truly a universal affair with 2.3 million cups of coffee consumed globally every minute. By total volume sales, coffee is the fourth most-consumed beverage in the world.

That makes the retail side of the market a major factor. Dominated by companies like Nestlé and Jacobs Douwe Egberts, global retail coffee sales in 2017 reached $83 billion, with an average yearly expenditure of $11 per capita globally.

Of course, some countries are bigger coffee drinkers than others. The largest global consumers by tonnage are the U.S. and Brazil (despite also being the largest producer and exporter), but per capita consumption is significantly higher in European countries like Norway and Switzerland.

The next time you sip your coffee, consider the multilayered and vast global supply chain that makes it all possible.

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Essential Workers Need Better Masks


This post is by Devabhaktuni Srikrishna from HBR.org

Employers should invest in this cost-effective alternative to the N95.

Get Ready for Airbnb’s IPO to Blow Away Expectations


This post is curated by Keith Teare. It was written by Scott Galloway. The original is [linked here]

Some are predicting a $30 billion valuation. Here’s why it could actually be a lot higher.

Continue reading on Marker »

How Total Spend by U.S. Advertisers Has Changed, Over 20 Years


This post is by Katie Jones from Visual Capitalist

How Total Spend by U.S. Advertisers Has Changed, Over 20 Years

Total Spend by U.S. Advertisers, Over 20 Years

With an advertising economy worth $239 billion in 2019, it’s safe to say that the U.S. is home to some of the biggest advertising spenders on the planet.

However, the COVID-19 pandemic has resulted in the major upheaval of advertising spend, and it is unlikely to recover for some time.

The graphic above uses data from Ad Age’s Leading National Advertisers 2020 which measures U.S. advertising spend each year, and ranks 100 national advertisers by their total spend in 2019.

Let’s take a look at the brands with the biggest budgets.

2019’s Biggest Advertising Spenders

Much of the top 10 biggest advertising spenders are in the telecommunications industry, but it is retail giant Amazon that tops the list with an advertising spend of almost $7 billion.

In fact, Amazon spent an eye-watering $21,000 per minute on advertising and promotion in 2019, making them undeniably the largest advertising spender in America.

Explore the 100 biggest advertisers in 2019 below:

Rank Company Total U.S. Ad Spend 2019 Industry
#1 Amazon $6.9B Retail
#2 Comcast Corp. $6.1B Entertainment
#3 AT&T $5.5B Telecommunications
#4 Procter & Gamble $4.3B Consumer Goods
#5 Walt Disney $3.1B Entertainment
#6 Alphabet $3.1B Technology
#7 Verizon Communications $3.1B Telecommunications
#8 Charter Communications $3.0B Telecommunications
#9 American Express $3.0B Financial Services
#10 General Motors $3.0B Automotive
#11 JPMorgan Chase $2.8B Financial Services
#12 Walmart $2.7B Retail
#13 L’Oréal $2.3B Beauty
#14 T-Mobile U.S. $2.3B Telecommunications
#15 Berkshire Hathaway $2.3B Various
#16 Nestlé $2.3B Food & Beverages
#17 Ford $2.3B Automotive
#18 Expedia Group $2.2B Travel & Hospitality
#19 Capital One Financial $2.2B Financial Services
#20 Fiat Chrysler Automobiles $2.0B Automotive
#21 Samsung $2.0B Electronics
#22 Pfizer $1.9B Pharmaceuticals
#23 Progressive $1.8B Insurance
#24 PepsiCo $1.7B Food & Beverages
#25 Bank of America $1.7B Financial Services
#26 LVMH $1.6B Retail
#27 Target $1.6B Retail
#28 McDonald’s $1.6B Food & Beverages
#29 Booking Holdings $1.6B Travel & Hospitality
#30 GlaxoSmithKline $1.5B Pharmaceuticals
#31 Johnson & Johnson $1.5B Pharmaceuticals
#32 Anheuser-Busch InBev $1.5B Food & Beverages
#33 Toyota $1.5B Automotive
#34 Merck & Co. $1.5B Logistics
#35 Nike $1.5B Retail
#36 AbbVie $1.4B Pharmaceuticals
#37 Honda $1.4B Automotive
#38 Unilever $1.4B Consumer Goods
#39 ViacomCBS $1.4B Entertainment
#40 Macy’s $1.3B Retail
#41 State Farm $1.2B Insurance
#42 Kohl’s $1.2B Retail
#43 Home Depot $1.1B Retail
#44 Wells Fargo $1.1B Financial Services
#45 Yum Brands $1.1B Food & Beverages
#46 Netflix $1.1B Entertainment
#47 U.S. Government $1.0B Government
#48 Estée Lauder $994M Beauty
#49 Nissan $990M Automotive
#50 Wayfair $932M Retail
#51 Diageo $918M Food & Beverages
#52 Sanofi $889M Pharmaceuticals
#53 Discover Financial Services $883M Financial Services
#54 Mars $880M Food & Beverages
#55 Eli Lilly $864M Pharmaceuticals
#56 Kroger $854M Retail
#57 Allstate $854M Insurance
#58 Molson Coors $822M Food & Beverages
#59 Apple $818M Technology
#60 Microsoft $816M Technology
#61 Coca-Cola $816M Food & Beverages
#62 DISH Network $815M Entertainment
#63 Lowe’s $811M Retail
#64 Kraft Heinz $782M Food & Beverages
#65 Volkswagen $780M Automotive
#66 IAC $775M Entertainment
#67 Best Buy $772M Retail
#68 Intuit $760M Technology
#69 Uber $756M Technology
#70 Constellation Brands $749M Food & Beverages
#71 Sony $746M Technology
#72 Cox Enterprises $715M Entertainment
#73 Citigroup $691M Financial Services
#74 Adidas $688M Consumer Goods
#75 LendingTree $688M Financial Services
#76 Amgen $685M Technology
#77 Gilead Services $683M Pharmaceuticals
#78 Facebook $671M Technology
#79 Lions Gate $668M Entertainment
#80 Marriott International $667M Travel & Hospitality
#81 EssilorLuxottica $665M Consumer Goods
#82 J.C. Penney $644M Retail
#83 Liberty Mutual $640M Insurance
#84 Daimler $640M Automotive
#85 Hyundai $627M Automotive
#86 Walgreens $621M Retail
#87 Dell $618M Technology
#88 IBM $606M Technology
#89 Reckitt Benckiser $593M Consumer Goods
#90 Keurig Dr Pepper $593M Food & Beverages
#91 Restaurant Brands International $589M Food & Beverages
#92 Inspire Brands $589M Food & Beverages
#93 Clorox $581M Consumer Goods
#94 Novartis $579M Pharmaceuticals
#95 eBay $562M Retail
#96 Gap $562M Retail
#97 Takeda $541M Pharmaceuticals
#98 Kia Motors $534M Automotive
#99 Coty $531M Beauty
#100 Subarau $532M Automotive

The report offers several ways of looking at this data—for example, when looking at highest spend by medium, Procter & Gamble comes out on top for traditional media spend like broadcast and cable TV.

On the digital front, Expedia Group is the biggest spender on desktop search, while Amazon tops the list for internet display ads.

The Rise and Fall of Advertising Spend

Interestingly, changes in advertising spend tend to fall closely in step with broader economic growth. In fact, for every 1% increase in U.S. GDP, there is a 4.4% rise of advertising that occurs in tandem.

The same phenomenon can be seen among the biggest advertising spenders in the country. Since 2000, spend has seen both promising growth, and drastic declines. Unsurprisingly, the Great Recession resulted in the largest drop in spend ever recorded, and now it looks as though history may be repeating itself.

Total advertising spend in the U.S. is estimated this year to see a brutal decline of almost 13% and is unlikely to return to previous levels for a number of years.

The COVID-19 Gut Punch

To say that the global COVID-19 pandemic has impacted consumer behavior would be an understatement, and perhaps the most notable change is how they now consume content.

With more people staying safe indoors, there is less need for traditional media formats such as out-of-home advertising. As a result, online media is taking its place, as an increase in spend for this format shows.

But despite marketers trying to optimize their media strategy or stripping back their budget entirely, many governments across the world are ramping up their spend on advertising to promote public health messages—or in the case of the U.S., to canvass.

The Saving Grace?

Even though advertising spend is expected to nosedive by almost 13% in 2020, this figure excludes political advertising. When taking that into account, the decline becomes a slightly more manageable 7.6%

Moreover, according to industry research firm Kantar, advertising spend for the 2020 U.S. election is estimated to reach $7 billion—the same as Amazon’s 2019 spend—making it the most expensive election of all time.

Can political advertising be the key to the advertising industry bouncing back again?

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Mapped: America’s $2 Trillion Economic Drop, by State and Sector


This post is by Iman Ghosh from Visual Capitalist

Change in GDP $2T Economic Drop

Mapped: America’s $2 Trillion Economic Drop

It only took a handful of months for the U.S. economy to reel from COVID-19’s effects.

As unemployment rates hit all-time highs and businesses scrambled to stay afloat, new data shows that current dollar GDP plummeted from nearly $21.6 trillion down to $19.5 trillion between Q1’2020 and Q2’2020 (seasonally adjusted at annual rates).

While all states experienced a decline, the effects were not distributed equally across the nation. This visualization takes a look at the latest data from the Bureau of Economic Analysis, uncovering the biggest declines across states, and which industries were most affected by COVID-19 related closures and uncertainty.

Change in GDP by State and Industry

Between March-June 2020, stay-at-home orders resulted in disruptions to consumer activity, health, and the broader economy, causing U.S. GDP to fall by 31.4% from numbers posted in Q1.

The U.S. economy is the sum of its parts, with each state contributing to the total output—making the COVID-19 decline even more evident when state-by-state change in GDP is taken into consideration.

State Real GDP Change Biggest Industry Decline Industry Change
(p.p.)
Alabama -29.6 Durable Goods Manufacturing -5.02
Alaska -33.8 Transport and Warehousing -9.43
Arizona -25.3 Accommodation and Food Services -4.2
Arkansas -27.9 Health Care and Social Assistance -4.57
California -31.5 Accommodation and Food Services -4.43
Colorado -28.1 Accommodation and Food Services -3.85
Connecticut -31.1 Health Care and Social Assistance -4.61
Delaware -21.9 Health Care and Social Assistance -4.19
Florida -30.1 Accommodation and Food Services -5.3
Georgia -27.7 Accommodation and Food Services -3.43
Hawaii -42.2 Accommodation and Food Services -18.85
Idaho -32.4 Health Care and Social Assistance -4.49
Illinois -29.7 Accommodation and Food Services -4.11
Indiana -33.0 Durable Goods Manufacturing -6.74
Iowa -28.2 Durable Goods Manufacturing -4.35
Kansas -30.3 Durable Goods Manufacturing -4.42
Kentucky -34.5 Durable Goods Manufacturing -5.41
Louisiana -31.4 Accommodation and Food Services -4.72
Maine -34.4 Accommodation and Food Services -7.09
Maryland -27.7 Health Care and Social Assistance -4.18
Massachusetts -31.6 Health Care and Social Assistance -4.73
Michigan -37.6 Durable Goods Manufacturing -7.57
Minnesota -31.3 Health Care and Social Assistance -4.55
Mississippi -32.9 Health Care and Social Assistance -4.56
Missouri -32.1 Health Care and Social Assistance -4.29
Montana -30.8 Health Care and Social Assistance -5.67
Nebraska -31.0 Transport and Warehousing -6.13
Nevada -42.2 Accommodation and Food Services -15.62
New Hampshire -36.9 Accommodation and Food Services -6.7
New Jersey -35.6 Health Care and Social Assistance -5.33
New Mexico -28.3 Mining, Quarrying, and Oil and Gas Extraction -4.4
New York -36.3 Accommodation and Food Services -5.97
North Carolina -30.5 Accommodation and Food Services -4.67
North Dakota -27.6 Transport and Warehousing -4.94
Ohio -33.0 Durable Goods Manufacturing -4.92
Oklahoma -31.1 Transport and Warehousing -6.22
Oregon -31.9 Accommodation and Food Services -5.81
Pennsylvania -34.0 Health Care and Social Assistance -5.07
Rhode Island -32.4 Health Care and Social Assistance -5.73
South Carolina -32.6 Accommodation and Food Services -6.16
South Dakota -28.8 Health Care and Social Assistance -5.44
Tennessee -40.4 Health Care and Social Assistance -6.25
Texas -29.0 Health Care and Social Assistance -3.13
Utah -22.4 Transport and Warehousing -3.12
Vermont -38.2 Accommodation and Food Services -8.52
Virginia -27.0 Health Care and Social Assistance -3.59
Washington -25.5 Accommodation and Food Services -4.39
West Virginia -29.6 Health Care and Social Assistance -5.48
Wisconsin -32.6 Durable Goods Manufacturing -5.17
Wyoming -32.5 Transport and Warehousing -7.38
🇺🇸 U.S. -31.4 Accommodation and Food Services -4.38

Note: Industry changes are reported in percentage points (p.p.) of total current dollar GDP between Q1 and Q2.

A total of 18 states took the biggest hit within the Accommodation & Food Services sector, which was also the industry that suffered the most nationally, dropping by 4.38%.

Highly dependent on tourism, Hawaii bore the brunt of decline in this industry with a 18.85% drop. According to The Economic Research Organization at the University of Hawaii (UHERO), a second wave of infections and expired financial assistance were behind this contraction.

Next, the Health Care & Social Assistance sector was most impacted in 17 states between the two quarters, falling the most in Tennessee (-6.25%).

The most resilient industry amid the pandemic was Financial Services. In the state of Delaware, home to major banks such as JPMorgan Chase and Capital One, the sector actually grew by 4.47%. However, Delaware’s GDP ultimately still fell due to contractions in other sectors.

Each Industry’s Worst Performing State

Looking at it another way, the worst-performing state by industry also becomes clear when the change in percentage points (p.p.) Q1’–Q2’2020 GDP contributions are measured. Of the 21 industries profiled, Nevada shows up in the lower end of the spectrum four times.

Industry Worst-performing state Change (p.p.)
Agriculture, forestry, fishing and hunting Nebraska -4.99%
Mining, quarrying, and oil and gas extraction Wyoming -5.76%
Utilities Nebraska -0.33%
Construction New York -2.02%
Durable goods manufacturing Michigan -7.57%
Nondurable goods manufacturing Indiana -2.65%
Wholesale trade New Jersey -3.35%
Retail trade Nevada -2.88%
Transportation and warehousing Alaska -9.43%
Information California -0.88%
Finance and insurance South Dakota -1.53%
Real estate and rental and leasing Florida -2.00%
Professional, scientific, and technical services District of Columbia -4.46%
Management of companies and enterprises Nevada -0.38%
Administrative/ support /waste management / remediation Nevada -2.48%
Educational services Rhode Island -1.47%
Health care and social assistance Tennessee -6.25%
Arts, entertainment, and recreation Nevada -4.44%
Accommodation and food services Hawaii -18.85%
Other services (ex. govt) District of Columbia -2.40%
Government and government enterprises Alaska -4.19%

With many U.S. business leaders expecting a second contraction to occur in the economy, will future figures reflect further declines, or will states manage to bounce back?

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Visualizing U.S. Money Supply vs. Precious Metal Production in the COVID-19 Era


This post is by Jenna Ross from Visual Capitalist

U.S. Precious Metal Coin Production vs. Dollars Printed

U.S. Precious Metal Coin Production in the COVID-19 Era

Gold and silver have played an important role in money throughout history. Unlike modern currencies, they can’t be created out of thin air and derive value from their scarcity.

In the COVID-19 era, this difference has become more prominent as countries print vast amounts of currency to support their suffering economies. This graphic from Texas Precious Metals highlights how the value of U.S. precious metal coin production compares to U.S. money creation.

Year to Date Production

In this infographic, we have calculated the value of money supply added as well as bullion minted, and divided it by the U.S. population to get total production per person. Here’s how the January-September 2020 data breaks down:

  Total (Ounces) Dollar Value Dollar Value Per Person
U.S. Gold Ounces 826,000 $1.6B $4.79
U.S. Silver Ounces 22,261,500 $544M $1.65
U.S. Money Supply $3.4T $10,250.16
U.S. Debt $3.8T $11,578.36

Gold and silver dollar values based on Oct 5, 2020 spot prices of $1,915.93 and $24.47 respectively.

The value of new U.S. money supply was more than 2,100 times higher than the value of new gold minted. Compared to minted silver, the value of new U.S. money supply was over 6,000 times higher.

Production Per Day, Per State Over Time

Here’s how production has changed on a per day, per state basis since 2010:

  2010 2020 YTD (Jan-Sep) Min-Max Production, 2010-2019 
Minted Gold Coins  78oz 61oz 12oz-78oz 
Minted Silver Coins  1,945oz 1,631oz 899oz-2,633oz 
U.S. Dollars $19M $255M $19M-$50M 

Year to date, U.S. precious metal coin production is within a normal historical range. If production were to continue at the current rate through December, gold would be above historical norms at 81 ounces and silver would be within the normal range at 2,175 ounces.

The issuance of U.S. dollars tells a different story. Over the last nine months, the U.S. has already added 400% more dollars to its money supply than it did in the entirety of 2019—and there’s still three months left to go in the year.

A Macroeconomic View

Of course, current economic conditions have been a catalyst for the ballooning money supply. In response to the COVID-19 pandemic, the U.S. government has issued over $3 trillion in fiscal stimulus. In turn, the U.S. Federal Reserve has increased the money supply by $3.4 trillion from January to September 2020.

U.S. Money Supply

Put another way, for every ounce of gold created in 2020 there has been $4 million U.S. dollars added to the money supply.

The question for those looking for safe haven investments is: which of these will ultimately hold their value better?

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Every Company In and Out of the Dow Jones Industrial Average Since 1928


This post is by Aran Ali from Visual Capitalist

View the full-size version of this infographic.

data visualization showing dow jones industrial average companies since 1928

Every Company In and Out Of The Dow Since 1928

View the high resolution of this infographic by clicking here.

The Dow Jones Industrial Average (DJIA) is reported on daily by every major finance and media platform—a testament to its importance and relevance in global financial markets.

The market benchmark has a rich history embedded alongside America’s rise as a global superpower in the 20th century, and the inflows and outflows of companies on the 30 stock index coincide with broader secular trends. For example, the delisting of many industrial stocks over time encapsulates America’s transition towards a service-based economy. Meanwhile, the addition of tech companies in the last few decades paints a similar picture of change.

Today’s infographic looks at Dow data spanning over nine decades, all the way back to the tail end of the Roaring Twenties.

Crank Up The Volatility

An increasingly competitive and accelerating business landscape results in greater churn for stock market indices.

In fact, in the 92 years of activity visualized for the DJIA, there were 93 changes in its composition. This is not surprising, as the average duration of a company’s tenure on American indices has been trending down for decades—that said, 63% of Dow changes occurred in the second half of the 92 year sample period.

The current iteration of the DJIA includes some long-serving constituents, with the average length of companies in the index sitting at 20 years. General Electric was the last standing member of the original group from 1928, but in 2018, they were replaced by Walgreens.

2020 has also brought with it some fresh faces, including three changes so far. They include Salesforce for ExxonMobil, Amgen for Pfizer, and Honeywell International for United Technologies. Here’s a full list of the current companies in the index:

Company Market Cap (B) TTM Revenue (B) YTD Stock Performance
American Express $81.1 $34.3 -21.0%
Amgen $149.8 $23.1 3.0%
Apple $1996 $273.9 55.0%
Boeing $94.6 $66.6

-49.5%
Caterpillar $81.2 $43.6 -0.2%
Cisco Systems $167.2 $49.3 -18.5%
Chevron $134.8 $115.0 -40.3%
Goldman Sachs Group $69.3 $18.2 -14.4%
Home Depot $299.2 $119.3 24.6%
Honeywell International $116.6 $34.5 -7.1%
IBM $109.1 $74.3 -9.8%
Intel $221.5 $79.0 -14.5%
Johnson & Johnson $392.2 $80.5 0.8%
Coca-Cola $212.2 $34.3 -11.6%
JPMorgan Chase $295.4 $76.3 -31.6%
McDonald’s $170.9 $19.1 10.7%
3M $93 $31.4 -9.4%
Merck & Co. $209.9 $47.2 -10.0%
Microsoft $1596.3 $143.0 31.4%
Nike $196.4 $37.3 24.7%
P&G $347.3 $71.0 9.9%
The Travelers Companies $27.6 $28.6 -21.6%
United Health Group Inc. $297.4 $195.1 3.5%
Salesforce $195.8 $19.4 52.2%
Verizon $255.3 $129.7 -3.5%
Visa $428.8 $22.9 6.1%
Walgreens Boots Alliance $31.3 $138.7 -40.0%
Walmart $398.9 $542.0 15.4%
Walt Disney $225.6 $69.8 -13.3%
Dow $35.4 $3.1 -14.9%
Average $297.67 $88.5 -3.1%

Although all the stocks in the DJIA are intended to be in line with broader economic trends, the similarities end there. For some DJIA stocks, 2020 has brought growth and opportunity—for others, quite the opposite.

YTD stock price performances range vastly from a high of 55% to a low of -49%. Perhaps it serves as no surprise that the best performing companies serve in the tech space like Apple, Microsoft, and Salesforce, while the worst performing are the likes of Boeing and Chevron.

A Sign of the Times

The three changes in 2020 can best be described as modernizing the Dow.

The delistings include businesses in industries such as Aerospace & Defense and Big Pharma. But the most monumental exit? ExxonMobil, which was once the biggest company by market capitalization in America.

Their fall from grace best symbolizes the state and direction the world is headed towards.

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The post Every Company In and Out of the Dow Jones Industrial Average Since 1928 appeared first on Visual Capitalist.

With $18M in new funding, Braintrust says it’s creating a fairer model for freelancers


This post is by Anthony Ha from Fundings & Exits – TechCrunch

Braintrust, a network for freelance technical and design talent that launched over the summer, is announcing that it has raised $18 million in new funding.

Co-founder and CEO Adam Jackson has written for TechCrunch about how tech companies need to treat independent contractors with more empathy. He told me via email that the San Francisco-based startup is making that idea a reality by offering a very different approach than existing marketplaces for freelance work.

For one thing, Braintrust only charges the companies doing the hiring — freelancers won’t have to pay to join or to bid on a project, and Braintrust won’t charge a fee on their project payments. In addition, the startup is using a cryptocurrency token that it calls Btrust to reward users who build the network, for example by inviting new customers or vetting freelancers. Apparently, the token will give users a stake in how the network evolves in the future.

“Just imagine if Uber had given all of its drivers some ownership in the company what a different company it would be today,” Jackson said. “Braintrust will be 100% user-owned. Everyone who participates on the platform has skin in the game.”

And for companies, Braintrust is supposed to allow them to tap freelancers for work that they’d normally do in-house. The startup’s clients already include Nestlé, Pacific Life, Deloitte, Porsche, Blue Cross Blue Shield and TaskRabbit.

According to Jackson, most of the talent on the platform consists of career freelancers, but with many people losing their jobs during the COVID-19 pandemic, “we’ve seen an influx of talent coming looking to join the ranks of the freelancers.”

He added that the startup already became profitable after raising its $6 million seed round, so the new funding will allow it to build the core team and also bring in more work.

“We exist to help companies accelerate their product roadmaps and innovation, and this injection of funding will help us do just that,” Jackson said.

The new funding was led by ACME and Blockchange, with participation from new investors Pantera, Multicoin and Variant.

SAP continues to build out customer experience business with Emarsys acquisition


This post is by Ron Miller from Fundings & Exits – TechCrunch

SAP seemed to be all in on customer experience when it acquired Qualtrics for $8 billion in 2018. It continued on that journey today when it announced it was acquiring Austrian cloud marketing company Emarsys for an undisclosed amount of money.

Emarsys, which raised over $55 million according to PitchBook data, gives SAP customer personalization technology. If you spoke to any marketing automation vendor over the last several years, the focus has been on using a variety of data and touch points to understand the customer better, and deliver more meaningful online experiences.

With the pandemic closing or limiting access to brick and mortar stores, personalization has taken a new urgency as customers are increasingly shopping online and companies need to meet them where they are.

With Emarsys, the company is getting an omnichannel marketing solution that they say is designed to deliver messages to customers wherever they are, including e-mail, mobile, social, SMS and the web, and deliver that at scale.

When SAP announced it was spinning out Qualtrics a couple of months ago, just 20 months after buying it, it left some question about whether SAP was fully committed to the customer experience business.

Brent Leary, founder and principal analyst at CRM Essentials, says that the acquisition shows that SAP is still very much in the game. “This illustrates that SAP is serious about CX and competing in a highly competitive space. Emarsys adds industry-specific customer engagement capabilities that should help SAP CX customers accelerate their efforts to provide their customers with the experiences they expect as their needs change over time,” Leary told TechCrunch.

As an ERP company at its core, SAP has traditionally focused on back-office kinds of operations. But Bob Stutz, president, SAP Customer Experience, sees this acquisition as a way to continue bringing back-office and front-office operations together.

“With Emarsys technology, SAP Customer Experience solutions can link commerce signals with the back office and activate the preferred channel of the customer with a relevant and consistently personalized message, allowing customers the freedom to choose their own engagement,” Stutz said in a statement.

The company, which is based in Austria, was founded back in 2000, when marketing was a very different world. It has built a customer base of 1,500 companies with 800 employees in 13 offices across the globe. All of this will become part of SAP, of course, and come under Stutz’s purview.

As with all transactions of this type it will be subject to regulatory approval, but the deal is expected to close this quarter.

Mapped: The Uneven Recovery of U.S. Small Businesses


This post is by Nick Routley from Visual Capitalist

Mapped: The Uneven Recovery of U.S. Small Businesses

Mapped: The Uneven Recovery of U.S. Small Businesses

Small businesses are the backbone of the U.S. economy, employing nearly half of the private sector workforce.

Unfortunately, lockdown and work-from-home measures brought about by COVID-19 have disproportionately affected small businesses – particularly in the leisure and hospitality sectors.

As metro-level data from Opportunity Insights points out, geography makes a great deal of difference in the proportion of U.S. small businesses that have flipped their open sign. While some cities are mostly back to business as usual, others are in a situation where the majority of small businesses are still shuttered.

The Big Picture

In the U.S. as a whole, data suggests that nearly a quarter of all small businesses remain closed. Of course, the situation on the ground differs from place to place. Here’s how cities around the country are doing, sorted by percentage of small businesses closed as of September 2020:

Metros Small Businesses Closed Small Businesses Closed (Leisure & Hosp.)
San Francisco -49% -65%
New Orleans -45% -72%
Honolulu -41% -39%
Washington DC -37% -55%
San Jose -35% -41%
Portland -34% -46%
San Antonio -34% -60%
Sacramento -33% -43%
Boston -33% -42%
Oakland -32% -52%
Austin -32% -65%
Bakersfield -31% -64%
Houston -30% -58%
Seattle -28% -47%
San Diego -28% -41%
Baltimore -28% -43%
Detroit -28% -44%
Los Angeles -27% -39%
Chicago -27% -37%
Tucson -27% -37%
Atlanta -26% -33%
Fresno -26% -50%
Oklahoma City -26% -56%
Cleveland -26% -39%
Denver -26% -56%
Indianapolis -25% -29%
Denver -25% -38%
El Paso -25% -34%
Philadelphia -24% -34%
Tulsa -23% -40%
Albuquerque -23% -42%
Colorado Springs -23% -37%
Louisville -23% -25%
Miami -23% -38%
Fort Worth -22% -34%
Las Vegas -22% -35%
Tampa -22% -45%
Milwaukee -22% -30%
New York City -21% -40%
Dallas -21% -38%
Memphis -21% -37%
Minneapolis -21% -36%
Nashville -21% -39%
Columbus -21% -35%
Phoenix -19% -36%
Jacksonville -18% -35%
Salt Lake City -18% -24%
Charlotte -18% -42%
Raleigh -16% -34%
Wichita -15% -29%
Kansas City -15% -24%
Omaha -13% -14%

New Orleans and the Bay Area are still experiencing rates of small business closures that are almost double the national median.

Small businesses in the leisure and hospitality sector have been particularly hard hit, with 37% reporting no transaction data.

Getting Back to Business

Some cities are seeing rates of small business operation that are nearing pre-pandemic levels.

Change in small businesses open by city - back to normal

Of the cities covered in the data set, Omaha had the highest rate of small businesses open.

Still Shuttered

In cities with a large technology sector, such as San Francisco and Austin, COVID-19 is shaking up the economic patterns as entire companies switched to remote working almost overnight. This is bad news for the constellation of restaurants and services that cater to those workers.

Change in small businesses open by city - still closed

Likewise, cities that have an economy built around serving visitors – Honolulu and New Orleans, for example – have seen a very high rate of small business closures as vacations and conferences have been paused indefinitely.

As the pandemic drags on, many of these temporary closures are looking to be permanent. Yelp recently reported that of the restaurants marked as closed on their platform, 61% are shut down permanently. As well, businesses in the retail and nightlife categories also saw more than half of closures become permanent.

In Remembrance of Revenue

A business being completely closed is a definitive measure, but it doesn’t tell the whole story. Even for businesses that remained open, revenue is often far below pre-pandemic rates.

small businesses revenue covid-19

Once again, businesses in the leisure and hospitality sector have been hit the hardest, with revenue falling by almost half since the beginning of 2020.

At present, it’s hard to predict when, or even if, economic activity will completely recover. Though travel and some level of in-office work will eventually ramp back up, the small business landscape will continue to face major upheaval in the meantime.

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