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Friday, Mav 4. 1990 / University Daily Kansan
Economy's service sector inflates personal expenses
The Associated Press
NEW YORK — If you are one of those people whose own inflation rate is rising faster than the official consumer price index, perhaps you might find the answer in the cost of services.
For reasons not entirely clear, many people have a tendency to measure the prices they pay for tangible items such as food, cars, houses, household goods and the like. We are aware of rising prices chewware.
Index of leading economic Indicators Seasonally adjusted Index,1982=100
160
150
140
130
120
'87 '88 '89 '90
Leading Indicators rose
0.9% in March after
falling 1.0% in February
Not only is the service sector bigger, but prices there are rising much faster than in the goods sector. Price increases in health care, for example, have exceeded the general average for many years, including this one.
Elsewhere is the service sector of the economy, which is much larger than the goods sector. It includes health care, food vending, hair styling, banking, government, education, law and more.
The index of leading economic Indicators tracks a weighted, seasonally adjusted average of 11 economic statistics to forecast economic direction.
The dichotomy could be temporary. It also might be fundamental and difficult to contain.
S. OU.R.C.E: Buureau et Eccoonomie Annalysis
Officially, the consumer price index rate at an annual rate of 5. percent in March. But within that rate was a significant split: Inflation in the goods sector was 2. percent in the service sector was 7. percent.
How, for example, does the country restrain health-care prices when lives are at stake? How does it offset mandated minimum wage increases in education while willing to lower education costs while you children are in school?
Knight-Ridder Tribune News
Some of those increases tend to sneak up on people. While a person might buy food each day, he might use a doctor's services only a couple times a year and a lawyer's services even less. Thus, a sense of price is lost.
5/2/90
A report by the Coalition of Service
Industries gives a portrait of the service sector that might surprise many people. Nine out of 10 workers in this industry have 803 have been employed in services.
Last year, nearly all the 2.5 million workers who entered the labor force found jobs in services. Goods producers added only 30,000 workers.
Two decades ago the service society occupied two-thirds of the labor force. Today, there are three workplaces for every one in goods production.
Meanwhile, service productivity has been lagging because the production of services is labor-intensive, and job production can be automated.
Some of those trends will continue. The Bureau of Labor Statistics projects that another 18 million jobs will be created by the year 2000, an average of about 1.5 million a year. Most of the jobs will be in services.
Total employment is expected to rise from 118 million in 1988 to 138 million by the turn of the century. Employment in services is projected to rise from 75.9 percent of all non-employed and salary jobs in 1988 to 72 percent.
The change means that jobs in the goods sector as a percentage of the whole will continue to decline. And productivity increases, which tend to restrain price increases, are hardest to achieve in the service sector.
While these generalities are based on the workings of the economy in general, the chances are high that they do not. The economy is subject to the same pressures.
Expected dividends of peace produce economic problems
The Associated Press
Already pinched, consumers find themselves paying higher prices for basics such as vegetables, fruits, meats, beverages and gasoline. Mortgage rates are rising, and rental rates are rising even faster.
Analysis
With many states falling far behind their anticipated revenues, taxes seem to have only one direction to go. Little hints are dropped here and there that the Fed might be ready to raise interest rates again.
Corporate profits are down. They have been falling for more than a
NEW YORK — It seemed for a while that the economy was coming in for a soft, safe landing, with the Federal Reserve defy working the instrument panel. But now the red lights are flashing.
year, but in that time, corporate dividends were raised. Now, unless an unexpected profits surge erases, the board of directors caws will become more common.
Even without that prospect, the stock market has little push, and the bond market even less. The latter is a distinct surprise to a great many investors who felt confident that prices would rise and rates would
Now that the damage has been done, these same lenders and others affected by them are clamping down hard. Good small loans are not possible, not because they do not deserve it, but because the lenders are frightened.
The savings and loan debacle seems to expand a few billion dollars every time one looks. And as it does, the confidence of U.S. citizens suffers more. Weren't these lenders supposed to know what they were doing?
become a peace layoff; General Electric has just announced that it will eliminate 4,200 aerospace jobs. Lockheed said it would lay off 2,750 workers in its aeronautical systems component.
Meanwhile, downward movement in the federal budget deficit seems to become more difficult every day. Improvement in the trade deficit could be difficult as well if inflation rates raise U.S. production costs.
The so-called peace dividend has
In an economic sense, it's not much of a spring. You might say the clouds hang low, and the sun is in hiding, just when people were looking forward to buying houses, vacationing or getting on with postponed projects.
Such matters add up, in an economic sense, to a case of spring fever, a sense of dolotuism just when they thought they'd be feeling better;
Coke is it, Burger King says Chain to switch soft drink companies
The Associated Press
NEW YORK — Somewhat this summer, a Burger King customer may leave an opening for a quick-witted clerk by ordering, "Cheese-
"No Pepsi, Coke," the ordertaker will be able to say, in a variation on the line John Belushi made famous.
Burger King Corp., the nation's second-largest hamburger chain, said Tuesday that it was switching to Coo-Coa Cola Co. in an effort to compete, ending an association that started in 1983 with Pensi-Cola Co.
Coca-Cola products such as Coca-Cola Classic, Diet Coke, Sprite and Minute Maid orange soda will replace it. The King's 5,400 restaurants in the United States, Burker King said.
have little effect on earnings for either soft-drink company.
Analysts said the switch will
"We selected Coca-Cola because of its ability to provide a powerful mix of global brand strength, state-of-the-art technological capabilities, and service," Burger King Chief Executive Barry J. Gibbons said.
Atlanta-based Coca-Cola controls an estimated 85 percent of the fountain portion of the U.S. soft drink business and is the primary employer of the major fast food chains, including leader McDonald's Corp.
Recently, Wendy's International Inc. said it was planning to switch to Coca-Cola at its 1,100 company-owned restaurants when its agreement with Pepsi-Cola expires at the end of the year.
Pepsi-Cola, based in Somers,
N.Y., still has some major restaurant
accounts, including Pizza
Hut, Taco Bell and Kentucky Fried Chicken, all owned by its parent, PepaCox. It also serves the team at McKay's and Ground Round chains.
Neither Burger King nor Coca-Cola would estimate the value of the soft-drink account.
Emanuel Goldman, who follows the soft drink business for Paine Webber in San Francisco, estimated Pepsi-Cola sales at Burger King on Thursday about 13.5 percent of Pense's annual fountain volume.
Jesse Meyers, editor of the trade publication Beverage Digest, estimates the switch could add a percentage point to Coca-Cola's 40.5 percent share of the overall market for beverage packaging. Pepsi-Cola's 30.7 percent share by the same amount. The market is valued at $27.4 billion
Meyers said Burger King's switch may be a response to the recent rapid growth of PepsiCo's restaurant operations.
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