(Business 2.0) – ECONOMY

WAY-NEW PRODUCTIVITY PARADOX

Profits are down and growth has been slow, but look on the bright side: After falling precipitously at the start of 2002, the overall productivity of the U.S. economy began to improve in the third quarter. Why? The Bureau of Labor Statistics credits the proliferation of pink slips. Companies have historically retained workers well into a downturn. Today they move much more quickly to cut costs (read: employees). Technology helps too, by creating big efficiencies in sectors such as banking, wholesale, and retail sales. Add it all up, and it now takes fewer hours for American workers to achieve greater economic output.

MEDIA

TURNING DOWN THE VOLUME

Don't blame it all on Napster, which was launched in 1999. Or Morpheus, which appeared in 2001. Recorded music's share of entertainment spending in the United States has been falling since 1996--even as total spending has grown by 6.9 percent per year to top $79 billion in 2002. Since the music-buying boom triggered by the conversion to CDs subsided in the mid-1990s, the recording industry has struggled to find a new cash cow. May we suggest legal, user-friendly online music downloads?

PERCENTAGE CHANGE OF RECORDED MUSIC'S SHARE OF TOTAL ENTERTAINMENT SPENDING

Filmed Interactive Recorded entertainment entertainment music

'96 72% 5% 24% '97 72% 7% 22% '98 71% 7% 22% '99 70% 8% 22% '00 71% 9% 21% '01 73% 9% 19% '02 74% 9% 17% '03 75% 9% 16%

SOURCE: Veronis Suhler Stevenson NOTE: Some totals exceed 100% due to rounding.

ZEITGEIST

GREETINGS FROM PLANET VAGABOND

It's not just cash that flows more freely in a global economy--people move around a lot more too. Some are political refugees. Others are former emigrants returning to war-torn homelands. Still others are simply seeking a better way of life. New U.N. data shows that almost 10 percent of the people in economically developed nations are now migrants. All told, more than 175 million people, 3 percent of the world population, reside in a country other than the one where they were born. In response, 40 percent of national governments have put policies in place to discourage immigration.

POPULATION CHANGE THROUGH IMMIGRATION/EMIGRATION (IN THOUSANDS OF PEOPLE)

1. United States +1,250 2. Rwanda +395 3. Russia +287 4. Germany +185 5. Canada +144 6. Italy +118 7. Australia/New Zealand +103 8. Bosnia/Herzegovina +100 9. Hong Kong +99 10. United Kingdom +95

1. China -381 2. Democratic Republic of the Congo -340 3. Mexico -310 4. India -280 5. Kazakhstan -200 6. Philippines -190 7. Indonesia -180 8. Ukraine -100 9. Burundi -80 10. Egypt -80

SOURCE: United Nations, Population Division, International Migration 2002

TECHNOLOGY

POLISH THAT RESUME

The tech sector accounted for almost a third of all layoff announcements in October. But looking ahead to 2003, many human-resources execs expect the layoffs to end--and many others may even start hiring again. Still, few anticipate a return to happy days: Only a third of survey participants expect a strong economic turnaround within the next 12 months. Even in a slow labor market, though, optimistic hiring managers hope to load up on cheap talent--especially in pricey areas like research and development and sales.

TECH COMPANY HIRING PLANS FOR THE NEXT 12 MONTHS

Increase 46% Decrease 12% No change 42%

AREAS OF TECH ORGANIZATIONS EXPECTED TO SEE THE LARGEST GROWTH IN HEAD COUNT

Manufacturing and distribution 5% Research and development 45% Customer service 5% Tech support 15% Sales and marketing 30%

SOURCE: CHALLENGER GRAY & CHRISTMAS