US unemployement rate is more than the disclosed

According to US department of labor the unemployment is 9.1% as on May 2011. That is 13.7 M. The dropped out and under employed people are not considered in the above list. In May, the number of long-term unemployed (those jobless for 27 weeks and over) increased by 361,000 to 6.2 million. This number will continue to increase as the unemployed move through the duration categories. But this number is not the actual number.

In the above image, the unemployment was in peak in early 1980s. That time that is
before Clinton administration, the unemployment percentage was calculated inclusive of "discouraged workers". Discouraged workers are those who tried for job and gave up as they didn't get job. Many of them are more than 50 years. The above doesn't include the "Marginally attached" workers. They are people who are available for jobs but not joining any job due to child care or transportation cost.

US must address this problem as this is growing seriously. Otherwise a great depression is unavoidable.

Google updated Panda 2.2

Google has updated its search algo Panda 2.2 last week. Most of the websites started getting the traffic slowly back. All the traffic drop happened for them during the Panda update earlier this year.

We are able to see the increase in traffic in our website. In the Panda update G removed low quality content websites and gave tips to think like Google to have a quality website.

http://googlewebmastercentral.blogspot.com/2011/05/more-guidance-on-building-high-quality.html

We have to give high priority to CONTENT and we have to stop tweaking the pages for Google. In addition to this, we have to give importance to the page loading time. These two are the primary factors for any page to be on top of SERP.

Is US heading towords another recession?

US stock market is down continuously for the sixth week. This is the worst in nine years. If this continues for one more week, then this is the worst state after the 2001 Dot Com bubble.

QE2 is going to end in June 2011. Now Fed. is releasing more risky mortgage bonds and are bought by big banks. This makes the Fed. monetary base as high. This may be the starting point for the recession

Some of the signs for the recession are seen recently.

1. The Unemployment rate is increased to 9.1%
2. The Dow Jones is falling down continuously.
3. tax receipts from households total less than the government paid out in unemployment
4. One out of every four dollars that the U.S. government borrows goes to pay the interest on the national debt.
5. China has announced that they are going to be reducing their holdings of U.S. dollars.
6. Americans are planning to slow down their spending due to price increase.

Below is the comparison of "Great Depression vs Great Recession".

		Great Depression		Great Recession
Bank failures	9,096 – 50% of banks (Jan. 1930 – March 1933)		57 – 0.6% of banks (Dec. 2007 – May 2009)
Unemployment rate	25%		8.5%
Economic decline1	-26.5% (1929 - 1933)		-3.3% (Second quarter 2008 - first quarter 2009)
Biggest decline in Dow Jones industrial average	-89.2% (Sept. 3, 1929 – July 8, 1932)		-53.8% (Oct. 9, 2007- March 9, 2009)
Change in prices	-25% (1929 – 1933)		+0.5% (Dec. 2007-March 2009)
Emergency spending programs	1.5% of GDP for 1 year (Increase in 1934 budget deficit)		2.5% of GDP for 2 years2 (2009 American Reinvestment and Recovery Act)
States’ response	Raise taxes, cut spending		Federal stimulus plan gives fiscal relief to states to lessen impact of tax increases
Increase in money supply by Federal Reserve	17% (1933)		125% (September 2008 – May 2009)

Some of the values of above Great Recessions are already reached now. Is it going to be another recession? Or Is US heading towards a "Great Depression"?

Saravanan

Groupon IPO - Is it a high risk in Social media?

Groupon a website that offers daily discount on local merchants has filed for an Initial Public offering. In Dec. 2010, Google offered 6B to acquire Groupon was rejected by them. They raised a fund ($950 M) in January 2011 and most of the money was paid to the employee and the initial investors ($810M). At the end, around $135 M was used to run the company.

They are investing more on the marketing, Sales and Administrative expenses. Their net LOSS for the year 2010 was $390M. Their marketing and selling spending was more than that of their Cost of Revenue. The letter from ANDREW D. MASON CEO of Groupon Inc. says

We don't measure ourselves in conventional ways.

There are three main financial metrics that we track closely. First, we track gross profit, which we believe is the best proxy for the value we're creating. Second, we measure free cash flow—there is no better metric for long-term financial stability. Finally, we use a third metric to measure our financial performance—Adjusted Consolidated Segment Operating Income, or Adjusted CSOI. This metric is our consolidated segment operating income before our new subscriber acquisition costs and certain non-cash charges; we think of it as our operating profitability before marketing costs incurred for long-term growth.

If you compare the first IPO filings of the two companies, Groupon and Google, there was a profit for Google $143M when they went for IPO where as Groupon has a loss (389M) in 2010 and 102 M in Q1 2011.

Also when you compare the business model of other successful Social Media companies like Facebook and LinkedIn, where their marketing spending and sales spending is less to bring in customers where as Groupon is investing more on that area.

In addition, there is a continuous drop in the US economic growth for the past six weeks, and policy makers started controlling the headline inflation instead of the core inflation.

The Weekly Leading Index (WLI) Growth indicator of the Economic Cycle Research Institute (ECRI) declined to 4.9 from last week's 5.0. This is the sixth consecutive week of decline from the 11-month interim high of 7.8 for the week ending on April 15.

Wall Street Journal says 3 reasons to worry

1. Crazy Spending
2. Early investors taken out around $1B
3. Wrong timing.

Jason Fried of 37 Signals was a board member of Groupon and now an advisory to the company says "spending less than you earn is the only way to have a healthy relationship with money."

This is going to be a big risk, which Andrew says as "We aggressively invest in growth" & "We are unusual and we like it that way".

Saravanan

Social Pressure

I have a strong feeling that getting an ENGINEERING Degree is a criminal waste of time and money. My daughter was interested in Architecture (some study related to Art). She was seriously preparing for the NATA exam. But unfortunately she scored lower marks (I think we made mistake in putting her in state board from CBSC), and I thought B.Arch is going to be tough for her and I suggested her for Degree in Visual media. She is also accepted and my daughter and my wife got applications from few colleges in Chennai.

Once this news spread to my close friends and family members (all are well wishers of me and my family), they stared calling me and asking me not to put her in the visual media and asked me to put her in BE. In fact everyone said the same reason for putting her in BE, which really hurts me. Same time my daughter attended a "Free counseling for Plus 2 students" and she has decided to go with engineering degree.

My BIL said I must ignore all their comments. But I didn't.

At last I convinced myself and I admitted her in one of the Chennai colleges BE computer science, a course that I HATE IN MY LIFE (even though it is my profession). I gave my daughter an option to take Civil!!!!!!!! But she said, she is not interested in Civil.

Saravanan

Google Announces its second Quarter Result - an analysis

Google announces its second quarter results and it shows the growth is 3%. The quarter on quarter growth is drastically down in the last three quarter(it is less than 20% in Q4 2008 and less than 10% in the first half of 2009).

The financial results for the last four years are available under the below links.

http://investor.google.com/fin_data.html
http://investor.google.com/fin_data2008.html
http://investor.google.com/fin_data2007.html
http://investor.google.com/fin_data2006.html

They are totally depending on AdWords revenue. AdWords customers are getting lesser ROI from AdWords as their AdWords content results are not bringing better results. Even though they are introducing more functionalities in Adwords, their quality is going down.

Google is also not getting any additional service which picked up recently. They have closed the magazine ads and TV ads. They are now concentrating on OS and browser to take up Microsoft share.

If AdCenter (Microsoft) takes a lift, they will have impact in their revenue. Also bing is taking attraction in the search industry.

Google Analytics Tools

Google analytics started giving more features and reports. The recent developments are Event Tracking, Traffic estimator, Automatic Matching and Custom Reports.

Using event tracking, we can track the downloads of any flash, pdf, zip, exe and bin files. There are two steps to enable event tracking. First step is to create an event tracking object and the second step is to call an event.

Traffic estimator will give us the keyword search traffic and the cost estimates. We can get the

• Max. Cost Per Click
• Search Volume
• Estimated Average CPC
• Estimated ad position
  

Automatic matching is a key functionality, which helps to display our ads in targeted searches missed by our keywords. It automatically extends our surplus budget to bring traffic that our keywords missed to bring. A matching will ensure that never exceed our budget. If we are already meeting our daily budgets, automatic matching will have a minimal effect on our account.

This takes the keywords from the landing page and for relevant searches our ads will be shown. If our landing page has irrelevant keywords, enabling this will bring us wrong traffic.

We can define correlations with drag-and-drop simplicity and have the option to build out our own analytics reporting interface that goes beyond single page dashboard creation.