No one is buying clothes anymore — here’s what they’re spending money on instead

Hayley Peterson

Retail stocks have been getting hammered this week following disappointing quarterly sales numbers from a handful of stores, including Macy’s, Gap, Kohl’s, Nordstrom, and Target.

Executives from nearly every company blamed a spending pullback in one common category for the declines: apparel.

So if consumers aren’t spending on clothes anymore, what are they buying?

People are instead buying big-ticket items, like cars, boats, and swimming pools, as well as building new homes and furnishing them, according to an analysis by Jharonne Martis, director of consumer research for Thomson Reuters.

Consumers are also spending on hotel stays and travel, she found.

To determine where people are diverting their spending money, Martis analyzed Commerce Department data and identified the highest retail performers in terms of earnings growth rates.

“When looking at the winners in terms of earnings, it’s clear there is a nesting theme,” Martis wrote.

Here are the top earnings growth rates, according to Martis’ research. (The first company listed, MarineMax, is a recreational-boat retailer).

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10 Habits of Successful People

Everyone needs every advantage they can get in the working world. Here we’ve compiled some of our favorite tips for getting your day off to a SUCCESSFUL start.

1. Wake up an hour early. Yes, we know, we know. An hour? But that’s what the snooze button was invented for! Well break that habit once and for all. People who wake up an hour early have the time to take care of themselves, eat a healthy breakfast, and gradually prepare for the day without the hectic running around, key-finding, and stressful panic.

2. Early birds also get to enjoy a bit of peace and quiet. In your car or on the train, you might listen to the radio, your music, or the chaos around you. Taking some time to just enjoy the sounds of silence will center your mind and let you be alone with your thoughts.

3. Early to bed…To still get the seven to eight hours of sleep you need, go to bed an hour early. Turn off the Netflix, put down the phone, and get some Zzs! Getting enough sleep amplifies your ability to think clearly when you’re awake, and it boosts your metabolism. If your body is rested, it performs at it’s peak ability!

4. Pack some snacks. Rather than working through lunch, keep some nuts, yogurt, peanut butter, fruit, etc. at your desk so you can graze all day. It’ll stave off the dreaded 2pm wall and keep your blood sugar from crashing and burning.

5. Keep moving. Start your day with a few push ups or a walk around the block. Then at work, keep moving! Print and hand-deliver that memo. Walk to a bathroom on another floor. Movement keeps your blood flowing through your body, especially to your brain, to help you think clearly and stay awake.

6. Talk to friends/family. Taking the time to talk to people you care about and who care you about early in the morning gets you off to a more positive and optimistic start. You can use that energy to power you through that morning meeting you used to dread!

7. Have a mantra. Speaking of positivity, sometimes you have to be your own cheerleader. Motivation starts from within you, so have a key word or phrase that keeps you going through the day.

8. Visualize. Visualization during that quiet time in the morning will clear your head and help you prioritize your day. Decide what needs to be done in what order and following that road map will lead you to a successful end to the day!

9. Check yourself. Keep that check list on you and mark things off as you accomplish them. You’ll be able to actually see yourself kicking butt and taking names and you’ll feel that much better because of it.

10. Purge. At the start of every day, de-clutter your life. Get rid of those old magazines, files, receipts and other miscellaneous junk pieces cluttering your desk. It’ll make you feel better (physically and mentally) and you’ll improve your productivity.

Have a great week!

Businessman Midair in a Business Meeting

4 financial steps every new graduate should take

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Congrats, new graduate, on earning your college degree!

You’ve certainly earned the right to celebrate your accomplishments and take loads of cap-and-gown photos with your friends and family.

But there’s something else you need to do now as well: Start thinking about your financial future.

You’re lucky to graduate at a time when the job market is relatively favorable.

Making some smart decisions about what you do with those first few paychecks can help you build a strong financial foundation that will afford you flexibility and independence as you move through adulthood.

Take these steps to get started:

1. Make retirement savings a priority.

You’re a new graduate just starting your career now, so it may feel strange to start planning for the end of it, but money you can stash away for retirement now is the most valuable.

Your long time horizon means that the dollars you save now will be worth far more at retirement, thanks to compound interest. Aim to save at least enough through your work retirement account to get any employer match, since that’s essentially free money.

Next, you’ll want to start a Roth IRA. It is funded with after-tax dollars, but will grow tax-free and you won’t pay any money on withdrawals. These are great accounts for young workers, since you’re likely in a lower tax bracket now than you will be in retirement. You can put up to $5,500 into a Roth IRA this year, as long as you’re earning less than $117,000.

2. Have a plan for your student loans.

Last year, the average graduate with education debt finished school owing nearly $30,000 in student loans. Regardless of your balance, it’s important to prioritize your student loan payments early on, even if you’re still in the grace period (typically six months after graduation) before payments come due.

If it looks like you’ll have trouble making payment based on your income, see if you’re eligible for federal student loan repayment programs, which may tie the amount you have to pay to your income. Unless you’re eligible for loan forgiveness because you work in the public sector, however, stick with the standard plan if you can afford it, because it will cost you the least in interest over the life of the loan. If you are making standard payments, prioritize saving for retirement over paying your loans off early, since your long-term return on those investments is likely higher than your current interest rate, and you can deduct the interest on your taxes.

“Unless you’re paying more than 7 percent on your student loan, I’d resist the temptation to pay them off, and instead just save and invest that extra money,” says David John Marotta, president of Marotta Wealth Management in Charlottesville, Va.

3. Consider your health insurance options.

Under the Affordable Care Act, you must have health insurance or pay a penalty, but you’ll want a policy to prevent an illness or injury from jeopardizing your financial future. If you’re under age 26, you can stay on a parent’s health insurance plan, although you’ll need to see how the cost of that plan compares to the options provided by your employer. (If you’re not eligible for health insurance at work, or you’re a freelancer, you can buy insurance directly via the Obamacare exchanges).

If you don’t have any chronic illnesses and rarely visit the doctor, the most affordable option is likely a high-deductible health plan, which has low premiums and will cover preventative-care basics such as a check-ups and birth control. You’ll have to pay out of pocket for the costs of additional care up to your deductible amount. Prepare for those costs by setting tax-free money aside in a Health Savings Account.

4. Build an emergency fund.

Even on a low starting salary, you should aim to set aside some money regularly for unplanned expenses and emergencies. Try to set aside about 10 percent of your income until you have three to six months’ worth of expenses in this rainy day fund. That way you don’t have to dip into your retirement accounts or run up high-interest credit card debt if your car breaks down or you find yourself temporarily unemployed. Set up automatic transfers from your checking account into a designated savings account (or if your employer allows it, direct deposit part of your paycheck into savings) from the start, so that you get used to living on less than you earn right away.

The founder of Sam Adams explains the management strategy that helps his company eliminate 30% of job candidates

By Richard Feloni
jim koch
In the nascent days of the Boston Beer Company, its cofounder Jim Koch would personally recruit vendors for his Samuel Adams Boston Lager.

He’d return to these bars to train staff members on a Sam Adams sales pitch for drinkers who stuck to established brands like Budweiser. (Bars were willing to let him do this because his beer had higher profit margins.)

On one of these trips in 1986, at a Washington, D.C. bar called Rumors, Koch approached an employee named Colleen Keegan Williams because he was impressed by her level of engagement during the training, Koch wrote in his book “Quench Your Own Thirst.”

He learned that she had graduated from George Washington University with a finance degree and was working at the bar as she looked for a place to start her career. Koch then asked her if she ever considered selling beer, an idea she had never even thought of, but as a dedicated beer fan, found ideal. She joined the Boston Beer Company and became a successful salesperson.

It’s one of the key moments, Koch wrote, that inspired him to incorporate “ride-alongs” as part of the job interview process at Boston Beer Co., in which he or one of his managers could observe a candidate’s behavior in the field, such as a bar or liquor store.

“This process weeds out about 30% of the prospective hires who passed all the traditional interview tests,” Koch wrote. “People think that selling beer sounds cool, but then they encounter the blood and guts of the business. They see the greasy back-ends of the bars, not the shiny front.”

When Boston Beer Co. hires a salesperson, they want someone who not only understands the grittier side of the beer industry, but also embraces it, like Williams did back in ’86.

In addition to test-runs, Boston Beer Co. has been using profile tests since the 1990s as part of the interview process. They measure traits like a candidate’s “need to be proactive and take initiative, their need for order and structure, their need for social interaction, and their tendency to perform tasks patiently,” Koch wrote.

“The profile test helps us determine what activities people enjoy doing, and hence whether they’re likely to love working in their job with us.”

For example, he once interviewed an accountant candidate named Hank whose profile test suggested someone who was an independent and creative thinker, a decidedly atypical personality for an accountant. Koch had a conversation with Hank and got him to admit he didn’t actually enjoy accounting, but would love being a salesperson. Koch hired him for that position and Hank became an exceptional employee.

Both techniques stem from Koch’s philosophy that all hires should “raise the average” of the team they will be joining, and that as much time and care as necessary should be used to find these candidates. And ultimately, Koch said, after using the interview process to form a judgment of candidates, you will know instinctively if they are worth hiring.

“It’s easy to visualize in your mind the average person in your sales force or on your brewery floor or even in senior management and it’s easy for your intuition to evaluate whether a candidate is better than the average person,” Koch wrote. “Your gut will tell you.”
In the nascent days of the Boston Beer Company, its cofounder Jim Koch would personally recruit vendors for his Samuel Adams Boston Lager.

He’d return to these bars to train staff members on a Sam Adams sales pitch for drinkers who stuck to established brands like Budweiser. (Bars were willing to let him do this because his beer had higher profit margins.)

On one of these trips in 1986, at a Washington, D.C. bar called Rumors, Koch approached an employee named Colleen Keegan Williams because he was impressed by her level of engagement during the training, Koch wrote in his book “Quench Your Own Thirst.”

He learned that she had graduated from George Washington University with a finance degree and was working at the bar as she looked for a place to start her career. Koch then asked her if she ever considered selling beer, an idea she had never even thought of, but as a dedicated beer fan, found ideal. She joined the Boston Beer Company and became a successful salesperson.

It’s one of the key moments, Koch wrote, that inspired him to incorporate “ride-alongs” as part of the job interview process at Boston Beer Co., in which he or one of his managers could observe a candidate’s behavior in the field, such as a bar or liquor store.

“This process weeds out about 30% of the prospective hires who passed all the traditional interview tests,” Koch wrote. “People think that selling beer sounds cool, but then they encounter the blood and guts of the business. They see the greasy back-ends of the bars, not the shiny front.”

When Boston Beer Co. hires a salesperson, they want someone who not only understands the grittier side of the beer industry, but also embraces it, like Williams did back in ’86.

In addition to test-runs, Boston Beer Co. has been using profile tests since the 1990s as part of the interview process. They measure traits like a candidate’s “need to be proactive and take initiative, their need for order and structure, their need for social interaction, and their tendency to perform tasks patiently,” Koch wrote.

“The profile test helps us determine what activities people enjoy doing, and hence whether they’re likely to love working in their job with us.”

For example, he once interviewed an accountant candidate named Hank whose profile test suggested someone who was an independent and creative thinker, a decidedly atypical personality for an accountant. Koch had a conversation with Hank and got him to admit he didn’t actually enjoy accounting, but would love being a salesperson. Koch hired him for that position and Hank became an exceptional employee.

Both techniques stem from Koch’s philosophy that all hires should “raise the average” of the team they will be joining, and that as much time and care as necessary should be used to find these candidates. And ultimately, Koch said, after using the interview process to form a judgment of candidates, you will know instinctively if they are worth hiring.

“It’s easy to visualize in your mind the average person in your sales force or on your brewery floor or even in senior management and it’s easy for your intuition to evaluate whether a candidate is better than the average person,” Koch wrote. “Your gut will tell you.”

There’s a new driver of the global economy, and it changes how we should look at the world

Elena Holodny
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Economists and analysts like to fixate on the industrial sector, and that makes sense.

Data coming from industrial tends to be a bit more volatile, so historically it’s been pretty helpful in explaining the short-term swings in the economy.

But the less analyzed services sector is playing an increasingly larger role in the overall output and employment figures in the global and US economies.

And consequently, it may now be a better gauge of what’s going on in the world.

Services employment has surged to 46% of the global total in 2016, up from 34% in 1991. Over the past 25 years, about 75% of the 1 billion new jobs created in the world have been in services, according to figures cited by a Macquarie team led by David Doyle in a recent note to clients.

The same thing is happening with output data, as the share of GDP attributed to services has increased over the past four decades in both developed markets and emerging markets.

“Services have risen dramatically in importance and are increasingly dominant in shaping the outlook for global growth,” the Macquarie team wrote.

The note elaborated:

This was evident over the past two years as manufacturing PMIs showed weakness across major economies, leading many to conclude that a global recession was on the horizon. While this may have been the case in previous decades, in the current period the high services share in developed economies has made such an outcome far less likely. Services activity has held firm for the most part speaking to the underlying resilience of the global economy.

For what it’s worth, Deutsche Bank’s Torsten Sløk made a somewhat similar argument back in October 2015 via two pie charts, shown below.

One chart shows the share of the US employment in services versus manufacturing, and the second shows the share of earnings in the S&P that 500 comes from services versus manufacturing.

Notably, although manufacturing makes up the bulk of the S&P 500, it’s responsible for just a sliver of the employed workforce. Therefore, Sløk argued at the time, we were seeing a profit recession, but not an economic recession.

The Macquarie team also argued that our structural transition to a more services-based economy comes with key changes. For example, they argue we’ll see less economic volatility — given that the industrial sector is more volatile, if it makes up a smaller share, then overall volatility drops — and that trade increasingly will revolve around services.

However, most notably, they also argue that this will lead to continued lower productivity growth in developed markets. They note that the level of productivity in the services sector is much lower than in the goods-manufacturing sector, and that the growth rate of productivity in the services sector has historically been way less than the growth rate in manufacturing.

Still, that may not be a bad thing. After all, lower productivity combined with more stability theoretically just means that we might be looking at a more “slow and steady” kind of world.

Or as the Macquarie team put it, “the rising importance of services has played a key role in our team’s view that the current expansion should continue to be characterized by structurally lower growth rates, but also by incredible persistency and resiliency.”

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