Another reason not to fear inflation — Roberto Rigobon

MIT Sloan Professor Roberto Rigobon

From Bloomberg View

U.S. inflation has been accelerating in recent months, presenting the Federal Reserve with a tricky question as it decides how quickly to remove stimulus from the U.S. economy: Is the rise in prices a precursor of things to come or simply a “catching up” phase as people begin to spend again after a brutal winter?

Recent data from the U.S. Labor Department have led some to suggest that the long run of very low U.S. inflation could be ending. From Dec. 31 through May 31, the consumer price index — not seasonally adjusted — rose a cumulative 2.1 percent. That’s equivalent to an annualized inflation rate of more than 5 percent, far exceeding the Fed’s target of about 2 percent.

If this is more than a temporary phenomenon, the Fed might have to respond by raising interest rates sooner than expected — a move that would restrain economic growth and could trigger sharp declines in stock and bond markets.

Some officials at the Fed, though, reportedly do not believe that the surge in consumer prices represents the beginning of a new inflationary trend. After all, in the period just before the winter, from Sept. 30 to Dec. 31, prices actually fell by a cumulative 0.5 percent. Combine the two periods, one with an increase and one with a small drop, and you get an annualized inflation rate since September of about 2.4 percent.

Read the full post at Bloomberg View

Read More »

Management Goes Mobile — Carl Stjernfeldt

MIT Sloan Sr. Lecturer Carl Stjernfeldt

It’s an old business rubric:  What gets measured, gets managed.

In the age of big data, the very basic set of measurements that managers used to rely on is expanding to a robust set of 24/7 sensor inputs from factory floors to off-shore petroleum platforms – all of it accessible across a wide variety of mobile devices to employees at many levels.

Management is now able to access data from varied locations, crunch it at headquarters and then return the enhanced data to managers out in the field, on the factory floor or on the oil fields. These new, more robust data sets will allow managers to make better decisions in a shorter amount of time than ever before. For companies in complex industries, such as Shell where I work, the potential for increased performance, efficiency and safety is enormous. Read More »

Not all entrepreneurs are young — Jim Dougherty

MIT Sloan Sr. Lecturer Jim Dougherty

From Xconomy

Most of the famous entrepreneurs we hear about are fairly young. We tend to read in the popular press about the Mark Zuckerbergs of the world and assume that all successful entrepreneurs launch businesses in their 20s. However, this couldn’t be further from reality.

Recent studies show that older entrepreneurs are increasing while the number of younger entrepreneurs is decreasing. According to the Kauffman Index of Entrepreneurial Activity, the share of entrepreneurs in the 55-64 age group jumped from 14.3 percent in 1996 to 23.4 percent in 2012. In contrast, the share of entrepreneurs in the youngest age group of 20-34-year-olds decreased from 34.8 percent in 1996 to 26.2 percent in 2012.

Read More »

Partnering with Amazon? Think twice fashion retailers — Sharmila C. Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

From Fortune

When I read that Amazon was in talks to partner with big fashion retailers like J. Crew, Abercrombie & Fitch and Neiman Marcus, it got my attention. Despite Amazon’s leadership position in online retail, you typically don’t associate these higher-end clothing retailers with a mainstream site that targets essentially everyone.

If we were talking about a partnership between Amazon and Wal-Mart  WMT -0.94%  or even Costco, that would be far less surprising because of their parallels in broad customer bases and emphasis on low prices. But rather than partnering, Wal-Mart is making its own investments to level the playing field with Amazon. So why are fancier retailers like Neiman Marcus considering such a partnership? What are the risks? And do these risks outweigh the possible benefits? I think they do.

Read More »

How to Eradicate Ebola in 100 Days — Trond Undheim

MIT Sloan Sr. Lecturer Trond Undheim

Stopping the spread of Ebola as quickly as possible is crucial. Several disjointed paths seem to be in motion, both regionally and globally. Last month’s Africa Summit in Washington DC touched on it but did not have all Ministers of Health present, and individual African countries have issued scattered curfews but no effective travel bans on citizens in affected areas. The WHO continues to issue warning statements of varying levels of severity, most recently with a casualty figure of 10,000 deaths, which may not impress those who realize that seasonal influenza kills scores more—so should we not worry, then? Meanwhile, many, especially in Africa, are looking to the WHO for more than predictive statistics. The WHOs recently published 26-page Ebola Response Roadmap makes but a small dent in this disease. Read More »