The economic activity index softened in Q1 while the PMI trended lower than in the previous quarter, owing to rising business costs amid higher inflation. On a brighter note, the external sector likely contributed to the overall quarterly expansion, as gold exports hit a record high in March, which more than offset lower coffee shipments.
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Turning to Q2, improved economic activity in April suggests that tailwinds may have held up. The PMI rose in both April and May on the back of increased customer demand and continued job creation. Furthermore, double-digit export growth in April should provide an additional push to the second quarter expansion. Sample Report 5 years of economic forecasts for more than 30 economic indicators. Uganda GDP Chart. Search form Search.
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The shift of classifieds to the web particularly hurt New York and many local newspapers. The law was first formulated by Baumol and William Bowen 50 years ago. They have applied it to health care, education, the performing arts, and most social services that cities provide, but it can also be applied with some modification to serious magazines and newspapers.
In his most recent book, The Cost Disease, Baumol distinguishes between progressive and stagnant sectors of the economy. In the progressive sectors, such as manufacturing, increases in productivity defray the costs of increased wages, so that as wages rise, the costs of production do not.
In the stagnant sectors, such as health care, productivity rises too slowly to defray the costs of rising wages, so that the costs of production keep going up.
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Here is how the distinction works. On the progressive side, through the introduction of technology, the same number of auto workers become able to produce twice as many cars. Their wages also double, but the cost of production per car do not. So the costs of production keep going up. The same goes for doctors who see and treat the same number of patients today as they did ten years ago, or kindergarten teachers who may even teach fewer students today than they did before.
If they make more money, the costs of production go up. In the stagnant sector, business owners or governments can, of course, introduce some labor-saving technology—for instance, computerized learning—that lowers cost, but productivity in these sectors still does not approach that of the progressive sectors. First, the rise in the costs of stagnant services is translated into prices that rise faster than average. Thus, the costs of healthcare and higher education go up even faster than the rate of inflation. That may not matter to workers whose income is rising proportionately and who have to pay less for products from the progressive sectors, but it hurts workers at the lower end of the income scale whose wages may not be rising or even falling.
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They get priced out of a college education and decent health care. Secondly, the rise in the costs of public services translates into more money that governments have to pay. This is no problem if tax revenues keep rising in line with rising incomes, but if a recession stalls incomes, or if conservative tax cuts drops revenues, then the result is a fiscal crisis.
Now, how does this all apply to magazines and newspapers? Print newspapers and magazines combine progressive and stagnant economies. There have been huge advances—from monks copying out manuscripts to computerized printing and design—in the production of the physical objects. But the production of news and features—while benefiting, too, from computers as well as cell phones—belongs more properly to the stagnant sector.
It still takes reporters months to develop an investigative piece. The best feature pieces also require months of work by editors and writers. A reporter is more similar to a performing artist than to an autoworker. If print newspapers and magazine had to rely only on their readers for income, they probably would have suffered the fate of other stagnant services.
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But they could rely on an additional source of revenue from advertisers who wanted to reach their readers. With the help of this income, they could pay rising wages to writers and editors and still make a healthy profit. Once advertising revenue began to decline, however, the rising costs of producing news and features began to eat away at profit margins. Many of these publications were still profitable, but at lower rates than other businesses.
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