The Unemployment Rate Is Dropping, Which Is Not as Good as It Sounds






As long as inflation remains in check, the Federal Reserve has promised not to raise interest rates until unemployment hits 6.5 percent. So how long until that happens? A few estimates are worth noting for the contradictions they reveal in the labor market.


According to calculations by the Brookings Institution’s Hamilton Project, at the current pace of job growth, about 155,000 jobs per month over the past two years, we won’t see 6.5 percent unemployment until 2018. That would mean a decade of zero percent interest rates. It has been four years since the Fed lowered rates to near zero. Imagine another six.






But don’t worry. Most economists think we’ll hit 6.5 percent way sooner than 2018. The average prediction of 75 economists surveyed by Bloomberg is that unemployment will be down to 7.3 percent by the second quarter of 2014. Both Joe Lavorgna, chief economist at Deutsche Bank, and Jacob Oubina, senior economist at RBC Capital Markets, think we’ll be at 6.5 percent by then. That’s not because they feel better about the economy. It’s actually because they’re more pessimistic about it.


The researchers at the Hamilton Project based their projections off the Congressional Budget Office’s 2011 estimates (PDF) of labor force participation over the next decade. The CBO assumes that for the next 10 years, the size of the work force will grow at the same pace it did over the previous decade, 0.8 percent a year. Right now, the labor force is expanding at less than half that pace. As people give up looking for a job, the labor force is growing much slower than anticipated.


The smaller the labor force, the fewer jobs you need to push down the unemployment rate. This is the dark cloud behind the steady decline in the jobless rate we’ve seen over the last year. Much of  the drop has been due to people fading from the labor force, rather than robust job gains. If you factor in the 2.5 million people who want a job but have stopped looking, and therefore aren’t counted as unemployed, the jobless rate jumps to 14.4 percent.


This the trouble with tying monetary policy to the unemployment rate: It’s murky as a signal for the health of the economy. James K. Galbraith, an economist at the University of Texas, thinks that continued shrinkage of the labor force will lower the rate faster than a strong economy that encourages people to start looking again. “A stronger economy might actually hold it up longer,” says Galbraith.


And that’s the irony of the current labor market. The slow pace of job growth has actually hastened the decline in the unemployment rate. Once the economy starts adding more jobs and people are compelled to restart their job search, the unemployment rate may stagnate, if not rise. This is what Jan Hatzius, chief economist at Goldman Sachs, thinks is going to happen in 2013. “I’m surprised at how quickly the participation rate declined this year,” says Hatzius. “Our models say it should stabilize, if not rise, next year.” Which is why he foresees a slowdown in the decline in the unemployment rate through 2013. Not because the economy will be worse off, but because it will be better.


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China tightening controls on Internet






BEIJING (AP) — China‘s new communist leaders are increasing already tight controls on Internet use and electronic publishing following a spate of embarrassing online reports about official abuses.


The measures suggest China’s new leader, Xi Jinping, and others who took power in November share their predecessors’ anxiety about the Internet’s potential to spread opposition to one-party rule and their insistence on controlling information despite promises of more economic reforms.






“They are still very paranoid about the potentially destabilizing effect of the Internet,” said Willy Lam, a politics specialist at the Chinese University of Hong Kong. “They are on the point of losing a monopoly on information, but they still are very eager to control the dissemination of views.”


This week, China’s legislature took up a measure to require Internet users to register their real names, a move that would curtail the Web’s status as a freewheeling forum to complain, often anonymously, about corruption and official abuses. The legislature scheduled a news conference Friday to discuss the measure, suggesting it was expected to be approved.


That comes amid reports Beijing might be disrupting use of software that allows Web surfers to see sites abroad that are blocked by its extensive Internet filters. At the same time, regulators have proposed rules that would bar foreign companies from distributing books, news, music and other material online in China.


Beijing promotes Internet use for business and education but bans material deemed subversive or obscene and blocks access to foreign websites run by human rights and Tibet activists and some news outlets. Controls were tightened after social media played a role in protests that brought down governments in Egypt and Tunisia.


In a reminder of the Web’s role as a political forum, a group of 70 prominent Chinese scholars and lawyers circulated an online petition this week appealing for free speech, independent courts and for the ruling party to encourage private enterprise.


Xi and others on the party’s ruling seven-member Standing Committee have tried to promote an image of themselves as men of the people who care about China’s poor majority. They have promised to press ahead with market-oriented reforms and to support entrepreneurs but have given no sign of support for political reform.


Communist leaders who see the Internet as a source of economic growth and better-paid jobs were slow to enforce the same level of control they impose on movies, books and other media, apparently for fear of hurting fledgling entertainment, shopping and other online businesses.


Until recently, Web surfers could post comments online or on microblog services without leaving their names.


That gave ordinary Chinese a unique opportunity to express themselves to a public audience in a society where newspapers, television and other media are state-controlled. The most popular microblog services say they have more than 300 million users and some users have millions of followers reading their comments.


The Internet also has given the public an unusual opportunity to publicize accusations of official misconduct.


A local party official in China’s southwest was fired in November after scenes from a videotape of him having sex with a young woman spread quickly on the Internet. Screenshots were uploaded by a former journalist in Beijing, Zhu Ruifeng, to his Hong Kong website, an online clearing house for corruption allegations.


Some industry analysts suggest allowing Web surfers in a controlled setting to vent helps communist leaders stay abreast of public sentiment in their fast-changing society. Still, microblog services and online bulletin boards are required to employ censors to enforce content restrictions. Researchers say they delete millions of postings a day.


The government says the latest Internet regulation before the National People’s Congress is aimed at protecting Web surfers’ personal information and cracking down on abuses such as junk e-mail. It would require users to report their real names to Internet service and telecom providers.


The main ruling party newspaper, People’s Daily, has called in recent weeks for tighter Internet controls, saying rumors spread online have harmed the public. In one case, it said stories about a chemical plant explosion resulted in the deaths of four people in a car accident as they fled the area.


Proposed rules released this month by the General Administration of Press and Publications would bar Chinese-foreign joint ventures from publishing books, music, movies and other material online in China. Publishers would be required to locate their servers in China and have a Chinese citizen as their local legal representative.


That is in line with rules that already bar most foreign access to China’s media market, but the decision to group the restrictions together and publicize them might indicate official attitudes are hardening.


That comes after the party was rattled by foreign news reports about official wealth and misconduct.


In June, Bloomberg News reported that Xi’s extended family has amassed assets totaling $ 376 million, though it said none was traced to Xi. The government has blocked access to Bloomberg’s website since then.


In October, The New York Times reported that Premier Wen Jiabao’s relatives had amassed $ 2.7 billion since he rose to national office in 2002. Access to the Times’ Chinese-language site has been blocked since then.


Previous efforts to tighten controls have struggled with technical challenges in a country with more than 500 million Internet users.


Microblog operators such as Sina Corp. and Tencent Ltd. were ordered in late 2011 to confirm users’ names but have yet to finish the daunting task.


Web surfers can circumvent government filters by using virtual private networks — software that encrypts Web traffic and is used by companies to transfer financial data and other sensitive information. But VPN users say disruptions that began in 2011 are increasing, suggesting Chinese regulators are trying to block encrypted traffic.


Curbs on access to foreign sites have prompted complaints by companies and Chinese scientists and other researchers.


In July, the American Chamber of Commerce in China said 74 percent of companies that responded to a survey said unstable Internet access “impedes their ability to do business.”


Chinese leaders “realize there are detrimental impacts on business, especially foreign business, but they have counted the cost and think it is still worthwhile,” said Lam. “There is no compromise about the political imperative of controlling the Internet.”


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Netflix blames Amazon for Christmas Eve outage






NEW YORK (Reuters) – An outage at one of Amazon‘s web service centers hit users of Netflix Inc‘s streaming video service on Christmas Eve and was not fully resolved until Christmas Day, a spokesman for the movie rental company said on Tuesday.


The outage impacted Netflix subscribers across Canada, Latin America and the United States, and affected various devices that enable users to stream movies and television shows from home, Netflix spokesman Joris Evers said. Such devices range from gaming consoles like the Nintendo Wii and PlayStation 3 to Blu-ray DVD players.






Netflix, which is based in Los Gatos, California, has 30 million streaming subscribers worldwide, of which more than 27 million are in the Americas region that was exposed to the outage and could have potentially been affected, Evers said.


Evers said the issue was the result of an outage at an Amazon Web Services‘ cloud computing center in Virginia and started at about 12:30 p.m. PST (2030 GMT) on Monday and was fully restored before 8:00 a.m. PST Tuesday morning, although streaming was available for most users by 11:00 p.m. PST on Monday.


The event marks the latest in a series of outages from Amazon Web Services, with one occurring in April of last year that knocked out such sites as Reddit and Foursquare.


“We are investigating exactly what happened and how it could have been prevented,” Evers of Netflix said.


“We are happy that people opening gifts of Netflix or Netflix capable devices can watch TV shows and movies and apologize for any inconvenience caused last night,” he added.


Officials at Amazon Web Services were not available for comment. Evers, the Netflix spokesman, declined to comment on the company’s contracts with Amazon.


(Reporting by Sam Forgione; Editing by Leslie Gevirtz and Matt Driskill)


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Ticket rush: Film fans hand Hollywood record cash






LOS ANGELES (AP) — The big deal for Hollywood is not the record $ 10.8 billion that studios took in domestically in 2012. It’s the fact that the number of tickets sold went up for the first time in three years.


Thanks to inflation, revenue generally rises in Hollywood as admission prices climb each year. The real story is told in tickets, whose sales have been on a general decline for a decade, bottoming out in 2011 at 1.29 billion, their lowest level since 1995.






The industry rebounded this year, with ticket sales projected to rise 5.6 percent to 1.36 billion by Dec. 31, according to box-office tracker Hollywood.com. That’s still well below the modern peak of 1.6 billion tickets sold in 2002, but in an age of cozy home theater setups and endless entertainment gadgets, studio executives consider it a triumph that they were able to put more butts in cinema seats this year than last.


“It is a victory, ultimately,” said Don Harris, head of distribution at Paramount Pictures. “If we deliver the product as an industry that people want, they will want to get out there. Even though you can sit at home and watch something on your large screen in high-def, people want to get out.”


Domestic revenue should finish up nearly 6 percent from 2011′s $ 10.2 billion and top Hollywood‘s previous high of $ 10.6 billion set in 2009.


The year was led by a pair of superhero sagas, Disney’s “The Avengers” with $ 623 million domestically and $ 1.5 billion worldwide and the Warner Bros. Batman finale “The Dark Knight Rises” with $ 448 million domestically and $ 1.1 billion worldwide. Sony’s James Bond adventure “Skyfall” is closing in on the $ 1 billion mark globally, and the list of action and family-film blockbusters includes “The Hunger Games,” ”The Twilight Saga: Breaking Dawn — Part Two,” ”Ice Age: Continental Drift,” ”Madagascar 3: Europe’s Most Wanted,” ”The Amazing Spider-Man” and “Brave.”


Before television, movies were the biggest thing going, with ticket sales estimated as high as 4 billion a year domestically in the 1930s and ’40s.


Movie-going eroded steadily through the 1970s as people stayed home with their small screens. The rise of videotape in the 1980s further cut into business, followed by DVDs in the ’90s and big, cheap flat-screen TVs in recent years. Today’s video games, mobile phones and other portable devices also offer easy options to tramping out to a movie theater.


It’s all been a continual drain on cinema business, and cynics repeatedly predict the eventual demise of movie theaters. Yet Hollywood fights back with new technology of its own, from digital 3-D to booming surround-sound to the clarity of images projected at high-frame rates, which is being tested now with “The Lord of the Rings” prelude “The Hobbit: An Unexpected Journey,” shown in select theaters at 48 frames a second, double the standard speed.


For all of the annoyances of theaters — parking, pricy concessions, sitting next to strangers texting on their iPhones — cinemas still offer the biggest and best way to see a movie.


“Every home has a kitchen, but you can’t get into a good restaurant on Saturday night,” said Dan Fellman, head of distribution for Warner Bros. “People want to escape. That’s the nature of society. The adult population just is not going to sit home seven days a week, even though they have technology in their home that’s certainly an improvement over what it was 10 years ago. People want to get out of the house, and no matter what they throw in the face of theatrical exhibition, it continues to perform at a strong level.”


Even real-life violence at the movie theater didn’t turn audiences away. Some moviegoers thought twice about heading to the cinema after a gunman killed 12 people and injured 58 at a screening of “The Dark Knight Rises” in Colorado last summer, but if there was any lull in attendance, it was slight and temporary. Ticket sales went on a tear for most of the fall.


While domestic revenues inch upward most years largely because of inflation, the real growth areas have been overseas, where more and more fans are eager for the next Hollywood blockbuster.


Rentrak, which compiles international box office data, expects 2012′s foreign gross to be about $ 23 billion, 3 percent higher than in 2011. No data was yet available on the number of tickets sold overseas this past year.


International business generally used to account for less than half of a studio film’s overall receipts. Films now often do two or even three times as much business overseas as they do domestically. Some movies that were duds with U.S. audiences, such as “Battleship” and “John Carter,” can wind up being $ 200 million hits with overseas crowds.


Whether finishing a good year or a bad one, Hollywood executives always look ahead to better days, insisting that the next crop of blockbusters will be bigger than ever. The same goes this time as studio bosses hype their 2013 lineup, which includes the latest “Iron Man,” ”Star Trek,” ”Hunger Games” and “Thor” installments, the Superman tale “Man of Steel” and the second chapter in “The Hobbit” trilogy.


Twelve months from now, they hope to be talking about another revenue record topping this year’s $ 10.8 billion.


“I’ve been saying we’re going to hit that $ 11 billion level for about three years now,” said Paul Dergarabedian, a box-office analyst for Hollywood.com. “Next year I think is the year we actually do it.”


___


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http://www.hollywood.com


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Condom Dispensers in Philly Schools






Philadelphia is installing condom dispensers in 22 city high schools where students as young as 14 will be able to receive condoms for free in an effort to combat an “epidemic” of sexually transmitted disease among the city’s teenagers.


Students returning to school from Christmas break will find clear plastic dispensers filled with condoms in the offices of nurses whose schools have the highest rates of sexually transmitted diseases.






“We believe distributing condoms is part of our obligation to keep students healthy and to remain healthy,” said school district spokesman Fernando Gallard. “The health department has described this as a continued epidemic of STDs among teenagers in Philadelphia.”


Condoms have in the past been provided to students in Philadelphia as part of wider program in which the teenagers are provided “free, voluntary and confidential” testing for sexual diseases in their schools, Gallard said.


It was the results of those tests that led officials to launch the current program to distribute condoms regularly in schools instead of once a year when the tests are administered.


Of the 130,000 student who have received testing in the last five years, some 6,500 or 5 percent of them have tested positive for diseases including HIV, the virus that causes AIDS.


Parents were made aware of the distribution program in October and were given the chance to opt their children out of receiving the prophylactics.


Gallard said the school district has not received “specific calls” from parents objecting to the program. The total number of parents who chose to disallow their children from receiving condoms, however, is unknown.


According to Advocates for Youth, a nonprofit organization that advocates for sexual health among young people, there are at least 418 schools nationwide providing condoms.


In August, despite outrage from some parents, the school board in Springfield, Mass., approved a plan to distribute condoms in public high schools, as well as middle schools, providing free contraception to students as young as 11.


Philadelphia has plans to expand condom distribution to more schools, but has no plans to introduce prophylactics to middle schoolers, Gallard told ABCNews.com.


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Say Hello to Higher Taxes: Why Neither Party Wants a Deal






With five days to go until the fiscal cliff, Republicans and Democrats are displaying as much effort as New York Jets quarterback Mark Sanchez in the latter stages of a typical four-interception blowout—which is to say, none whatsoever. They can barely bestir themselves to maintain the pretense that they’re working to avoid the $ 600 billion of tax hikes and spending cuts due to arrive next week.


President Obama is flying back from Hawaii tonight to keep up appearances. But almost nobody expects a deal before Jan. 1. Negotiations essentially ended after John Boehner’s Plan B fell apart last week. As the Wall Street Journal put it this morning, “the parties are engaged in a political staring contest.” Sounds productive.






One reason nothing is happening could be that, at this point, both parties secretly want to go over the cliff. As the political scientist Jonathan Bernstein noted:


[N]ot only do liberals believe that the expiration of Bush-era tax rates gives them a bargaining advantage, but many Republicans may well prefer that outcome as well. I think if there was any information generated by the Plan B fiasco, it might have been just that: some Republicans really would prefer an eventual outcome that involves relatively higher tax rates as long as they don’t have to make an affirmative vote for it.


That strikes me as exactly right, although I’d characterize the Republican motivation slightly differently. I’m not sure how many Republicans actively wish for taxes to go up. But I’m sure they all recognize that taxes will rise on Tuesday, when rates automatically revert to their Clinton-era levels. That’s why Plan B was such a heavy lift: It called on House Republicans to cast a career-threatening vote to raise taxes, when everyone knew full well that such a vote was entirely unnecessary, since the cliff would do the dirty business of raising taxes for them if they just waited a week.


Best of all, once rates reset, Republicans (and Democrats, too) would find themselves in the much more comfortable position of negotiating tax cuts for the vast majority of Americans. Given this reality, the question to ask in the days and hours leading up to the fiscal cliff is not whether the two parties will strike a deal, but why they would want to.


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Afghan bomber attacks near major US base






KABUL, Afghanistan (AP) — A vehicle driven by a suicide bomber exploded at the gate of a major U.S. military base in eastern Afghanistan on Wednesday, killing the attacker and three Afghans, Afghan police said. The Taliban claimed responsibility for the attack.


Police Gen. Abdul Qayum Baqizai said a local guard who questioned the vehicle driver at the gate of Camp Chapman was killed along with two civilians and the assailant. The camp is located adjacent to the airport of the capital of Khost province, which borders Pakistan. Chapman and nearby Camp Salerno had been frequently targeted by militants in the past, but violent incidents have decreased considerably in recent months.






Taliban spokesman Zabihullah Mujahid said in an email that the bomber targeted Afghan police manning the gate and Afghans working for the Americans entering the base. He claimed high casualties were inflicted.


NATO operates with more than 100,000 troops in the country, including some 66,000 American forces. It is handing most combat operations over to the Afghans in preparation for a pullout from Afghanistan in 2014. Militant groups, including the Taliban, rarely face NATO troops head-on and rely mainly on roadside bombs and suicide attacks.


NATO forces and foreign civilians have also been increasingly attacked by rogue Afghan military and police, eroding trust between the allies.


On Tuesday, the Interior Ministry said a policewoman who killed an American contractor in Kabul a day earlier was a native Iranian who came to Afghanistan and displayed “unstable behavior” but had no known links to militants.


The policewoman, identified as Sgt. Nargas, shot 49-year-old Joseph Griffin, of Mansfield, Georgia, on Monday, in the first such shooting by a woman in the spate of insider attacks. Nargas walked into a heavily-guarded compound in the heart of Kabul, confronted Griffin and shot him once with her pistol.


The U.S-based security firm DynCorp International said on its website that Griffin was a U.S. military veteran who earlier worked with law enforcement agencies in the United States. In Kabul, he was under contract to the NATO military command to advise the Afghan police force.


The ministry spokesman, Sediq Sediqi, told a news conference that Nargas, who uses one name like many in the country, was born in Tehran, where she married an Afghan. She moved to the country 10 years ago, after her husband obtained fake documents enabling her to live and work there.


A mother of four in her early 30s, she joined the police five years ago, held various positions and had a clean record, he said. Sediqi produced an Iranian passport that he said was found at her home.


No militant group has claimed responsibility for the killing.


The chief investigator of the case, Police Gen. Mohammad Zahir, said that during interrogation, the policewoman said she had plans to kill either the Kabul governor, city police chief or Zahir himself, but when she realized that penetrating the last security cordons to reach them would be too difficult, she saw “a foreigner” and turned her weapon on him.


There have been 60 insider attacks this year against foreign military and civilian personnel, compared to 21 in 2011. This surge presents another looming security issue as NATO prepares to pull out almost all of its forces by 2014, putting the war against the Taliban and other militant groups largely in the hands of the Afghans.


More than 50 Afghan members of the government’s security forces also have died this year in attacks by their own colleagues. The Taliban claims such incidents reflect a growing popular opposition to the foreign military presence and the Kabul government.


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10 Talented Dogs Playing the Piano









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Wife’s Garbled Text a Sign of Stroke






Dec 25, 2012 12:57pm



8ae4a  gty texting ll 121225 main Wifes Garbled Text a Sign of Stroke

Sending garbled texts may be a sign of stroke. Image credit: Stone/Getty Images.







Smartphone autocorrect is famous for scrambling messages into unintelligible gibberish but when one man received this garbled text from his 11-week-pregnant wife, it alarmed him:


“every where thinging days nighing,” her text read. “Some is where!”


Though that may sound like every text you’ve ever received, the woman’s husband knew her autocorrect was turned off. Fearing some medical issue, he made sure his 25-year-old wife went immediately to the emergency room.


When she got there, doctors noted that she was disoriented, couldn’t use her right arm and leg properly and had some difficulty speaking. A magnetic resonance imaging scan — MRI — revealed that part of the woman’s brain wasn’t getting enough blood. The diagnosis was stroke.


Fortunately, the story has a happy ending. A short hospital stay and some low-dose blood thinners took care of the symptoms and the rest of her pregnancy was uneventful.


Click here to read about how texting pedestrians risk injuries


The three doctors from Boston’s Harvard Medical School, who reported the case study online in this week’s Archives of Neurology, claim this is the first instance they know of where an aberrant text message was used to help diagnose a stroke. In their report, they refer to the woman’s inability to text properly as “dystextia,” a word coined by medical experts in an earlier case.


Dystextia appears to be a new form of aphasia, a term that refers to any trouble processing language, be it spoken or written. The authors of the Archives paper said that at least theoretically, incoherent text messages will be used more often to flag strokes and other neurological abnormalities that lead to the condition.


“As the accessibility of electronic communication continues to advance, the growing digital record will likely become an increasingly important means of identifying neurologic disease, particularly in patient populations that rely more heavily on written rather than spoken communication,” they wrote.


Even though jumbled texts are so common, Dr. Larry Goldstein, a neurologist who is the director of the stroke center at Duke University, said he also believes it’s possible they can be used to sound the alarm on a person’s neurological state, especially in a case like this where the text consisted of complete words that amounted to nonsense rather than the usual autocorrected muddle.


“It would have been very easy to dismiss because of the normal problems with texting but this was a whole conversation that wasn’t making sense,” Goldstein said. “I might be concerned about a patient based on a text like this if they were telling me they hadn’t intended to send a disjointed jumble but they weren’t able to correct themselves.”


In diagnosing stroke, Goldstein said both patients and medical professionals tend to discount aphasic symptoms, even in speech, but they can often be the first clue something is up. In this woman’s case, other signs were there. Her obstetrician realized in retrospect that she’d had trouble filling out a form earlier in the day. She had difficulties speaking too which might also have been picked up sooner if a recent upper respiratory infection hadn’t reduced her voice to a whisper.


But unlike this woman, most people leave their autocorrect turned on. If we relied solely on maddeningly unintelligible text messages to determine neurological state, neurologists might have lines out the door.



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In Brazil’s Favelas, a Middle Class Arises






The night before appliance retailer Casas Bahia opened in Rio de Janeiro’s largest slum, resident Joana Darc de Morandi couldn’t sleep. Shopping list in hand, Joana was first in line to get in, seven hours before some 200 people began streaming through the store’s front door. “It’s very important for the neighborhood,” Morandi, 57, says of Rocinha, the slum where she lives. “Casas Bahia being here is a show. It’s beautiful. It means everything. You can find anything you need.”


Drawn by improved security, rising incomes, and a booming credit market, Brazil’s big retailers are opening shop in the favelas, the hillside shantytowns once viewed by most Brazilians as no-go areas. About 56 percent of the 12 million people who live in slums such as Rocinha were considered middle class in 2011, up from 29 percent in 2001, according to a study this year by Instituto Data Popular, a São Paulo-based research group. As reforms have taken hold over the last 10 years, the economy has created many more jobs than before, giving inhabitants of the favelas a chance to work. Unemployment in Brazil dropped to 5.3 percent in October, less than half the level a decade earlier. A stepped-up government aid program that paid the poor to keep their children in school, among other things, also boosted income. Today, Rio’s favelas have an economy worth 13 billion reais ($ 6.1 billion), according to the Data Popular study.






Casas Bahia’s Rocinha location sold 10 times more during its Nov. 6 opening than an average store takes in on a typical day. The chain will open its third favela location next year, says Roberto Fulcherberguer, vice president of Via Varejo, which operates the Casas Bahia brand. The company’s competitor, Ricardo Eletro, opened its first Rocinha store in October 2011.


A linchpin of the expansion has been Rio’s so-called pacification community policing strategy, Fulcherberguer says. Special forces last year took control of Rocinha and expelled or arrested drug gangs that controlled the slum of 69,000, which sprawls above the city’s wealthiest beachside neighborhoods, including Ipanema. Rocinha was the 28th favela to be pacified in Rio since 2008, and 12 more are scheduled to be occupied before the city hosts matches of the 2014 FIFA World Cup.


“We are already looking for properties, either to rent or to buy, in any community that has been pacified and where there is protection by police or the army,” Michael Klein, Via Varejo’s chairman, told reporters at the opening of the Rocinha store. “The more communities that are pacified, the more Casas Bahia stores we’ll have.” Sales in the first three quarters of 2012 from Via Varejo’s stores were up 9.1 percent from a year earlier, according to financial results released Oct. 31. The company expects 70 percent of its growth to come from Casas Bahia stores in the northeast, one of the country’s poorest regions, Fulcherberguer says.


A challenge for retailers could arise as more homes in the favelas are formally connected to the power grid. Utilities are working to turn families that tap illegally into the electrical system into regular customers. The problem is that legitimate electric power is much more expensive than illegally obtained power. Families that switch to normal electricity service may not be able to afford appliances that need a lot of power to run, says Marcelo Neri, an economist who studies poverty.


Morandi’s not concerned about having enough electricity to power the blender, mixer, fan, and coffeemaker she bought at Casas Bahia. She paid for her goods in two installments, which means she probably paid interest in the high double digits. That didn’t bother her either. Until recently she wanted to leave her favela; she’s changed her mind. “We were missing Casas Bahia, and now we’ve got that,” Morandi says. “Rocinha is marvelous.”


The bottom line: If the slums of Rio were a separate economy, they would have a GDP worth $ 6 billion—an attention-getting number for chain stores.


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