U.S. NEWS Medicare Premiums To Remain

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A2 | Friday, October 10, 2014
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THE WALL STREET JOURNAL.
U.S. NEWS
Conditions for U.S. Growth
Improve, Economists Say
BY KATHLEEN MADIGAN
BY LOUISE RADNOFSKY
Bloomberg News
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Faster job growth and stronger consumer confidence are already putting the U.S. expansion
on a steady trajectory heading
into 2015. Now, falling energy
prices are offering another boost,
according to The
WSJ SURVEY Wall
Street
Jo u r n a l ’s
monthly survey of economists.
The panel of 46 economists—
not all of whom answered every
question—estimates the economy
grew at a 3.2% annual rate in the
third quarter and will expand at
a 3% pace in the current quarter.
The consensus outlook expects
inflation-adjusted gross domestic
product will grow 2.8% in 2015’s
first half; that projected growth
path is well above the 2.2% annual rate averaged so far in this
recovery.
“The U.S. expansion is finally
moving at a decent pace,” said
economist James Smith of Parsec
Financial.
With the unemployment rate
already down to 5.9%, as September’s nonfarm payrolls report
showed, the economists now see
faster improvement on the labor
front than they expected just a
few months ago. The WSJ survey
was taken after the Oct. 3 release
of the payrolls report.
The economists project job
growth will average about
214,000 a month over the next
year. The unemployment rate is
forecast to end this year at 5.8%
and finish 2015 at 5.4%. As recently as June, the average forecast was that the jobless rate
would be 6.1% at the end of 2014
and 5.6% at the end of 2015.
When it comes to downside
risks to the outlook, international
affairs remain the dominant fear.
A few economists also raised
caution flags over the strengthening dollar and a possible widening in the nation’s trade deficit.
“Stagnation in Europe and
slowing activity in China present
material headwinds to U.S. ex-
Medicare
Premiums
To Remain
Flat in 2015
Lower energy costs are seen as a boon to consumer spending. Here, a
Chevron Corp. refinery in Richmond, Calif., earlier this year.
ports,” said Wells Fargo economist John Silvia.
A new positive in the outlook
is the recent decline in energy
prices. On Wednesday, the onemonth futures contract for oil on
the New York Mercantile Exchange closed at $87.31 per barrel, down 19% since its recent
peak in June. It fell further on
Thursday.
Economists in the survey see
the contract oil price sitting at
$91.16 at the end of this year.
While that is up slightly from the
current price, it is down sharply
from the $99.45 projected in the
June survey.
Although geopolitical events,
especially in the Middle East, can
shock oil markets, the price drop
is projected to continue through
2015, with oil ending next year at
a price of $90.24.
Inflation-adjusted consumer
spending is growing 2.6% across
the second half, the economists
say, and falling gasoline prices—
which frees up money to be spent
elsewhere—contributed 0.13 percentage point to inflation-adjusted
consumer spending last quarter. It
could add 0.21 points to consumer
spending this quarter.
“It will help Christmas spending,” said Ram Bhagavatula of
Combinatorics Capital.
Lower energy prices mean
top-line inflation will increase at
a slower pace than was expected
just a month ago, the panel also
says. Economists now see inflation—defined as the 12-month
change in the consumer-price index—of 1.9% at year’s end. The
September consensus view was
that inflation would be above 2%
by the end of this year.
The consensus view of solid
output growth, falling unemployment and sedate inflation likely
keeps the Federal Reserve on target to begin raising interest rates
from near zero sometime next
year. The average forecast shown
in the survey sees the Fed’s first
interest-rate
increase
in
mid-2015.
Online>>
For more on how the surveyed
economists responded, see
WSJ.com/Economics
Most Medicare beneficiaries
will pay monthly premiums of
$104.90 for 2015, the same as
this year and last year, while
cost-sharing for hospital and
skilled nursing stays will increase slightly, the Obama administration said Thursday.
The premiums cover doctor’s
visits, outpatient care and medical supplies under what is known
as Part B of the federal insurance
program for people over age 65.
Higher-income seniors pay more.
An individual whose tax return
shows income between $85,000
and $107,000, for example, will
pay $146.90 a month.
Annual deductibles for most
people using services under
Part B will also remain unchanged for 2015 at $147, federal
officials said. The deductible for
admission to a hospital under
Part A of the program is increasing to $1,260 for the first 60
days of a period of illness in
2015, up from $1,216 this year.
Beneficiaries in skilled nursing facilities will pay $157.50 a
day after their 20th day there in
2015, up from $152 a day this
year.
Health and Human Services
Secretary Sylvia Mathews Burwell said the steadiness in premiums was a sign of slowed cost
growth within Medicare, which
she attributed in part to the
2010 federal health law.
Economists and health-policy
experts have debated the extent
to which the law’s provisions,
which include incentives for hospitals and physicians to coordinate care and to avoid costly readmissions, have contributed to
the slowdown.
Some have suggested that the
weak economy of recent years
has also prompted people to cut
back on their use of medical
services.
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Amazon plans to open a site on 34th Street in New York, above, in time for the holiday shopping season.
ing to the people familiar with the
company’s thinking.
Amazon has studied opening a
brick-and-mortar outlet for years,
even scouting locations in its
hometown of Seattle about two
years ago before scrapping the
idea because of insufficient foot
traffic, said another person familiar with the effort. Amazon once
sold Kindles in Wal-Mart Stores
Inc. and Target Corp. outlets, but
those retailers pulled the devices
from shelves two years ago in an
apparent nod to Amazon’s growing power in retailing.
The 12-story building on 34th
Street, owned by Vornado Realty
Trust, once housed an Ohrbach’s
department store and now has
Mango and Express stores at
street level. There are two loading
docks at the back of the building.
The Amazon store will be in the
shadow of the Empire State Build-
CORRECTIONS 
AMPLIFICATIONS
JetBlue Airways Corp. is testing a program in the New York
area that ties monetary incentives
of as much as $500 to measures
including employees’ body-mass
index. A Marketplace article
Wednesday about employer wellness programs said the incentives
depended solely on body-mass index. Also, Jim Napoli is a partner
at the Washington, D.C., office of
the law firm Seyfarth Shaw LLP.
The article incorrectly said he is
with Constangy, Brooks & Smith
LLP, his previous employer.
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com or by
calling 888-410-2667.
ing, which last year attracted 4.3
million visitors to its observatory.
It is a block east of Herald Square,
where Macy’s flagship store draws
more than 20 million annual visitors, according to the 34th Street
Partnership, a business-improvement district.
“Foot traffic on 34th Street is
unparalleled,”
said
Chase
Welles, executive vice president
at SCG Retail, a real-estate-service company.
The streetscape of 34th Street
has changed dramatically since the
1990s, when it was populated by
low-end retailers. Since then, the
business-improvement district and
area companies have spent about
$2 billion on upgrades to the
neighborhood and individual properties, according to the 34th Street
Partnership. Global and national
retailers such as Zara, Uniqlo and
Vince Camuto have opened stores
on the street.
Vornado Chief Financial Officer Stephen Theriot hailed the
34th Street building on a recent
webcast. “As a former department store, it’s got very high ceilings, it’s got big, open floor
plates, and that’s the type of
property that a lot of the creative
class tenants” favor, he said.
Ordering online with the option
to pick up in stores has proved
popular; retailers including WalMart, Home Depot Inc. and Macy’s,
offer the service. Others employ
delivery services such as Google
Inc., eBay Inc. or startup Deliv Inc.
to fetch orders from stores, rather
than warehouses, and bring them
to customers.
Amazon has experimented with
physical stores before, including
pop-up shops and locations run
by subsidiaries. Last November,
Kindle-brand pop-ups appeared in
U.S. malls, selling e-readers and
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mediacy of a traditional store.
Amazon’s space at 7 West
34th St., across from the Empire
State Building in Midtown,
would function as a mini warehouse, with limited inventory for
same-day delivery within New
York, product returns and exchanges, and pickups of online
orders. The Manhattan location
is meant primarily to be a place
for customers to pick up orders
they’ve made online, but will
also serve as a distribution center for couriers and likely one
day will feature Amazon devices
like Kindle e-readers, Fire smartphones and Fire TV set-top
boxes, according to people familiar with the company’s thinking.
Opening a physical location is
“about marketing the Amazon
brand,” said Matt Nemer, a Wells
Fargo analyst. “Same-day delivery, ordering online and picking
up in store are ideas that are really catching on. Amazon needs
to be at the center of that.”
Operating stores also carries
risks. Until now, Amazon largely
has avoided some costs associated with retailing, including
leases, paying employees and
managing inventory in hundreds
of stores. Those expenses could
imperil the company’s already
thin profit margins.
Some details about the New
York site couldn’t be learned
immediately, including the size,
length of the lease or amount of
inventory that would be housed
there. People familiar with the
matter cautioned that Amazon’s
plans could change, and that the
store is an experiment and
could be deemed unsuccessful.
If it is successful, however, the
New York location could presage a
rollout to other U.S. cities, accord-
Keith Bedford for The Wall Street Journal
Amazon Plans Brick-and-Mortar Store
tablets from vending machines.
Its Zappos unit has a store near
its Kentucky distribution center
and once operated a few outlets
in its hometown of Las Vegas; and
its Quidsi unit runs a cosmetics
store in Manhasset, N.Y.
Amazon also has set up large
metal lockers in convenience
stores and parking garages
around the country, to accommodate deliveries and returns.
The lockers don’t offer sameday delivery, however. The lockers have been a popular option,
and Amazon has expanded them
to a number of cities, including
overseas, after initially just offering them in Seattle.
Amazon took some inspiration
from a trial by the U.K.’s Home
Retail Group PLC, allowing customers to order eBay goods online and pick them up in its Argos stores, said one person
familiar with Amazon’s thinking.
By year’s end Argos expects to
provide the service at 650 stores
from 65,000 eBay sellers.
Other primarily online retailers have opened physical storefronts, including clothier Bonobos
Inc., eyeglasses purveyor Warby
Parker, and subscription beautyproducts service Birchbox.
New York-based Bonobos
opened its first of 10 retail
stores in 2011; it plans 40 by
2016, said Chief Executive Andy
Dunn. The stores offer limited
inventory so customers can determine their size and choose
styles and patterns; the merchandise is then shipped to their
home from a warehouse, or can
be collected later in-store.
Mr. Dunn said customers who
order clothing from Bonobos
brick-and-mortar stores spend
roughly twice as much as online
shoppers.
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