Quote of the Week

"Current events form future trends." Gerald Celente

Celente is the President and CEO of the Trends Research Institute
http://www.trendsresearch.com/

Economic Update

Bloomberg:
Dollar May Surpass ‘Established Lows,’ Goldman Says
Aug. 27 (Bloomberg) -- The dollar may weaken through “established lows” as signs of a global economic recovery drive gains in equities and oil, Goldman Sachs Group Inc. said.

“That kind of shift could easily be prompted by continued good news from the macro front and the persistently negative dollar-equity and dollar-oil correlations,” Thomas Stolper, an economist at Goldman Sachs in London, wrote in a report yesterday. “Dollar bulls could well end up disappointed. Even a short-term move beyond our three- and six-month forecasts of $1.45 per euro is getting increasingly likely.”Read the full story here

Associated Press:

Bank insurance fund down 20 percent in 2Q

WASHINGTON (AP) -- The agency that guarantees bank deposits said Thursday there are no immediate plans to borrow money from the government to bolster its insurance fund, which has shrunk under the weight of collapsing banks.

The fund fell 20 percent to $10.4 billion in the second quarter as U.S. banks overall lost $3.7 billion, the Federal Deposit Insurance Corp. said. That's the fund's lowest point since 1992 at the height of the savings-and-loan crisis. Some analysts have warned that the fund could fall below zero by year's end. read the full story here

San Francisco Chronicle:

Bleak financial picture at UC Berkeley

Forced to cut $150 million from his campus budget this year, Chancellor Robert Birgeneau of UC Berkeley painted a grim picture of employee layoffs and pay cuts, fewer courses and likely fee increases as thousands of students returned to school on Wednesday.

"These are extraordinary times," Birgeneau said during his back-to-school remarks. "And for UC administration, these are less-than-inspiring times."

Funding from the state, he said, fails to cover about 9,000 of Berkeley's 35,000 students. Put another way, he said, state funding now covers about 25 percent of the school's budget, down from about 75 percent in earlier years.

"This is not a stable situation," he said.Read more here

Wall Street Journal:

As Budget Deficit Grows, So Do Doubts on Dollar

LONDON -- The U.S. economy may be showing signs of recovering from the financial crisis, but the jury is still out on the future of the U.S. dollar.

While many analysts expect the dollar to strengthen in coming months as the crisis fades and the U.S. economy turns toward growth, a growing chorus of investors is expressing concern about the longer-term outlook for the greenback. Read the full story here

Reuters:

'Cash for Refrigerators' Debuts in Fall. Really.

By Joe Walsh

Before heading home to face the anger at the now infamous health care "town halls," Congress rushed through an extension to what was then considered a popular program: Cash for Clunkers. Then, like much of the August break, Cash for Clunkers went sideways as critics picked apart the program's weaknesses, consumers stopped showing up with so many clunkers, and dealers started making noise about something as simple as when they might actually get the rebate money that the government promised.

So, what do you do when you have a poorly-conceived and ill-managed project winding down (Clunkers expires at 8 p.m. eastern on August 24)? Kick off another one, even more poorly thought out, and gloss it with an equally catchy name: Cash for Refrigerators. Beginning in the fall, consumers will have access - through existing state-level energy efficiency incentive programs - $300 million in stimulus funds made available as rebates for energy efficient appliances. Read the full story here

Eye on the Economy

Stories today from Bloomberg that caught my eye:









Pension Plans’ Private-Equity Cash Depleted as Profits Shrink
Aug. 20 (Bloomberg) -- U.S. pension funds contributed to the record $1.2 trillion that private-equity firms raised this decade. Three of the biggest investors, state pensions in California, Oregon and Washington, plunked down at least $53.8 billion. So far, they only have dwindling paper profits and a lot less cash to show the millions of policemen, teachers and other civil servants in their retirement plans. Read the full story here

Mortgage Delinquencies Rise to Record as U.S. Home Prices Fall
Americans fell behind on their mortgage payments at a record pace in the second quarter as job losses and falling real estate prices thwarted government efforts to stabilize the housing market.
Read the full story here

U.S. Initial Jobless Claims Rose by 15,000 to 576,000
More Americans unexpectedly filed claims for jobless benefits last week, indicating companies are trying to cut costs further even as the economy stabilizes.Applications rose to 576,000 in the week ended Aug. 15 from a revised 561,000 the week before, the Labor Department said today in Washington. The number of people collecting unemployment benefits the week earlier was little changed at 6.24 million. Read the full story here

Philadelphia Area Manufacturing Unexpectedly Expands
Manufacturing in the Philadelphia region unexpectedly expanded in August for the first time in almost a year, a sign the economy is pulling out of the recession. Read the full story here

Corporate Defaults Soar to $453 Billion, S&P Reports
Corporate defaults worldwide rose in 2009, surpassing the number for the whole of 2008, Standard & Poor’s said in a report today.A total of 201 issuers defaulted through Aug. 12, affecting $453.1 billion of debt, S&P said. That’s up from 126 defaults totaling $433 billion for all of last year, the report said. Read the full story here

From Reuters:

Getting ready for the dollar’s fall, It just won’t go away, this needling worry about the U.S. dollar losing its coveted top-dog status.
No matter that there are plenty of reasonable arguments to support the dollar as the world reserve currency — namely there’s just no alternative — for perhaps decades to come.Yet, in a world where once-rock-solid assumptions quickly turn to dust, investors should keep an eye on the dollar since changing perceptions are chipping away at its cherished status as currency to the world. Read the full story here

New York Times reports:
A Surprise Increase in U.S. Jobless Claims
WASHINGTON (AP) — The number of newly laid-off workers filing claims for unemployment benefits rose unexpectedly for a second consecutive week, an indication that jobs remain scarce.
Read the full story here

Bio360 program

Please click on the Bio360 document to read all the features and benefits of this unique program launched by Polyair. Oxobiodegradable bubble packaging and mailers are now available, please contact your packaging consultant at smarterpackaging@gmail.com for more information.

Summer Bubble Pouch/Bag Promotion!

The Summer Bubble pouch promotion is underway! If you have not inquired how to shop your way to savings, DO IT RIGHT NOW!!! Contact your packaging consultant for more information @ smarterpackaging@gmail.com.

Eye on the Economy:With Few Exceptions, Retailers Remain Weak

The New York times Report today:

By STEPHANIE ROSENBLOOM

With consumers keeping a firm grip on their wallets, many of the best-known names in retailing said they suffered another quarter of earnings declines and were planning new ways to lure shoppers back to their stores.

Results posted by several chains in the last week beat analysts’ low expectations, but that was largely because the stores had cut costs, not because consumers had filled up their shopping carts.

Second-quarter earnings declined year over year at Home Depot, Target, Lowe’s, Nordstrom, and Macy’s. Saks, Dillard’s, J. C. Penney and Abercrombie & Fitch posted losses. And Wal-Mart, one of the most resilient chains in this economy, reported results that were about the same as last year.

A notable exception was TJX, which owns big-box discount chains, including T. J. Maxx, and reported record second-quarter sales and earnings.

Discounters continue to fare better than their midtier competitors as consumers trade down and buy only essentials. That trend, of course, has been especially troubling for luxury retailers.

Saks, the upscale department store, said Tuesday that its year-over-year loss widened. For the three months ended Aug. 1, Saks lost $54.5 million, or 39 cents a share, compared with a loss of $32.7 million, or 24 cents a share, for the period a year ago. Sales at stores open at least a year, a measure of retail health known as same-store sales, sank 15.5 percent.

To cope, Saks cut costs, shrank its inventory and made changes to its merchandising and marketing strategies. Nowadays the chain’s emphasis is on value and exclusivity.

In an example of retailers’ new plans to get consumers shopping again, Saks is introducing a private label men’s clothing collection and expanding its Off Fifth outlet business.

“Growing Off Fifth makes even more sense in this environment as customers focus on value,” Stephen I. Sadove, the chairman and chief executive of Saks, said in a call with investors on Tuesday. “There’s less than 10 percent overlap between Saks Fifth Avenue and Off Fifth customers. So we’re essentially reaching an entirely different customer base with these stores.”

In addition to opening more Off Fifth stores, Saks plans to fill them with more merchandise made exclusively for the stores, rather than fashions from earlier seasons.

The new private label menswear collection will be in Saks Fifth Avenue stores this month. Until now, Saks’s private label program included mostly sweaters and other basics, Ronald L. Frasch, Saks’s president and chief merchandising officer, told investors on Tuesday. The chain is also working with its existing designers and brands to add new products at lower prices.

Target, the chain known for chic design at low prices, has also been tweaking its strategy, offering more grocery items to lure struggling consumers. The chain said on Tuesday that its second-quarter earnings fell 6.3 percent compared with the period a year ago, though that was better than analysts expected. For the three months ended Aug. 1, Target earned $594 million, or 79 cents a share, down from $634 million, or 82 cents, last year. Sales fell 2.7 percent, to $14.6 billion.

Jason Asaeda, a retailing analyst with Standard & Poor’s Equity Research, told investors in a research note to buy Target stock because the chain is “strengthening its business with a growing assortment of value-priced consumables.”

Home Depot, the big home-improvement retailer, reported a 7 percent earnings decline for the quarter on Tuesday, also better than analysts’ expectations. The chain has focused on offering customers new repair and maintenance items, which they have been buying instead of higher-priced discretionary goods.

“This is the second consecutive quarter of positive transactions for tickets under $50,” Craig Menear, Home Depot’s executive vice president for merchandising, told investors in a conference call.

For the three months ended Aug. 2, Home Depot earned $1.1 billion, or 66 cents a share, down from $1.2 billion, or 71 cents a share, in the same quarter a year ago. Sales for the quarter fell 9.1 percent, to $19.1 billion, compared with last year. Same-store sales declined 8.5 percent for the quarter.

Bucking the trend, TJX, which owns T. J. Maxx, Marshalls and HomeGoods stores, reported on Tuesday its best-ever second quarter earnings. For the three months ended Aug. 1, the company made a profit of $262 million, or 61 cents a share, up 27 percent from last year when the company earned 48 cents a share. Same-store sales rose 4 percent.

“Our extreme values on exciting brands and fashions continue to resonate with consumers and drive extraordinary increases in customer traffic counts,” Carol Meyrowitz, the company’s president and chief executive, said in a statement.

More than a dozen retailers plan to report their earnings results in the coming days. But analysts are not expecting many of them to repeat the performance of TJX. Ken Perkins, president of the research company Retail Metrics, expects the nation’s stores to turn in a ninth consecutive quarter of declines.

And the weak sales trends are likely to continue into the third quarter. As Mr. Sadove told investors: “I don’t see the consumer appreciably changing in terms of their behavior.”

The G4 Airspace machine has arrived!

Polyair introduces Foam in Place Vision Film

Please contact you packaging consultant for more information on this product at smarterpackaging@gmail.com.

Bottled water: industry must react to Bundanoon ban; The Australian town of Bundanoon has banned sales of bottled water

Datamonitor CommentWire, July 10, 2009 Friday 4:14 PM GMT

An Australian town situated approximately 100 miles south of Sydney in New South Wales is believed to be the first community in the world to have banned sales of bottled water. A gathering of 350 Bundanoon residents voted almost unanimously to ban sales from September 2009. Proposed replacement schemes include shops selling reusable containers that can be filled at public water fountains or, for a nominal fee, with filtered water at stores. Controversy surrounding local bottled water operations in Bundanoon may well have influenced the move.

Plans were announced to build a water extraction plant in the town, which would have taken water from Bundanoon to Sydney for processing and bottling, before some bottles would have inevitably been returned to the town for sale. The proposals provoked much anger among residents and a court battle is still being waged to determine the fate of the plant. Meanwhile, New South Wales premier Nathan Rees has also banned government officials in the state from buying bottled water, declaring that all New South Wales government departments would be switching to tap water. Bottled water has proved extremely popular in Australia, with an estimated $390m spent on the industry in 2008. For a country with a population of just under 22 million people, this represents a substantial business, and gives any bans on sale an increased significance. These recent events may not signal the death of the bottled water industry just yet, but they do serve to showcase the depth of feeling among some consumers with regards to bottled water. Other establishments could now follow the precedent set in Bundanoon, and a domino effect would be catastrophic. The industry must react to stories such as these and ensure that its operations can become cleaner and greener in the near future, in order to ensure that these incidents remain isolated. For more information on the growing sustainable packaging trend, see Datamonitor's report entitled Sustainable Packaging Trends: Consumer Perspectives and Product Opportunities, which was published in April 2009

Turning Green into Gold

Companies that invest in sustainability now are likely to reap dividends when the economy improves

Packaging Digest, 7/21/2009 10:21:00 AM

I’ve been ruminating about the tough economy like everyone else. Rather than lamenting what is, I think this downturn affords businesses a rare opportunity to slow down, rethink and reset.

Consumer product companies that innovate, will insulate their brands to a higher degree from the current downturn while positioning them for future growth. Tip: it’s time to research sustainability measures that can begin to be implemented—now. If there’s ever been a time and a place to allocate tight marketing budgets, this is it.

Why sustainability and why now? Sustainability practices are increasingly important to consumers. Interestingly, they have not pulled back from buying green, slow economy, decreased purchasing power, or not. That goes for products as well as packaging. Information Resources Inc. (IRI) recently released an informative report that CPG companies really need to take heed of, titled: “Sustainability: CPG Marketing in a Green World.”

With more and more consumers consciously choosing to live greener lives, sustainable product packaging is no longer an afterthought. Rather, it should be adopted and integrated as part of an overall brand repositioning in sync with an overall environmentally responsible plan. Company brand values need to be tweaked and realigned with today’s consumer values more than ever, if they are going to succeed over the long haul.

IRI’s report tracked consumer behavior in eight distinct demographic segments and the following green segments: organic, Fair Trade commodities, and eco-friendly products. While sales to hard-core eco-centric consumers fell 6.6% in 2008 largely due to price increases, “respectful stewards” increased spending on environmentally friendly products by 15.5% and “proud traditionalists” by 8.4%. This helped buoy sales up 4.1% for the year, signifying that previously less green consumers are climbing what IRI refers to as “the green adoption curve”.

IRI’s eight green consumer groups:

• Eco-centrics. “Green” is the chosen way of life for these consumers; they are well-informed, active and ardent supporters of green products.
• Respectful stewards. Idealistic, community-focused consumers who see value in paying more for products that are green.
• Proud traditionalists. Hard-working, family-focused consumers who focus on having environmentally-conscious homes and experiment with green products.
• Frugal earth mothers. Lower income female consumers who look for savings while also looking for more prudent, wholesome products for their families.
• Skeptics. Men who are highly educated and earn high incomes; who are also skeptical about the benefits of purchasing green products.
• Eco-chics. Young adult consumers who think being green is hip. They’ll buy on impulse; they’re early adopters but haven’t delved deeply into environmental issues.
• Green naives. Younger, lower income consumers who haven’t made the correlation between cause/effect and environmental responsibility.
• Eco-villains. Middle income male consumers; couldn’t care less about any environmental issues and dismiss environmental concerns outright.

The key for marketers is to understand which segments of consumers are prevalent within their own constituencies so that their companies can offer the right kind of innovations and messaging that is relevant to them. This will take some resource investments of time, capital and research on the part of the marketing department, but the returns are too important to ignore.

Green Packaging: Why Now?
There are few consumer goods that are 100% green, natural and organic, but there are more and more products with at least some components that are green, natural or organic. There is no such thing as 100% green packaging. However, that does not mean companies can’t make commitments now and into the future to conduct business as environmentally soundly as possible. Nor does it mean they cannot find innovative new ways to develop and integrate greener components in their products and packaging. Right?

Why would companies invest in this now, when budgets are getting slashed? Consider this: research demonstrates that while sustainable packaging isn’t the primary consumer purchase motivator, it has become important enough to make consumers opt for one brand over another within a product category if one company embraces good environmental practices and a competitor doesn’t.

The Hartman Group’s “Sustainability Outlook: The Rise of Consumer Responsibility” shares some significant findings concerning packaging attitudes in a recent survey among 1,600 consumers:

• The highest rating—75% of respondents stated the importance of packaging that could be recycled as most important to them.
• 71% indicated biodegradability in packaging an important asset.
• 67% cited packaging made from recycled content important to them.
• 63% like to purchase packaging that is refillable.
• 62% felt that minimal packaging was important.
• 60% of respondents look for packaging that can be repurposed for other uses.
• 51% indicated compostable packaging was important to them.

Bottom line: with so much talk focused on myriad environmental issues over the past few years, and growing impetus in recent months, the consumer is increasingly aware. There is growing concern about packaging and what becomes of it after it has served its purpose. The three R’s—Reduce, Reuse, Recycle have hit home with greater numbers of consumers now.

Consumer product companies ought to consider: what better way is there to sell sustainable values than through that most important of marketing initiatives—packaging? Utilizing the three R’s in updated packaging design sends a powerful message. Better yet, using the packaging itself as a communications platform about the company’s commitment to sustainability gives marketers a powerful tool to reach consumers. Targeting that messaging to the company’s proper green demographic(s) becomes meaningful. Tying that messaging in to the company website, advertising and every other marketing initiative it uses, will further educate targeted consumers.

Contrary to the belief that consumers are increasingly skeptical due to widespread green-washing, The Hartman Group’s survey yielded an eye-opening statistic. 82% of those surveyed thought most companies’ green claims “mostly true”. Of course, it is important to maintain trust with consumers by being honest about all of the company’s sustainability practices, including those made on and about packaging. It is better to say nothing, than it is to make claims that stretch the truth; the latter can do considerable damage to the brand, precisely when building consumer trust has never been more important.

Consumers are not only looking to niche companies that have made sustainability a cornerstone of their brands. They’re also expecting established mass market companies to move in this direction, and rewarding those that do. Being responsible stewards of the environment by adopting better business practices is step one. Offering more sustainable products and continuing product innovations is step two and that necessarily leads to sound packaging.

Sustainable packaging should be used to push the values of “reduce, reuse and recycle” and as the ultimate platform to reach the target consumer with the company’s overall sustainable positioning. Here is a terrific opportunity to further differentiate brands in a meaningful way—right now and for the future. Seizing this golden opportunity will lead to green in more ways than one.

Ted Mininni is president of Design Force, Inc., the leading brand design consultancy to consumer product companies with Enjoyment Brands™. Design Force helps their clients market brands that deliver positive, gratifying experiences to consumers. Their expertise lies in emotionally connecting consumers to brands by creating compelling visual brand experiences, which motivate purchase decisions.

ADP Says U.S. Companies Decreased Payrolls by 371,000

Bloomberg reports:

By Shobhana Chandra

Aug. 5 (Bloomberg) -- Companies in the U.S. cut fewer jobs in July as the worst recession since the Great Depression eased, a private report based on payroll data showed today.

The estimated 371,000 drop, higher than economists had forecast, followed a revised 463,000 decline the prior month, figures from ADP Employer Services showed today.

Stabilization in housing and manufacturing and help from the federal stimulus effort will usher economic growth this quarter, economists say. Consumer spending, which accounts for 70 percent of the economy, may be slow to gain speed as home prices fall, wages stagnate and unemployment climbs.

“We have seen the worst, but there is still more pain ahead,” said David Semmens, an economist at Standard Chartered Bank in New York. “Consumer spending will remain weak, especially as we head towards double-digit figures in unemployment.”

Stocks opened little changed after index futures dropped immediately following the report. The Standard & Poor’s 500 index was at 1005.84 at 9:32 a.m. in New York. Treasuries fell, sending yields on benchmark 10-year notes to 3.74 percent from 3.69 percent late yesterday.

The Labor Department’s payrolls report, due in two days, may show employers cut another 328,000 jobs in July and unemployment jumped to 9.6 percent, according to the median forecasts in a Bloomberg News survey.

Worst Job Market

The economy already has lost 6.5 million jobs since the recession began in December 2007, the most of any economic slump since the 1930s.

The ADP report was forecast to show a decline of 350,000 jobs, according to the median estimate of 30 economists in a Bloomberg survey. Projections ranged from decreases of 410,000 to 200,000.

ADP includes only private employment and does not take into account hiring by government agencies. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

“We’re heading in the right direction and heading there at about the pace we expect,” Chris Varvares, president of Macroeconomic Advisers, said on a conference call today. Job losses may “dwindle toward zero” by the end of this year, and payrolls may turn positive by early 2010, he said.

Employers announced 5.7 percent fewer job cuts in July than the year earlier, according to a report today by Chicago-based placement firm Challenger, Gray & Christmas Inc. Following a 9 percent drop in June, it was the first time since late 2007 that planned firings declined for two months in a row.

Today’s ADP report showed a decrease of 169,000 workers in goods-producing industries including manufacturers and construction companies. Service providers cut 202,000 workers.

Breakdown

Employment in construction dropped by 64,000, while financial firms decreased jobs by 26,000, ADP said.

Companies employing more than 499 workers shrank their workforce by 74,000 jobs. Medium-sized businesses, with 50 to 499 employees, eliminated 159,000 jobs and small companies decreased payrolls by 138,000, ADP said.

Announcements of staff reductions continued this week. General Motors Co. disclosed it may cut more U.S. hourly jobs after an offer of buyouts and early retirements fell about 7,500 workers short of the reorganized automaker’s target.

The ADP report is based on data from 400,000 businesses with about 23 million workers on payrolls. ADP began keeping records in January 2001 and started publishing its numbers in 2006.

Smarter Packaging presents: Crazy Corner, something not related to packaging but interesting!

Smarter Packaging's Crazy Corner article of the week:
Every week I come across an article that is not only interesting but crazy. By crazy I mean that it is insane that certain realities are just part of our everyday life today. In this segment I try to point out some news I came across on a weekly basis that is not packaging related at all but still interesting to read and I hope you find as crazy as I do, anyway here is the first aticle of this segment that I will try and make a weekly feature.
Enjoy!

From my daily browse on Bloomberg I came across this:
Antidepressant Use in U.S. Doubled Over Decade to 10% in 2005

By Nicole Ostrow

Aug. 3 (Bloomberg) -- The number of Americans taking antidepressants doubled to 10.1 percent of the U.S. population in 2005 compared with 1996, increasing across income and age groups, a study found.

An estimated 27 million U.S. people ages 6 and older were taking the drugs by 2005, while their use of psychotherapy declined, according to Columbia University research. Each person treated for depression in 2005 also filled more prescriptions, an average of 6.9 that year compared with 5.6 in 1996, said the study published in the August issue of the Archives of General Psychiatry.

The surge in antidepressant use propelled that class of treatments to become the top-selling U.S. medicines in 2005, surpassing blood-pressure prescriptions, the study said. Those findings highlight the need for doctors who aren’t psychiatrists and who prescribe these medicines to be trained to diagnose and manage depression so patients get the most effective treatment, said the lead author Mark Olfson.

Rising use of the drugs “may involve the introduction of new antidepressants, the increase in the direct-to-consumer advertising, lessening stigma with seeking mental health care” and more Americans acknowledging they are depressed, said Olfson, a professor of clinical psychiatry at Columbia University and New York State Psychiatric Institute in New York, in a July 31 telephone interview. “The reasons for this increase are not clear.”

Antidepressant Sales

The trend fueled sales of such antidepressants as Eli Lilly & Co.’s Prozac, Forest Laboratories Inc.’s Celexa and Pfizer Inc.’s Zoloft. The research found more growth in the class of antidepressants known as selective serotonin reuptake inhibitors and a decline in tricyclic antidepressants.

The researchers analyzed U.S. data from the 1996 and 2005 Medical Expenditure Panel Surveys, sponsored by the Agency for Healthcare Research and Quality, which provide national estimates on health-care usage and costs. The 1996 survey found 5.8 percent of 18,993 people surveyed took antidepressants, compared 10.1 percent of the 28,445 people surveyed in 2005.

The results also showed a jump in the use of antidepressants across demographic groups, with the exception of blacks. The rate of use of the medicines among blacks in 2005 was 4.5 percent, less than half that of whites. The rate for Hispanics increased to 5.2 percent in 2005 from 3.7 percent in 1996. Among all races, the percentages of men and women of all ages, marital status and educational levels taking antidepressants in 2005 rose from 1996, the study showed.

Diagnoses Rise

Olfson said it’s unclear if more people are depressed or if more people are just taking antidepressants. Other studies have found diagnoses of major depression in adults increased from 3.3 percent in 1991-1992 to 7.1 percent in 2001-2002, according to the journal article.

The new research found a decline in nondrug therapy. About 20 percent of people being treated with antidepressants also underwent psychotherapy in 2005 compared with almost 32 percent in 1996, the data showed.

“There’s being a greater emphasis placed on medications rather than psychotherapy in treating mental health problems,” Olfson said. “I hope these numbers will draw attention to how many people are being prescribed these medications.”

Cost Impact

Olfson said the decline in therapy may be because people have to pay more out of pocket for that treatment. He said depressed people not under the care of a psychiatrist don’t typically follow through with their treatment or stay on their medicines long enough to improve. Medicine and therapy in combination are proven to be more effective than either treatment alone, he said.

The number of children ages 6 to 17 who took antidepressants jumped 78 percent in 2005 from 1996, Olfson said, from a rate of 1.4 per 100 children to 2.6 per 100. The increase continued after the U.S. Food and Drug Administration in October 2004 issuing a “black box” warning that antidepressants increase the risks of suicide in children and adolescents.

The study was sponsored by the Agency for Healthcare Research and Quality and the National Alliance for Research on Schizophrenia and Depression.

To contact the reporter on this story: Nicole Ostrow in New York at nostrow1@bloomberg.net.