Jobless Claims as Percent of Labor Force Fall for 3rd Month in a Row, First Time Since Early 2006

With June employment data now available, the graph above of Initial Jobless Claims as a Percent of the Labor Force (1975-2009) has been updated to reflect the June labor force of 154,926,000 and the June average for initial unemployment claims (618,187.5 for the 4-week moving weekly average). That measure of initial jobless claims adjusted for the size of the labor force shows that we are currently above the levels of the last two recessions (1990-1991 and 2001), but still far below the levels of the previous three recessions in the mid-1970s and early 1980s.

For current initial jobless claims to reach the peaks of the 1970s and 1980s of about .60% (see chart above), we would have to have initial jobs claims today of about 929,000, or 50% above current levels. By this measure of the employment situation, it seems unlikely we'll get anywhere close to the recessionary levels of the 1970s and 1980s.

See related Scott Grannis post here.

Toyota Is The Most American Car Company

The Toyota Camry is more American than the Ford F-150, at least according to Cars.com's annual American-Made Index. The findings further muddy the Buy American debate that rages across the country. Toyota Motor Corp. also is the most American car company, according to the rankings of the index in terms of U.S. content in its cars and trucks.

~Today's Detroit News

CD post yesterday

Do those signs above mean that the "most American car" in the U.S. would be towed?

PJ O'Rourke: Why Politicians Love Trains, Hate Cars

There's something romantic about trains, but try getting the tracks to come to your house. When it comes time to unload the groceries, the romance of the train ends immediately.

Politicians love trains. Why? Because they can tell where the tracks go. They know where everybody's going. For policiticians it's all about control and power. Politicians hate cars because cars make people free. Not only free in the sense that they can go anywhere they want, which bugs politicians, but they can move out of the political districts that the politicians represent.

Politics itself is nothing more than an attempt to achieve power and prestige without merit. That's the definition of politics.

~P.J. O'Rourke on Reason.tv "Where Was The Government With Studebaker

Will D.C. Taxi Industry Become a Cartel Like NYC?

WASHINGTON EXAMINER -- The District’s open, all-are-invited taxicab industry is so saturated with drivers that the entire enterprise is threatened, according to a D.C. Council member who has filed a bill to cap the number of cabs allowed on city streets. Councilman Jim Graham introduced legislation to limit the number of taxicabs in D.C. through either a medallion system, like ones used in New York City and Chicago, or a certification system.

The soaring number of taxicab operators in D.C. -- roughly 8,000, most of whom own their own cars -- is a "pressing and urgent problem," Graham said. There are more licensed drivers in D.C. per capita than any place in the world, he said, and new applicants continue to take the required class, giving them access to the driver exam administered by the D.C. Taxicab Commission. A glut of drivers could jeopardize the chances of any cabbies making an adequate living, Graham has said.

New York City's medallion system, established in 1937 during the Great Depression in response to a ballooning number of unregulated taxis, artificially capped the number of cabs on the road, to what is now about 13,000. The medallion program, however, made it very difficult for the average New Yorker to join the industry as an owner: The May 2009 price for an individual medallion, those held by owner-operators, was $568,000. The cost of a corporate medallion was $744,000 (see chart above, medallion prices have more than doubled since 2004).

MP: Isn't this an example of a "pressing and urgent problem" that would easily solve itself without government intervention, and a problem that will probably be made significantly worse with government intervention? That is, if there really is an excess supply of taxis in D.C. relative to the demand for taxis, that surplus will be automatically corrected and eliminated by firms/drivers exiting the industry in response to low prices and low/negative profits.

Just like a shortage of taxis would be automatically corrected by firms entering the industry, attracted to the "smell of profits" created by the high prices. As long as the taxi industry has easy entry for new firms, and easy exit for existing firms, which seems to be the case, any surplus or shortage of taxis will automatically be eliminated.

By restricting the supply of taxis with costly medallions, that regulatory action will create a government-enforced taxi cartel, with an artificially low number of taxis and artificially high prices. Membership fees to join the cartel will became extremely expensive (more than half a million dollars to join the NYC Taxi Cartel), and the average person will be priced out of the cartel.

HT: Coyote Blog

Power To The People in Cuba. Sometimes

The Ghost of Power Cuts Past has returned across my country (Cuba). The inconvenient blackouts so common in the nineties have returned because of the international crisis and the dysfunctional Cuban economy. We'd come to believe they were ancient history, overcome by the so called Energy Revolution driven -- five years ago -- by Fidel Castro himself.

~Cuban blogger Yoani Sanchez, "The Ghost of Power Cuts Past Returns to Cuba"

MP: Maybe this is a version of one of the realities of socialism, which is that the people living under socialism pretend to work and then the government returns the favor and pretends to pay them. In this version, the Cuban people pretend to pay for their electricity, or pretend to work for their electricity, and the government pretends to provide electricity. Or not.

Macho Run Amok and Excessively Compensated Is Giving Way to Macho Unemployed and Undirected

The era of male dominance is coming to an end. Seriously.

For years, the world has been witnessing a quiet but monumental shift of power from men to women. Today, the Great Recession has turned what was an evolutionary shift into a revolutionary one. The consequence will be not only a mortal blow to the macho men’s club called finance capitalism that got the world into the current economic catastrophe; it will be a collective crisis for millions and millions of working men around the globe.

Consider, to start, the almost unbelievably disproportionate impact that the current crisis is having on men—so much so that the recession is now known to some economists and the more plugged-in corners of the blogosphere as the “he-cession.” More than 80% of job losses in the United States since November have fallen on men, according to the U.S. Bureau of Labor Statistics (see chart above of male vs. female jobless rates). And the numbers are broadly similar in Europe, adding up to about 7 million more out-of-work men than before the recession just in the United States and Europe as economic sectors traditionally dominated by men (construction and heavy manufacturing) decline further and faster than those traditionally dominated by women (public-sector employment, healthcare, and education). All told, by the end of 2009, the global recession is expected to put as many as 28 million men out of work worldwide.

Indeed, it’s now fair to say that the most enduring legacy of the Great Recession will not be the death of Wall Street. It will not be the death of finance. And it will not be the death of capitalism. These ideas and institutions will live on. What will not survive is macho. And the choice men will have to make, whether to accept or fight this new fact of history, will have seismic effects for all of humanity—women as well as men.

Make no mistake: The axis of global conflict in this century will not be warring ideologies, or competing geopolitics, or clashing civilizations. It won’t be race or ethnicity. It will be gender. We have no precedent for a world after the death of macho. But we can expect the transition to be wrenching, uneven, and possibly very violent.

~"The Death of Macho," by Reihan Salam in Foreign Policy

Fireworks

CHECK IT OUT.

Cars.com 2009 American-Made Car Index: Detroit Automakers Have Only 5 of Top 10, Fewest Ever

Cars.com's American-Made Index highlights the cars that are built here, have the highest amount of domestic parts — with eligible models having parts-content ratings of 75% or higher — and are bought in the largest numbers by Americans.

The Toyota Camry, once an American-Made Index presence, hasn't appeared on this list since 2007. Not only does it return for 2009, it's displaced Ford's F-150 as the only leader this list has had since we began compiling it in 2006. Three others joined the list, two of which — the Ford Taurus and Toyota Venza — have never been on the AMI before, and Detroit automakers claimed just five of the 10 spots. That's a record low for them.

MP: "Foreign" automakers captured half of the top ten spots for American-made cars in 2009:

#1. Toyota Camry (pictured above)
#4. Honda Odyssey
#6. Toyota Sienna
#7. Toyota Tundra
#10. Toyota Venza

Ray Charles: America The Beautiful

Ray Charles in 1991, it doesn't get any better than this:

Stronger Underwriting, Bigger Down Payments

Understanding the causes of the foreclosure explosion is required if we wish to avoid a replay of recent painful events. The suggestions being put forward by the administration and most media outlets -- more stringent regulation of subprime lenders -- would not have prevented the mortgage meltdown regardless of their merit otherwise.

Rather, stronger underwriting standards are needed -- especially a requirement for relatively high down payments. If substantial down payments had been required, the housing price bubble would certainly have been smaller, if it occurred at all, and the incidence of negative equity would have been much smaller even as home prices fell. A further beneficial regulation would be a strengthening, or at least clarifying at a national level, of the recourse that mortgage lenders have if a borrower defaults. Many defaults could be mitigated if homeowners with financial resources know they can't just walk away.

We are at a crossroads where we can undo the damage to the housing market by strengthening underwriting standards in a reasonable way. But to do so political leaders must face up to the actual causes of the mortgage crisis, not fictitious causes that fit political agendas and election strategies.

~Economist Stan Liebowitz in today's WSJ

Instead of Adopting Canadian-style Health Care, How About Learning from Its Banking System?

USA TODAY -- Our northern neighbor sometimes seems so similar to the United States that it's hard to tell where the USA ends and Canada begins. Here's one way: Canada is the place with healthy banks, taxpayers unscathed by megabillion-dollar bailouts and no need to overhaul financial regulation because it was done right the first time.

As U.S. officials scramble to prevent a crisis sequel, the ability of Canadian banks to navigate the current financial storm is earning global plaudits. The World Economic Forum in October ranked the country's financial institutions No. 1 in the world for solvency. U.S. banks came in 40th, two rungs behind Botswana.

The Great Mancession of 2008-2009 Continues As A New Jobless Rate Gender Gap is Set in June

The BLS data released today show that the 2.4% difference between the adult male unemployment rate (10.0%) and adult female unemployment (7.6%) in June is the largest male-female jobless rate gap in the history of BLS data back to 1948 (see chart above of the monthly unemployment rates since 2006).

Further, the 2.4% adult male-female jobless rate gap sets a new record for the largest gap in either direction. There was a 2.3% female-male jobless rate gap in 1967 and again in 1978 when female unemployment rate was higher than the male rate, and a 2.3% male-female jobless rate gap in April and May of this year, but the male-female 2.4% gap in June is the highest on record (BLS data goes back to 1948).

In other words, the current jobless rate gap is historically unprecedented; there has never been a time since at least WWII when there was such an imbalance in unemployment rates by gender. Welcome to the Great Mancession of 2008-2009.

Athletes and Their Agents Don't Set Ticket Prices

CD regular reader Jim Moore writes in an email:

"I don't know if you're interested in reader-provided links, but there's an excellent little economics tutorial in the WSJ today (Wednesday) by Allen Barra, "Sports Salaries Show What We Really Value," page A11."

Here's at least part of that economic lesson:

The athletes and their agents don't determine the price of tickets, souvenirs and food. Not even the owners determine them. In general, you are the ones who set the prices for T-shirts and baseball hats.

It may take a while but eventually, if baseball management has overpriced its commodities, consumers -- that's you, the fans -- will show them their error and the prices will come down. If you are willing to pay their prices that means they set the right prices after all.

MP: It's similar to the economic reality that oil companies do NOT set oil prices or gas prices, it's market forces that ultimately determine market prices.

By the way, I am always interested in reader-provided links, ideas for posts, articles, suggestions, news items, blog items, etc., etc. Many CD posts have been based on reader-provided material, so please feel free to send along interesting items at any time to mjperry@umich.edu.

Canada: Boom in Private Health Care Business

Private for-profit clinics are a booming business in Canada -- a country often touted as a successful example of a universal health system. Facing long waits and substandard care, private clinics are proving that Canadians are willing to pay for treatment.

"Any wait time was an enormous frustration for me and also pain. I just couldn't live my life the way I wanted to," says Canadian patient Christine Crossman, who was told she could wait up to a year for an MRI after injuring her hip during an exercise class. Warned she would have to wait for the scan, and then wait even longer for surgery, Crossman opted for a private clinic.

As the Obama administration prepares to launch its legislative effort to create a national health care system, many experts on both sides of the debate site Canada as a successful model. But the Canadian system is not without its problems. Critics lament the shortage of doctors as patients flood the system, resulting in long waits for some treatment. "No question, it was worth the money," said Crossman, who paid several hundred dollars and waited just a few days.

~FOX NEWS

Web Search Volume for Layoffs Falls to 8 Mo. Low

Chart above (click to enlarge) shows the Web Search Volume (that is supposed to track "interest over time") for the term "layoffs," which fell in May to the lowest level since early October.

The chart below shows the alternative Google Trends search volume and news reference volume for the term "layoffs."

See related CD post on Google Trend searches, and how they can predict economic activity.

It's Doctors and Politics, Not The Market, That Control the Supply of Doctors

The marketplace doesn't determine how many doctors the nation has, as it does for engineers, pilots and other professions. The number of doctors is a political decision, heavily influenced by doctors themselves.

And Congress also controls the supply of physicians by how much federal funding it provides for medical residencies — the graduate training required of all doctors.

To become a physician, students spend four years in medical school. Graduates then spend three to seven years training as residents, usually treating patients under supervision at a hospital. Residents work long hours for $35,000 to $50,000 a year. Even doctors trained in other countries must serve medical residencies in the USA to practice here.

Medicare, which provides health care to the nation's seniors, also is the primary federal agency that controls the supply of doctors. It reimburses hospitals for the cost of training medical residents.

The United States stopped opening medical schools in the 1980s because of the predicted surplus of doctors. The Association of American Medical Colleges dropped this long-standing view in 2002 with the statement: "It now appears that those predictions may be in error." Last month, it recommended increasing the number of U.S. medical students by 15%. Florida State University's College of Medicine, the first new medical school since 1982, will graduate its first class this year.

~"Medical Miscalculation Creates Doctor Shortage" in USA Today on March 2, 2005

Thanks to an anonymous commenter on this CD post

Housing Affordabilty Index: 7.2 Point Drop in May From Rising Home Prices: Market Reached Bottom?

The National Association of Realtors' Housing Affordability Index remained high in May (171.6%) by historical standards (see chart above, data here), but fell by 7.2 percentage points from April's record high of 178.8%, mostly because of the increase in the median home price from $166,000 in April to $172,900 in May.

The 7.2 point May decline was the largest monthly drop in the HAI in four years, providing further evidence that the housing market may have reached a bottom. Watch for the HAI to continue to fall this year, as both home prices and mortgage rates rise and the real estate market continues to recover.

Banking Fact of the Day

Number of bank failures this year so far: 45 (FDIC data here, click on "Produce Report").

Total Assets of the 45 failed banks: $36.965 billion

Total Bank Assets of All 8,246 FDIC-insured banks: $13.542 trillion (data here)

Failed Bank Assets as a Percent of Total Bank Assets: .27% (or about 1/4 of 1%)


Bottom Line: The worst of the banking crisis is behind us, the percent last year was 2.69%.

New Vanguard Economic Momentum Index: Economic Recovery is Near, Recession May Be Over

The general improvement in global financial conditions since March has fostered a marked improvement in investor sentiment and led many to inquire when (rather than if) the current U.S. recession will end. Increasingly, market commentary has focused on evidence of “green shoots” that would suggest the rate of economic deterioration is at least slowing. But how can we know that the right signals are being captured, and—more important—how accurate have such measures been in identifying the turning points of past business cycles?

In this brief, we unveil a proprietary Vanguard Economic Momentum Index consisting of more than 70 financial and economic indicators that in the past have anticipated (to varying degrees) the beginning and end of economic recessions. This new index is specifically designed to anticipate turning points in the business cycle, and it differs in important ways from several other widely tracked indexes of leading indicators. As of the end of May 2009, the Vanguard Economic Momentum Index indicated that a U.S. economic recovery likely will begin by the end of 2009.

Figure 1 below (click to enlarge) presents a “dashboard” of the individual components that make up the Vanguard Economic Momentum Index. The components are ranked in descending order based on their historical ability to forecast nonfarm payroll growth. For presentation purposes, they have been assigned colors based on these criteria:

Red: Indicator consistent with future employment losses at an increasing rate.

Yellow: Indicator consistent with future employment losses at a decreasing rate.

Green: Indicator consistent with future employment gains.

Components shaded either green or yellow in Figure 1 are considered evidence of so-called green shoots, since their most recent rate of acceleration is consistent with an eventual economic recovery. Yellow shading reflects a recent improvement in the component’s rate of change (i.e., its rate of decline has slowed, or its “second derivative” has turned positive).

Figure 1 shows a notable recent improvement in various economic and financial indicators, especially through May 2009. Some examples of such components are the S&P 500 Index, the shape of the Treasury yield curve, corporate bond spreads, and certain housing and manufacturing statistics. Encouragingly, the components near the top—those that have been the most anticipatory leading indicators of future economic conditions—have changed for the better ahead of those toward the bottom, although the improvement in individual indicators is far from unanimous.

Figure 2 below (click to enlarge) illustrates that after bottoming in November 2008, the index turned positive in February 2009 and continued that trend into March and April. This sharp reversal brings the index to levels that were associated with past economic recoveries. Indeed, by the end of May, the index was near the highs reached following the deep recessions of the mid-1970s and early 1980s. Based on historical patterns, the index’s climb suggests a high statistical probability that a U.S. recovery will begin by the end of 2009.

MP: Based on the pattern of this index over the last eight recessions, and especially in the four severe recessions of the 1970s and early 1980s, it looks very likely that the current recession might already be over, or will be ending shortly.

HT: Heather Brooks

Markets in Everything: Backyard Urban Farming

MyFarm was started by Trevor Paque, a young mortgage broker, who decided in 2007 to get out of the office and take up farming. Hardly a new idea, but Paque took a new approach. His business plan called for building, planting, and harvesting vegetable gardens in small overgrown, weed-infested patches of soil that many people in San Francisco call back yards.

Pricing for each garden includes $50 for a site analysis to check sunlight and soil; $600 to $1,000 to build raised beds, install drip irrigation, and plant seeds; and $20 to $35 for weekly maintenance and harvesting. As part of the weekly maintenance, the farmer harvests a box of vegetables for the owner. To test the market, Paque posted an ad on Craigslist and within 20 minutes he had 200 responses.

~Down On The Urban Farm, by Linda Platts in Perc Reports

Persistent Myths and Fictions in Feminist Scholarship: The "Scholarly" Merchants of Hype

Over the years, the feminist fictions have made their way into public policy. They travel from the women's-studies textbooks to women's advocacy groups and then into news stories. Soon after, they are cited by concerned political leaders. President Obama recently issued an executive order establishing a White House Council on Women and Girls. As he explained, "The purpose of this council is to ensure that American women and girls are treated fairly in all matters of public policy." He and Congress are also poised to use the celebrated Title IX gender-equity law to counter discrimination not only in college athletics but also in college math and science programs, where, it is alleged, women face a "chilly climate."

The president and members of Congress can cite decades of women's-studies scholarship that presents women as the have-nots of our society. Never mind that this is largely no longer true. Nearly every fact that could be marshaled to justify the formation of the White House Council on Women and Girls or the new focus of Title IX application was shaped by scholarly merchants of hype like Professors Lemon and Seager.

~From Christina Hoff Sommers' commentary in today's Chronicle of Higher Education (also at the AEI website here).

Cedar Rapids, Iowa; One Year Later

Sorry for the light posting over the last few days - I've been on a road trip since Saturday, and for the last 24 hours or so many of the Blogger blogs have been unable to accept new posts (it's still not fixed yet, I found a way around it). And I'm now staying at a Trappist monastery in Iowa for a few days (with no Internet access), before driving up to Minneapolis tomorrow to see Dr. John and the Lower 911 Band at the Dakota Jazz Club. I'll be spending the month of July blogging from my hometown of Minneapolis ("returning to my native village," as they say in India).

My first stop was Cedar Rapids, Iowa, where I lived for part of my grade school days, from kindergarten through 6th grade, and I toured the flood area on Sunday, and I was surprised at how devastated the area still looks one year later. The vast majority of the 4,000 homes that were affected are still abandoned, and will probably never get rebuilt (too old, too damaged, too expensive to rehab, no insurance, etc.). Scattered among those abandoned homes are a few that have been rebuilt with residents living there, and a few that are under construction. But it really looks pretty grim in "Iowa's Katrina" neighborhood.

A few visible signs of how badly the area was devastated, besides all of the abandoned homes:

1. There are portable toilets scattered around the worst-hit neighborhoods, I assume for workers, displaced residents, inspectors, etc. in those neighborhoods, many of which must not have water or sewer.

2. The gas station above in the photos, which was under water on June 13, 2008 at the height of the flood. A year later, nothing has changed, including the year-old price on the sign: $3.87 per gallon.

Here's a recent NPR report "Cedar Rapids, Iowa, 1 Year After Record Flood"

Quote of the Day

The problem with socialism is that eventually you run out of other people's money.

~Margaret Thatcher

More on the Male-Female SAT Math Test Gap

It's well known that for the SAT mathematics test, a) male high school students in the U.S. have higher scores on average than females, b) the gap is large and statistically significant (+30 points), and c) the male-female math test score gap has persisted over time, since at least 1971, and probably much longer (see chart above, data here from the Dept. of Education).

One explantion for the female-male math test score gap is summarized here by Janet Hyde et al.:

In 2007 the SAT was taken by 798,030 females but only 690,500 males, a gap of more than 100,000 people. Assuming that SAT takers represent the top portion of the performance distribution, this surplus of females taking the SAT means that the female group dips farther down into the performance distribution than does the male group. It is therefore not surprising that females, on average, score somewhat lower than males. The gender gap is likely in large part a sampling artifact.

MP: In other words, it is only because more females than male take the SAT exam that males score higher on average than females, and if the sample sizes were more equal, the difference in mean math test scores would disappear.

Consistent with this explanation of the difference in mean math test scores would be the following assumption:

Ceteris paribus, if the number of females taking the math SAT exam relative to males (and female percentage of total) increases over time, the male-female math test score gap should INCREASE over time, since an increasing number of females (and increasing percent of total) taking the SAT should lower female mean math test scores over time relative to male math test scores. Reason? The increasing number of females taking the SAT will "dip further down into the performance distribution" over time.

Using Census Bureau data, the chart below shows that females taking the SAT exam as a percent of the total increased from 50% in 1975 to 53.6%, as the male percentage has decreased from 50% to 46.4% over that period (see chart below).

According to the reasoning above, as the number of females taking the SAT exam increased over time (along with the percent of total) relative to males, the mean female score should have decreased relative to the male mean score, and the male-female gap should be INCREASING over time, theoretically.

But that is exactly the opposite of what has actually been happening. The chart below shows that the male-female gap has actually been decreasing over time, even as more females took the test relative to males, from a high of 46 points in 1977 to a gap of 33 points in 2008.

Bottom Line: The gender gap appears to be more than just a sampling artifact, since the decreasing male-female math test score gap is exactly the opposite of what the Hyde et al. hypothesis would predict.


Update: Additionally, if the number of females taking the test increases over time, the Hyde hypothesis would also predict a falling mean female math test score over time, when in fact we see the opposite: a rising female mean SAT math test score.

Comments welcome.

Chart of the Day: Med. Equipment, Canada vs. U.S.

Source: Fraser Institute

“Advocates of single-payer health care systems tend to promote the allegedly lower monetary costs, but they ignore the lack of access to medical resources,” said Brett Skinner, Fraser Institute Director of Health, Pharmaceutical and Insurance Policy Research and lead author of the peer-reviewed study: "The Hidden Costs of Single Payer Health Insurance: A Comparison of the United States and Canada."

The study shows that health care in Canada appears to cost less relative to the United States because Canadian public health insurance does not cover many advanced medical treatments and technologies, common medical resources are in short supply, and access to health care is often severely delayed.

Reason.tv: Obama Care

Reason.tv

Reason.tv: What If Government Ran Health Care?

Reason.tv

New Blogs

News from 1930: A daily summary based upon news from the Wall Street Journal from the corresponding day in 1930.

John Stossel's Take: ABC News' Co-Anchor of "20/20" offers his libertarian views on the economy, education, health care and politics.

ECRI Leading Index: First Pos. Growth in 22 Months

NEW YORK, June 26 (Reuters) - A gauge of future U.S.economic growth rose, and its yearly growth rate turned positive, raising hopes that the end of the recession is insight, a research group said today. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index (WLI) rose to a 37-week high of 117.6 for the week ending June 19, from a downwardly revised 117.0 the previous week.

The index's annualized growth rate spiked to a 97-week high of 2.1% from minus 0.6% a week ago. It was ECRI's highest yearly growth reading since the week ended August 10, 2007, when it stood at 3.4% (see chart above).

"Following a 28-week upturn, WLI growth has broken into positive territory for the first time in over 22 months -- an affirmation that an end to the recession is at hand," said Lakshman Achuthan, managing director at ECRI.

Milton Friedman on The Phil Donahue Show, 1979

Part 2 here.

Part 3 here. (Starting at about 1:00 in this segment is the famous part where Milton Friedman "schools" Phil on "greed.")

Part 4 here.

Part 5 here.

In 1979, Milton Friedman appeared on The Phil Donahue Show and discussed The Great Depression, the New Deal, the auto industry, auto (Chrysler) bailouts, greed, Amtrak, auto emissions regulation and airbags, Ralph Nader, tariffs, free trade, price controls and gas shortages, oil companies, etc., and other topics that are still relevant today.

The Volatility Index (VIX) Falls to a 9-Month Low

The CBOE Volatility Index (VIX) closed yesterday (Thursday) below 27 for the first time since September 12 of last year, and reached a new 9-month low of 26.36. From the November highs that peaked at almost 81, the VIX has fallen by more than 67%.

Cartoon of the Day

HT: Marc Mayfield

Consumer Confidence Rises 4th Straight Month for the First Time Since the End of the 2001 Recession

LA TIMES -- Confidence among U.S. consumers rose this month for a fourth straight time, reflecting signs that the worst of the recession has passed. The Reuters/University of Michigan final index of consumer sentiment gained to 70.8, the highest level since February 2008, from 68.7 in May.

Recent reports show some areas of the economy, such as housing and manufacturing, are seeing a smaller pace of decline, consistent with the Federal Reserve's projection this week that the slump is "slowing." Government data today indicated that efforts to revive the economy are allowing consumers to spend even with unemployment at a 25-year high. The data also showed savings surged to the highest level since 1993.

MP: The last time the Michigan consumer sentiment index increased in four consecutive months was the period from October 2001 to January 2002, which signalled the end of the 2001 recession (see shaded area in chart above). The four-month cumulative increase of 14.5 points in consumer sentiment from March to June 2009 (see shaded area in chart) is even greater than the 11.2 point increase in late 2001-early 2002.

Florida Home Sales Increase for 9th Straight Month

ORLANDO, FL (June 23, 2009) – Florida’s existing home sales rose in May – the ninth month in a row that sales activity increased in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors (FAR). Statewide sales showed gains over the previous month’s sales level in both the existing home and existing condominium markets. Also, for the first time in many months, the statewide median sales price in May for existing homes and for existing condos ($144,400) rose over the previous month’s figure ($138,500) by 4.26%.

Existing home sales rose 16% last month with a total of 13,921 homes sold statewide compared to 12,044 homes sold in May 2008, according to FAR (see chart above). Statewide existing home sales in May increased 6.2% over April’s statewide activity.

Florida’s median sales price for existing homes last month was $144,400; a year ago, it was $203,800 for a 29% decrease. However, the statewide existing home median price in May ($144,400) was higher than the statewide median price reported in each of the previous four months ($139,500 in Jan., $141,900 in Feb., $141,300 in Mar. and $138,500 in Apr.).

MP: Just like in California, we now have both rising home sales (units) and rising median home prices in Florida for May, suggesting that both markets have probably bottomed and are now in the early states of recovery.

California Home Prices Increase in May for Third Straight Month; Largest May Increase in History

LOS ANGELES (June 25) – Home sales increased 35.2% in May in California compared with the same period a year ago, while the median price of an existing home declined 30.4%, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.) reported (see chart above).

“With affordability for first-time buyers at a record high, sales of existing, single-family homes continued to remain above the 500,000 level for the ninth consecutive month,” said C.A.R. President James Liptak. “Buyers are beginning to realize that the combination of favorable home prices, historically low mortgage rates, and first-time home buyer tax credits, may not align again for many years.

The median price of an existing, single-family detached home in California during May 2009 was $267,570, a 30.4% decrease from the revised $384,540 median for May 2008, C.A.R. reported. The May 2009 median price rose 4.2% compared with April’s $256,700 median price.

“The statewide median price rose for the third consecutive month in May, posting the largest monthly increase on record for the month of May, according to statistics dating back to 1979,” said C.A.R. Chief Economist Leslie Appleton-Young. “Nearly all regions in the state reported positive month-to-month changes in median price."

C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2009 was 4.2 months, compared with 8.7 months for the same period a year ago (see chart above). The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

WALL STREET JOURNAL -- California's median price for an existing single-family house rose for the third straight month, a sign that the state's battered real-estate market may be bottoming out.

California's real-estate market, the nation's largest, is seen as a barometer of the U.S. economy. Housing prices soared during the boom, and their plummet during the market's collapse resulted in massive foreclosures and fueled the recession. Economists say the state's housing market will lag behind the nation's in recovering, so any indication of improvement in California bodes well for the rest of the U.S.

MP: Unit sales increasing in CA + Median home prices increasing in CA + Median number of days to sell a home decreasing in CA + Unsold inventory index (4.2 months) falling to less than 50% compared to a year ago (8.7 months) in CA + Fewer foreclosed properties among those being sold in CA =

REAL ESTATE MARKET IN RECOVERY

Income, Spending, and Saving All Increase in May

WASHINGTON -- Households pushed their savings rate to the highest level in more than 15 years in May as a big boost in incomes from the government's stimulus program was devoted more to bolstering nest eggs than increased spending. The savings rate, which was hovering near zero in early 2008, surged to 6.9%, the highest level since December 1993 (see chart above).

The Commerce Department said consumer spending rose 0.3% in May, in line with expectations. But incomes jumped 1.4%, the biggest gain in a year and easily outpacing the 0.3% gain that economists expected (see chart above).

Michael

Michael Jackson: August 29, 1958 – June 25, 2009

Milton Friedman on The Phil Donahue Show, 1980

Part 2 here.

Part 3 here.

Part 4 here.

Part 5 here.

From 1980, when Milton Friedman appeared on The Phil Donahue Show to promote his new book "Free to Choose," and discussed topics that are still as relevant and current today as they were almost 30 years ago: deficit spending, regulation, Adam Smith, General Motors, bailing out Chrysler, monetary policy, airline mergers, auto safety, windfall profits tax, automobile dealers, subsidies, smoking laws, legalization of marijuana, monopoly, military spending, energy policy, etc.

HT: Peter Parlapiano

Corporate Profits Increased in Q1, Largest in 3 Yrs.

The BEA reported today that corporate profits (data here) increased in the first quarter of 2009 by $128 billion, the largest quarterly increase in more than three years, and the first quarterly increase in more than a year, following 4 consecutive quarterly decreases (see chart above).

More on Math SAT Scores

From the Supporting Online Material for "Gender Similarities Characterize Math Performance," published in Science Magazine, July 2008:

Gender differences in performance on the SAT Mathematics test are widely publicized and contribute to the public’s view that males excel in mathematics, compared with females. In 2007, males scored an average of 533 ± 114 (mean ± SD = 114) on the Mathematics portion of the SAT, compared with an average of 499 ± 111 for girls. For many reasons, these data tell us nothing about gender differences in mathematics performance. Chief among these reasons is sampling. The SAT is taken almost exclusively by college-bound students, and even then, some college-bound students do not take it because their intended college requires some other test such as the ACT. Therefore, there is no well-defined sampling frame that would permit broader generalization. Perhaps more important is the fact that, coupled with the current trend for more females than males to attend college, the SAT is taken by more females than males.

In 2007 the SAT was taken by 798,030 females but only 690,500 males, a gap of more than 100,000 people. Assuming that SAT takers represent the top portion of the performance distribution, this surplus of females taking the SAT means that the female group dips farther down into the performance distribution than does the male group. It is therefore not surprising that females, on average, score somewhat lower than males. The gender gap is likely in large part a sampling artifact.

MP: In an email, Greg Mankiw also made this observation, and so did Junkyard_Hawg1985 in several comments on this CD post. I'm not completely convinced that a difference in sample sizes could account for such a large difference in mean SAT math test scores (+30 points in all years). And that 30+ point male-female math test score gap existed even back in 1971 when the sample size issue was probably reversed: more men probably took the test back then than women, and it was probably the male group that "dipped further down into the performance distribution" than the female group.

But even putting aside the issue of possible gender differences in mean SAT scores, we are still left with the huge gender disparity in math performance at the highest levels, which would have nothing to do with the sample size issue, and would have everything to do with the gender differences in the variability of test performance and/or intelligence.

As the table above shows, males outnumber females by almost 2 to 1 for SAT math test scores above 750, and by 1.6 males to 1 female for test scores between 700-740. For the 650-690 range, males outnumber females by a factor of 1.38 to 1, and for the 600-640 range the ratio is 1:15 males to every female. For all of the other ranges except the bottom one, females outnumber males. So we are still left with the outcome of superior male math performance, at least at the highest levels of achievement, if not on an average basis.

Then what about the issue of complete female dominance over males for the writing portion of the SAT exam, with a significantly higher mean score and overrepresentation at all of the highest score levels?

Street Justice for German Financial Advisor

A group of wealthy pensioners has been accused of kidnapping and torturing a financial adviser who lost about $4 million of their savings.

The pensioners, nicknamed the "Geritol Gang" by German police after an arthritis drug, face up to 15 years in jail if found guilty of subjecting German-American James Amburn to the alleged four-day ordeal.

Link.

Government Health Plans Always Ration Care

President Obama objects when people use the word "rationing" in regards to government-run health care. But rationing is inevitable if we simply expand government control without fixing the way health care is reimbursed so that doctors and patients become sensitive to issues of price and quality.

What will be new about government-run health care is the instrument of regulatory control. There will be an omnipotent federal health board. The idea of an omnipotent board that makes unpopular decisions on access and price isn't a new construct. It's a European import. In countries such as France and Germany, layers of bureaucracy like health boards have been specifically engineered to delay the adoption of new medical products and services, thus lowering spending.

In France:

■ Assessment of medical products is done by the Committee for the Evaluation of Medicines.

■ Reimbursement rates are set by the National Union of Sickness Insurance Funds, a group that also negotiates pay to doctors.

In Germany:

■ The Federal Joint Committee regulates reimbursement and restrictions on prescribing, while the Institute for Quality and Efficiency in Healthcare does formal cost-effectiveness analysis.

■ The Social Insurance Organization, technically a part of the Federal Joint Committee, is in charge of setting prices through a defined formula that monitors doctors' prescribing behavior and sets their practice budgets.

■ In the past 12 months, the 15 medical products and services that cleared this process spent an average 35 months under review (the shortest review was 19 months, the longest 51).

In short, other countries where government plays a large role in health care aren't shy about rationing. Even Mr. Obama's budget director has acknowledged that rationing reduces costs.

~Scott Gottlieb, "Government Health Plans Always Ration Care," in today's Wall Street Journal via NCPA

As Steve Chapman wrote, "The administration pretends we can get generous government-sponsored coverage for everyone without higher taxes, higher insurance premiums or rationing of health care."

MP: In reality, with government-sponsered health coverage we will probably face a trifecta: higher taxes, higher premiums AND rationing.

Quote of the Day

There's no brand loyalty that the offer of a "penny off" can't overcome it.

~A Marketing Aphorism, and opening quote of Chapter 3: "Demand Analysis and Optimal Pricing," in Managerial Economics by Samuelson and Marks

Troubled Economy Increased Shoplifting Rates in 2008; Consumers and Employees Got More Greedy

LOS ANGELES, CA - Preliminary results of the latest National Retail Security Survey show that retail shrinkage averaged 1.52% of retail sales in 2008, up from 1.44% in 2007. According to the survey, total retail losses increased last year to $36.5 billion, up from $34.8 billion in 2007. According to the survey, the majority of retail shrinkage last year was due to employee theft, at $15.9 billion, which represented almost half of losses (44%).

"While the economy plays a role in the amount of shoplifting around the country, these crimes are mostly the case of greed instead of need," said National Retail Federation's Joe LaRocca. "People aren't stealing to feed their families; they're stealing iPods, handbags, and other discretionary items."

MP: We hear a lot about corporate greed (526,000 Google hits), but don't hear very much about consumer greed (27,300 Google hits), and even less about employee greed (only 1,990 Google hits). But as the story above highlights, many consumers and employees are quite greedy themselves, and they helped themselves to more than $36 billion worth of merchandise owned by the corporations that are so often accused of being "greedy," (or whose managers are accused of "greed").

Even the majority of consumers who don't shoplift, can still in fact be pretty ruthless, cutthroat and disloyal, read about it here.

Wal-Mart Goes Upscale

ASSOCIATED PRESS -- The recession steered a new type of customer to Wal-Mart - deeper in the pockets and suddenly looking for bargains. Now the world's largest retailer has to figure out how to keep that customer when the economy recovers.

So Wal-Mart is bringing in more brand names, ditching scores of other products, and redesigning hundreds of stores to give them wider aisles, better lighting, and better sight lines.

It's more than just a cosmetic upgrade. That new breed of customer also spends about 40% more than the traditional Wal-Mart shopper, and the retailer senses an opportunity to accelerate its growth.

MP: Consumer sovereignty.

Spain Has Spent About $1m Per Green Job; and Has Lost More Than 2 Jobs for Every Green Job Created

WASHINGTON -- The Spanish professor is puzzled. Why, Gabriel Calzada wonders, is the U.S. president recommending that America emulate the Spanish model for creating "green jobs" in "alternative energy" even though Spain's unemployment rate is 18.1%-- more than double the European Union average -- partly because of spending on such jobs?

Calzada, 36, an economics professor at Universidad Rey Juan Carlos, has produced a report which, if true, is inconvenient for the Obama administration's green agenda, and for some budget assumptions that are dependent upon it.

~George Will's column "Tilting at Green Windmills"

The following are key points from the "Study of the Effects on Employment of Public Aid to Renewable Energy Sources":

1. As President Obama correctly remarked, Spain provides a reference for the establishment of government aid to renewable energy. No other country has given such broad support to the construction and production of electricity through renewable sources. The arguments for Spain’s and Europe’s “green jobs” schemes are the same arguments now made in the U.S., principally that massive public support would produce large numbers of green jobs. The question that this paper answers is “at what price?”

2. We find that for every renewable energy job that the State manages to finance, Spain’s experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.

3. The study calculates that since 2000 Spain spent €571,138 ($800,000) to create each “green job”, including subsidies of more than €1 million ($1.4 million) per wind industry job. The study calculates that the programs creating those jobs also resulted in the destruction of nearly 110,500 jobs elsewhere in the economy, or 2.2 jobs destroyed for every “green job” created.

"Stimulus" Stimulates Lining Up at the Trough

Even if the "stimulus" package doesn't seem to be doing much to stimulate the economy, it is certainly stimulating many potential recipients of government money to start lining up at the trough. All you need is something that sounds like a "good thing" and the ability to sell the idea.

~Thomas Sowell

Significant Gender, Ethnic Differences on Math SAT

The 2008 SAT Math scores (see table above, click to enlarge) reveal statistically significant ethnic differences. Difference-of-means tests (not reported here) reveal that Asians score significantly higher on average than Whites, who score significantly higher on average than American Indians, who score significantly higher on average than Mexicans, who score significantly higher than other Hispanics, who score significantly higher than Puerto Ricans, who score significantly higher than Blacks/African Americans. All differences are statistically significant at the 1% level.

Additionally, gender differences on the math SAT exist for all ethnic groups, see table below. For each major ethnic group (Asian, White, American Indian, Other Hispanic, Mexican, Puerto Rican and Black), the mean score for males on the 2008 SAT exam are statistically significantly higher (1% level) than the mean score for females.

In many cases, the ethnic differences on the SAT math exam outweigh the gender differences. For example, Asian females score significantly higher on average than males of any other ethnic group, white females score significantly higher than males of any ethnic group except Asians, American Indian females score significantly higher than black or Puerto Rican males, and females from all ethnic groups except black/African-American score significantly higher than black males. All significant levels are 1%.

Bottom Line: There are statistically significant ethnic and gender differences on the SAT math exam.

Why are MD Salaries So High? The Medical Cartel

Greg Mankiw features the chart above on physicians' salaries in the U.S. vs. various European countries and Canada, showing that MDs in the U.S. make about $200,000, which is between 2 and 5 times as much as doctors make in other countries. How do we explain the significantly higher physician salaries in the U.S.?

One explanation is the restriction on the number of medical schools, and the subsequent restriction on the number of medical students, and ultimately the number of physicians. Consider the difference between law schools and medical schools.

In 1963, there were only 135 law schools in the U.S. (data here), and now there are 200, which is almost a 50% increase over the last 45 years in the number of U.S. law schools. Unfortunately, we've witnessed exactly the opposite trend in the number of medical schools. There are 130 medical schools in the U.S. (data here), which is 22% fewer than the number of medical schools 100 years ago (166 medical schools, source), even though the U.S. population has increased by 300%. Consider also that the number of medical students in the U.S. has remained constant at 67,000 for at least the period between 1994 and 2005, according to this report, and perhaps much longer.

The charts below tell an interesting story (data here):

The number of applicants to medical school keeps going up, by more than 21% between 2003 (34,786) and 2008 (42,231), despite the fact that the number of students admitted has gone up by only about 9% (from 16,538 to 18,036) over that period.

Because of the 21% increase in applicants since 2003 for only 9% more openings available in U.S. medical schools, the number of medical school applicants per available opening in medical schools increased from 2.1 in 2003 to 2.34 in 2008 (see chart below).

Because of the significant increase in applicants for a much smaller increase in available openings in medical school, the percent of medical school applicants accepted has decreased from 47.5% in 2003 to 42% in 2007, before increasing to 42.7% in 2008, see chart below.

Bottom Line: One reason we might have a "health care crisis" due to rising medical costs, and the world's highest physician salaries is that we turn away 57.3% of the applicants to medical schools. What we have is a form of a "medical cartel,: which significantly restricts the supply of physicians, and thereby gives its members monopoly power to charge above-market prices for their services.

In his classic book Capitalism and Freedom, Milton Friedman describes the American Medical Association (AMA) as the "strongest trade union in the United States" and documents the ways in which the AMA vigorously restricts competition. The Council on Medical Education and Hospitals of the AMA approves both medical schools and hospitals. By restricting the number of approved medical schools and the number of applicants to those schools, the AMA limits the supply of physicians. In the same way that OPEC was able to quadruple the price of oil in the 1970s by restricting output, the AMA has increased their fees by restricting the supply of physicians.

If we had 130 law schools (instead of 200) and 200 medical schools in the U.S. (instead of 130), it would probably go a long way to solving our "health care crisis." More MDs at much lower salaries along with fewer lawyers and lawsuits would be a good thing, wouldn't it? Can't breaking up the medical cartel, training more physicians, and lowering MD salaries be part of the discussion for health care reform?

Falling Odds for Ben, Rising Odds for Pos. Q3 GDP

Falling Intrade odds for Bernanke's reappointment as Fed chair, from 75% to 60% in 17 days:


Rising Intrade odds for positive U.S. real GDP growth in Q3, from 25% to 50% in 115 days:

SAT Math Scores Reveal HUGE Gender Differences

On a previous post, I documented the statistically significant male-female test score gap for the 2008 SAT math exam, and the graph above shows that this statistically significant difference of more than 30 points has persisted over time. Could the male-female SAT math test score gap be explained by: a) males taking more math classes than females in high school, or b) males demonstrating higher performance in high school math classes than females, or c) male high school students having higher GPAs than female students? The answers appear to be NO, using data from the 2008 SAT report.

Table 13 below (click to enlarge) shows that female high school students dominate male students at the highest GPA levels (A+, A and A-) by wide margins, and male students dominate female students at the lowest GPA levels (C, D, E or F). For example, there are 150 female students earning GPAs at the highest A+ level for every 100 male students, and there are 160 male students earning GPAs at the lowest D/E/F level for every 100 female students. Further, the overall GPA for all female students (3.38) is higher than the overall GPA for male students (3.23).

Table 14 below (click to enlarge) shows that there is essentially no male-female difference for average years of math study (3.9 years for males vs. 3.8 years for females) or math GPA (3.12 for both male and female students).

Table 15 below (click to enlarge) shows no male-female differences for: a) years of math study or b) highest level of math achieved, and shows that the 54% of students taking AP/Honors math classes are female vs. 46% male. That is, there are 117 female students taking AP/Honors math classes for every 100 male students.

Bottom Line: Female high school students are better students on average compared to male high school students, and they are equally or better prepared than males for the math SAT exam based on the number and level of math classes taken in high school. And yet, male students score significantly higher on the SAT math test than females, and the statistically significant male-female test score gap of more than 30 points persists over time.

Based on the statistical evidence, is there any other conclusion than this obvious one: In general and on average, male high school students in the U.S. are just plain better at math than female high school students? If there are other reasonable conclusions, please share them.

And yet, we hear statements like this: "There just aren't gender differences anymore in math performance," says University of Wisconsin-Madison psychology professor Janet Hyde. Stereotypes are very, very resistant to change," she says, "but as a scientist I have to challenge them with data."

Do those data include publicly available SAT score data showing statistically significant gender differences in math scores that persist over time? Apparently not.

Both the Mean and Variance of SAT Math Test Scores is Higher For Males Than for Females

The table above (click to enlarge) shows mean test scores and standard deviations for the SAT exam on the three different sections (reading, math and writing), broken down by gender (data available here, see Table 2) for the more than 1.5 million college-bound seniors who took the SAT in 2008.

Difference-of-means tests that I have calculated (not reported here) reveal that the mean male test scores are significantly higher than the mean female test scores for both reading and mathematics (at the 1% level of significance), and the mean female test scores for writing are significantly higher than male test scores (at the 1% level). Confirming the results of previous research, additional statistical tests confirm that the variability of male test scores is significantly greater than the variability of female test scores, for both the mathematics and reading exams.

SAT test score distributions are displayed in the table below (click to enlarge), and show the following:

For math test scores above 750, males outnumber females by almost 2 to 1, and for test scores between 700-740, the ratio is about 1.6 males for every female. For the 650-690 range, males outnumber females by a factor of 1.38 to 1, and for the 600-640 range the ratio is 1:15 males to every female. For all of the other ranges except the bottom one, females outnumber males. Overall, female SAT test takers (812,764) outnumbered males (704,226) by 1.15 to 1.
The difference between male and female test scores for the math section of the SAT has persisted over time, see chart below (data here, page 3).

Although the gap between male and female test scores has declined over time, and in 2008 was the smallest (33 points) since 1971 (see chart below). However, given the large sample size, even a difference in mean test scores of one point would still be statistically significant, so the gap would almost have to completely disappear before the average male and female scores would be statistically equivalent.

Rising Grades, Falling Test Scores for HS Seniors

Click to enlarge.

Between 1998 and 2008, the percentage of college-bound high school seniors with a GPA equal to letter grades of A+, A or A- increased from 38% to 42%, while the average SAT scores for that group decreased by 15 points from 565 to 550 for the Reading section, and by 19 points from 578 to 569 for the Math section (data here from The College Board, Table 17).

Existing Home Sales, Median Prices Increase in May

WASHINGTON (Dow Jones) -- Existing-home sales improved again in May, but falling prices and bloated supply promise to make a housing sector recovery slow.

MP: That's one way to look at it. Here are some alternative views:

1. The April to May increases in median home prices (3.84%) and mean home prices (3.26%) were the largest monthly price increases in more than a year (data here).

2. The monthly May increase in both median home prices (3.84%) and homes sold (2.36%) was only the second time in at least a year that both prices and unit sales increased in the same month.

3. The back-to-back increase in home sales in both April and May is the first time in at least a year of two consecutive monthly increases.

4. The most recent two-month increase in sales of 4.84% is the largest since April 2004 (source).

5. The 9.6 months supply of inventory in May is below last year's May level of 10.9 months by more than five weeks, and is at the second-lowest level in the last year.

According to Brian Wesbury and Bob Stein:

The data today are consistent with our outlook that the economy is recovering from a panic. Home sales, building activity, and the rate of decline in home prices all seem to be bottoming or have already formed a bottom. In fact, the level of existing home sales in May was the highest since October 2008.

Economic Reports and Releases via NBER

Great economic data and free services are available from the National Bureau of Economic Research, where you can register to receive free e-mail notifications of more than 100 different economic releases. You can also access all of the hundreds of current and archived economic reports, and view the release schedule for each report.

Richmond Fed Index Rally Suggests Econ Recovery

Manufacturing activity in the central Atlantic region advanced somewhat faster in June, according to the Richmond Fed’s latest survey. The seasonally adjusted manufacturing index — our broadest measure of manufacturing activity — jumped to 6 from May’s reading of 4 (see chart above). Looking at the main components of activity, new orders expanded further, while factory shipments grew at a slightly slower rate and employment exhibited more moderate weakness. Other indicators were mostly positive. Backlogs increased for the first time since August 2007, while vendor delivery times stabilized and capacity utilization edged higher. In addition, manufacturers reported somewhat quicker growth in finished goods inventories.

MP: Signalling the end of the 2001 recession, the Richmond Fed Manufacturing Index was above zero by early 2002 when the U.S. economy was officially in economic recovery (see chart above). The Richmond Fed index has increased 61 points since the end of 2008, and has now been in positive territory for two consecutive months for the first time since the summer of 2007, suggesting that the recession has ended in the Richmond Fed region (MD, VA, WV, NC, SC and DC).

There have been a lot of somewhat-sensationalized descriptions by the media of the current recession ("Worst economic crisis since the Great Depression®, "Great Depression II™," etc.), and I'm wondering how the media will describe the pending economic recovery? We'll probably be more likely to hear descriptions like "The Slowest/Weakest Most Sluggish Economic Recovery Since ______" than descriptions like "The Greatest/Fastest/Strongest Economic Recovery Since _____."

ECRI: Recession Will Be Over By End of Summer; WLI Registers Largest Three-Month Gain in History

NEW YORK, June 19 (Reuters) - A gauge of future U.S. economic growth rose along with its yearly growth rate, reaffirming hope that yearly growth will turn positive in the summer months, a research group said on Friday. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index (WLI) rose to a 36-week high of 117.1 for the week ending June 12, from an upwardly revised 116.2 the previous week (see chart above). In recent weeks, the group has forecast that the U.S. recession will end sometime during this summer, as its yearly economic growth reading rebounds from late-2008 lows.

The index's annualized growth rate spiked to an 85-week high of minus 0.6 percent from the prior week's revised rate of minus 3.5 percent (MP: And compares favorably to the year-end growth rate reading of -28.1%, see data here).

"With WLI annualized growth rocketing up almost 30 percentage points in six months (MP: from -28.1% in December), it's virtually pounding the table about the recession ending this summer," said Lakshman Achuthan, managing director at ECRI.

MP: The WLI has increased nine weeks in a row - the last time that happened was almost 20 years ago - and the index has increased in 13 out of the last 14 weeks (data here). The index of future economic activity is now at a 9-month high of 117.1, the highest level since October 3 of last year (see chart above). Further, the 12-point, three-month increase in the WLI from the early March low of 105.1 is the largest three-month gain in the history of the WLI back to 1967.

Canadian Oil Sands: More Oil Than Saudi Arabia?

Canada's oil sands hold an estimated 170 billion barrels of oil that can be recovered with existing technology and as much as 1.7 trillion barrels -- more than five times the size of Saudi Arabia's reserves -- that could be produced with the use of new methods that are being developed.

As the only non-OPEC source with the capability for large production growth during the next several years, oil sands have the potential to reduce the Organization of Petroleum Exporting Countries' revenues, weakening the cartel and those members that often undertake policies hostile to U.S. interests.

By getting more of their oil from Canada, refineries in the Midwest are moving from being at the back of the crude oil supply line to the front. With these secure supplies, Midwest refineries are not as vulnerable to supply disruptions from overseas producers or hurricanes in the Gulf of Mexico.

So who would object to Canadian oil sands?

Eenvironmental groups like the Natural Resources Defense Council and the Sierra Club are trying to shut down Canadian oil sands production and block the expansion of refineries here in the U.S.

If the environmental groups truly cared about achieving results in their battle against global warming, they would better focus their energy on the construction of scores of power plants in rapidly developing economies like China and India that account for most of the increase in the world's carbon emissions. These developments pose the real global environmental danger, not the Canadian oil sands.

~From my editorial in today's Detroit News

Canada's Wait Times Exceed Benchmarks

From Canada's Wait Time Alliance for Timely Access to Health Care's 2009 annual report "Unfinished Business: Report Card on Wait Times in Canada":

Five years ago the governments of Canada resolved to improve wait times for health care by committing nearly $6 billion to the cause. Although there are signs of improvement, the lack of uniform and timely information on wait times is just one symptom of the ‘unfinished business’relating to wait times in Canada. What’s going on?

■ Based on the UK's National Health Service target of 18-weeks from initial referral by a family physician to start of treatment, a majority of Canadian patients had wait times that exceeded the 18-week target. Access is particularly poor for: ophthalmology (adult strabismus), obstetrics and gynecology, gastroenterology, plastic surgery and orthopedics.

■ The median wait for radical (curative) cancer care was 46 days or nearly 7 weeks and the majority of these treatments exceeded the Canadian Association of Radiation Oncology benchmark for curative cancer treatment of 4 weeks (2 weeks for the consult wait and 2 weeks for treatment). This is troublesome given the clear link between a delay in radiation therapy and a chance of cure.

■ The study found that the median wait time from the time the patient presented at the Emergency Department to the time the patient was discharged (i.e., the patient did not need to be admitted to an inpatient bed) was almost 6 hours, while the average wait was nearly 9 hours, both much longer than the benchmark of 4 hours.

Moreover, the median wait time for patients requiring an inpatient bed-that is, from the time the patient presented at the ED to the time they were admitted to an inpatient bed-was
19 hours (average is 23.5 hours or nearly one full day), which is substantially higher than the established thresholds (e.g., more than three times the 6 hour guideline for high-level acuity patients). The longer wait for patients to be admitted is often due to the inability to find an available hospital inpatient bed.

Chart of the Day:TIPS Derived Inflation Expectation

Update: Both charts above and the comments below have been updated, based on using 10-year constant maturity yields for both Treasury series (thanks to Michael Pond for suggesting this).

The top chart shows the weekly, bond market-based 10-year TIPS-derived expected inflation back to 2003, calculated as the difference between 10-year regular, nominal Treasury yields and 10-year Treasury inflation-indexed yields, both on a constant maturity basis (St. Louis Fed data here for 10-year TIPS and here for regular 10-year Treasuries; see the bottom chart for those yields separately.

After an unusual period in late 2008 resulting in a narrowing spread when the TIPS 10-year yields were unusually high and approaching 3%, and regular Treasury yields were unusually low and approaching 2%, the Treasury market seems to have stabilized, and the bond market's 10-year expectation of inflation is back around 2.5%, consistent with the inflationary expectations from 2003-2007.

Canada's Health Care System: Poor Value

The beginning of May marks the end of income tax season in Canada. Over one-half of the personal income taxes Canadians just paid in aggregate are required to cover the cost of our taxpayerfunded health care program. Given this level of expenditure, you might expect that Canadians receive world-class access to health care. But the evidence demonstrates that this is not so.

Consider Canada’s waiting lists, which are among the longest in the developed world.

■ In 2007, waiting lists for access to health care in Canada reached a new all-time high of 18.3 weeks from general practitioner referral to treatment by a specialist. Despite substantial increases in both health spending and federal cash transfers to the provinces for health care over the last decade or so, this wait time is 54% longer than the overall median wait time of 11.9 weeks back in 1997.

■ Canadians were more likely to experience waiting times of more than six months for elective surgery than Australians, Germans, the Dutch, and New Zealanders, but slightly less likely than patients in the United Kingdom;

■ Canadians were least likely among the six nations to wait less than one month for elective surgery;

■ Canadians were most likely to wait six days or longer to see a doctor when ill, and were least likely among the six universal access nations surveyed to receive an appointment the same
day or the next day; and,

■ Canadians were least likely to wait less than one hour and most likely to wait two hours or more for access to an emergency room among the six universal access nations surveyed

That is hardly the sort of access you might expect from the developed world’s third most expensive universal access health insurance system.

~Nadeem Esmail of the Fraser Institute

HT: NCPA

Buy American = Fewer American Jobs, Not More

Cartoon by Henry Payne.

When Congress inserted “Buy America” protectionist provisions that required some goods (such as steel, cement, and textiles) financed by the stimulus bill to be made in America, our government invited a trade war with our economic partners. Now Canada and China are imposing their own protectionist regulations, potentially destroying well-paid American jobs in the export sector. Other countries may follow suit.

The tragic losers of “Buy America” are free trade agreements and potential job growth in the American economy. Seductively, “Buy America” promises workers they can have it all: cheap goods from China, oil from Canada, as well as protection from global competition. But real life just doesn’t work that way. In reality, “Buy America” is shorthand for fewer jobs as other countries retaliate.

Trillions of international dollars pass through America each year not because we are isolated, but because we are the hub of the world. Terrorists twice attacked the World Trade Center because the building symbolized international trade. They destroyed a building and murdered thousands of innocent Americans, but they failed to vanquish world trade. Sadly, politicians who erect barriers to trade are hostile not only to trade but to our country and to our jobs.

~Diana Furchtgott-Roth

The Uninsured and Static vs. Dynamic Assumptions

Although 70% of insured Americans rate their health care arrangements good or excellent, radical reform of health care is supposedly necessary because there are 45.7 million uninsured. That number is, however, a "snapshot" of a nation in which more than 20 million working Americans change jobs every year. Many of them are briefly uninsured between jobs. If all the uninsured were assembled for a group photograph, and six months later the then-uninsured were assembled for another photograph, about half the people in the photos would be different.

~George Will

MP: Many of those discussing the "problems" of income, wealth or wage inequality often must be troubled because they are making the underlying assumption that individuals and households in the U.S. are permanently stuck in a certain income or wealth quintile (bottom or top) or income percent (top or bottom 10%), without acknowledging the dynamic movements up and down the income and wealth quintiles over time. Those who are troubled by the 45.7 million insured Americans are probably making a similar flawed, underlying assumption about the uninsured: that those individuals or households insured in a certain year remained permanently insured, and those individuals or households who are uninsured in a certain year remain permanently uninsured with no possibility of ever getting insurance without government intervention, with no interaction between the two groups.

As George Will reminds us, the "uninsured" are often temporarily, not permanently uninsured, and the composition of the 45.7 million uninsured changes all the time, i.e. it's not like a private club closed to new members.

The unrealistic assumption of static group compositions over time (for income, wealth, or the uninsured, wages, etc.), and a rejection of the more realistic assumption of dynamic group changes, generally and inevitably leads to one policy conclusion: government intervention. Or at the very least, the assumption of static group compositions strengthens the case for government intervention and the assumption of dynamic group compositions weakens the case for government intervention.

Wal-Mart Creates 3,000 New Jobs So Far in June

Logan, Utah: 350 new jobs (average wage $10.98 per hour)

Conway, SC: 400 new jobs ($11.29 per hour)

Miamisburg, OH: 200 new jobs ($11.34 per hour)

Weaverville, NC: 350 new jobs ($11.30 per hour)

Durham, SC: 530 new jobs ($11.30 per hour)

Charlotte, NC: 300 new jobs ($11.30 per hour)

Jefferson City, MO: 350 new jobs ($11.27 per hour)

Metairie, LA: 300 new jobs ($11 per hour)

Carlyle, IL: 50 new jobs ($11.70 per hour)

Phoenix, AZ: 120 new jobs ($11.17 per hour)

Cocoa, FL: 220 new jobs

Markets in Everything: Direct Donor-Student Loans

NY TIMES -- Unithrive, which made its debut last month, matches alumni lenders and cash-strapped Harvard students, who post photographs and biographical information and can request up to $2,000. The loans are interest-free and payable within five years of graduation.

The nonprofit site is the brainchild of three recent Harvard graduates, who hope it can help ease the crisis in paying for college, especially if it is one day rolled out to other colleges that cannot afford to be as generous as their alma mater, which already awards scholarships to all students with demonstrated need.

The appeal of direct donor-to-student loans, Unithrive’s founders say, is that alumni will have a personal connection to current students: those requesting loans list hometowns, majors and classes they have taken. Alumni can lend to students with whom they feel a bond. They are promised updates 3 times a year from students they support - not unlike the letters that sponsors of poor children in Africa receive through the Christian Children’s Fund.

Happy Father's Day; Welcome The "Lipstick Economy" And Major Jobless Rate and Degree Gaps

As the top chart above shows, the male-female jobless rate gap of 2.5% is truly unprecedented. During and following the last two recessions of 1990-1991 and 2001, the male unemployment rate was about 1% higher than the female unemployment rate. But there has never been any recession in U.S. history, or any time during even a non-recessionary period, when the male unemployment rate was this much (2.5%) higher than the female jobless rate.

As the bottom chart above shows, 1981 was the last year that men received more college degrees than women, and the female-male "degree gap" has increased in every year since, and is projected by the Department of Education to increase further through 2017 when women will receive 158 college degrees (at all levels) for every 100 degrees received by men.

On this Father's Day, we should maybe recognize that we are witnessing what might possibly be a permanent structural change in the labor market and higher education, which will have profound and lasting implications for family roles, career choices, divorce settlements and child custody decisions by family courts, public policy, etc.

For example, just thinking out loud here, would it be possible in the future that a college-educated, professional woman working full-time would pay alimony to her unemployed ex-husband who hasn't found employment since the Great Mancession of 2008, and he might also get primary custody of the children and be paid child support?

Inflation Smackdown: Laffer vs. Blinder

Arthur Laffer in the WSJ on June 11, "Get Ready for Inflation and Higher Interest Rates":

As bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10. It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless.

Banks now have huge amounts of excess reserves, enabling them to make lots of net new loans. At present, banks are doing just what we would expect them to do. They are making new loans and increasing overall bank liabilities (i.e., money). The 12-month growth rate of M1 is now in the 15% range, and close to its highest level in the past half century.


Alan Blinder counters in today's NY Times article "Why Inflation Isn’t the Danger:"

The mountain of reserves on banks’ balance sheets has, in turn, filled the inflation hawks with apprehension. But their concerns are misplaced. To understand why, start with the basic economics of banking, money and inflation. In normal times, banks don’t want excess reserves, which yield them no profit. So they quickly lend out any idle funds they receive. Under such conditions, Fed expansions of bank reserves lead to expansions of credit and the money supply and, if there is too much of that, to higher inflation.

In abnormal times like these, however, providing frightened banks with the reserves they demand will fuel neither money nor credit growth — and is therefore not inflationary.

MP: The chart above shows the significant growth in both the monetary base and excess reserves over the last year. According to Laffer, banks are lending out the excess reserves, which will be inflationary, and according to Blinder, banks are holding onto the excess reserves, which will not fuel inflation.

Who's correct? The graph below of the Total Loans and Leases of all commercial banks suggests that Blinder is more correct, at least for now. Total bank loans peaked in late 2008 and have actually been gradually declining since last October, falling by almost $200 billion from the peak. And the graph above shows that excess reserves at banks have increased lately, which is consistent with the recent decline in bank loans. As the Fed has expanded the monetary base and bank reserves, banks have been holding a majority of those increased reserves as excess reserves, and they are NOT lending them out.

Blinder also argues that the bond market does not seem too worried about future inflation:

The market’s implied forecast of future inflation is indicated by the difference between the nominal interest rates on regular Treasury debt and the corresponding real interest rates on Treasury Inflation Protected Securities, or TIPS. These estimates change daily. But on Friday, the five-year expected inflation rate was about 1.6% and the 10-year expected rate was about 1.9%. Notice that the latter matches the Fed’s inflation target rate of just under 2%. I don’t think that’s a coincidence.

MP: The chart below shows the recent history of 10-year Treasury yields from both regular and inflation-indexed notes and illustrates Blinder's point of inflationary expectations of about 2%, based on the difference in yields between regular 10-year Treasuries of 4% and 10-year inflation-indexed Treasuries of about 2%.

Bottom Line: Both the bond market data showing contained expectations of inflation at around 2%, and the commercial banking data showing declining loan volume, seem to support Blinder's position more than Laffer's. I'm leaning toward Blinder's position for now. Inflation is not any kind of "clear and present danger," at least not yet.

Vehicle Profiling, Vehicle Discrimination?

I took this picture this afternoon about a mile from my office, at the parking lot of UAW Local 599 in Flint, on the edge of Buick City, which employed 28,000 GM workers in the 1980s and was demolished in 2002.

1. First of all, is that really legal in the U.S. to engage in such blatant "vehicle discrimination/vehicle profiling" based on a car's national origin? Is there really much difference between a sign that says "No Mexicans allowed on our property" and the sign above that essentially says "No cars built by Mexicans allowed on our property"?

2. Second, what about cars built by the Canadian UAW brothers and sisters 60 miles away in Windsor, Ontario, and at other locations in Canada? Those wouldn't technically qualify as "American-Union Made Automobiles," would they?

Below is a list of vehicles from the UAW website ("Support union jobs in the U.S. and Canada") that are built by the CAW (Canadian Auto Workers); would Local 599 really tow these union-made vehicles from Canada?

Buick Lacrosse

Chevrolet Camaro

Chevrolet Impala

Chrysler 300

Dodge Challenger
Dodge Charger

Ford Crown Victoria

Lincoln Town Car

Mercury Grand Marquis
Chevrolet Equinox

Ford Edge

Ford Flex

Lincoln MKT
Lincoln MKX

Pontiac Torrent

3. Also listed on the UAW website are these 2009 model vehicles built in the U.S. for foreign automakers by UAW workers, would they be "American-Union Made Automobiles" or not?

Mazda6

Mitsubishi Eclipse

Mitsubishi Eclipse Spyder

Mitsubishi Galant

Toyota Corolla

Mazda B-Series

Toyota Tacoma

Mitsubishi Endeavor

4. For the Ford F-Series Pickup Truck, some 2009 models are assembled in Venezuela and Brazil, so some of those can't qualify as "American-Union Made" can they?

5. Some of the GMC Sierras and Chevy Silverados are assembled in Canada and some in the U.S. Are only those assembled in the U.S. allowed in the Local 599 parking lot?

6. What about the Volkswagen Routan, a rebadged variant of the Chrysler RT platform, built by the CAW?

7. What about the Chevrolet Aveo (built in S. Korea) or a Cadillac Catera (built in Germany from 1997-2001)? Would Local 599 really tow a Chevy or Cadillac out of its parking lot?

Ontario Sends Cancer Patients to Buffalo, Detroit

WINDSOR STAR -- Between April 2007 and April of this year, 55 Ontario patients have been referred to Roswell Park in Buffalo, NY to receive IL-2 treatments for stage IV melanoma, and four patients were sent to the Harper University Hospital and the Karmanos Cancer Center in Detroit, Michigan.

The story is about a 30-year old Canadian man with melanoma who lives in Windsor, Ontario and has been approved for IL-2 treatments in the U.S. by Canadian authorities, but is being forced to drive four hours to Buffalo instead of across the Detroit River for treatment in Detroit. Reason? Cost savings.

Is this really the kind of government-run health care system we want in the U.S.? Where will we send cancer patients if we adopt a Canadian-style health care system?

Twin Cities Home Sales Increase in May

According to a recent report from the Minneapolis Area Association of Realtors:

The number of traditional home sales is growing. Only 43% of the pending sales in May were lender-mediated, compared to 59.4% in January. This decrease in lender-mediated market share brought the overall median price up $12,000 from last month to $165,000 in May. Despite the month-over-month increase, that’s still a 19.5% drop from May 2008.

MP: From May 2007 to May 2008 both unit pending sales and median prices were falling in the Twin Cities (see chart above), suggesting that the real estate market there was in decline and hadn't yet hit bottom. Over the last year, median home prices have fallen by another 19.5%, to levels not seen since 2001, and unit sales are finally starting to rebound, increasing by 17.3% from last May. In May, both pending sales and median prices increased from April, suggesting that the TwinCities real estate market might have finally reached bottom and in now coming back.

Capitalism: Still The Most Productive Economic Engine Ever; Our Future Growth Depends On It

A few years from now, strange as it may sound, we might all find that we are hungry for more capitalism, not less. An economic crisis slows growth, and when countries need growth, they turn to markets. After the Mexican and East Asian currency crises—which were far more painful in those countries than the current downturn has been in America—we saw the pace of market-oriented reform speed up.

If, in the years ahead, the American consumer remains reluctant to spend, if federal and state governments groan under their debt loads, if government-owned companies remain expensive burdens, then private-sector activity will become the only path to create jobs. The simple truth is that with all its flaws, capitalism remains the most productive economic engine we have yet invented. Like Churchill's line about democracy, it is the worst of all economic systems, except for the others.

Its chief vindication today has come halfway across the world, in countries like China and India, which have been able to grow and pull hundreds of millions of people out of poverty by supporting markets and free trade. Last month India held elections during the worst of this crisis. Its powerful left-wing parties campaigned against liberalization and got their worst drubbing at the polls in 40 years.

Capitalism means growth, but also instability. The system is dynamic and inherently prone to crashes that cause great damage along the way. For about 90 years, we have been trying to regulate the system to stabilize it while still preserving its energy. We are at the start of another set of these efforts. In undertaking them, it is important to keep in mind what exactly went wrong. What we are experiencing is not a crisis of capitalism. It is a crisis of finance, of democracy, of globalization and ultimately of ethics.

Finance has a history of messing up, from the Dutch tulip bubble in 1637 to now. The proximate causes of these busts have been varied, but follow a strikingly similar path. In calm times, political stability, economic growth and technological innovation all encourage an atmosphere of easy money and new forms of credit. Cheap credit causes greed, miscalculation and eventually ruin.

~From "The Capitalist Manifesto: Greed Is Good (To a point)" in the current issue of Newsweek

Creative Capitalism Filling a Gap with Retail Clinics

In times of economic crisis, the ability of the free market to solve problems may come into question. But in one vital corner of the economy, a little creative capitalism is helping fill a gap.

Enter the retail health clinic. In the past decade, more and more pharmacies like CVS and Walgreens, supermarkets such as Kroger and Publix and big-box stores like Wal-Mart have made space for clinics that treat minor ailments, administer vaccines and examine kids who need medical forms to enroll in camp. In those nine years, storefront clinics have logged at least 3.4 million visits. Today there are about 1,200 such clinics, pulling in some $550 million in annual revenue, by one estimate.

~Time Magazine article "Getting Well While You Shop"

MP: While politicians and bureaucrats in Washington dream up the next grandiose government health care reform to address rising healthcare costs and the 44 million uninsured, the most effective, affordable and convenient healthcare solutions might be right around the corner at your local pharmacy or supermarket.

We have a food stamp program to provide food for America's poor, what about "retail healthcare stamps" to provide basic healthcare services for low-income groups?

Cleveland Fed's Median CPI Inflation vs. BLS

Greg Mankiw has an interesting post on the difference between standard CPI inflation reported by the BLS and an alternative measure of inflation calculated by the Cleveland Federal Reserve based on the median CPI. Professor Mankiw points out that:

The average of any data set can be thrown off by a few extreme outliers; the median is a more robust statistic to estimate the central tendency in the data.

Right now, the two measures of inflation are diverging substantially. The standard CPI shows deflation over the past year, but that average is due to a few anomalous sectors, such as energy. If you look at the median CPI, which shows what a more typical price is doing, the inflation rate does not look very unusual (see chart above).

MP: The BLS reported on Wednesday that annual standard CPI inflation (deflation) from May 2008 to May 2009 was -1.30% (see chart), mostly because of a -27.3% decrease in the energy prices and a -14.3% decrease in transportation prices from a year ago (when gas was almost $4 per gallon and oil was about $125 per barrel).

In contrast, the Cleveland Fed reported on the same day that its adjusted, Median CPI increased by +2.4% year-to-year through May 2009 (see chart).

The Cleveland Fed has been studying and reporting median CPI for a long time, here is a paper from 1991 on "Median Price Changes: An Alternative Approach to Measuring Current Monetary Inflation."

Here's an interactive graphing feature from the Cleveland Fed for creating charts of inflation.

Larry Summers Vindicated? Global Study Shows Greater Male Variability in Math, Reading Scores

Table 1.

(Note: All results displayed in both tables are statistically significant at the 5% level or higher.)

Table 2.

The tables above show selected statistics from the paper Global Sex Differences in Test Score Variability (see summary here), published by two economists, one from the London School of Economics and the other from the Helsinki School of Economics. Analyzing standardized test scores in reading and mathematics from the OECD’s "Program for International Student Assessment" (PISA), a survey of 15-year olds in 41 industrialized countries, the authors found that:

Our analysis of international test score data shows a higher variance in boys' than girls' results on mathematics and reading tests in most OECD countries. Higher variability among boys is a salient feature of reading and mathematics test performance across the world. In almost all comparisons, the age 15 boy-girl variance difference in test scores is present. This difference in variance is higher in countries that have higher levels of test score performance.

Sex differences in means are easier to characterize: It is evident from the PISA data that boys do better in mathematics, and girls do better in reading. This has a compositional effect on the variance differences as well. The higher boy-girl variance ratio in mathematics comes about because of an increased prevalence of boys in the upper part of the distribution, but the higher variance in reading is due to a greater preponderance of boys in the bottom part of the test score distribution. Because literacy and numeracy skills have been shown to be important determinants of later success in life (for instance, in terms of earning higher wages or getting better jobs), these differing variances have important economic and social implications.

We therefore confirm that 15-year-old boys do show more variability than girls in educational performance, with specifics that differ according to whether mathematics or reading are being studied and tested. These results imply that gender differences in the variance of test scores are an international phenomenon and that they emerge in different institutional settings.

MP:

1. The results above show that for both the U.S. (Table 1) and the global group of 41 countries (Table 2), the mean math test scores for 15-year boys are significantly higher than the average score for girls, but the reverse is true for reading test scores: girls score significantly higher than boys on average in reading.

2. For both the U.S. and the 41 countries in the global group, the variability of boys' test scores for both reading and mathematics is significantly greater than the variability of girls' test scores (at the 1% level in all cases), suggesting that there are more boys in the upper and lower tails of the test score distributions.

3. Looking at the top 5% and the bottom 5% of test scores, we can see that boys are overrepresented in almost every case:

a. In the bottom 5% of reading scores, there are 245 boys for every 100 girls in the U.S. (220 boys for every 100 girls for the world group), and in the top 5% of reading scores there are 167 girls for every 100 boys (172 girls for the global group).

b. In the bottom 5% of math scores, there are 121 boys for every 100 girls in the U.S. (94 for the global group), and in the top 5% there are 172 boys for every 100 girls (170 girls for the world group).

In other words, the results indicate that boys' test scores are significantly more variable than girls' test scores, resulting in boys being significantly overrepresented in both the bottom 5% and the top 5% of students in the U.S., and these outcomes are a global phenomenon.

Bottom Line: Can Larry Summers get his job back as president of Harvard, for saying basically the same thing?

"It does appear that on many, many different human attributes- height, weight, propensity for criminality, overall IQ, mathematical ability, scientific ability - there is relatively clear evidence that whatever the difference in means - which can be debated - there is a difference in the standard deviation, and variability of a male and a female population."?

See related CD posts here, here and here?

All The President's Women and Women's Groups

Men are bearing the brunt of the current economic crisis (the "man-cession") because they predominate in manufacturing and construction, the hardest-hit sectors, which have lost more than 3 million jobs since December 2007. Women, by contrast, are a majority in recession-resistant fields such as education and health care, which gained 588,000 jobs during the same period.

Last November, President-elect Obama addressed the devastation in the construction and manufacturing industries by proposing an ambitious New Deal-like program to rebuild the nation's infrastructure. He called for a two-year "shovel ready" stimulus program to modernize roads, bridges, schools, electrical grids, public transportation, and dams and made reinvigorating the hardest-hit sectors of the economy the goal of the legislation that would become the recovery act.

Women's groups were appalled. Grids? Dams? Opinion pieces immediately appeared in major newspapers with titles like "Where are the New Jobs for Women?" and "The Macho Stimulus Plan." A group of "notable feminist economists" circulated a petition that quickly garnered more than 600 signatures, calling on the president-elect to add projects in health, child care, education. At the same time, more than 1,000 feminist historians signed an open letter urging Obama not to favor a "heavily male-dominated field" like construction: "We need to rebuild not only concrete and steel bridges but also human bridges." As soon as these groups became aware of each other, they formed an anti-stimulus plan action group called WEAVE-- Women's Equality Adds Value to the Economy.

What did President-elect Obama do when the National Organization for Women (NOW), the Feminist Majority, the Institute for Women's Policy Research, and the National Women's Law Center soon joined the battle against the supposedly sexist bailout of men's jobs? Our incoming president did what many sensible men do when confronted by a chorus of female complaint: He changed his plan. He added health, education, and other human infrastructure components to the proposal.

~ From Christina Hoff Sommers' (resident scholar at the American Enterprise Institute) article "No Country for Burly Men: How Feminist Groups Skewed the Obama Stimulus Plan Towards Women's Jobs," just published in the Weekly Standard

First Monthly Travel Increase Since October 2007

The Federal Highway Administration reported today that travel on all roads and streets increased by by +0.6% (1.4 billion vehicle miles) in April 2009 compared to April 2008. This was the first monthly percentage increase compared to the same month in the previous year since October 2007, and follows 17 consecutive monthly percentage decreases (see graph above).

Does this increased driving suggest consumers are feeling more confident? Another green shoot/mustard seed? Possibly.

Comments welcome.

HT: John Thacker

Ronald Reagan on Socialized Medicine: 1961

Southern California Real Estate Market Rebounds: Unit Sales and Median Prices Both Increase in May

DQNews.com -- Southern California home sales rose for the 11th consecutive month in May as sales of $500,000-plus homes started to come back. The median price paid increased slightly from the prior month for the first time since July 2007, the result of a shift in market activity where sales of deeply discounted foreclosures waned and mid- to high-end purchases rose, a real estate information service reported.

A total of 20,775 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties last month. That was up 1.3% from 20,514 in April and up 22.8% from 16,917 a year ago. Sales have now increased year-over-year for 11 consecutive months. May’s sales were the highest for that month since May 2006, when 30,303 homes sold, but were 21.2% below the average May sales total since 1988, when DataQuick’s statistics begin.

The median price paid for all new and resale houses and condos sold in the six-county Southland last month was $249,000, up 0.8% from $247,000 in April but down 32.7% from $370,000 a year ago. The median price hadn’t risen from one month to the next since July 2007, when it increased 0.6% from $502,000 to $505,000.

"We appear to be in the early stages of the market gradually tilting back toward a more normal balance of sales across the home price spectrum. As more sellers get realistic, more buyers get off the fence and more lenders offer reasonable terms for high-end purchase financing, we’ll see a more normal share of sales in the more established, higher-cost areas that have been nearly comatose,” said John Walsh, MDA DataQuick president.

MP: Although the increases were small, the fact that both unit home sales and median home prices increased in May suggests that the Southern California real estate market has reached a bottom and is on the road to recovery.

Southern California Home Prices Rise Slightly in May, First Monthly Increase Since July 2007

LA TIMES (front page of today's Business Section) -- Southern California's median home price rose slightly in May for the first time in nearly two years. But the increase was more reflective of a change in the types of homes sold than an end to falling values, a real estate research firm reported Wednesday. The $249,000 median price in May was up less than 1% from April's $247,000 figure, and marked the fifth-straight month the median has held at roughly $250,000, according to San Diego-based MDA DataQuick.

The modest rise reflects increasing purchases at the high end of the housing market, where sales have been virtually frozen. For much of the last year, most home sales have occurred in the low end of the housing market, with banks unloading foreclosed properties at deep discounts, dragging the median price down. Now, more expensive properties are selling, which raises the median, through a market paradox: many of those homes sold after owners cut prices to lure buyers. Still, stirring sales activity at the high end is a sign that the market is crawling toward equilibrium.

The April-to-May Southern California median price increase was the first month-to-month gain since July 2007, when it moved from $502,000 to $505,000, which was the market's peak.

HT: Benjamin

71-Point Increase in Philly Fed Forecast Index Suggests Economic Recovery Is Now Underway

The Philadelphia Fed reports today that the Six-Month Forecast Indicators Show Continued Improvement:

Broad indicators of future activity showed significant improvement this month. The future general activity index remained positive for the sixth consecutive month and increased markedly from 47.5 in May to 60.1, its highest reading since September 2003 (see chart above). The index has now increased 71 points since its trough in December.

The indexes for future new orders and shipments each improved 12 points this month. For the second consecutive month the percentage of firms expecting employment to increase over the next six months exceeded the percentage expecting declines (21 percent versus 8 percent). The future employment index improved three points. The future workweek index increased 24 points.

MP: Notice in the chart above that in 2001 the 60-point increase in the forecast index signalled the end of the 2001 recession. Hopefully the recent 71-point increase in the future activity index since December 2008 is signalling the end of the current recession.

According to the Philadelphia Fed, "Most of the survey’s broad indicators of future activity showed continued improvement, suggesting that the region’s manufacturing executives are becoming more optimistic that a recovery in business will occur over the next six months."

Wolfram Alpha

Watch a 13-minute introduction video to Wolfram Alpha featuring Stephen Wolfram.

Jobless Claims Fall to Lowest Level in Four Months

The Department of Labor just released its Unemployment Insurance Weekly Claims Report, reporting that the four-week moving average (which smoothes out the volatility) of initial unemployment claims fell this week to 615,750, the lowest level since February 7, more than four months ago (see chart above). From the April 4 peak of 658,750 claims, the four-week moving average has declined in 8 out of the last 10 weeks, and is now 43,000 claims below the peak. With every week of new data, it's looking more and more certain that April 4 was the peak for jobless claims, and the labor market will continue to gradually improve as move forward.