Gas Prices As Percent of Income Are Still Affordable
Professor Mark J. Perry's Blog for Economics and Finance
The chart above was created using inflation-adjusted gas prices from the Energy Information Administration from 1919 to 2008, along with the overall trend line for gas prices over the last 90 years.
The graph above was created using college tuition data from the National Center for Education Statistics (with estimates for 2007 and 2008), Consumer Price Index data from the BLS, and average annual oil price data for West Texas Intermediate Oil from Global Financial Data. All series are set to an index value of 100 in the base year of 1976. Comments:
Exports from emerging economies to U.S. have fallen, while exports to other emerging economies have remained strong:
Emerging markets now export more to China than to the U.S.:
THE ECONOMIST -- “Decoupling” is the source of a great deal of controversy. Economists argue about whether or not emerging economies will follow America into recession. Recent data suggest decoupling is no myth. Indeed, it may yet save the world economy.
Decoupling does not mean that an American recession will have no impact on developing countries. The point is that their GDP-growth rates will slow by much less than in previous American downturns. Most enjoyed strong growth during the fourth quarter of last year, and some speeded up, even as America’s economy ground to a virtual halt and its non-oil imports fell.Here are some reasons that globalization and decoupling can co-exist:
The top chart above shows the annual percentage changes in the monthly monetary base from 2002-2008. The bottom chart shows M1 (red) and the monetary base (blue) from 2002-2008.
From The Economist:
Despite all of the political rhetoric about "tax cuts for the rich" and the "middle class squeeze," a recent analysis by the Tax Foundation shows that federal income taxes have fallen for groups at all income levels as a result of the Bush tax cuts, compared to the 1999 tax rates under Clinton (see chart above). And in fact, the group in the chart above that experienced the largest percentage decrease in taxes were the married taxpayers with $50,000 of household income (clearly middle class by most definitions) - they paid 21% less in taxes under the Bush tax rates compared to the Clinton rates. By contrast, "rich" single taxpayers with income of $125,000 paid only 10% less in taxes. In other words, some middle-class taxpayers received twice the tax cut on a percentage basis as some of "the rich." .....So much for the claim that "the Bush Administration and Congressional policies are failing middle-class Americans."
WASHINGTON -- The number of U.S. workers filing new claims for unemployment benefits fell more sharply than expected last week, a rare sign of resilience in the labor market this year. The four-week average of new claims, which economists use to smooth out weekly volatility, fell by 1,500 to 359,500, the second-straight decline (see chart above).
Math 55 is advertised in the Harvard catalog as “probably the most difficult undergraduate math class in the country.” Math 55 does not look like America. Each year as many as 50 students sign up, but at least half drop out within a few weeks. As a former student told The Crimson newspaper in 2006, “We had 51 students the first day, 31 students the second day, 24 for the next four days, 23 for two more weeks, and then 21 for the rest of the first semester.” Said another student, “It’s like an episode of ‘Survivor’ with people voting themselves off.” The final class roster: 45% Jewish, 18% Asian, 100% male.
The BLS reported today that productivity in the nonfarm business sector increased by 1.9% in the fourth quarter of 2007 (see chart above), and was up by 2.9% compared to QIV of 2006. Productivity increased by 6.3% in the third quarter of 2007.
From today's IBD:
One family's sorrow (the one moving out of this house) is another family's joy (the one moving into this house).
University of Rochester Steven E. Landsburg presents the "case for foreclosure" in his new Slate.com Everyday Economics column:
If you're facing foreclosure, Treasury Secretary Henry Paulson wants to help. "If someone is willing to make a call to reach out," says Paulson, "there's a chance we can save their homes." But Paulson can't save these homes because the homes are not endangered in the first place. They stand to change hands, not to vanish. There cannot be more homeowners than there are homes, and if one home becomes vacant, then there can be one new homeowner. Call it the Law of Conservation of Homes.
None of these foreclosed houses is going to disappear. After a foreclosure, one family moves out, and another moves in. We see the sad faces of the people moving out, but we don't as often see the happy faces of the new homeowners moving in. Nevertheless, those happy faces are out there, and we should not discount them.
That's important, and it's important in a larger context. Often when it comes to economic policy, some effects—in this case, the genuinely moving stories of good people who can't afford to live where they've been living—are highly visible, while others—the genuinely moving stories of good people who can now achieve their dreams of home ownership—are less well-publicized. That doesn't make them any less real.
Landsburg analysis on foreclosures reminds me of Bastiat's essay "What Is Seen and What Is Not Seen":
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
This difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.
I think Landsburg falls into the "good economist" category.
From the Office of the United States Trade Representative, some NAFTA Fact Sheets:
DMITRI A. MEDVEDEV will be anointed president of Russia today thanks to the political handiwork of Vladimir V. Putin. But maybe the real winner is economic globalization.
Henry Payne writing in National Review: