And You Thought Medical Care Costs Were High
Professor Mark J. Perry's Blog for Economics and Finance
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PRINCETON, NJ -- Back-to-school spending seemed to show up during the week ending Aug. 16, as self-reported average daily spending hit a new high for the year. At the same time, consumer confidence maintained its new high of the prior week and job creation eased, but only slightly.
Using BLS price data, the chart above shows the CPI for all items vs. the CPI for new cars from January 1953 to July 2009, both series are equal to 100 in January 1953. Over this period, general inflation for all prices has averaged 3.78% per year, compared to new car prices, which have increased by less than 2% annually. If new car prices had increased since 1953 at the same rate as prices in general over that period, new car prices today would be more than 2.5 times their current prices.
The two best places in the country to find a job are Washington, D.C. (6 job postings per unemployed person) and Jacksonville, FL (3 job openings per unemployed person), according to a new Job Market Competition index put together by job search engine Indeed (see chart above).
St. Petersburg Times -- Despite being an agricultural nation with plentiful sun, soil and rain, Cuba produces barely 30% of the food it needs, due to an acute lack of resources and the inefficiency of its state farm sector. About 250,000 small family farms and 1,100 cooperatives till only about one-quarter of the land, yet still manage to outperform the state farms, producing almost 60% of crops and livestock, according to official figures.
RALEIGH NEWS AND OBSERVER -- This decade has been good for associate vice chancellors at UNC-Chapel Hill. Their numbers have nearly doubled, from 10 to 19, and the money paid to them has more than tripled, to a total of nearly $4 million a year. The university now admits that some of these people were in jobs that were not vital. They represent the rapid management growth in the 16-campus UNC system that has added tens of millions of dollars to annual payrolls.
From today's Washington Post, two former Baltimore police officers argue that "It's Time to Legalize Drugs":
Intro: A few years ago, while vacationing in New Hampshire, I stopped in one of its state-owned liquor stores to buy kosher wine for the upcoming Jewish holidays. I could not find any. But right across the state line, a privately owned Massachusetts liquor store that served the same communities had lots of choices.
MSNBC -- No cash for medical bills? Recession revives old-fashioned exchanges for health care. A nationwide trend is developing as more providers offer patients the option of paying for the non-covered costs of medical and dental care without a direct exchange of cash.
In today's Wall Street Journal article "We Don't Spend Enough on Health Care," Craig Karpel argues that increased spending on health care is actually desirable, and suggests that we don't spend too much on health care (currently 20% of GDP), we spend too little - 30% of GDP by the middle of the century would be optimal. Further, he points out the benefits of health care employment to the U.S. economy:
1. DENVER POST EDITORIAL -- Light rail — useful from the gritty-aired 1970s to not so long ago, when cars drank gasoline like frat boys drink beer — is now obsolete, and a transportation option that our environment can no longer afford. That's right. Unless we change energy sources or greatly increase light-rail ridership, we should just drive our cars to work instead.
2. MARKETPLACE -- Road repairs are funded though taxes on gas, but as more people buy hybrids and plug-in cars, some are worried about what's going to happen to that revenue.
In 2006, Congress, cloaking cunning with moralizing, effectively outlawed Internet gambling by making it illegal for banks or credit-card companies to process payments to online gambling operations. This was more than moral pork for social conservatives. It also blocked online competitors from poaching gamblers from the nation's most aggressive promoters of gambling -- state governments. They are increasingly addicted to revenues raised by lotteries -- the 42 states that have lotteries spent $520 million in 2007 promoting them -- and from taxation of other legal gambling. The law exempted Internet state lotteries and two powerful and vocal interests -- online betting on horse racing and some fantasy sports betting online.
NEW YORK FED - In August, after more than a year of negative readings, the Empire State general business conditions index rose into positive territory and reached its highest level since November 2007 - a clear indication that, on balance, business conditions had improved for New York State manufacturers. The Empire State general business conditions index increased 13 points, to 12.1, its highest level since November of 2007 (see chart above). Future indexes generally rose from last month and conveyed optimism about the six-month outlook; the capital expenditures index rose to its highest level in over a year.
FT.com -- Japan has climbed out of recession after the economy returned to growth in the second quarter, raising hopes that the worst of the financial crisis is over in the world’s second-largest economy. Data released on Monday showed that gross domestic product expanded 0.9% quarter-on-quarter on a seasonally adjusted basis, following four quarters of contraction. On an annualised basis, the economy grew 3.7%.
Examples include: playing video games at an arcade, going on a "blind" first date, running out of hard-drive space, needing to be 18 to have access to porn, paying for long distance, storing data on a floppy disk, sending documents via fax, and getting a new car with a cigarette lighter, and using a public phone booth.
The chart above shows the estimated number of new cancer cases in 2008 for gender-specific cancers, using data from the American Cancer Society. For men most of the cases were for prostate cancer, and for women it was mostly new cases of breast cancer, but also cervical and ovarian cancer. The ratio of new gender-specific cancers in 2008 was 1.32 new female cases of cancer for every one male case.
Check out the amazing guitar solo starting about 1:04.
In this 1941 propaganda cartoon produced by the Treasury Department, Donald Duck is told that it's not just his duty to pay his income taxes, it's a "privilege." This was right before mandatory income tax withholding was legislated, so I guess the government had to use propaganda to help convince Americans that they needed to save money to pay their income taxes.
Although it might have been slightly exaggerated in the cartoon, notice that Donald Duck fills out a simple one-page income tax form that could easily be completed in several minutes. Also, notice that because it was in the pre-withholding era, he actually writes out a personal check for $13, payable to the Internal Revenue Service. Ahhhhhhhh.....the good old days.
Here's a longer Donald Duck tax propaganda cartoon from the same era, encouraging Americans to be sure to save enough money to pay their taxes "gladly and proudly" in quarterly tax payments due on March 15, June 15, September 15 and December 15. Earlier this week, Charles Murray made the case for ending income tax withholding.
Excerpts below from an excellent WSJ article "The New American Dream: Renting: It's Time to Accept that Home Ownership is Not a Realistic Goal for Many People and To Curtail the Enormous Government Programs Fueling This Ambition," by Thomas Sugrue, professor at the University of Pennsylvania.
Bottom Line: More support for the high likelihood that the global financial crisis, mortgage tsunami, and housing bubble can all be traced to federal government intervention to create affordable housing, see previous CD post here.
WSJ article "Foreign Talent Loads the Bases in Minor Leagues":
Recent changes in U.S. immigration law and growing competition in baseball for raw talent have allowed the minor-league farm system to flourish with imported players. It has been a home run for globalization, but bad news for U.S.-born players, who suddenly have much more competition. Across the minor and major leagues, the total number of foreign-born players is growing fast, to almost 3,500 of the 8,532 players under contract this summer, from 2,964 three years ago.
There are some economists who are concerned about future inflation because of the loose, expansionary monetary policy in 2008, e.g. see Brian Wesbury and Bob Stein here, here and here. I don't think inflation will be a problem, and here's why:
By IBD's Michael Ramirez.
Washington Post -- The Obama administration made a national priority of spreading high-speed Internet access to every American home and offered stimulus money to help companies pay for it, but the biggest network operators are staying away from the program. As the Aug. 20 deadline nears to apply for $4.7 billion in broadband grants, AT&T, Verizon and Comcast are unlikely to go for the stimulus money, sources close to the companies said.
Lesson: There ain't no such thing as free stimulus money (TANSTAFSM).
Some say taking money could draw unwanted scrutiny of business practices and compensation, as seen with automakers and banks that have taken government bailouts. And privately, some companies are griping about conditions attached to the money, including a net-neutrality rule that they say would prevent them from managing traffic on their networks in the way they want.
Wall Street Journal -- Some of America's biggest food companies say the U.S. could "virtually run out of sugar" if the Obama administration doesn't ease import restrictions amid soaring prices for the key commodity. In a letter to Agriculture Secretary Thomas Vilsack, the big brands -- including Kraft Foods, General Mills, Hershey Co. and Mars -- bluntly raised the prospect of a severe shortage of sugar used in chocolate bars, breakfast cereal, cookies, chewing gum and thousands of other products.
The BLS reported today that annual standard CPI inflation (deflation) from July 2008 to July 2009 was -2.10% (see chart above, blue line), mostly because of a -28.1% decrease in energy prices and a -14.1% decrease in transportation prices from a year ago (when gas was $4 per gallon and oil was $130 per barrel).
1. TELEGRAPH -- A quarter of a million people are waiting more than 18 weeks for treatment on the NHS, new figures show. The figures, published by the Lib Dems, show that 236,316 people are currently waiting more than 18 weeks for a range of treatments including oral surgery, rheumatology and geriatric medicine. This means that nearly 10% of patients are not being treated within the government's waiting list target.
What's your monthly mortgage or rent payment? What's your monthly car payment? What's your monthly payment for your student loan, cell phone or cable TV? Most of us have a pretty good idea of these monthly payments, because we typically write checks every month, or pay online. Now, what's your monthly or quarterly tax liability for federal income taxes?
MP: Another advantage of ending withholding is that it would remove the significant financial burden on employers who are currently forced to act as tax collectors for the government.
Wall Street Journal -- U.S. retail sales fell 0.1% in July even with a boost from the government's cash-for-clunkers subsidy, the Commerce Department reported, marking the first decline in seasonally adjusted sales in three months.
MP: Actually, the seasonally-adjusted decline in retail sales was only -.055% (from $342.497 billion in June to $342.309 billion in July), so by rounding to only one decimal place the reported percentage decline (-0.10%) was almost twice the actual percentage decline (-0.055%).
Additionally, the Census Bureau reports shows a +1.11% increase in July retail sales without seasonal adjustment ($355.243 billion in July from $351.360 billion in June). And the BLS reported today that the Consumer Price Index (CPI-U) decreased 0.2% in July before seasonal adjustment. Therefore, real retail sales in July, adjusted for the 0.2% deflation in July, actually increased by 1.16% before seasonal adjustment.