Adjusted Jobless Claims Suggest Recession Ended

The September employment report was released yesterday, and the graph above of Initial Jobless Claims as a Percent of the Labor Force (1974-2009) has been updated to reflect the September labor force of 154,006,000 and the September average for initial unemployment claims (559,625 for the 4-week moving weekly average). This measure of initial jobless claims, adjusted for the size of the U.S. labor force, shows that jobless claims peaked during this recession above the levels of the last two recessions (1990-1991 and 2001), but were never anywhere close to the levels of the previous three recessions in the mid-1970s and early 1980s (see chart above).

In other words, this recession was worse than the last two, but not nearly as severe as the previous three, using this adjusted measure of jobless claims. Additionally, the sharp .059% reduction in adjusted jobless claims from the March 2009 high of 0.4226% to 0.3634% in September follows the same pattern of 0.05%-0.06% reductions in adjusted claims at the end of the 2001 recession (a .052% reduction from .3318% in October 2001 to February 2002) and at the end of the 1990-1991 recession (a .058% reduction from .3915% in March 1991 to .3327% in July 1991).

Finally, the current level of 0.3634% for jobless claims as a share of the September labor force is above the level at the end of the 2001 recession, but is very close to the levels that marked the ends of the four previous recessions (see dashed blue line in graph above).

See a very similar analysis here from Scott Grannis, who alternatively calculates jobless claims as a percent of payrolls with the exact same graphical pattern presented here using jobless claims as a percent of the labor force (slightly different denominator, but same numerator, and same story).

Quote of the Day: Blogs, Modern Day Public Square

Whatever the drawbacks and limitations of blogging, it serves, today, as our culture’s indispensable public square. Rather than one tidy ‘unifying narrative,’ it provides a noisy arena, open to everyone, for the collective working out of old conflicts and new ideas. As the profession of journalism tries to rescue itself from the wreckage of print and rethink its digital future, this is where its most knowledgeable practitioners and most creative students are doing their hardest thinking.

~Scott Rosenberg, from "Say Everything: How Blogging Began, What It's Becoming, and Why It Matters"

Mancession Continues: Male-Female Jobless Rate Gap at Record Level, Higher Than Last 2 Recessions

According to Table A-1 of today's Employment Situation report, male unemployment increased in September from 10.9% to 11% and female unemployment increased from 8.2% to 8.4%, and the male-female jobless rate gap fell from 2.7% in September from the all-time record gap of 2.7% in August. The current male-female jobless rate gap of 2.6% is three times higher than the maximum gap during the last recession and more than two times higher than the peak gap of 1.1% following the 1990-1991 recession. These facts about the male-female jobless rate gap are not only incontrovertible, they are truly unprecedented and historic.

And yet a new St. Louis Fed research report released today claims to: "debunk the popular notion that the current recession is predominantly a “man-cession”—a recession hurting American males proportionately more than women and other demographic groups.

The “man-cession” catchphrase is misleading and fails to reveal the full consequences of the recession across different demographic groups, according to author Howard J. Wall, a St. Louis Fed vice president and economist. “While it is true men are affected more than women during recessions, this recession is nothing out of the ordinary,” Wall said. “By some measures, the difference between men and women is smaller than in past recessions.”

A quick search of the full report shows that the term "unemployment rate" appears only once, but only in reference to the overall rate and not in reference to either men or women, and the terms "male unemployment" and "female unemployment" never appear. I'll read through more carefully later and make some additional comments, but I'm skeptical on first impression.

The Good Old Days Are Right Now

The chart above shows the significant increases in the energy efficiency of home appliances over time, with the refrigerator registering the most dramatic improvement (data were purchased from the Association of Home Appliance Manufacturers website).

In 1980, the energy factor (EF, a standard measure of an appliance's overall energy efficiency) of a standard home refrigerator was 5.59, and by 2008 the EF increased almost three-fold to 15.50, for a 177.3% improvement in energy efficiency in only 28 years. The other standard home appliances in the chart also had significant improvements in energy efficiency, from a 41.5% increase for the room air-conditioner, to a 91.4% increase for the dishwasher (thanks to Dennis Gartman for alerting me to these data in a recent "The Gartman Letter").

If the energy efficiency of a refrigerator has almost tripled since 1980, what's happened to its price, measured by the cost of the time it takes an average American to earn enough income to purchase a standard refrigerator?

In 1979, the 17-cubic foot Kenmore refrigerator pictured below from a Sears catalog cost $469.95 (on sale at the "lowest price in 1979"), and the average hourly wage then was $6.34 (Total: Private Industries), meaning that it would take 74.1 hours of work at the average hourly wage to earn enough income to purchase the refrigerator.

A 17.5 cubic-foot Whirlpool refrigerator (pictured below) is currently listed on the Sears website for sale at $524.99. At the current average hourly wage of $18.67, it would take the average American today only 28.1 hours of work to buy the refrigerator compared to 74.1 hours in 1979.

Bottom Line: A standard refrigerator today is not only almost 3 times more energy efficient than a comparable 1979-1980 model, its cost today is only about 1/3 the price of the 1979 model, measured in what is ultimately most important: our time. Put those two factors together, and the average American's refrigerator is almost nine times better than the refrigerator of 1980. Stated differently, if refrigerators hadn't fallen in price by almost a factor of 3 since 1980, and if they hadn't improved in energy efficiency by almost a factor of 3, Americans might be paying $1,500 today for a 17 cubic-foot refrigerator instead of $525, and it would be almost three times as costly to operate.

Despite our current economic problems and high unemployment, in many areas American consumers have never had it so good. Ever. The "good old days" are now.

Post Office Version of the Big Three "Jobs Bank"

Federal Times -- The U.S. Postal Service, struggling with a massive $7 billion deficit caused by plummeting mail volume, spends more than a million dollars each week to pay thousands of employees to sit in empty rooms and do nothing.

It’s a practice called “standby time,” and it has existed for years — but postal employees say it was rarely used until this year. Now, postal officials say, the agency is averaging about 45,000 hours of standby time every week — the equivalent of having 1,125 full-time employees sitting idle, at a cost of more than $50 million per year.

Mail volume is down 12.6 percent compared with last year, and many postal supervisors simply don’t have enough work to keep all employees busy. But a thicket of union rules prevents managers from laying off excess employees; a recent agreement with the unions, in fact, temporarily prevents the Postal Service from even reassigning them to other facilities that could use them. So they sit — some for a few hours, others for entire shifts. Postal union officials estimate some 15,000 employees have spent time on standby this year.

HT: Paul Ringstrom

Comments Now Back To Normal After Spam Attack

Last night about 8 p.m. Carpe Diem was hit with a major spam attack from China, where somebody posts comments with advertising on dozens, sometimes hundreds of posts. Luckily, I caught it while it was going on, and I was able to stop it by changing the settings and restricting comments temporarily. I just changed the setting back to normal, so you can post comments now as usual. Sorry for any inconvenience.

Dying To Do a Man's Job

The chart above shows that men suffered much more from fatal occupational injuries (4,703) in 2008 than women (368), by a factor of almost 13 to 1 (BLS data here).

Given the huge male-female occupational death gap, which has persisted over many decades, it is surprising that it has received so little attention as one important factor that could explain some of the male-female pay gap. To achieve greater female-male pay equity there would most likely have to be an increase in the number of women in higher-paying but higher-risk occupations. That outcome will certainly reduce the gender pay gap, but it would come at a cost—significantly more fatal occupational deaths and injuries for women. Would closing the pay gap, if it also means closing the gender occupational death gap, really be worth it?

Read my full post here at The Enterprise Blog.

Public Option = Massive Income Redistribution

From the Wall Street Journal article (9/29/2009) “Young Back Health Proposals Amid Potential Costs”:

Young adults remain some of the strongest supporters of a health-care overhaul, but many acknowledge they don't understand proposals that will likely saddle them with higher costs.

In the latest Wall Street Journal/NBC News poll, 18- to 34-year-olds showed some of the same apprehension as other age groups when asked whether President Barack Obama's health-care plan was a good idea. But half in that age group said they support a public insurance option, one of the most controversial elements of some of the proposals, with 43% opposed. It was the only age group in which more respondents supported than opposed a public option.

At the same time, the poll suggested many young adults didn't know what was in the legislation, with 48% saying they didn't understand or understood only somewhat what was being debated. That compared with 40% for respondents aged 65 and over.

MP: Before they throw their support so strongly behind a public insurance option, young adults might want to better understand the huge, inter-generational income redistribution that might be imposed on them if the public option passes, as outlined in these two recent reports:

From the Washington Post article (9/16/2009) “Young Adults Likely to Pay Big Share of Reform's Cost”:

As health-care legislation advances through Congress, the young adults who were so vital to President Obama's election are emerging as a significant beneficiary of his top domestic priority, but they are also likely to play a major role in funding any reform.

Drafting young adults into any health-care reform package is crucial to paying for it. As low-cost additions to insurance pools, young adults would help dilute the expense of covering older, sicker people. Depending on how Congress requires insurers to price their policies, this group could even wind up paying disproportionately hefty premiums -- effectively subsidizing coverage for their parents.

From the Wall Street Journal article (9/27/2009) “Health 'Reform' Is Income Redistribution”:

Like the homeowner who waits until his house is on fire to buy insurance, younger, poorer, healthier workers will rationally choose to avoid paying high premiums now to subsidize insurance for someone else. After all, they can always get a policy if they get sick.

To avoid this outcome, most congressional Democrats and some Republicans would combine guaranteed issue and community rating with the requirement that all workers buy health insurance—that is, an "individual mandate." This solves the incentive problem, and guarantees that both the healthy poor 25-year-old and the sick higher-income 55-year-old have heath insurance.

But the combination of a guaranteed issue, community rating and an individual mandate means that younger, healthier, lower-income earners would be forced to subsidize older, sicker, higher-income earners. And because these subsidies are buried within health-insurance premiums, the massive income redistribution is hidden from public view and not debated.

Record 7-Month Streak for Pending Home Sales

Pending home sales have increased for seven straight months, the longest in the series of the index which began in 2001, according to the National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in August, rose 6.4% to 103.8 from a reading of 97.6 in July, and is 12.4% above August 2008 when it was 92.4. The index is at the highest level since March 2007 when it was 104.5.

Lawrence Yun, NAR chief economist, said not all contracts are turning into closed sales within an expected timeframe. “The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules,” he said. “No doubt many first-time buyers are rushing to beat the deadline for the $8,000 tax credit, which expires at the end of next month.”

Jobless Claims (4Wk. Avg.) Fall to Lowest Level in 36 Weeks, Down 110,750 From Early April Peak

WASHINGTON — First-time claims for jobless benefits increased more than expected last week, a sign employers are reluctant to hire and the job market remains weak. And while consumer spending jumped by the most in nearly eight years in August due partly to the government's Cash for Clunkers program, economists worry whether that rebound can be sustained with U.S. households facing rising unemployment, tight credit conditions and other obstacles.

The Labor Department said Thursday that initial claims for unemployment insurance rose to a seasonally adjusted 551,000 from 534,000 in the previous week. Wall Street economists expected an increase of 5,000, according to a survey by Thomson Reuters.

The increase comes after three weeks of declines. Weekly claims have been trending down since the spring, but the decline has been painfully slow. The four-week average, which smooths out fluctuations, dropped to 548,000, about 110,000 below its peak in early April (see chart above).

MP: From the peak in early April, the four-week average has fallen by 110,750, and that measure of jobless claims has fallen in 19 out of the last 25 weeks. A comparison of the recent 110,750 decline to the last two recessions in the chart above, suggests that claims have been falling pretty sharply, and not "painfully slow," especially compared to the 1990-1991 recession.

$500 Million of Missing Tax Revenue from The Rich; ECON 101: If You Tax Something You Get Less of It

ASSOCIATED PRESS -- Early data from New York show the higher tax rates for the wealthy have yielded lower-than-expected state wealth. Gov. David Paterson, who had always warned targeting the rich could backfire, fears that's just what happened.

Paterson said last week that revenues from the income tax increases and other taxes enacted in April are running about 20% less than anticipated. So far this year, half of about $1 billion in expected revenue from New York's 100 richest taxpayers is missing. State officials say they don't know how much of the missing revenue is because any wealthy New Yorkers simply left.

But at least two high-profile defectors have sounded off on the tax changes: Buffalo Sabres owner Tom Golisano, the billionaire who ran for governor three times and who was paying $13,000 a day in New York income taxes, and radio talk-show host Rush Limbaugh. Golisano changed his official address to Florida, and Limbaugh, who also has a Florida home, announced earlier this year that he was relinquishing his home in Manhattan.

Donald Trump told Fox News earlier this year that several of his millionaire friends were talking about leaving the state over the latest taxes.

Thanks to Jeff Perry.

Canada's Improving Real Estate Market - Three Consecutive Monthly Increases in Home Prices

Canadian home prices in July were down 5.1% from a year earlier, according to the Teranet-National Bank National Composite House Price Index. Though it was the eighth consecutive 12-month decline, it was also the first time in 13 months that prices in every region covered by the index were up from the month before. For the composite index it was a third consecutive monthly rise (see charts above). The trend reversal is consistent with improving market conditions for the country as a whole in recent months - more homes have been selling and fewer have been coming on the market.

MP: The three consecutive monthly increases in Canada's main House Price Index follows 8 consecutive monthly decreases, and is the largest cumulative three-month increase in about two years (see bottom chart above).

Entrepreneurship At Its Finest: Why We Need Them

The reason that entrepreneurs are so important to the economy is because their very existence and success depends on one key factor: Effectively solving other people's problems. Need some new product to make your life better off, or something that already exists but you want it cheaper, better, faster, or more conveniently to make you better off? The entrepreneurs are at your service.

Here's a great example of entrepreneurship at its finest, featured recently on Club for Growth and Marginal Revolution- the Big Box Deliveries service in NYC. From its homepage:

On average, New York City stores and delivery services are 147% more expensive for Non-Perishable items and 107% more expensive for Perishable items than for similar items at Costco. Big Box Deliveries will "split the savings" with you. Each Non-Perishable item for sale has a “Costco” price and the “Average New York City” price for the exact same item but with Costco-sized bulk packing (see samples above).

For instance, Charmin costs $20.19 at Costco for 30 rolls. If a customer were to purchase 30 rolls in New York City, on average, the price would be $42.18. We split the savings. The customer pays $31.19 and saves $11. The Average New York City price is derived from real prices at Fresh Direct, Fairway, Gristedes, D’Agostino’s, Food Emporium, Whole Foods, Duane Reade™, CVS, Staples, Petco, and Diapers.com. Where there is no direct comparison for items, we use the overall average difference of 147.42% to calculate your final price.

They deliver 7 days a week to the Upper East and West sides of Manhattan, only to apartment buildings that have a doorman (doorperson?).

Markets in Everything: Deeply-Discounted Surgery for Cash, Payable in Advance

The Surgery Center of Oklahoma offers deeply-discounted surgery, payable in advance in cash or cashier's check, see a sample of prices above (click to enlarge).

From the FAQ section:

To keep our prices as low as possible, cashier's checks or cash are the methods preferred. Credit cards and personal checks cannot be accepted. Human resource departments or divisions of self-insured companies can make other arrangements if necessary.

Payment in full is required at the time service is rendered. No payment arrangements can be made. These deeply-discounted prices are otherwise not available.

HT: Jim DeLong via Nick Schulz

A Dirty Pun Tweaks China’s Online Censors in the World's Largest Cyber-Community

BEIJING -- The number of China's Internet users increased by 40 million to 338 million in January-June 2009, exceeding the total U.S. population, according to official news agency Xinhua. About 95% of towns and cities are connected to broadband Internet, Xinhua said. China has a population of over 1.3 billion people compared with the U.S. population of 307 million. The number of broadband Internet users in China increased by 10 million in the first half of the year to 93.5 million.

NY TIMES-- Government computers scan Chinese cyberspace constantly, hunting for words and phrases that censors have dubbed inflammatory or seditious. When they find one, the offending blog or chat can be blocked within minutes.

The grass-mud horse is an example of something that, in China’s authoritarian system, passes as subversive behavior (see video above). Conceived as an impish protest against censorship, the foul-named little horse has not merely made government censors look ridiculous, although it has surely done that. It has also raised real questions about China’s ability to stanch the flow of information over the Internet — a project on which the Chinese government already has expended untold riches, and written countless software algorithms to weed deviant thought from the world’s largest cyber-community.

Markets in Everything: Fantasy Sports Insurance

You’ve seen it time and time again… you spend your valuable TIME and MONEY preparing for your fantasy season… the anticipation of winning it all, drafting a team thatwould make any fantasy owner jealous, to have it all washed away with a major injury to your key player(s). NFL, MLB, NBA and NHL Team Owners carry disability insurance for key players on their team – Now Smart Fantasy Team Owners Can Too!

People Voting With Their One-Way U-Haul Rentals

Fortunately, the American people and businesses can vote with their feet, and with their one-way truck rentals, and that is apparently what the U-Haul data in the chart above show they are doing—moving away from places like Detroit and Providence with high unemployment and business-unfriendly environments, to cities like Fairfax, Fargo, and Houston that rank high for business climate in a new Forbes study on the best states for business.

Read my full post here at The Enterprise Blog.

Real Estate Recovery: Phoenix, Miami, Las Vegas

PHOENIX -- A total of 8,639 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in August, down 15.5% from July but up 20.2% from a year ago. Total home sales have increased on a year-over-year basis for eight consecutive months. Last month’s sales were at the highest level for an August since 2006.

MIAMI -- In August, 7,178 new and resale houses and condos closed escrow in the metro area encompassing Miami-Dade, Palm Beach and Broward counties. That was down a relatively sharp 9.6% from July but still up 27.4% from 5,635 in August 2008. August marked the sixth consecutive month in which the region's sales have risen on a year-over-year basis.

LAS VEGAS -- A total of 4,716 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County) last month (August), down a record 11.2% from July but up 16.5% from a year ago. August marked the 12th consecutive month in which sales have risen on a year-over-year basis.

Source: DQNews

14th Straight Month of Pending Sales Increases for the Minneapolis Area Housing Market

Minneapolis Area Association of Realtors -- Home prices continue to show signs of strengthening in August. From March 2009 through August 2009 the median sales price has grown from $154,125 to $175,000. During the same period last year prices were flat. Prices are stablizing due to strong buyer demand—especially in the lower price ranges—buoyed by low mortgage rates and the federal tax credit for first-time home buyers. For the 14th consecutive month, there were more pending sales than there were the prior year. August saw 4,897 signed purchase agreements, up 11% percent from August 2008. With the tax credit expiring in November, closed sales should stay robust for at least the next two months. Time will tell what the market looks like after that, but there will be less inventory.

MP: The chart above displays some of the key August data for the Twin Cities real estate market - home sales increased by 14.5% compared to August of last year, and the months supply of housing inventory decreased by three full months, from 9.9 months in August 2008 to 6.9 months in August of this year.

Single Most Important and Revolutionary Factor for Economic Development and Empowerment?

Over the last several years, what has been the single most important and revolutionary factor for the economic empowerment of the world’s poorest people?

Hint: It’s not foreign aid, the World Bank, or the International Monetary Fund.

Hint: It has compensated for inadequate infrastructure such as bad roads and slow postal services, it has facilitated the flow of information, it has allowed emerging market economies to operate more efficiently, and it has helped unleash entrepreneurship in some of the poorest countries in the world. And having it is “almost like having a card to get out of poverty in a couple of years.”

Find out what “it” is here, here and here.

U.S. Home Prices Increase for the Third Month in a Row For the First Time Since Spring 2006

NEW YORK (Reuters) - U.S. single-family home prices in July rose from the previous month, surpassing forecasts and bolstering the case for housing market stability after a three-year plunge, Standard & Poor's said on Tuesday. The S&P/Case-Shiller composite index of 20 metropolitan areas rose 1.6% in July from June, more than triple the estimate of a 0.5% rise found in a Reuters poll. This index rose 1.4% the month before. The 10-city index gained 1.7% in July after a 1.4% rise the previous month (see top chart above, data here).

"These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer's Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," David Blitzer, chairman of the index committee at S&P, said in a statement.

MP: The 1.61% July increase in the Composite-20 Index was the largest monthly gain since a 1.62% increase in April of 2005, and the period of three consecutive monthly increases in May, June and July of this year is the first time in more than three years that the index has increased three months in a row (see bottom chart above).

Markets in Everything: Carbon Offset Airport Kiosks

Three new kiosks with touch screens let travelers passing through SFO airport punch in an itinerary and purchase the appropriate carbon offset—calculated on the spot. These Climate Passport kiosks, the first in a U.S. airport, debuted yesterday and are located after security checkpoints near the entrances to Terminal 3 and international terminals A and G.

The offsets will fund two local projects: Garcia River Forest's planting of redwood and Douglas fir trees in heavily-logged Mendocino County and Dogpatch Biofuels, a bio-diesel fueling station based in San Francisco.

Link

See related article "Carbon Offsets: Eco-Extortion, Green Guilt, and the Selling of Indulgences."

Questions for Protectionists: Is The National Zoo with Foreign Animals Unpatriotic & Un-American?

Is China Guilty of "Panda Dumping"?

I now live several blocks from the Smithsonian National Zoo in Washington, D.C. and have visited there twice in the last week to see the exotic, foreign, imported pandas, hippo, zebras, the 8-month old baby gorilla, tigers, lions, etc.

Based on an earlier CD post, here are some questions for the trade protectionists, many of whom reside right here in the DC area, including my new neighbor President Obama:

1. Is there any material difference between American zoos like the Smithsonian National Zoo spending millions or billions of dollars annually to acquire "foreign" animals from South America, Africa and Asia for their exhibits, and American consumers spending billions of dollars annually to acquire foreign products from those same parts of the world, like tires from China?

2. If patronizing a foreign car company or a foreign tire company is considered to be an unpatriotic, un-American act, wouldn't visiting a zoo to patronize foreign, imported animals like the Chinese pandas be equally unpatriotic and un-American?

3. Protectionists might argue that you cannot buy an American elephant, so the only choice for the National Zoo is to purchase one from Africa or India. But isn't it also true that American consumers cannot buy what they might consider to be uniquely British, Japanese or German engineering features in an American car? Just like you cannot purchase an American elephant, you cannot purchase an American Jaguar, Lexus or BWM can you?

4. Isn't naming professional sports teams after foreign animals (Tigers, Lions) somewhat unpatriotic? If a team is named for an animal, wouldn't it really be better to name teams after American animals instead? If you support "Buy American," shouldn't you also support a "Name American" practice for professional sports teams?

5. One might argue that the National Zoo didn't spend any money purchasing the Chinese pandas (pictured above), but then wouldn't that be a case of "predatory panda pricing," since the Chinese government and Chinese people provided the pandas to the American people for "less than the cost of production." Should the American people complain to the WTO or the International Trade Commission that China is guilty of "panda dumping"? If we're willing to accept gifts from the Chinese people in the form of free pandas, why would we complain about them providing tires or other products at less than the cost of production, or complain about gifts from the Chinese people in the form of what is pejoratively called "predatory pricing" or "dumping"?

Libertarian Purity Test

Take Bryan Caplan's Libertarian Purity Test here.

HT: Mike Munger

There's Hope: Even Michigan Economy Rebounds!

DALLAS/September 28, 2009 – Comerica Bank’s Michigan Economic Activity Index improved five points in August to 78, the highest reading since December 2008. Compared to its recent May low, the Index is now up eight points, or 11%. Year-to-date, the Index averages 73, down 14 points from the 2008 average.

“A surge in Michigan auto sales related to the cash-for-clunkers incentives accounted for about half of the rise in our index in August,” said Dana Johnson, Chief Economist at Comerica Bank. “Although car sales will undoubtedly be much weaker in coming months, the decline in our index due to that component will be at least partially offset by rising light vehicle production. Our index may not rise in September, but it looks increasingly likely that it will trend higher over the balance of the year as a gradually accelerating national recovery boosts the auto sector and other components of the Michigan economy.”

Health Care PSA Smackdown

Do we need a "Public Health Insurance Option"?

YES. "Save the Insurance Company Executives PSA."

Protect Insurance Companies PSA from Will Ferrell

Use this link if the video above doesn't play.

NO. "Save the Celebrities PSA."

From the No Insurance Club.
Try this link if the video above doesn't play.

Chicago Fed Index Increases for 7th Straight Month

The three-month moving average, Chicago Fed National Activity Index-MA3 , improved for the seventh consecutive month (see charts above). At –1.09 in August (up from –1.61 in the previous month), the CFNAI-MA3 suggests that growth in national economic activity was below its historical trend.The production-related indicators made a smaller positive contribution of +0.29 to the index in August compared with +0.45 in July. Industrial production increased 0.8% in August, down slightly from 1.0 percent in the previous month; and manufacturing production increased 0.6 percent in August after rising 1.4 percent in July. July and August marked the first consecutive increases in industrial production since November and December 2007.

MP: The Chicago Fed National Activity Index (CFNAI-MA3) has increased in each of the last seven months (February to August), the first period of seven consecutive monthly increases since the December 2001 to June 2002 period following the 2001 recession, see bottom chart above.

Cuba's Farms: From State-Run to Private

GOOD NEWS: Faced with the smothering inefficiencies of a state-run economy and unable to feed his people without massive imports of food, Cuban leader Raúl Castro has put his faith in compatriots like Esther Fuentes and his little farm out in the sticks.

If Cuba is searching for its New New Man, then Fuentes might be him. The Cuban government, in its most dramatic reform since Castro took over for his ailing older brother Fidel three years ago, is offering private farmers such as Fuentes the use of fallow state lands to grow crops -- for a profit. Capitalism comes to the communist isle? Not quite, but close. Raúl Castro prefers to call it "a new socialist model." But Fuentes gets to pocket some extra cash.

"The harder you work, the better you do," said Fuentes, who immediately understood the concept. Castro's government says it has lent 1.7 million acres of unused state land in the past year to 82,000 Cubans in an effort to cut imports, which currently make up 60% of the country's food supply.

BAD NEWS: One of the challenges facing private farmers is the lack of credit and investment. They can work their new farms, but they often don't have enough fertilizer, seed or fuel. There's not enough electricity to run water pumps, Fuentes said, and no one has pesticides.

"This a big problem," said Alvarez, a University of Florida professor. "The government gives the farmers some land, which is good, but they don't give them any inputs. So they tell them, 'Take your old machete and go and fight the sun and weather and save us.' "

~Washington Post article today "Cuba Pins Hopes On New Farms Run for Profit"

Markets In Everything: Drive-Through Flu Shots

LEESBURG, Va. - Doctors and health departments are trying to meet the demand for the seasonal flu vaccination. Nurses in Leesburg Sunday offered a unique way to get the seasonal shot and Virginians turned out in droves. On Sunday, Leesburg residents had the opportunity to get a drive thru flu shot. Mattie Sherwood is a fan, saying you can't beat feeling the pinch in the comfort of your own car.

One Reason European Health Care Works: America

A 2006 article by Henry G. Grabowski and Y. Richard Wang in the peer-reviewed journal Health Affairs makes plain, the lion’s share of new chemical entities (NCEs)—that is, genuinely new drugs—are invented in the United States. Between 1993 and 2003, the authors found, 437 NCEs were introduced around the world. America was responsible for 152 of them—far more than any other country—with Japan coming in second with 88 and Germany a distant third with 42 (see chart above).

Why is this important? One reason for America’s drug dominance (though far from the only one) is America’s unsocialized medicine. Here, with the exception of a few programs like Medicaid and the VA system, the government doesn’t regulate the price of drugs, so when a company invents something big—the latest miracle cancer drug, say—it strikes it rich, making its executives hunger for more. Take away the profit motive, as government-run medicine often does by forcing drug companies to sell at discounted prices, and innovation will dry up.

So socialist Europe, by using American drugs is profiting from good old-fashioned American free enterprise. the lesson is to be skeptical of reports speaking glowingly of socialized health-care systems [MP: Example here of a report cited earlier in this article], because those systems wouldn’t work nearly as well as they do without unsocialized American medicine.

~From "The Pharmaceutical Umbrella," by Benjamin A. Plotinsky in City Journal

HT: Art Little

An Inconvenient Question: Did You Fly to the NYC Premiere of Climate Change Movie "Age of Stupid"?

MANILA (9/23/2009) - The much-awaited documentary "Age of Stupid" premiered globally in over 50 countries (including Antarctica) this week, sparking renewed calls for climate change action. The film, directed by British filmmaker and climate change activist Franny Armstrong ("If you're not fighting climate change or improving the world, you're wasting your life"), is set in the bleak scenery of 2055 where an archivist (played by Oscar nominee Pete Postlethwaite) is looking at 2008 archive footage that illustrate the signs and impacts of climate change.

The film's main premise is that climate change is happening now, often with alarming and disastrous effects, but humans are not doing more to stop it. The film has served as another rallying point for the climate change campaigns of many international environmental groups like Greenpeace, which is actively promoting the film worldwide.

MP: In the video above, journalist/filmaker Phelim McAleer asks celebrity attendees and film director Franny Armstrong an inconvenient question while covering the premiere of "The Age of Stupid": Did you fly to New York? Ms. Armstrong apparently can't or won't answer the question, and the journalist is ejected.

HT: Art Little

Yes, Income Inequality *IS* Increasing Significantly

In the National Football League.

CA Real Estate Recovery: Home Sales Increase for 14th Straight Month, Median Prices for 6th Month

LOS ANGELES (Sept. 25) – Home sales increased 9% in August in California compared with the same period a year ago, while the median price of an existing home declined 16.9%, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.) reported (see chart above). Closed escrow sales of existing, single-family detached homes in California totaled 526,970 in August at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR associations statewide. Statewide home resale activity increased 9% from the revised 483,400 sales pace recorded in August 2008.

The median price of an existing, single-family detached home in California during August 2009 was $292,960, a 16.9% decrease from the revised $352,730 median for August 2008, C.A.R. reported (see chart above). The August 2009 median price rose 2.6% compared with July’s $285,480 median price.

“The statewide median price rose for the sixth consecutive month in August,” said C.A.R. Vice President and Chief Economist Leslie-Appleton-Young. “Recent price gains are consistent with the low inventory levels of the past few months. Levels of distressed properties remain high, but have declined compared with earlier in the year, and are one reason why inventory levels are running below the state’s long-run average of 7.2 months.

C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in August 2009 was 4.3 months, compared with 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.

MP: In a separate report, DQNews reported that the August increase in California home sales was the 14th consecutive monthly sales increase on a year-over-year basis. Increasing home sales for 14 straight months, increasing median home prices for the last six months, and an unsold inventory index of almost 40% lower than a year ago - if those conditions do not reflect a true, solid real estate recovery in the California real estate market, how would a real recovery be any different?

Florida Real Estate Market Recovery: 12th Consecutive Monthly Increase in Home Sales

ORLANDO, Fla. (Sept. 24, 2009) – Florida’s existing home sales rose in August – marking a full calendar year (12 months) that sales activity increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors. Existing home sales rose 28% last month with a total of 13,850 homes sold statewide compared to 10,813 homes sold in August 2008 (see chart above). The state association also reported a 45% increase in last month’s statewide sales of existing condos compared to the previous year’s sales figure. Florida’s median sales price for existing homes last month was $147,400; a year ago, it was $188,500 for a 22 percent decrease.

MP: Along with home sale increases, median home prices are also starting to gradually increase as Florida's real estate market recovers. During the first four months of 2009 (Jan.-Apr.), the median home price averaged $140,000, compared to an average price of $147,000 during the most recent four months (May-Aug.). With a full year of monthly increases in home sales, and with rising median home prices, can we now officially declare that the Florida real estate market is in full recovery mode?