Saturday, July 03, 2010

As Share of Income, Americans Have the Cheapest Food in History and Cheapest Food on the Planet

The USDA recently updated its data on "Food expenditures as a share of disposable personal income," and reported that in 2009, Americans spent 9.47% of their disposable income on food (5.55% on food at home and 3.93% on food away from home).  The share of income spent on food last year was just slightly higher than the 9.42% in 2008, which is the all-time record low (see top chart above).  

As just one example of many that explain why Americans have the cheapest foods in history (as a share of income), the bottom chart above shows the inflation-adjusted wholesale price of milk back to 1890.  The current wholesale price of milk, about $15 per hundred weight (cwt), is about half the price of 25 years ago, and about one-third the price of 50 years ago.     

And compared to other countries, there's no other place on the planet that has cheaper food than the U.S. (2008 data here). The 5.5% of disposable income that Americans spend on food at home is less than half the amount of income spent by Germans (11.4%), the French (13.6%), the Italians (14.4%), and less than one-third the amount of income spent by consumers in South Africa (20.1%), Mexico (24.1%), and Turkey (24.5%), which is about what Americans spent DURING THE GREAT DEPRESSION, and far below what consumers spend in Kenya (45.9%) and Pakistan (45.6%). 

More proof that just being alive today in America, you've already "won the lottery of life."

Single Most Important Economic Issue of Our Time

"The landscape of capitalism may seem solid and settled and ready for seizure, but capitalism is really a mindscape.  Volatile and shifting ideas, and the human beings behind them-- not heavy and entrenched establishments -- are the source of our nation’s wealth. There is no bureaucratic net or tax web that can catch the fleeting thoughts of the greatest entrepreneurs of our past. Or future.

Wealth is valuable only to the extent that others think it will be valuable in the future, and that depends on running the fortune for the needs of the customers rather than for the interests of the owners. Its worth will collapse overnight if the market believes the company is chiefly serving its owner, rather than the owner serving it, or that it is being run chiefly for the managers rather than for the people who buy its wares. Look at the recent BP debacle and see for yourself.
The wealth of America isn't an inventory of goods; it's an organic, living entity, a fragile, pulsing fabric of ideas, expectations, loyalties, moral commitments, visions, and people. To vivisect it for redistribution would eventually kill it. As Mitterrand's French technocrats found early in the 1980s, the proud new socialist owners of complex systems of wealth soon learn they are administering an industrial corpse rather than a growing corporation.

That is why the single most important economic issue of our time – and one that impacts the poor and middle class alike – will be how we treat the very rich among us.

If the majority of Americans smear, harass, overtax, and over regulate this minority of wealth creators, our politicians will be shocked and horrified to discover how swiftly the physical tokens of the means of production collapse into so much corroded wire, eroding concrete, and scrap metal. They will be amazed at how quickly the wealth of America is either destroyed, or flees to other countries."

~Ziad K. Abdelnour, President & CEO Blackhawk Partners, from his essay "Why We Need the Rich: A Message to Americans – and Our Leaders in Washington DC – On Wealth Creation by a Wealth Creator."

Friday, July 02, 2010

June: 6th Double-Digit Increase in Car Sales

Auto sales increased in June by 14.4% compared to June last year, marking the sixth straight month of a double-digit percentage gain.

From the Detroit News, "All major automakers posted sales gains last month -- sales were up at 11.9% at GM, 13.4% at Ford and 35.4% at Chrysler -- and most also held their market share steady, with a few exceptions."

Also, as I reported yesterday, rail shipments of motor vehicles and equipment were up by 55.2 percent last week compared to the same month last year. 

7 Reasons the S&P Is Going to 1500

From yesterday's Wall Street Journal, by James Altucher:

"The S&P 500 may be headed downward right now, but here are seven reasons to believe it will go up. Way up."

Read the the whole article here.

More Evidence for Optimism Than For Pessimism

From The New Republic, an article by economist Stephen Rose (author of "Rebound: Why America Will Emerge Stronger From the Financial Crisis") titled "The Morning is Coming: Four Reasons Why the Economy Will Roar Back to Life":

"Our open economy encourages risk tasking; just ask the people behind the formation of 600,000 new businesses each year and the nine million who are self-employed. Because of this, we have a positive inflow of scientists and entrepreneurs—approximately one-quarter of the founders of Silicon Valley startups were non-Americans. And we have a great infrastructure for growth: an educated work force; many of the best universities in the world, which attract lots of foreign talent; access to capital; a good legal system; and an open society that encourages change. Europeans understand that Microsoft, Cisco, Apple, Intel, and the whole Internet revolution could not have started in Europe because businesspeople there are more risk averse and reluctant to build new relationships. And we have a thriving middle class that is ready to move, change jobs, and try new products.

If you look at the American capitalism since World War II, there are ample grounds for optimism. The U.S. economy has experienced almost continuous growth, punctuated by infrequent recessions, from which we have emerged stronger than ever.

Despite the green shoots, and the history of America quickly rebounding from other recessions since 1945, unexpected events could still slow the recovery. But I think the weight of evidence is on the side of optimism rather than pessimism."

Read the whole article here.

Wal-Mart Deserves the 2010 Nobel Peace Prize

From a 2008 NPR report "The Supermarket Revolution Moves Into Honduras":

"If somebody says "developing-world food market," what comes to mind? Maybe a street filled with fruit, vegetable and meat stands, like one in Tegucigalpa, the capital of Honduras. But another kind of market is taking over in Honduras: the supermarket.  Paiz, one of two supermarket chains in Honduras owned by Wal-Mart, is as bright and clean as any in the U.S. The number of Paiz stores is growing fast.

Supermarket sales in Honduras have been increasing by about 20 percent a year. Luis Alfonso Andino, who's in charge of vegetable shipments at one Paiz store in Tegucigalpa, says the growth is because customers know the food from the supermarkets won't make them sick.

High in the hills, near the town of Lepaterique, Vicente Sanchez ticks off the crops that his farmers cooperative grows: carrots, lettuce, cauliflower, cilantro. They all go straight to Wal-Mart. Sanchez's cooperative signed a deal with the chain, with the help of a Swiss aid organization called Swisscontact.   "Whatever we plant, we know that it's already sold before we plant it," he says. "Before, we'd plant things without knowing whether we had a buyer, and we used to lose out."

Edward Bresnyan, an agricultural economist at the World Bank office in Honduras, says the deals between farmers and supermarkets help fuel the economy. That translates to better roads and cell phones, so that farmers can find out where they can get the best prices.

For the farmers in Lepaterique, it's working pretty well so far. Some of them arrived at the Wal-Mart supply center in the outskirts of Tegucigalpa driving a pickup truck loaded with broccoli, green beans and carrots. Wal-Mart manager Gabriel Chiriboga looked pleased. Within 24 hours, shoppers will see those vegetables on supermarket shelves. And some of the money that they spend will flow back to the small — but well-connected — village."

MP: According to a recent fact sheet from Wal-Mart, it now operates 53 retail stores in Honduras, including seven Paiz supermarkets, and it employs more than 2,500 associates.  Wal-Mart has also been responsible for introducing  a "wide range of recycling, energy preservation and residual water treatment programs" in Honduras. 

Contrary to all of the criticism from groups like "Wake-Up Wal-Mart" that Wal-Mart destroys local businesses and depresses local communities with low wages and sub-standard benefits, violates labor laws and safety standards, engages in gender discrimination, etc., much of the evidence seems exactly the opposite:

In Honduras, Wal-Mart has helped stimulate local farmers and local communities, helped increase safety standards for food, created thousand of good-paying jobs, helped improve the distribution infrastructure with better roads, introduced environmentally-friendly practices like recycling and energy conservation, etc. 

Bottom Line: For all of its efforts to raise the standard of living in countries like Honduras, and help to lift millions of people out of poverty, I nominate Wal-Mart for the 2010 Nobel Peace Prize.

HT: C. August

Wal-Mart Benefits Local Farmers and Suppliers

Wal-Mart often gets criticized for driving small, downtown merchants out of business, who find it hard to compete against the giant retailer's "everyday low prices," although it would be more accurate to blame "greedy consumers" for the fate of the high-priced, downtown merchants.  As I wrote in 2002, "Wal-Mart can't force people to shop at its stores; all it can do is offer a low-priced alternative to the high-priced downtown merchants. "Greedy" consumers do the rest."

Here's a new story from NPR "Wal-Mart Helps Small Farms Supply 'Local' Foods," that explains how "The company wants to revitalize small and midsize farms in the U.S. and has begun a program to increase the amount of local produce sold in Walmart stores. The program also benefits consumers, who have access to fresher food, as well as Wal-Mart itself."

Wal-Mart is now working with about 350 small farmers as part of its Heritage Agriculture program, and this is just one example of how small local businesses can actually benefit from a local Wal-Mart.  Here's another example: "Wal-Mart purchased $269 million in products from 316 suppliers located throughout Idaho in 2009."

Markets in Everything: Vertical Seats on Planes

Ryanair is planning to run flights where passengers stand in "vertical seats" during the journey at a cost of just £5 per ticket (about $7.50).

HT: Juandos

Private Sector Jobs Increase in June for the 6th Month; First Time in Almost 3 Years, Since 2007


Some highlights of today's employment report:

1. The jobless rate fell to 9.5%, the lowest rate since June 2009.

2. Private-sector jobs have increased in each month this year, and by 83,000 in June, bringing the total to 593,000 private-sector jobs that have been created since December 2009. This is the first time in almost three years of six consecutive monthly gains in private-sector employment (see top chart above).  

3. Manufacturing employment has also increased for six consecutive months, for a total increase of 136,000 new jobs this year, and by 9,000 in June (see middle chart above).

4. Temporary employment increased in June by 20,500, marking the ninth month in a row of job gains for temporary help services, and bringing the total gain in this sector to 378,900 since the bottom last fall (see bottom chart above). 

5. Average overtime hours for manufacturing declined slightly in June to 3.8 hours, possibly because the 136,000 new jobs added this year reduce the need for overtime hours.   

Thursday, July 01, 2010

Why Job Growth Might Be Better Than It Seems

"Whatever happens tomorrow, it’s worth keeping something in mind: The official government statistics are probably understating job growth right now.  That tends to be the pattern after recessions end. As the economy is starting to add jobs again, the Bureau of Labor Statistics understates job growth. And the opposite happens during recessions. Then, the government understates job losses."

~David Leonhardt in the NY Times Economix blog
MP: As the chart above shows, the BLS revisions to employment levels are generally positive during expansions (initial reports of job gains are later revised upward) and negative during recessions (initial reports are revised downward), and this pattern was consistent following the last two recessions.  In that case, employment gains could actually be better than what gets reported initially.   

International Air Travel (Passenger and Freight) Rebounds in May to Above Pre-Recession Levels

Geneva - "The International Air Transport Association (IATA) announced international scheduled traffic statistics for May, which showed an 11.7% increase in passenger traffic and a 34.3% jump in freight demand compared to May 2009.

“Demand rebounded strongly in May following the impact of the European volcanic ash fiasco in April. Passenger traffic is now 1% above pre-recession levels, while the freight market is 6% bigger,” said Giovanni Bisignani, IATA’s Director General and CEO.

Strong traffic growth is contributing to a strengthening industry bottom line. Airlines are expected to post a $2.5 billion profit in 2010 in a dramatic turnaround from the $9.9 billion lost in 2009. “This is good news, but it is only a 0.5% margin. We are still a long way from sustainable profitability,” said Bisignani."

MP: In a related post, Scott Grannis reports today that the Harpex Shipping Index (a measure of rates charged by container ships in the North Atlantic) is showing ongoing improvements this year, and has recently reached the highest level since 2008. 
In a flurry of amazing posts today with positive economics news (it's hard to keep up with him!), Scott also reports that: a) the number of persons receiving unemployment compensation insurance has dropped by 25% since the high in 2008 (link), b) historically low mortgage rates and cheap home prices create great opportunities for homebuyers (link), c) construction spending has stabilized (link), and d) the manufacturing sector remains strong (link).

Rail Traffic Continues Double-Digit Gains vs.2009

Highlights of this week's Rail Traffic Report:

1. U.S. railroads originated 284,716 carloads for the week ending June 26, 2010, up 11.4 percent compared with the same week in 2009 (but down 13.2 percent from 2008).

2. Intermodal traffic totaled 227,229 trailers and containers, up 20.5 percent from a year ago and down only 1.1 percent compared with 2008.

3. Compared with the same week in 2009, container volume increased 22.1 percent and trailer volume rose 12.3 percent.

4. Seventeen of the 19 carload commodity groups increased from the comparable week in 2009, with metallic ores, up 172.2 percent; metals and metal products, up 75.4 percent; and motor vehicles and equipment, up 55.2 percent, posting the most significant gains.

5. Combined North American rail volume (U.S., Canada and Mexico) for the first 25 weeks of 2010 totaled 9,208,258 carloads, up 10.4 percent from last year, and 6,507,218 trailers and containers, up 12.9 percent from last year.

MP: Compared to last year, almost every measure of rail traffic for the U.S., Canada and Mexico has registered double-digit percent increases, and some measures like intermodal traffic in the U.S. are just slightly below 2008 levels. 

June Monster Employment Index Rises 21% v. 2009

From today's Monster Employment Report for June 2010:

1. The Monster Employment Index climbed 7 points in June and the annual growth rate, now at 21 percent (24-point increase), is at its highest since September 2006.

2.  Online demand for workers rose in 17 and remained flat in 5 of the 23 occupational categories in June with healthcare support registering the largest gain on a month-over-month basis.
3. Demand rose in all U.S. Census Bureau regions with West North Central registered the largest monthly as well as 3-month gain. On an annual basis, Middle Atlantic exhibited the most improvement while Mountain registered the most sluggish expansion in demand which was nonetheless positive at 13 percent.
4. Online recruitment activity rose in all major metropolitan markets, with Detroit registering the largest monthly gain.
5. 49 states registered increased online job opportunities in June, with a number of states, such as the Dakotas and Wyoming, registering notable rises following somewhat sluggish recruitment trends in the earlier spring months.

Markets in Everything: Renting White People

Beijing, China (CNN) -- "In China, white people can be rented.  For a day, a weekend, a week, up to even a month or two, Chinese companies are willing to pay high prices for fair-faced foreigners to join them as fake employees or business partners.

Some call it "White Guy Window Dressing." To others, it's known as the "White Guy in a Tie" events, "The Token White Guy Gig," or, simply, a "Face Job."  And it is, essentially, all about the age-old Chinese concept of face. To have a few foreigners hanging around means a company has prestige, money and the increasingly crucial connections -- real or not -- to businesses abroad."

HT: Matt Bixler

ESI Rises Above 40 for First Time Since June 2008

NEW YORK, June 30, 2010 – "For the third consecutive month, the Dow Jones Economic Sentiment Indicator (ESI) rose modestly signaling an improving U.S. economy. For June, the ESI rose above 40 for the first time since 2008, hitting 40.3. The ESI is up slightly from 39.4 in May. The ESI is determined by in-depth analysis of national news coverage across 15 daily newspapers."

Wednesday, June 30, 2010

#1 and #2 American-Made Cars: Toyota and Honda

#1 Toyota Camry
#2 Honda Accord

"'s American-Made Index rates vehicles built and bought in the U.S. Factors include sales, where the car's parts come from and whether the car is assembled in the U.S."

For 2010, the #1 American-made car is the Toyota Camry for the second year in  a row, followed by the Honda Accord.  Toyota has two other models in this year's top ten, the Tundra at #7 and the Sienna at #10; and Honda has the Odyssey at #6.  So the two "foreign car companies" - Toyota and Honda - captured half of the top ten spots for American-made cars in 2010, just like last year

Isn't it a bit ironic that the two "most American-made" cars would get towed from the UAW parking lot pictured below? And what about these vehicles built by the "Canadian Auto Workers" - Chevy Camaro, Chrysler 300, Dodge Challenger, Dodge Charger - wouldn't they get towed?

Update: The Mazda 6, Mitsubishi Eclipse, Mitsubishi Galant, and Toyota Corolla are all built by the UAW in the United States - would these union-made vehicles actually get towed?  

A New Economic Index: The Coffee Indicator

"As economists look for clues on the direction of consumer spending, they may want to look into how much Americans are willing to spend on their coffee.  Majestic Research tracks anonymous credit-card data, and can see how much consumers spend by category and store, and it broke out the average dollar transactions at Starbucks and Dunkin’ Donuts. The data show that during the worst of the recession consumers spent less at the two coffee outlets, but as the employment picture started to improve people were willing to spend more per transaction (see chart above)."

Read more here.

Restaurant Activity Softens in May, But Outlook Remains Pos. as Capital Spending Rose to 2-Yr. High

"The outlook for the restaurant industry softened in May, as the National Restaurant Association's comprehensive index of restaurant activity fell below 100 for the first time in three months. The Association's Restaurant Performance Index (RPI) - a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry - stood at 99.7 in May, down 0.7 percent from April’s level of 100.4. In addition, the RPI fell below 100 for the first time in three months, which signifies contraction in the index of key industry indicators.

Although the sales and customer traffic indicators softened in May, capital expenditure activity rose to its highest level in nearly two years. This, along with a continued positive outlook for sales and the overall economy, signals that restaurant operators remain optimistic that business conditions will improve in the months ahead."

Markets in Everything: Oil Spill Souvenirs

 South Florida Brothers Selling Oil Spill Souvenirs.

HT: Adam Evans

The French Candlemakers' Petition

From a Petition From the French Manufacturers of Candles:

"We (French candlemakers) are suffering from the ruinous competition of a foreign rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun

We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull's-eyes, deadlights, and blinds — in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country, a country that cannot, without betraying ingratitude, abandon us today to so unequal a combat."

~French economist Frédéric Bastiat writing in 1845.  Bastiast was born today in 1801

Just like we shouldn't complain about a foreign rival like the sun "dumping" light on us for free or below cost, we also shouldn't complain about foreign countries "dumping" goods in the U.S. below cost, and we shouldn't complain about currency "manipulation" that makes goods cheaper to U.S. consumers and companies, and we shouldn't complain about free gifts or foreign aid from other countries.

In addition to highlighting the economic fallacies of protectionism and promoting the economic benefits of free trade, Bastiat also facetiously proposed laws forbidding the use of everybody's right hand, based on the false assumptions that more difficulty means more work and more jobs, and more work produces more wealth.  

Tuesday, June 29, 2010

Chicago's Only Wal-Mart Has Improved Its West Side

"Now that it appears Chicago's South Side will be getting a Wal-Mart, what will it mean for that community? The store is scheduled to open in early 2012 at 111th and Doty in Pullman. CBS-TV 2's Jim Williams went to the only current Chicago Walmart on the West side to see how it has affected that neighborhood."  

Watch the video here to see the positive effect Wal-Mart has had on Chicago's west side by creating more than 400 good-paying jobs, making the neighborhood safer, and helping to revitalize the area and bring in new stores including a Menards Home Improvement store, a CVS pharmacy, two new banks and an Aldi Grocery Store.  Area alderwomen Emma Mitts credits Wal-Mart for attracting many new stores to the neighborhood, and says that "traffic is so heavy on the weekends that it's hard to get up and down the strip, and that's a good thing and I'm so grateful for it."

Although Wal-Mart frequently gets blamed for putting local merchants out of business when the open a new store, this story provides some evidence to the contrary - by stabilizing a rough area on Chicago's West Side and attracting thousand of customers for "everyday low prices," at Wal-Mart actually helped to attract new businesses to this Chicago neighborhood, including direct competitors like Menards, CVS and Aldi.  In other words, Wal-Mart provides many significantly "positive externalities" and "spillover benefits" to the communities in which it operates, even though it frequently gets more attention for some of the "negative externalities" and "spillover costs" it might impose. For neighborhoods like the west side of Chicago, it sure looks like the positive externalities (jobs, tax revenues, great safety, more commercial activity, etc.) far outweigh any negative externalities.     

Case-Shiller Reports Highest Yearly Gain Since 2006

Highlights of today's Case-Shiller report for April home prices:

1. Annual growth rates of all 20 MSAs and the 10- and 20-City Composites improved in April compared to March 2010.

2. The 10-City Composite is up 4.6% from where it was in April 2009, and the 20-City Composite is up 3.8% versus the same time last year (see top two charts).  These two year-to-year improvements were the highest annual percentage gains since September 2006.  

3. 18 of the 20 MSAs and both Composites saw improvement in prices as measured by April versus March monthly changes.

4. The strongest year-to-year price gains were in California, with San Francisco leading the 20 MSAs with an 18% increase from April 2009-April 2010, followed by San Diego (11.7%) and Los Angeles (7.8%).  Strong gains were also reported for Minneapolis (9.5%), Washington D.C. (7.3%), Cleveland (6.8%) and Phoenix (5.5%), see table above (click to enlarge).     

Highest ASA Staffing Index Level in 85 Weeks

American Staffing Association -- "During the week of June 14–20, 2010, temporary and contract employment increased 1.11%, pushing the index up one point to a value of 91 (see top chart above).  At a current index value of 91, U.S. staffing employment is 32% higher than the level reported for the first week of the current year and is 25% higher than the same weekly period in 2009 (see bottom chart)."

MP: The ASA index of 91 for the week of June 14-20 is the highest level in 85 weeks, since late October 2008, and is also the ninth consecutive week of an annual gain above 20%, and the eighteenth week of double-digit gains. 

Email Use Declines, Especially for 18-34 Year Olds

"Online Canadians have reported a significant decline in the number of weekly emails received, according to the latest Ipsos Interactive Reid Report. The average number of email received in the past week (including spam) has declined by 35% from 198 in late 2008 to 129 today.

Study author Mark Laver noted that ‘when you look at some of the new communications platforms, such as Facebook, Twitter and Messenger, that have taken off in the last few years the decline in email usage is really not that surprising, what is surprising is the size of the decline that is happening.’

Generally, 18-34 year olds do everything more online than their older counterparts. However, this age group now receives the fewest emails each week with an average of 116. Those respondents with high school educations or less also receive significantly fewer emails each week."

MP: Compared to Q4-2007 (226 average emails per week), email use in Canada during the first quarter of this year is about half that amount (129 average weekly emails). 

Monday, June 28, 2010

Markets in Everything: Lion Meat Burgers

MESA, Ariz. - People are feeling the World Cup fever all over the globe. The South Africa tournament has captivated fans, and now a Mesa, Arizona restaurant is paying homage to the host country with a special menu item. But by offering that item, the owner has received threats.  Cameron Selogie is selling burgers made from lion meat, starting Wednesday at Il Vinaio in Mesa.

The big cat is not illegal to eat in the U.S., and the African lions used to make the burgers were actually raised on a free-range animal farm in the Midwest.

HT: John Stossel via Coyote Blog.

Quote of the Day

"Hillsdale College is one of the last true meritocracies. There's no place on its application for racial identity, and it doesn't know the racial make-up of its student body until it shows up on campus in the fall. 

'The purpose of education is not diversity,' Hillsdale President Larry Arnn says. 'It's truth.'"

~Detroit News

Consumer Spending Makes a Comeback

One of the bright spots in today's report on Personal Income and Outlays was the significant improvement in May for real personal consumption expenditures, especially for durable goods (cars, appliances, business equipment, electronic equipment, home furnishings and fixtures, housewares, photographic equipment, recreational goods, sporting goods, etc.). 

Compared to last May, real consumption expenditures increased last month by 2.6%, which is the highest year-to-year gain since August 2007, 33 months ago (see top chart).  For durable goods the annual increase in May was 11.4% compared to last year, following an 11.5% increase in April.  The last time consumer expenditures on durable goods increased by more than 11% was in July 2005, and the last time there were two consecutive monthly increases above 11% was in 2002 (see chart above).   

These increases in consumer expenditures, especially for "big-ticket items," are consistent with the last week's report on consumer sentiment, which just reached its highest level this month since January of 2008. 

Top-Down Collectivism Fatigue: Let's Turn Around

"According to Hayek, order can emerge not just from the top down but from the bottom up. The American people are suffering from top-down fatigue. President Obama has expanded federal control of health care. He'd like to do the same with the energy market. Through Fannie and Freddie, the government is running the mortgage market. It now also owns shares in flagship American companies. The president flouts the rule of law by extracting promises from BP rather than letting the courts do their job. By increasing the size of government, he has left fewer resources for the rest of us to direct through our own decisions.

Hayek understood that the opposite of top-down collectivism was not selfishness and egotism. A free modern society is all about cooperation. We join with others to produce the goods and services we enjoy, all without top-down direction. The same is true in every sphere of activity that makes life meaningful—when we sing and when we dance, when we play and when we pray. Leaving us free to join with others as we see fit—in our work and in our play—is the road to true and lasting prosperity. Hayek gave us that map.

Hayek never said that totalitarianism was the inevitable result of expanding government's role in the economy. He simply warned us of the possibility and the costs of heading in that direction. We should heed his warning. I don't know if we're on the road to serfdom, but wherever we're headed, Hayek would certainly counsel us to turn around."

~George Mason economist Russ Roberts in today's WSJ

Chicago Fed Index: "Mature Economic Recovery"

"The Chicago Fed National Activity Index edged lower to +0.21 in May from +0.25 in April. Production indicators continued to make strong contributions to the index in May, while weaker contributions from employment- and housing-related indicators accounted for the slight decrease in the index from April.

The index’s three-month moving average, CFNAI-MA3, rose to its highest level since March 2006, increasing to +0.28 in May from +0.05 in April (see chart above). May’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend. Moving above +0.20, the index’s three-month moving average in May also reached a level historically associated with a mature economic recovery following a recession. With regard to inflation, the CFNAI-MA3 in May indicates limited inflationary pressure from economic activity over the coming year."

Sunday, June 27, 2010

Optical Illusions

MCAT Scores for Medical Students by Gender

The chart above is based on average MCAT scores by gender for students admitted to U.S. medical schools in each year between 2002 and 2009 (data here).  Men consistently have higher MCAT scores (30.975 average score for the 2002-2009 period) than women (29.5375 points) by an annual average of 1.4375 points for this period.  In the most recent year of 2009, men scored higher on average by 1.50 points (31.6 men vs. 30.1 women), which is a statistically significant difference with a t-statistic of 25.08 from a "difference of means test" (prob = 0.0000). 

Medical School Acceptance Rates, 2007-2009

Here's a new chart (click to enlarge) with updated data from the Association of American Medical Colleges on medical school acceptance rates for Asians (data here), whites (data), Hispanics (data) and blacks (data) during the period 2007-2009, based on various combinations of MCAT scores (24-26 and 27-29) and GPAs (from 3.00 to 3.59).  

For example, for applicants with an MCAT score between 24-26 and a GPA between 3.00 and 3.19, only 1 out of every 25 Asian applicants was accepted, compared to about one out of every 11 white applicants, one of out every three Hispanics, and more than half of black applicants with those same credentials.   

Thanks to Walt G. for the help pointing out the links to the data.

Manhattan Apt. Sales Up by 80% in Second Quarter

WSJ -- "Sales of Manhattan apartments picked up during the second quarter of 2010, to the fastest pace since the summer of 2008, an illustration that the market has been recovering during the spring selling season, usually the busiest time of the year. A Wall Street Journal review of closed-sales filings with New York City Department of Finance shows that during the second quarter, which ends June 30, sales were running 80% above the pace reported a year ago (see chart above).

Analysts said there has likely been a modest recovery in prices as well. During the spring season, the pickup in Manhattan co-op sales was particularly strong, with co-op sales hitting the highest pace since the summer of 2007."

HT: Bill

Markets in Everything: $10-$30 to Cut in Line

WSJ -- "Several airlines are selling the chance to jump to the front of check-in lines, boarding queues and even security lines for about $10 to $30 per flight. Perks that used to be reserved only for elite-level frequent fliers and first-class passengers are now up for grabs to those who'll pay to jump the line. Lots of travelers are buying."