White Castle Has Offered Health Insurance To Its Workers Since 1924, But Obamacare May End That
White Castle has been offering health insurance to its workers in 1924, but Obamacare "will make it hard for the company to maintain its 421 restaurants, let alone create new jobs," says company spokesman Jamie Richardson in this Cleveland Plain Dealer article.
"The Columbus-based family owned restaurant chain - known for serving small square hamburgers called "sliders" – says a single provision in the bill will eat up roughly 55 percent of its yearly net income after 2014. Starting that year, the bill levies a $3,000-per-employee penalty on companies whose workers pay more than 9.5 percent of household income in premiums for company-provided insurance. White Castle, which currently provides insurance to all of its full-time workers and picks up 70 to 89 percent of their premium costs, believes it will likely end up paying those penalties.
House Republican Leader John Boehner of Ohio, a vocal foe of the changes, says White Castle's analysis shows how the law's "job-crushing" impact will be most severe in lower-income areas, where jobs like those at White Castle are most needed. "The irony is that in the name of expanding health care coverage, the administration is making it harder than ever for unskilled workers to get started in the workforce," Boehner said in a missive on White Castle's plight.
White Castle is also examining whether it would make financial sense for the company to eliminate health insurance coverage altogether and have all its employees buy insurance on the federal exchange, says Richardson."
HT: Steve Bartin
Tierney Wins The Peak Oil Bet
In August of 2005, Houston banking executive Matthew Simmons (one of the world's "leading experts" on the topic of peak oil, although not very good at predicting oil prices) and New York Times columnist John Tierney each put up $5,000 and made a bet about the price of oil in 2010.
The wager was based on the price of oil in 2010, specifically on the average daily price for the entire year, adjusted for inflation into 2005 dollars. If the inflation-adjusted oil price this year is $200 or more per barrel, Mr. Simmons wins $10,000 plus interest, and if the average price this year is less than $200, Tierney wins the bet.
The bet was made public in Tierney's New York Times column on August 23, 2005 called "The $10,000.00 Question." Economist Julian Simon's widow put up $2,500 towards Tierney's $5,000 obligation, to honor the tradition of her husband's famous wager with Paul Ehrlich.
The chart above shows monthly oil prices in 2010 (converted to 2005 dollars), including monthly projections through the end of the year, from the Energy Information Administration. Now that we're halfway through 2010, it looks pretty certain that average oil prices this year won't even be anywhere close to $100, and will probably average less than $70, far below the $200 price predicted by Simmons. Unless oil somehow averages more than $330 per barrel for the rest of the year, I think it's pretty safe to assume that Tierney has won the "peak oil bet."
ASA Staffing Index Level Above Last Year by 26%
American Staffing Association - "During the week of June 21–27, 2010, temporary and contract employment increased 0.05%, maintaining the index at a value of 91. 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 26% higher than the same weekly period in 2009 (see top chart above)."
MP: The ASA index level of 91 for temporary and contract employment activity in the fourth week of June is the second week in a row at that level, which is the highest reading in 86 weeks ( since late October 2008, see chart above). The 26% gain in the index marks the tenth consecutive week of an annual gain above 20% compared to the same week last year, and is also the nineteenth straight week of double-digit gains for temporary employment (starting in mid-February).
The ongoing increases in temporary hiring, measured by both the ASA Staffing Index and the BLS temporary employment levels (nine straight monthly increases that have added almost 400,000 jobs since last September), provides evidence that the demand for temporary and contract employment continues to strengthen, which should hopefully translate into more broad-based, permanent job creation in the second half of this year.
Down With Gloom and Doom
From Matt Ridley's article "Down with Doom: How the World Keeps Defying the Predictions of Pessimists":
"When I was a student, in the 1970s, the world was coming to an end. The adults told me so. They said the population explosion was unstoppable, mass famine was imminent, a cancer epidemic caused by chemicals in the environment was beginning, the Sahara desert was advancing by a mile a year, the ice age was retuning, oil was running out, air pollution was choking us and nuclear winter would finish us off. There did not seem to be much point in planning for the future.
By the time I was 21 years old I realized that nobody had ever said anything optimistic to me - in a lecture, a television program or even a conversation in a bar - about the future of the planet and its people, at least not that I could recall. Doom was certain.
The next two decades were just as bad: acid rain was going to devastate forests, the loss of the ozone layer was going to fry us, gender-bending chemicals were going to decimate sperm counts, swine flu, bird flu and Ebola virus were going to wipe us all out. In 1992, the United Nations Earth Summit in Rio de Janeiro opened its agenda for the twenty-first century with the words `Humanity stands at a defining moment in history. We are confronted with a perpetuation of disparities between and within nations, a worsening of poverty, hunger, ill health and illiteracy, and the continuing deterioration of the ecosystems on which we depend for our well-being.'
By then I had begun to notice that this terrible future was not all that bad. In fact every single one of the dooms I had been threatened with had proved either false or exaggerated. The population explosion was slowing down, famine had largely been conquered, India was exporting food, cancer rates were falling not rising, the Sahel was greening, the climate was warming, oil was abundant, air pollution was falling fast, nuclear disarmament was proceeding apace, forests were thriving, sperm counts had not fallen. And above all, prosperity and freedom were advancing at the expense of poverty and tyranny.
I began to pay attention and a few years ago I started to research a book on the subject. I was astounded by what I discovered. Global per capita income, corrected for inflation, had trebled in my lifetime, life expectancy had increased by one third, child mortality had fallen by two-thirds, the population growth rate had halved. More people had got out of poverty than in all of human history before. When I was born, 36% of Americans had air conditioning. Today 79% of Americans below the poverty line had air conditioning. The emissions of pollutants from a car were down by 98%. The time you had to work on the average wage to buy an hour of artificial light to read by was down from 8 seconds to half a second.
Not only are human beings wealthier, they are also healthier, wiser, happier, more tolerant, less violent, more equal. Check it out - the data are clear. Yet if anything the pessimists had only grown more certain, shrill and apocalyptic."
HT: Coyote Blog
Quotes of the Day: Consumer Sovereignty
1. “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
~Sam Walton
2. “It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.”
~Henry Ford
3. "Consumers are the kings and queens of the market economy, and ultimately they reign supreme over corporations and their employees. In a market economy, it is consumers, not businesses, who ultimately make all of the decisions. When they vote in the marketplace with their dollars, consumers decide which products, businesses, and industries survive—and which ones fail. It is therefore consumers who indirectly but ultimately make the hiring and firing decisions, not corporations. After all, corporations can make no money, hire no people, and pay no taxes unless somebody, sooner or later, buys their products."
~Mark Perry
Markets in Everything: No-Cash Restaurants
NEW YORK -- At the Greenwich Village restaurant Commerce, cash is off the menu. In the latest encroachment of credit and debit cards onto the greenback's turf, the high-end New York City restaurant said goodbye to dollars and cents this week. The message to diners: Tip in cash if you wish, but otherwise, your money is no good here. New York magazine ridiculed the restaurant, saying it should rename itself "e-Commerce."
HT: E. Frank Stephenson
Apple iPhone: Designed in U.S., Assembled in China
.
"...designed by Apple engineers in the United States, sourced with high-tech components from around the world and assembled in China. Shipped back to the United States, the iPhone is priced at $600, though the cost to consumers is less, subsidized by AT&T in exchange for service contracts.
“China makes very little money on these things,” said Jason Dedrick, a professor at Syracuse University and an author of several studies of Apple’s supply chain. Much of the value in high-end products is captured at the beginning and end of the process, by the brand and the distributors and retailers. According to the latest teardown report compiled by iSuppli, a market research firm in El Segundo, Calif., the bulk of what Apple pays for the iPhone 4’s parts goes to its chip suppliers, like Samsung and Broadcom, which supply crucial components, like processors and the device’s flash-memory chip. The total bill of materials on a $600 iPhone — the supplies that go into final assembly — is $187.50, according to iSuppli (see chart above).
The least expensive part of the process is manufacturing and assembly. And that often takes place here in southern China, where workers are paid less than a dollar an hour to solder, assemble and package products for the world’s best-known brands.
MP: There are several important points here:
1. We often assume that "assembled in China" means that 100% of the product's content and value is produced or "captured" in China, when in this case only 1% of the iPhone's value is produced by China, and more than 60% of the iPhone's retail value is produced by American engineers, designers, and other IT professionals at Apple, and also at other U.S. companies like Intel and Texas Instruments that provide some of the components.
2. Assuming the U.S. government counts an iPhone as a $600 import from China (or some lower wholesale value) and increases the trade deficit with China by $600 - even though China contributes only about 1% to the final value - our $227 billion trade deficit with China could be significantly overstated.
3. The article also points out that labor costs are starting to rise in China's "dominant electronics manufacturing center in Shenzhen toward lower-cost regions farther west, even deep in China’s mountainous interior." In other words, China's workers are receiving significant benefits from globalization and trade with the United States - "buy an iPhone in the U.S. and you're helping a worker China get higher wages or a bonus." I thought trade, globalization and capitalism were supposed to produce bad outcomes for workers, who get exploited by greedy employers?
4. At least in the case of the iPhone, a strengthening Chinese currency or rising inflation or wages in China wouldn't have much effect on the retail price here, since the cost of assembly is so insignificant to start with - $6.54 per $600 unit. Further, production will shift towards lower-cost regions of China as the article mentions, or production will shift out of China to Vietnam and other markets with lower wages.
5. To paraphrase what economist Hal Varian wrote in 2007 about the iPod:
"The real value of the iPhone doesn't lie in its parts or even in putting those parts together. The bulk of the iPhone's value is in the conception and design of the iPhone. That is why Apple gets $360 for each of these iPhones it sells, which is by far the largest piece of value added in the entire supply chain. Those clever folks at Apple figured out how to combine hundreds of mostly generic parts into a valuable product. They may not make the iPhone, but they created it. In the end, that's what really matters."
This is what the NY Times meant when it said that "Much of the value in high-end products is captured at the beginning and end of the process," in this case by Apple and its distributors and retailers.
HT: Colin Grabow for the NY Times article link.
Stamp Gouging? Stamp Scalping?
WASHINGTON (AP) -- "Buy those Forever stamps now. The cost of mailing a letter is going up again. Fighting to survive a deepening financial crisis, the Postal Service said Tuesday it wants to increase the price of first-class stamps by 2 cents -- to 46 cents -- starting in January. Other postage costs would rise as well. The agency's persisting problem: ever-declining mail volume as people and businesses shift to the Internet and the declining economy reduces advertising mail."
MP: Over the last 90+ years, the average retail price of gasoline has increased about 11.7 times, from 25.5 cents per gallon in 1919 to a projected $2.98 per gallon in 2011, according to annual gas price data from the EIA. That's slightly less than the projected 12.9 time increase in the Consumer Price Index from 1919 to 2011 (see EIA data), meaning that the real price of gas has fallen over this period. Over the same period, the price of a first-class stamp in the U.S. has increased 23X, from 2 cents in 1919 to 46 cents in 2011 starting next year if the rate increase is approved (historical stamp price data available here). That means that first-class stamps have gone up in price at about twice the rate of both gasoline prices and overall consumer prices in general.
The chart above compares stamp prices, retail gas prices and the CPI using an index that is equal to 100 in 1919 for all three series, and includes the CPI index from 1919-2011, also equal to 100 in 1919. If stamp prices had increased over time at "only" the rate of gas prices, a first-class stamp would only cost only about 24 cents today instead of 44-46 cents. If stamp prices had increased at the same rate as consumer prices in general, stamps today would cost about 26 cents.
Update: A comparison of stamp prices to a CPI services index (as Tim Worstall suggests) shows that first-class stamps have increased in price by 14.67 times since 1956 while the CPI for transportation services has increased by 11.2 times over the same period.
ISM Business Activity Index: Expansion for 7th Mo.
From today's Non-Manufacturing ISM Report On Business Activity:
ISM's Non-Manufacturing Business Activity Index in June registered 58.1 percent, a decrease of 3 percentage points when compared to the 61.1 percent registered in May (see chart above). Fourteen industries reported increased business activity, and two industries reported decreased activity for the month of June. Two industries reported no change from May. Comments from respondents include: "Promotions and sales activity from months ago starting to pay off" and "Increasing demand."
MP: The ISM Business Activity Index for non-manufacturing industries has now been in expansion (index above 50) in 10 out of the last 11 months, and for 7 straight months, both for the first time since 2007, before the recession started. The ISM Business Activity Index has now been above 58 for four consecutive months for the first time since early 2006, more than four years ago. These recent improvements in the ISM Business Activity index provide more evidence of an ongoing, V-shaped economic recovery.
Note: The overall ISM Non-Manufacturing Composite Index (NMI) started in January 2008, and that reading also signals expansion in June at 53.8 (above 50). Brian Wesbury points out that the ISM Business Activity Index is more closely related to real GDP growth than the overall NMI.
The Two Americas: Public vs. Private Workers
"
Even using all the standard controls—race and gender, full- or part-time work, firm size, marital status, region, residence in a city or suburb, and more—the federal wage premium stubbornly hovers around 12%, meaning private employees must work 13½ months to earn what comparable federal workers make in 12.
If the overall generosity of federal benefits matches that of federal salaries (which seems quite likely), total compensation for federal workers may easily exceed $14,000 per year more than an otherwise similar private employee.
A federal pay premium is unfair both to private workers, who receive less than their government peers, and to taxpayers who must cover the difference. Given our 2.7 million-strong federal work force, the government effectively overbills Americans by almost $40 billion every year just on labor costs."
~AEI's Andrew Biggs and Jason Richwine (Heritage) in today's WSJ
Why Is This Simple Grammar Rule SO Difficult?
I've started keeping a collection of writers (blog commentors, etc.) who misuse the word "it's" (contraction for "it is"), instead of its (possessive), here are seven examples from just the last several weeks:
1. Shale gas has it's skeptics: they're hesitant about it's prospects based on economics and environmental factors. I don't work in the shale gas industry and therefore don't feel qualified to forecast it's long-term prospect.
2. If oil was so rare in the US, then why is 95% of it's land and water off limits to drilling?
3. My point is that the OECD index uses stock market levels as an input to derive it's levels.
4. Tithing has lost it's promise
5. I suspect my laptop is having trouble keeping up because of it’s GB’s and MB’s.
6. And while you’re at it, do the same with “Price Theory and It’s Applications”
7. I despise Walmart, not for it's anti-union stance, but for it's overall philosophy and what it's done to it's supply base.
Maybe I'm just a complete supercilious grammar snob, but why do SO many seemingly intelligent people have SO much trouble with a basic grammar rule that is SO simple? If you didn't learn about this rule in "grammar school," perhaps a simple five-minute remedial review is in order, you can start here.
Dems Control House: From 62% to 46% in 46 Days
The Intrade odds for the Democrats to maintain control of the House of Representatives after the November elections have been trading below 50% for the last week, and the odds have fallen from 62% on May 21 to 46% today.
U.S. Motor Vehicle Export Milestones
1. General Motors' first-half of the year sales in China, the world's biggest auto market, exceeded sales in its home U.S. market for the first time.
2. After 15 years of building cars and SUVs in Spartanburg, South Carolina, BMW has now shipped over one million cars to overseas markets. That's nearly two-thirds of all of the production from the plant.
Update: Unfortunately, President Obama doesn't seem to fully understand yet the benefits of free trade (or appreciate the fact that 95% of the world's consumers are in export markets outside the U.S.?), and has failed to put the Colombia Free Trade Agreement (signed in 2006 by President Bush) up for a vote in Congress, despite claiming that he supports its "rapid ratification," despite this recent June 2 letter from 39 members of Congress (including 20 Democrats) urging Obama to sign the Colombia FTA, and despite this joint letter in 2008 from GM, Ford and Chrysler supporting Congressional approval of the Colombia FTA (along with more than 1,200 other U.S. companies, business organizations, farm and ranch groups, and chambers of commerce that also support the Colombia FTA).
Lady Liberty Fireworks
Fourth of July 2010 Facts from the Census Bureau (including the fact that we imported $209 million worth of fireworks from China last year, and $2.5 million worth of U.S. flags from China).
Wall Street Journal (2007): "Nearly all the celebratory explosions set off by Americans -- from the lowly New Year's firecracker to today's mighty Fourth of July mortar -- originate in Liuyang, a county nestled into the red hills and bamboo forests of Hunan, China."
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."
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.
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."
