Tuesday, August 10, 2010

July Tax Collections in Some States Are Booming

1. TENNESSEE – State sales tax revenues for July jumped with the largest monthly growth in over three years. The last month in which sales tax collections exceeded this month’s growth rate was April of 2007.

2. OKLAHOMA - State revenue collections for the month of July, the first of the new fiscal year, outperformed both prior year collections and the official estimate, state Treasurer Scott Meacham reported. "Collections in all major areas are above the same month of last year," Meacham said. "As we begin the new fiscal year, the recovery of Oklahoma's economy is obviously under way."

3. KENTUCKY — State General Fund tax revenue grew for the third consecutive month in July and is on pace to reach budgeted expectations in the new fiscal year.  For the month, sales tax revenue was up a strong 8.1 percent, corporation tax revenue was up 25.2 percent and income tax revenue was up 3.3 percent, compared to July 2009.

4. GEORGIA -- For the second consecutive month, tax collections -- an indication of economic activity -- improved in July. Officials announced Friday that tax collections were up 4.7 percent in July over July 2009. That's after a 3.8 percent gain in June. It may not seem like much, but the state hasn't registered consecutive months of improved tax collections in more than two years.

5. MASSACHUSETTS -- Massachusetts got $721 million in income taxes, $21 million more than the same month last year, or a 3 percent increase. That was $67 million more than the state expected to collect. Sales tax collections totaled $450 million, up more than 30 percent from July 2009 and $12 million above the state benchmark.

"Suspicious Packages": A Proposed Islam-Friendly Gay Bar To Be Built Next to Mosque at Ground Zero



On the Glenn Beck show, Greg Gutfeld discusses his plan to "build and open the first gay bar that caters not only to the west, but also Islamic gay men. To best express my sincere desire for dialogue, the bar will be situated next to the mosque Park51, in an available commercial space."

HT: Nick Gillespie

If You Tax Something, You Get Less of It

In this previous CD post, it was reported that world-class Jamaican sprinter Usain Bolt won't be competing in this weekend's Aviva London Grand Prix because of a new U.K. tax rule that imposes a top rate of income tax of 50 percent on athletes, not just on the income earned in the U.K., but also on a proportion of their worldwide sponsorship and endorsement income. 

Now it looks like some of the leading professional golfers aren't so sure they want to play in this year's Ryder Cup, scheduled to take place in Wales in October.  The European Tour's director of public relations said today that the tax rule was "seriously hampering our efforts."

You have to wonder, couldn't they have predicted this would happen? 

HT: Chris Silva

Update: Tiger Woods’ reluctance to accept a Ryder Cup wild card may in part be due to a £1m tax bill he could face by playing.

ASA Staffing Index Reaches 94-Week High in July

The American Staffing Association (ASA) Staffing Index for temporary and contract employment activity reached a 94-week high of 94 for the week of July 26, the highest index level since a reading of 95 for the week of October 6, 2008 (see chart above, data here).

Compared to the same week last year, the latest ASA Staffing Index has improved by 27% for Week 31 (see bottom chart above). This marks the 15th week in a row with percentage gains above 20% compared to the same month in 2009, the 24nd straight week of double-digit percent increases vs. 2009, and the 30th consecutive week for the ASA Index being above the same level in the previous year (every week this year).

The ongoing gains in the ASA Staffing Index every week this year to a new 94-week high, along with the recent huge gains in online help wanted ads,translating into more broad-based, permanent job creation as we move forward, and a gradual decline in the nation's jobless rate. 

Monday, August 09, 2010

Chart of the Day: Jobs vs. Help Wanted Ads Gap

The chart above shows monthly payroll employment and monthly online help wanted ads from May 2005 to July 2010.  Since the April 2009 low of 3,188,800 total online help wanted ads, there has been an increase of 1.105 million help wanted ads to 4.29 million in July.  From the December 2009 bottom of 129.58 million jobs there has been an increase of only 654,000 payroll jobs, for a ratio of 1.7 new jobs advertised and available for every one new job added to U.S. payrolls.  And the last time there were 4.29 million online help wanted ads in November 2008, there were 135 million payroll jobs.  So perhaps there's a long lag between when online help wanted ads appear and when those jobs are actually filled, in which case we can expect almost 5 million jobs to be filled based on the number of jobs advertised.  Or maybe the "U.S. could end up with a permanent caste of long-term unemployed, like those that weigh on government budgets in some European countries," as mentioned in today's Wall Street Journal?

Muslim Raheel Raza Speaks Out Against Ground Zero Mosque


Despite 9.5% Jobless Rate, Firms Struggle to Hire; Help Wanted Ads Increased by 1m Since Apr. 2009

Wall Street Journal -- "With a 9.5% jobless rate and some 15 million Americans looking for work, many employers are inundated with applicants. But a surprising number say they are getting an underwhelming response, and many are having trouble filling open positions.

"This is as bad now as at the height of business back in the 1990s," says Dan Cunningham, chief executive of the Long-Stanton Manufacturing Co., a maker of stamped-metal parts in West Chester, Ohio, that has been struggling to hire a few toolmakers. "It's bizarre. We are just not getting applicants."

Employers and economists point to several explanations. Extending jobless benefits to 99 weeks gives the unemployed less incentive to search out new work. Millions of homeowners are unable to move for a job because the real-estate collapse leaves them owing more on their homes than they are worth.

The job market itself also has changed. During the crisis, companies slashed millions of middle-skill, middle-wage jobs. That has created a glut of people who can't qualify for highly skilled jobs but have a hard time adjusting to low-pay, unskilled work like the food servers that Pilot Flying J seeks for its truck stops."

Some economists fear the U.S. could end up with a permanent caste of long-term unemployed, like those that weigh on government budgets in some European countries. "It is a very worrisome development," says Steven Davis, an economist at the University of Chicago's Booth School of Business. "It leads over a long period of time to social alienation as well as economic hardship."

MP: The chart above helps to illustrate the situation described in the WSJ article.  Online help wanted ads (available from the Conference Board) reached a 20-month high in July at 4,293,300, the highest number since November of 2008, and an increase of more than 1 million since the April 2009 low of 3,188,800.  During the same period (April 2009 to July 2010), the jobless rate has remained stubbornly stuck at between 9-10%, despite an increase in more than 1 million new job openings.   

Completely Automatic Underground Car Parking


HT: Bob Wright

Where Americans Are Spending More...and Less

Since the recession started, Americans have increased spending the most on telephone equipment, pets, education, child care, health care, housing, food and drink and have cut back spending the most on moving, motor vehicles, gas, recreational vehicles, video/audio equipment, and travel outside the U.S.

Read more of Mike Mandel's analysis on the changes in consumer spending since the fourth quarter of 2007.  

Markets in Everything: Smart Parking Meters with 'Demand-Responsive Pricing'


"San Francisco has been working on making parking "smarter" for quite a while now, and it's just recently taken another big step in that direction by starting to replace over 5,000 older parking meters with the snazzy new model pictured above. Those will not only let you pay with a credit or debit card, but will automatically adjust parking rates based on supply and demand, which means you could pay anywhere from $0.25 to $6.00 an hour depending on how many free spaces there are. Those rates are determined with the aid of some sensors that keep a constant watch on parking spaces, which also means you'll be able to check for free spaces in an area on your phone or your computer before you even leave the house."

Link.

More On the Higher Education Bubble

Glenn Reynolds has a new follow-up article to his earlier article that predicted that "higher education is in a bubble (see chart above), one soon to burst with considerable consequences for students, faculty, employers, and society at large." In his new article, Glenn offers some advice to students (don't go into debt) and colleges (don't go on spending binges).

Creating A New Job Carries a Punishing Price Due to Government's 33% Surtax on a Typical Job

Michael Fleischer, a small business owner in New Jersey, writes in today's WSJ that when he adds it all up, it costs him $74,000 to put $44,000 in his median-paid employee's pocket and provide her with $12,000 in benefits, because of the 33% surtax charged by the state and federal governments for income taxes, Social Security taxes (employer and employee shares), state and federal unemployment coverage, workers' compensation, and Medicare (employer and employee shares).  Mr. Fleischer concludes that:

"A life in business is filled with uncertainties, but I can be quite sure that every time I hire someone my obligations to the government go up. From where I sit, the government's message is unmistakable: Creating a new job carries a punishing price."

HT: Juandos and Pete Friedlander

Sunday, August 08, 2010

The Miracle of Flight Has Never Been Cheaper

There's been a lot of complaints lately about air travel because of crowded planes, fees for checked luggage, security lines, etc., and there's a lot of nostalgia for the good old days of free food, no extra fees for baggage or anything else, half-empty planes where you could often get 2 or 3 seats to yourself, no security issues, etc. But I don't think anybody is too nostalgic for the airfares of yesteryear, which were 66% higher in 1993 at an average ticket price of $541 (in 2010 dollars) compared to today's average air fare of only $326.  That's an average savings today of $215 per flight compared to the average airfare in 1993, and an average savings of more than $100 per flight compared to the average airfare in the 1990s (1993-1999, data here and here).     

I couldn't find average airfare data before 1993, but it's probably safe to say that the average, inflation-adjusted airfares of 2009-2010 are the cheapest in history, in case that's any consolation for your recent inconveniences while travelling by air.   

And any time you're really depressed about your air travel experience, watch Louis C.K.'s video "Everything's Amazing and Nobody's Happy," which you can now watch on your laptop while flying on an airplane that has Internet access, and be thankful that you're sitting in a chair flying through the air in the sky, because of the "miracle of human flight."
         
Update: According to this source (thanks to Jet Beagle), "The average airfare dropped by more than one-third between 1977 and 1992 (adjusting for inflation).  That would mean that the average airfare in the late 1970s was around $800 (in today's dollars). 

Saturday, August 07, 2010

Update: Lemonade Stands Get Reprieve

"Multnomah County's top elected official apologized Thursday for health inspectors who forced a 7-year-old girl to shut down her stand last week because she didn't have a food-safety permit."

HT: Ron H.

Day 550: Obama vs. Carter

At around day 550, according to Gallup:

Barack Obama
Disapprove: 53%
Approve: 41%
Spread: -12%

Jimmy Carter
Disapprove: 44%
Approve: 39%
Spread: -5%

Friday, August 06, 2010

Markets in Everything: Divorce Insurance

NY Times -- "Here’s a new option for those worried they’ll end up on the wrong side of the statistics that show so many marriages ending over time: divorce insurance.  SafeGuard Guaranty Corp., an insurance start-up based in North Carolina, recently released what it’s billing as the world’s first divorce insurance product.

Here’s how its WedLock product works.  The casualty insurance is designed to provide financial assistance in the form of cash to cover the costs of a divorce, such as legal proceedings or setting up a new apartment or house. It is sold in “units of protection.” Each unit costs $15.99 per month and provides $1,250 in coverage. So, if you bought 10 units, your initial coverage would be $12,500 and you’d be paying $15.99 per month for each of those units. In addition, every year, the company adds $250 in coverage for each unit.

Then, if you get divorced and your policy has matured (see below for the maturation rules), you would send WedLock proof of your divorce. In return, you’d receive a lump sum of cash equivalent to the amount of coverage you had purchased."

HT: Joe Armendariz

Markets in Everything, or Not: Lemonade Stand

Government officials shut down a 7-year old's lemonade stand in Portland, Oregon.

Thursday, August 05, 2010

Container Traffic Surges at Indian Ports in First Four Months of Fiscal Year (April to July)

Journal of Commerce -- "Container traffic at major ports in India for the April-July period increased 14 percent over the same period last year, the Indian Ports Association (IPA) said in a statement on Wednesday.  IPA estimated total volume for the first four months of fiscal 2010-11 at 2.5 million 20-foot equivalent units."

Weekly Rail Traffic Sets Record for 2009 and 2010

WASHINGTON, D.C. – Aug. 5, 2010 – "The Association of American Railroads reported today that for the week ending July 31, 2010, U.S. railroads reported the highest traffic levels of 2010 for both carload and intermodal traffic. U.S. railroads originated 300,292 carloads for the week, up 9.4 percent compared with the same week in 2009, but down 10.6 percent from the same week in 2008.

Intermodal traffic totaled 232,895 trailers and containers, up 20.2 percent from the same week in 2009, and up 0.9 percent compared with 2008. Compared with the same week in 2009, container volume increased 21.9 percent and trailer volume rose 11.7 percent. Compared with the same week in 2008, container volume increased 9 percent and trailer volume dropped 28.9 percent.

Eighteen of the 19 carload commodity groups increased from the comparable week in 2009 with only waste and scrap, down 1.9 percent, posting a decline. Metallic ores, up 73 percent, and metals and products, up 35.2 percent, were the commodities posting the most significant increases."

MP: Both the carload freight loadings and intermodal rail volumes for the last week of July were at their highest level for both 2009 and 2010 (see top chart above).  Compared to 2009, carload traffic has improved in almost every week since late February, and for intermodal rail, the positive trend started back in January, and has experienced double-digit gains in most weeks since April.  According to Warren Buffett's favorite economic indicator (rail freight), it looks like the economy has been doing better recently than at any time since 2008, and the recovery continues to gain momemtum almost weekly. 

European Safety Net = European Unemployment?


Following the post in yesterday's NY Times Economix blog "Eurosclerosis Comes to America" by Casey Mulligan (U. Chicago economist) the chart above shows monthly payroll employment and monthly job openings (both from BLS) from January 2004 to May 2010 (job openings for June are not yet available).  Casey Mulligan wrote:

"This recession has been unique in terms of the multitude of public policies that dull incentives to work and earn income. Best known are unemployment benefits, which are paid only to people who have not yet accepted a new job. But the mortgage modification programs, begun by the Bush administration and tweaked by the Obama administration, offer mortgage forgiveness to borrowers with low incomes while offering nothing to those with high incomes.

The new home-buyer tax credit, the enhanced food-stamp program and many other programs in President Obama’s stimulus bill are much the same: people without low incomes need not apply. People accepting jobs in this economy see their various safety-net benefits reduced or eliminated.

Payments to the unemployed are compassionate, and maybe even the best government reaction to a deep recession. But previous economic research has shown that this compassion has a cost: programs like these make it more difficult for employers to fill their job openings. It is no surprise that adopting a European safety net is giving us a European unemployment problem."

MP: Casey shows a graph of job openings and jobless rates to support his conclusions (similar to the bottom chart above), and the chart above of job openings and payroll employment tells the same story. Since the end of last year, payroll employment has only increased by an anemic .77% while job openings have increased by a much healthier 26.6%. Over the last year, job openings have increased by almost 29%, while the unemployment rate has barely moved, as Casey's graph and data show, possibly due to all of the generous jobless benefits and the many extensions to those benefits. 

The chart above shows that the historically close relationship between payroll employment and job openings has not held up very well over the last year, for the reasons that Casey outlines.  And the huge increases in online job availability as documented by the Monster Employment Index also lends some support to the fact that job openings are showing strong gains, which have not yet shown up in employment gains and jobless rate decreases.       

July Monster Employment Index Grows 21% vs. Last Year, 6th Consecutive Month of Positive Growth

From today's Monster Employment report for July:

1. July's year-over-year growth rate of 21% held steady from the 20.5% annual growth in June, suggesting no significant change in underlying demand for labor nationwide.

2. July was the sixth consecutive month of annual growth in online job availability, and the 21% annual growth rate in July was the highest since July 2006 (see chart). 

3. The Index dropped 3 points in July from June as online job availability eased with a decrease in summer hiring activity.

4. Education and public administration saw large growth in online job demand following relatively tempered springtime hiring activity.

5. Manufacturing and transportation and warehousing industries rose in July, adding to longer-term trends that reflect continued growth in overall production and commerce.

6. Amongst occupations, demand increased in some professional categories, including architecture and engineering; and life, physical, and social sciences.

7. All 28 metro markets tracked by the Index exhibited positive annual growth.

Wednesday, August 04, 2010

Random Roundup

1. Intrade odds for the Republicans to control the House after the November elections is now up to a contract-high of 60%.

2. China: Mobile phone users top 805 million in June.

3. Eurosclerosis Comes to America (NYT, with great graph)- "This recession has been unique in terms of the multitude of public policies that dull incentives to work and earn income."

4. Rethinking Socialized Medicine in Canada (IBD).

5. When you think of quality healthcare at lower costs, think Brazil.

6. Foreign-trained MDs As Good As Those Trained in U.S.

7. Android Beats iPhone With New Subscribers.

Even If Deflation Is Bad, We Know How to Solve It

"Even if deflation is a bad thing, we know how to solve it. Print enough new money and people will eventually start spending it. It’s alleged that no matter how much you print, it can all just fall into the liquidity trap, and it’s alleged that this is what happened in Japan over the past decade. But I am sure the Japanese just didn’t try hard enough. Liquidity trap or not, I guarantee you there’s a central banker in Zimbabwe who knows how to fight deflation. If we really get into trouble, all we have to do is hire him."

~Steven Landsburg

Tuesday, August 03, 2010

Dow Jones ESI Hits Highest Level Since June 2008


NEW YORK, August 2, 2010 –"The Dow Jones Economic Sentiment Indicator (ESI) has given an upbeat signal on the economy, registering its biggest rise since October and a return to the level of June 2008.  The ESI rose to 42.3 in July (see chart above), two points higher than the 40.3 tracked in June 2010. The rise is modest, but it is an acceleration from the slender gains of recent months and implies some recent pessimism about the economy may be misplaced."

U.S. Car Buyers Are Bullish on the U.S. Economy

Car sales rebounded in July to the highest level since last August, as consumers purchased more than 12 million new vehicles last month at a seasonally adjusted annual rate (see chart above, data here). On a cumulative year-to-date basis, vehicle sales are 14.7% ahead of last year at this time.  Compared to the month of July last year, total vehicle sales are up by 5.1% this year, boosted by a whopping 17.6% increase in light trucks versus last July (see related CD post "The Pickup Indicator"). 

Ignoring last August when sales were artificially high due to the "cash for clunkers" program July auto sales were the highest in almost two years, since September 2008 when 12.52 million units were sold (on annual basis).  The American consumers must be pretty bullish on the American economy based on their willingness to buy new vehicles, despite all of the gloom and doom and talk of a "double dip."    

West Coast Container Volume Jumps 15 Percent

Journal of Commerce -- "Container volume at West Coast ports increased 15 percent in the first six months of 2010 compared to the same period in 2009, according to the Pacific Maritime Association. The tally reflects all loaded containers, both inbound and outbound. Containerized imports on the West Coast increased 17 percent while exports were up 11 percent."

More From the "You Just Can't Make This Stuff Up" File: Universities That Use Kindles vs. the ADA

From today's Washington Examiner:

"The Justice Department threatened several universities with legal action because they took part in an experimental program to allow students to use the Amazon Kindle for textbooks. Last year, Princeton, Arizona State and Case Western Reserve wanted to know if e-book readers would be more convenient and less costly than traditional textbooks. The environmentally conscious educators also wanted to reduce the huge amount of paper students use to print files from their laptops.

It seemed like a promising idea until the universities got a letter from the Justice Department's Civil Rights Division, now under an aggressive new chief, Thomas Perez, telling them they were under investigation for possible violations of the ADA.

The Civil Rights Division informed the schools they were under investigation. In subsequent talks, the Justice Department demanded the universities stop distributing the Kindle; if blind students couldn't use the device, then nobody could. The Federation made the same demand in a separate lawsuit against Arizona State."


HT: Colin Grabow

ASA Staffing Index Reaches 91-Week High in July


The American Staffing Association (ASA) Staffing Index for temporary and contract employment activity reached a 91-week high of 92 for the week of July 19, the highest level since a reading of 93 for the week of October 20, 2008 (see chart above, data here).  Compared to the same week last year, the latest ASA Staffing Index has improved by 24.3% for Week 30 (see bottom chart above). This marks the 14th week in a row with percentage gains above 20% compared to the same month in 2009, the 23nd straight week of double-digit percent increases vs. 2009, and the 29th consecutive week for the ASA being above the same level in the previous year (ever week this year).

The ongoing gains in the ASA Staffing Index every week this year to a new 91-week high hopefully translate eventually into more broad-based, permanent job creation as we move forward.

Real Consumption Growth Highest Since 2007

From Table 10 in today's BEA report on Personal Income and Outlays, the graph above shows the percent change from a year earlier in Real Personal Consumption Expenditures, monthly from December 2006 to June 2010.  Most of the news reporting focuses more on month-to-month changes, with the resulting "gloom and doom" headlines like "Flat consumer spending adds to recovery worries," with commentary like "Consumer spending and incomes were unexpectedly flat in June implying an anemic economic recovery for the remainder of this year."

Looking at real consumer spending over a longer period of time like a year, the picture is not quite so gloomy.  The graph above shows that consumer spending (percent change from a year earlier) slowed consistently through 2007 and 2008, reached a bottom in the spring of 2009, and has been improving consistently since last summer, when the recession most likely ended.  The growth in real consumer spending has been positive for the last seven months on an annual basis, and reached a 31-month high in June of 1.7%, the highest growth rate in real consumer spending since November 2007.   

The Seen vs. The Unseen

"The heart of the case against the Detroit bailout is that it saps the life-blood of entrepreneurial capitalism. The bailout reinforces the debilitating precedent of protecting firms deemed ‘too big to fail.’ Capital and other resources are thus kept glued by politics to familiar lines of production, thus impeding entrepreneurial initiative that would have otherwise redeployed these resources into newer, more-dynamic, and more productive industries.

The ‘success’ of the bailout is all too easy to engineer and to see. The cost of the bailout – the industries, the jobs, and the outputs that are never created – is impossible to see, but nevertheless real."

~Don Boudreaux at Cafe Hayek responding to Paul Ingrassia's defense of the auto bailout in yesterday's WSJ ("Two Cheers for the Detroit Bailout").

See also "What Is Seen and What Is Not Seen" by Bastiat who wrote in 1848: "There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil."

Monday, August 02, 2010

ISM Reporting: Upbeat vs. "Gloom and Doom"



The upbeat version from Scott Grannis: "The ISM manufacturing index (above) was stronger than expected, and as my chart suggests, this is fully consistent with the 3-4% economic growth rate (if not more) that I've been expecting to see for the past year. It's a bit weaker than the fabulously strong levels that were showing up recently, but it is not supporting the popular "new normal" economy theory, in which growth registers a feeble 2-3%.

Most encouraging was the employment index (bottom chart above) which is still at very strong levels that have been seen only rarely in the past several decades. This is very good news, since the weakest part of the recovery so far has been jobs and business investment, and the ISM index suggests that the manufacturing sector has shrugged off this malaise quite nicely.

My thesis is still in place: this economy is growing at a 3-4% pace, which is not very impressive given the extent of the recent recession, but it is stronger than the market has been expecting, and that is enough to drive equity prices higher and corporate spreads lower.

The "gloom and doom" version of the exact same ISM report from FT.com:

"The ISM Survey of the US manufacturing sector (published on Monday) offers the first reliable glimpse of activity in the US economy in the third quarter of the year. It is not encouraging.

Although the headline reading was rather better than widely anticipated (an out-turn of 55.5 compared to 56.2 in June), the details of the survey showed that new orders are now slowing markedly, and inventories have started to rise more rapidly than companies may be intending. Taken together with the GDP data for Q2 (discussed in an earlier blog), the ISM survey points to a significant danger that the US economy will continue to slow sharply in the months ahead.  Although this can be a somewhat volatile series on a monthly basis, the underlying trend in the series (also shown in the graph) is now definitely headed downwards.

It is surprising to me that the stock market has so far been so resilient in the face of the mounting weight of evidence that growth rate in the US economy has dipped below trend, with no knowing where this will end."

Markets in Everything: Condos Cheaper Than Cars

Get a 1BR, 1.5 bath condo in the complex pictured above in Deerfield Beach, Florida (near Ft. Lauderdale) for just $24,999 (details here), about the same price as a Toyota Camry LE ($26,125 MSRP), or choose from 25 other Deerfield Beach condos for $28,000 or less, starting at just $19,500.

Or check here for 33 Las Vegas condos for only $20,000 or less, starting at $10,000; and here you'll find 31 condos in the Phoenix area (Glendale) for $28,000 or less, starting at $12,500. 

You'll probably never get a better deal on U.S. real estate than right now, especially with mortgage rates at historical lows.  So if you've been thinking about a Florida condo, vacation home, rental property, or a first home, now's the time - everything's on sale.  

Miami Home Sales Increase in June for 16th Month

According to DQ News, "Miami area home sales rose sharply in June, the result of low prices, low mortgage rates and what was likely the final big boost from the federal home buyer tax credits." Other highlights include:

1. Sales of existing condos rose to a five-year high in June, and total escrow closings were the highest for any June since 2007. 

2. In June 9,296 new and resale houses and condos closed escrow in the Miami metro area, up by 18.3 percent from May and up 20.4 percent from June 2009 (see chart above).

3. Miami-area home sales have increased on a year-over-year basis for 16 consecutive months, starting in March 2009.

4. June resales (excludes new homes) of single-family detached houses and condos combined were the highest for the month of June since 2006, and rose in June year-over-year for the 19th consecutive months. 

5.  The median home price for the Miami region in June was $150,000, up 1.4% from $148,000 in May but down 6.3% from $160,000 in June 2009. The Miami area's median price has fallen on a year-over-year basis for 33 consecutive months.

Chart of the Day: Record Corporate Profits in Q1

 
According to BEA data via the St. Louis Fed, after-tax corporate profits reached an all-time record high of $1.369 trillion in the first quarter of 2010 (see chart above). 

Sunday, August 01, 2010

House Dems Will Take a Thumping in November

Intrade odds for Republicans to control the House after the November elections rose today  to the highest level in the contract's history: 58.6% (see chart above).  When Obama took office in January 2009, the Intrade odds were only 15% that the Republicans would control the House in 2010, and those odds have consistently risen and have been trading above 50% since late June. 

In Michael Barone's latest column, he surveys the most recent polling data and writes that "most signs suggest Democrats will take a thumping this year."  Michael concludes that:

"These metrics -- the generic ballot results and polls in individual districts -- suggest that House Democrats are headed toward historic losses. Quite a swing in 18 months."

In addition to the polling data, the "pay-to-play" futures contracts at Intrade support Barone's conclusion.   

Saturday, July 31, 2010

Tax Cuts, Tax Hikes, It's All Relative

The changes in the income tax rates that took effect in 2001 and 2003 are referred to as the "Bush tax cuts," and you'll find more than one million results for a Google search of the phrase "Bush tax cuts."  Certainly, compared to the "Clinton tax hikes" that took effect in 1993 and raised the top marginal income rate to 39.6%, the reductions of the top tax rate to 38.6% in 2002 and 35% in 2003 were "tax cuts" (see chart above). 

But if you go back further and compare the Bush tax rates to the highest marginal tax rates under Bush, Sr. (31%) and Reagan (28%), couldn't the Bush II tax rates more accurately be referred to as the "Bush tax hikes"?  Of course, the tax rates were much higher before 1988, here's the full history back to 1913 in the chart below.  Compared to most of the tax rates between the 1930s and the 1980s, couldn't the Clinton tax rates also accurately be referred to as the "Clinton tax cuts"?  


More on the ADA’s 20th Anniversary

"In recent months a New Jersey jury ordered a rheumatologist to pay $400,000 for not providing a deaf patient with a sign language interpreter at his own expense; the Ninth Circuit ruled that the law may require movie theaters to provide captions and descriptions for blind or deaf viewers; a federal appeals court ruled that the nation’s paper currency unfairly discriminates against the disabled and must be redesigned (thus taking a different view from the National Federation of the Blind, which doesn’t think there’s a problem); a police dispatcher won a settlement in her lawsuit saying she was unfairly discriminated against because of her narcolepsy (tendency to fall asleep at inappropriate times); a large online tutoring service agreed to provide interpreters; miniature golf courses learned they will have to make 50 percent of their holes accessible to wheelchair users; and so forth."

From Cato's Walter Olson

Happy Birthday Milton Friedman, July 31



Classic 30-minute video of Milton Friedman in 1975 (transcript here) discussing the minimum wage, Social Security, politics, the Welfare State, doing good by spending other people's money, housing, rent control, government intervention and the Great Depression, collectivism, the free society, greed, private charity.

The Gradual Decline in Presidential Approval



The chart above displays the consensus of presidential approval/disapproval polls from Pollster, showing a new record -5% gap between average approval of 45.1% and an average disapproval of 50.1%. 

Friday, July 30, 2010

U.S. Economic Expansion Stronger Over Last 4 Quarters Than Following the Last Two Recessions

Today's GDP report from the BEA raised a lot of concerns about the economic recovery, based on headlines and reports like this:

1. Steep decline in GDP growth raises alarms,
2. US recovery loses steam,  
3. Double-dip feared as US economic growth loses pace, and
4. The closer you look at the GDP report, the uglier it gets, etc. 

But how does GDP growth in this recovery (assuming the recovery started in third quarter of 2009) over the last four quarters (1.6%, 5%, 3.7% and 2.4%) compare to output growth in the four quarters following the last two recessions in 1990-1991 and 2001?  Pretty good actually, see the graph above showing real GDP growth in the one-year periods (four quarters) following the last three recessions.

Sure, real GDP growth has slowed from 5% to 3.7% to 2.4% over the last three quarters, but following the 2001 recession real GDP slowed even more, from 3.5% to 2.1% to 2% to 0.1%.  And looking at the average growth over the four quarters following the last three recessions, the average 3.18% real GDP growth over the last year was higher than the 1.93% following the 2001 recession and higher than the 2.63% following the 1990-1991 recession.  Keep in mind that the economic recovery that started in 1991 was the longest (120 months) and strongest economic expansion in the history of the U.S.   

So what about a headline like "U.S. economic expansion stronger now than at the beginning of the last two recoveries?"

Thursday, July 29, 2010

From the "You Just Can't Make This Stuff Up" File: ADA vs. Chipotle; Happy 20th Birthday ADA

Washington Examiner, Investor's Business Daily, Cato InstituteSan Francisco Chronicle, and Reason.

"The 9th U.S. Circuit Court of Appeals ruled this week that customers in wheelchairs are being denied the full "Chipotle experience" of watching their food being prepared because Chipotle's 45-inch counters are too high."

LAX Freight Traffic Back to Pre-Recession Level



According to data from Los Angeles World Airports (LAX), air freight cargo at LAX reached a 30-month high in May of 168,297 tons, the highest freight volume since November 2007, the month before the recession officially started.  Air freight at LAX decreased slightly in June to 163,959 tons, but that was still a 19.2% improvement from a year earlier.  Compared to the recent bottom of 113,205 tons in February 2009, freight traffic at LAX has rebounded by 45%. Freight volumes in each of the last three months (April, May and June) have been the highest volumes for those months since 2007, which provides evidence of a complete recovery for LAX freight to pre-recession levels.

Passenger traffic at LAX in June was 4% above last year, and was the tenth month in a row that passenger traffic increased compared to a year earlier.    

Further highlights from today's LAX press release include:

1. Total passengers during the first six months of 2010 rose 4.9% compared to the same period last year, reflecting a 3.4% growth in domestic passengers and a 9% percent increase in international travellers. 

2. Air cargo tonnage also increased 24.8% to 941,238 tons during the first six months of this year, from 754,022 tons during the same period in 2009. Air mail tonnage rose 19.1% to 34,032 tons from 28,577 tons in 2009. Freight is up 25.1% to 907,206 tons this year from 725,445 tons in 2009.

“Since late last year we have seen a slow increase in passenger volume due to some improvement in the economy further assisted by added service on existing routes from several of the domestic and international airlines, and the introduction of new flights in June by Alitalia to Rome,” said Gina Marie Lindsey, executive director of LAX. “The next several months will confirm the extent to which recent upward movement in traffic is the foundation of a sustained pattern.”

Warren Buffett's Favorite Economic Indicator - Weekly Rail Traffic - Maintains Steady Pace

WASHINGTON, D.C. – July 29, 2010 – "The Association of American Railroads today reported that rail traffic continues to maintain a steady pace with U.S. railroads originating 286,854 carloads for the week ending July 24, 2010, up 4.7 percent compared with the same week in 2009, but down 13.5 percent from pre-recession levels in 2008.

Intermodal traffic totaled 230,443 trailers and containers, up 19.2 percent from the same week a year ago and down only 2.1 percent compared with 2008. Compared with the same week in 2009, container volume increased 21.1 percent and trailer volume rose 9.3 percent. Compared with the same week in 2008, container volume increased 6.4 percent and trailer volume dropped 33.4 percent.

Fifteen of the 19 carload commodity groups increased from the comparable week in 2009. Those groups posting the most significant gains were metallic ores, up 56.3 percent; metals and products, up 31.2 percent; motor vehicles and equipment, up 29 percent; and farm products excluding grain, up 25.8 percent. Farm products excluding grain, up 5.6 percent, was the only commodity group to post an increase over 2008 levels."

Americans Cut Back on Visits to the Doctor, But Increase Visits to Retail Health Clinics by 36%

From today's WSJ article "Americans Cut Back on Visits to Doctor":
Insured Americans are using fewer medical services, raising questions about whether patients are consuming less health care as they pick up a greater share of the costs. Doctor visits have declined each month this year, including a 7.6% drop in May 2010 from May 2009.

The drop in usage is showing up as health-care companies report financial results. Insurers, lab-testing companies, hospitals and doctor-billing concerns say that patient visits, drug prescriptions and procedures were down in the second quarter from year-ago levels.

"People just aren't using health-care like they have," said Wayne DeVeydt, WellPoint Inc.'s chief financial officer, in an interview Wednesday. "Utilization is lower than we expected, and it's unusual."
Well, maybe it's not really so unusual based on this report "MinuteClinic visits up 36% in Q2":
Fewer physician visits have contributed to a lift in visits to MinuteClinic as patients look for convenient and cost-effective access to healthcare services.

"Recent reports by IMS have indicated that fewer people are visiting doctors. We see this data on the fourth quarter versus the first quarter of this year, and we are expecting to see the same in the second quarter," said Tom Ryan, chairman and CEO of CVS Caremark. "Patients are visiting fewer primary care doctors and specialists. Obviously, the sluggish economy and continued high unemployment has impacted peoples' ability to afford physician visits."

Clearly, this trend, coupled with MinuteClinic's expansion of service offerings and increased awareness, has helped drive the MinuteClinic business, as people in need of convenient and affordable health care take advantage of MinuteClinic's portfolio of roughly 500 clinics in 25 states and the District of Columbia.

MinuteClinic visits rose 36% during the second quarter. "We believe that MinuteClinic's strong growth reflects our expansion of services and the improved awareness around our clinical offerings," Ryan said.
Bottom Line: Consumers aren't necessarily consuming less health care like the WSJ suggests; rather, they are shifting their demand for health care away from expensive, conventional physician offices with limited hours to affordable and convenient retail clinics.  Especially when consumers are spending their own out-of-pocket money for health care and they have a choice, they prefer market-driven, consumer-driven options like affordable, convenient retail clinics over conventional physician offices.

Cartoon of the Day

Gary Varvel.  

Wednesday, July 28, 2010

Global Economy's Remarkable Recovery: World Trade Projected to Expand by 8.1% This Year

Excerpts from a bullish report on world trade and global shipping from IHS Global Insight (Press Release here and Executive Summary here):

"Global trade along virtually every trade route has shown a remarkable recovery from the 2007–09 recession.  Despite some commentators' views that global trade volumes would not recover to their earlier levels before 2013 at the earliest, we are seeing what appears to be a sustained recovery in trade since late 2009 through at least the middle of 2010.

International trade volumes are forecasted to increase in line with the recovery in demand. World trade by all modes (airborne, seaborne, and overland) declined 7.2% in 2009. As the economy improves through the middle of 2010, total world trade is forecasted to grow 8.1%, followed by 6.9% growth in 2011.

Containerized trade volumes at the global level are forecast to reach nearly 10.0 percent, with a slightly stronger recovery – 10.6 percent -- on the mainline East-West trade lanes in 2010, before slowing over the next two years. While trade growth is projected into 2011 and beyond, the pace is expected to be slower than in 2010. However, 2010 and 2011 will be banner years relative to the hardship the container industry faced in 2008 and 2009 with 3% and -8% growth on TEU volumes, respectively.

Dry bulk commodity shipment tonnage, which includes grain, iron ore, and coal, will increase 10.3 percent in 2010 and 8.7 percent in 2011."

Kerry Was Right: Dodging Yacht Tax Was Rational

Jeff Jacoby comes to John Kerry's defense....

"No one should be taking pride or pleasure in having railroaded Kerry into forking over $500,000 he likely never owed. I’m no fan of the senator, but he showed good sense in seeking to keep his taxes low. If only he would do the same for the rest of us."

Mpls. Orthopedics Clinics Battle It Out; Consumer-Driven Health Care That's "Better, Faster, Cheaper"

From the Mpls.-St. Paul StarTribune:

"For years, anybody who pulled, twisted, sprained or broke some part of their body would show up at the emergency room.  There, they'd often wait hours as more critical cases -- heart attacks or strokes -- leapfrogged ahead in line.

Then they'd go home with an appointment to come back and see an orthopedic surgeon anytime from three days to three weeks out.

In 2005, TRIA Orthopaedic Center in Bloomington, MN pioneered the idea of a free-standing orthopedic facility, with day surgery, clinic and physical therapy space, as well as the ability to do medical research. The goal was "better, faster, cheaper," said Dr. Marc Swiontkowski, one of the physician founders.

TRIA, which lost money in its early years but is now profitable, also introduced early on the idea of a walk-in acute injury clinic. It recently expanded its evening and weekend hours for the clinic to cater to injured high-school athletes and weekend warriors. The acute injury clinic has seen more than 12,000 patients so far this year -- 2,100 of them in June alone. Knee pain is the most common complaint, followed by foot and ankle pain." 

MP: In addition to seeing thousands of patients each month, TRIA is also now seeing something else - some new competition from Twin Cities Orthopedics, just opened a new facility in Edina, MN that offers same-day appointments and urgent care in the evenings and weekends.  Read more here about how market competition and consumer-driven health care can bring down costs, improve the quality of care, and dramatically increase convenience with evening and weekend hours.    

Funding Electric Vehicles is a Battery-Dead Idea




Can a bunch of technocrats in Washington really make better decisions than free consumers in the marketplace? No economic or scientific case exists for subsidizing the electric vehicle. The government should remain technology-neutral. Subsidies hinder the ability of free enterprise to innovate and develop other advanced auto technologies like the hydrogen fuel cell. The right way to create a diverse market for advanced technologies is to limit government involvement and introduce real tax reforms.

Government subsidies serve only to tilt the playing field and constrain the market's ability to operate. They are not in America's best interests.  Funding electric vehicles is a battery-dead idea.

~From my article in the Sacramento Bee

International Air Travel Shows Continuing Strength in June; Volumes are Above Pre-Recession Levels

Geneva - "The International Air Transport Association (IATA) announced today that international scheduled traffic statistics for June showed continued strong demand growth as the industry recovers from the impact of the global financial crisis. Compared to June 2009, international passenger demand was up 11.9% while international scheduled freight traffic showed a 26.5% improvement (see chart above)."  Other highlights include:

1. Passenger volumes are now 1-2% above the pre-recession peak in the first quarter of 2008.

2. Freight volumes remain 6% above the pre-recession peak in early 2008.

3. “The industry continues to recover faster than expected, but with sharp regional differences. Europe is recovering at half the speed of Asia with passenger growth of 7.8% compared to the 15.5% growth in Asia-Pacific,” said Giovanni Bisignani, IATA’s Director General and CEO. 

Outside of Europe, all regions reported double-digit growth in passenger traffic. “The question is how long can the industry maintain the double-digit momentum. Business confidence remains high and there is no indication that the recovery will stall any time soon. But, with government stimulus packages tailing off and restocking largely completed, we do expect some slowing over the months ahead,” said Bisignani.

MP: For both May and June, passenger and freight traffic have reached volumes that are above the pre-recession levels.  It's also interesting that the strongest improvements in both passenger and freight growth have been in Africa, Asia, the Middle East and Latin America, while growth in North America and Europe have lagged behind.   But it's good news that international air travel has rebounded strongly, and passenger travel and freight volumes are now both above their pre-recession peaks.   

Tuesday, July 27, 2010

Trucking Tonnage Falls in June But Remains 7.6% Above June Last Year

ARLINGTON, VA -- "The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 1.4 percent in June, although May’s reduction was revised from 0.6 percent to just 0.1 percent. May and June marked the first back-to-back contractions since March and April 2009. The latest reduction lowered the SA index from 110.1 (2000=100) in May to 108.5 in June (see chart above)."

On a 12-month basis, trucking activity looks a little better: 
"Compared with June 2009, SA tonnage climbed 7.6 percent, which was just below May’s 7.7 percent increase and the seventh consecutive year-over-year gain. Year-to-date, tonnage is up 6.6 percent compared with the same period in 2009."

MP: There have been some signs of a slowdown in the strength of the economic expansion in May and June (including the Richmond and Chicago Fed releases today on manufacturing activity in those regions), and the trucking tonnage index decrease in June probably helps to confirm that.  But we should also keep in mind that manufacturing has been leading the economic recovery, and some uneven "starts and stops" in the economic recovery are to be expected.