Tuesday, September 14, 2010

LA Port Shipping Is Back to Pre-Recession '07 Level

I reported yesterday that global trade reached a 26-month high in June, and today's report from the Port of Los Angeles provides additional statistical evidence of an ongoing boom in international trade activity. Shipping volume reached a 46-month high in August of 763,837 Twenty-foot Equivalent Units (TEUs), the highest monthly shipping activity since October of 2006 (see chart above), and the fourth highest monthly volume in history. 

Other highlights include:

1. Compared to August 2009, shipping volume at the LA Port this year gained 24.7%, marking the fifth straight double-digit, year-over-year percentage increase in TEUs.

2. On a year-to-date basis, shipping activity at the LA Port is up by almost 18% compared to the first eight months of last year.

3. August marked the third month in a row where total shipping volume exceeded 730,000 TEUs, which was the first time since a three month period from September to November 2007 before the recession started. 

4. For the month of August, this year's shipping activity was the highest in four years since August of 2006, which was also the case for July (highest for that month since 2006).  For June of this year, it was the highest June shipping volume ever in history at 730,317 TEUs.

Bottom Line: Shipping volumes for the last three months at the LA Port are back to the pre-recession levels of 2007, suggesting that there has been a full recovery in global trade from the 2008-2009 recession.   

142 Women Enrolled in Grad School Per 100 Men, and Women Outnumber Men in 7 Out Of 11 Fields

Click charts to enlarge.

The Council of Graduate Schools released its annual report today, here are links to the press release and full report.  What has been getting the most attention from this year's report is the fact that women earned a majority of doctoral degrees in 2009 (50.4%) for the first time ever, see top chart above. By field of study, women earning doctoral degrees outnumbered men in six of the eleven graduate fields: Arts and Humanities, Biology, Education, Health Sciences, Public Administration and Social/Behavioral Studies.  Men still outnumber women earning doctoral degrees in fields like Engineering (78.4%), Math and Computer Science (73.2%) and Physical Sciences (66.6%).  See related stories today by the Washington Post and Inside Higher Ed.    

The bottom chart below shows total graduate student enrollment in 2009 by gender and field for all graduate programs (Master's and Doctoral).  By this measure, it's not even close; women enrolled in graduate programs at all levels far outnumber men.  Women represent 58.9% of all graduate students in the U.S., meaning that there are now 142.3 women enrolled in graduate school for every 100 men.  In certain fields like Education (75% female), Health Sciences (79% female) and Public Administration (74.4%), women outnumber men by a factor of 3-4 times.  Overall, women enrolled in graduate school outnumber men in 7 out of the 11 graduate fields of study, all except for business (45.7% female), engineering (22.3% female), math and computer science (29% female) and physical sciences (37.3% female).    

This is more evidence that men have become the second sex in higher education.  And here's a prediction: The fact that men are underrepresented in graduate school enrollment overall (100 men for every 142 women), and underrepresented in 7 out of 11 graduate fields of study will get almost no media attention at all.  Additionally, there will be no calls for government studies, or increased government funding to address the problem, and nobody will refer to this gender graduate school enrollment gap as a "crisis."  But what will get media attention is the fact that women are underrepresented in four of the 11 fields of graduate study like engineering and computer science, which can likely be traced to some kind of overt or unexamined gender discrimination.     

Markets in Everything: The Jesus Toaster

I'm not making this up, check it out here, only $39.95.

Monday, September 13, 2010

The Fatal Political Obsession with Homeownership

From a letter sent to President Bush by Barney Frank, Nancy Pelosi, Maxine Waters and 73 other Congressional Democrats on June 28, 2004:

"We urge you to reconsider your Administration's criticisms of the housing-related government sponsored enterprises (the GSEs) and instead work with Congress to strengthen the mission and oversight of the GSEs. We write as members of the House of Representatives who continually press the GSEs to do more in affordable housing.

Until recently, we have been disappointed that the Administration has not been more supportive of our efforts to press the GSEs to do more. We have been concerned that the Administration's legislative proposal regarding the GSEs would weaken affordable housing performance by the GSEs, by emphasizing only safety and soundness. While the GSEs' affordable housing mission is not in any way incompatible with their safety and soundness, an exclusive focus on safety and soundness is likely to come, in practice, at the expense of affordable housing.

Our position is not based on institutional loyalty, but on concern for the GSE's affordable housing function. We appeal to you to agree to work on legislative proposals that foster sound oversight and vigorous affordable housing efforts instead of mounting assaults in the press. We also ask you to support our efforts to push the GSEs to do more affordable housing. Specifically, join us in advocating for more innovative loan products and programs for people who desire to buy manufactured housing, similar products to preserve as affordable and rehabilitate aging affordable housing, and more meaningful GSE affordable housing goals from HUD.

In closing, we reiterate that an exclusive emphasis on safety and soundness, without an appropriate balance in focus on the affordable housing mission of the GSEs, is misplaced."

MP: The graph above helps to explain the housing environment in June 2004 when the letter was sent to President Bush:

1. The homeownership rate was at an all-time historical high of 69.2% in the second quarter of 2004, and had increased by more than 5% from 63.9% in the first quarter of 1991.

2. Home prices had been inflating at a rate far greater than the general price level for almost a decade, as the unsustainable housing bubble was on its way to the 2007 peak in home prices.  At the time the letter was written in 2004, home prices had appreciated by 85.4% since 1991, which was more than twice the 39.6% increase in the CPI over that period (see chart above). 

So at the same time that homeownership was peaking and home prices were close to peaking, both at unsustainable levels, the Democrats in 2004 were still pushing for all of the policies that eventually caused the global financial crisis, mortgage tsunami, and housing bubble: affordable housing through lower down payments, looser underwriting standards and higher leverage.      

Five years later in 2009, the U.S. House of Representatives Committee on Oversight and Government Reform concluded that: "The consequences of these policies [the political obsession with homeownership] have brought the entire global financial system to the brink of collapse, destroying trillions in equity and untold numbers of lives. It is essential to reexamine the borrow-and-spend, high-leverage policies that became prevalent in the mortgage market as a result of well-intentioned-but-reckless decisions made by elected officials on behalf of the American people."

HT: Alex Pollock

2010 SAT Math Test: Huge Gender Gap Persists With a 34 Point Advantage for High School Boys

The College Board released data today on SAT scores for college-bound seniors in 2010, here are some highlights of the results relating to the 2010 SAT Mathematics test:

1. Continuing a trend that has persisted for many decades, high school boys continued to score significantly higher on the 2010 SAT Math test than their female counterparts, by 34 points this year: the average male score this year was 534 vs. the average female score of 500, see chart above.  The male advantage in the SAT Math test has ranged narrowly between 33 and 36 points since 1994, which is slightly lower than the 40+ point advantage for high school boys from 1976 to 1987.  

2. The gender differences in SAT Math test scores prevailed for all ethnic groups in 2010, with the following male-female point differences: American Indian (29 points), Asian (28 points), Black (14 points), Mexican-American (35 points), Puerto Rican (30 points) and white (36 points). 

3. For perfect scores of 800 points, there were 8,072 males and 3,887 females achieving at the highest possible level, for a male:female ratio of 2.08 to 1.  However, there were almost 15% more female high school students (827,197) taking the SAT in 2010 than male students (720,793), and to adjust for these differences in the number of test takers, we can calculate that 1.12% of male test takers scored perfect 800 scores, versus 0.47% of female test takers, for a male:female ratio 2.38:1, which is even higher than the unadjusted male:female ratio of 2.08:1.  By either calculation, there were more than twice as many male high school students getting a perfect score on the SAT Math test than female students. 

4. In contrast to the male high school students' superior performance on the SAT Math test, female high schools students are generally better students overall, and equally or better prepared for the SAT Math test than their male counterparts:

a. Females outnumbered males in the top 10% of their 2010 classes - there were 127 female students in the top 10% of high schools for every 100 male students (56% female to 44% male).

b. Nationwide, there were 144 female high school students with GPAs of A+ for every 100 males (59% female vs. 41% male). 

c. Females had a higher mean GPA of 3.40 than male students at 3.26. 

d. More than half (51%) of female high students took more than 4 years of mathematics, compared to 49% of male students.

e. There were 117 female high school seniors who took AP or Honors Math for every 100 male students (54% female vs. 46% male). 
Bottom Line: Female high school students are better students on average compared to male high school students, and they are equally or better prepared than males for the math SAT exam based on the number and level of math classes taken in high school. And yet, male students score significantly higher on the SAT math test than females, and the statistically significant male-female test score gap of more than 30 points persists over time.

Based on the statistical evidence, is there any other conclusion than this obvious one: In general and on average, male high school students in the U.S. are just plain better at math than female high school students?

And yet, we hear statements like this: "There just aren't gender differences anymore in math performance," says University of Wisconsin-Madison psychology professor Janet Hyde, "So parents and teachers need to revise their thoughts about this.  Stereotypes are very, very resistant to change, but as a scientist I have to challenge them with data."

Given the huge and persistent differences in SAT Math tests that persist over many generations, and are found among all ethnic groups, the scientific data about gender differences in math performance seem to be challenging Professor Hyde's fact-resistant stereotypes. 

Global Output Reaches All-Time High in June; World Economy in New Cycle of Economic Growth

According to the Netherlands Bureau for Economic Policy Analysis, world industrial production increased in June for the 15th straight month after declining in 11 out of 12 months between April 2008 and March 2009 (see chart above).  Compared to last June, world output has improved by 10.4% year-over-year, and June was the sixth consecutive month of double-digit percentage increase over the same month in 2009.  For the last two months, world production levels (135.1 in May and 135.3 in June) have been above the previous peak of 134.4 reached in March 2008, suggesting that there has been a complete recovery in world output from the global recession in 2008 and 2009. 

The same group also reported that the volume of merchandise world trade continued to show signs of improvements in June, following gains in 7 out of the previous 8 months (see chart below).  On a year-over-year basis, June's increase of 21.5% in merchandise world trade was the sixth straight double-digit percentage increase, and overall world trade in June (index = 159.3) is just 1.72% below the March 2008 peak of 162.1.  The world trade volume in June was at the highest level in 26 months, since April 2008.
Bottom Line: Based on the ongoing improvements in global production and world trade, especially the fact that global industrial production is now at an all-time historical high, I think we can safely say that that the world economy has made a complete recovery from the global slowdown in 2008 and 2009, and we're now in a new period of economic growth and expansion.   

Consumer Sovereignty By Daily Marketplace Ballot

1. "When we call a capitalist society a consumers’ democracy we mean that the power to dispose of the means of production, which belongs to the entrepreneurs and capitalists, can only be acquired by means of the consumers’ ballot, held daily in the marketplace.”

~Ludwig von Mises in "Socialism: An Economic and Sociological Analysis," 1951, page 21. 

2. “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.”

~“Consumer, Not Corporate, ‘Greed’ Is Ultimately Behind Layoffs.”

Sunday, September 12, 2010

RCA TV Cost 72 Hours of Work At Avg. Wage ($2.05/hr.) in 1959 = $1,350 Today @ $18.52/hour

The 1959 RCA TVs pictured above sold for $150 retail, which would be about 72 hours of work then at the average hourly manufacturing wage of $2.05.  At today's hourly wage of $18.52, that amount of work (72 hours) would be equivalent to $1,350 in today's dollars.  Today you can get a 19 inch LCD HDTV for as little as $138, which would be only 7.5 hours of work at the average hourly wage. 

Bottom Line: In 1959, the average worker had to work 9 full 8-hour days (almost two weeks) to earn enough income to purchase a 17 inch portable TV (ignoring taxes), and today's average worker would earn enough income in less than one day (7.5 hours) to purchase a 19 inch LCD HDTV.   

Your Pants are Lying to You: "Vanity Waist Sizing"

According to Esquire Magazine, many retailers are lying to consumers about waist sizes in order to make them feel thinner and more likely to buy their clothes.  The worst offenders? A pair of Old Navy pants labeled as size 36 were in fact 41 inches, a pair of size 36 Dockers were actually 39.5 inches, and Haggar and Gap were both selling 39 inch pants as size 36. CBS Sunday Morning featured a story today about the trend towards "vanity waist sizing."

Nebraska Revenue Beats Forecasts: All 4 Categories

Nebraska is now the 13th state to report an improvement in August tax revenues, thanks to the expansion of economic activity:

"For the first time in more than two years, monthly state tax revenue in Nebraska came in above forecasts in all four tax categories in August. Revenue from the four categories -- sales tax, individual income tax, corporate income tax and miscellaneous taxes -- were above the forecast for August.

The last time Nebraska's net monthly receipts (after refunds) were above forecast in all categories was September 2007, and the last time gross monthly receipts came in above forecast in all categories was June 2008.

"We needed to have a good month," to show that the state economy wasn't heading into another dip, said state Sen. Lavon Heidemann."

See the full list of 13 states here.

Saturday, September 11, 2010

$170,000 Student Loan Debt Ends Engagement

From the NY Times:

"Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he had a particularly strong reaction: he broke off the engagement within three days.

Ms. Eastman said she had told him early on in their relationship that she had over $100,000 of debt. But, she said, even she didn’t know what the true balance was; like a car buyer who focuses on only the monthly payment, she wrote 12 checks a year for about $1,100 each, the minimum possible. She didn’t focus on the bottom line, she said, because it was so profoundly depressing.

But as the couple got closer to their wedding day, she took out all the paperwork and it became clear that her total debt was actually about $170,000. “He accused me of lying,” said Ms. Eastman, 31, a San Francisco X-ray technician and part-time photographer who had run up much of the balance studying for a bachelor’s degree in photography. “But if I was lying, I was lying to myself, not to him. I didn’t really want to know the full amount.”

At a time when even people with no graduate degrees, like Ms. Eastman, often end up six figures in the hole and people getting married for the second time have loads of debt from their earlier lives, it should come as no surprise that debt can bust up engagements. Even when couples disclose their debt in detail, it poses a series of challenges."

The Real Health Care Problem: Spending Other People's Money; From 50% to 90% in 60 Years

The graph above (Census data here) highlights the #1 reason why medical costs have risen, and will continue to rise: Out-of-pocket payments for medical costs have been falling for the last fifty years, and are projected to continue to decline, and will  fall below 10% by 2017.  By way of comparison, out-of-pocket payments accounted for almost half (46.78%) of total medical costs in 1960.  When we're spending less than 10 percent of our own money on health care costs, one outcome is almost 100% inevitable: health care costs will continue to rise, and there's nothing about Obamacare that will change that. 

Markets in Everything: $25 to Speed for 24 Hours

CARSON CITY, Nev. — "One Nevada gubernatorial hopeful sees a speedy fix to Nevada's budget crisis. Nonpartisan candidate Eugene "Gino" DiSimone believes people would pay for the privilege to drive up to 90 mph on designated highways — and fill the state's depleted coffers.

After setting up an account, anyone in a hurry could dial in, and for $25 charged to a credit card, be free to speed for 24 hours. The Nevada Highway Patrol isn't keen on the idea, saying it would lead to increased injuries and traffic deaths."

The Student Loan Bubble: Deflating Just a Bit?

The three charts below help tell part of the "higher education bubble" story by looking at student loan volume using data from the Department of Education.  The first chart shows the actual gross student loan volume from 1994 to 2007, and the projected student loan volume from 2008 to 2017.  Here's what happening:

1. Between 1994 and 2006, student loan volume expanded by almost 7 times, from $23 billion in 1994 to $156.6 billion, for an average annual increase of more than 17%.

2. From slightly less than $40 billion in 1998, student loan volume more than doubled to $80 billion in just five years by 2003 ($87.5 billion), and then almost doubled again over the next three years, reaching $156.6 billion by 2006. 

3. After decreases in student loan volume in 2007 and 2008, the Department of Education predicts ongoing increases starting this year, reaching $214 billion by 2017, which will be 10 times higher than the amount in 1994.

Part of the increase in total student loan volume is from the increase in the number of student loans, which has more than tripled from 6.5 million borrowers in 1994 to almost 20 million borrowers this academic year.  The chart below shows the actual average student loan amount from 1994 to 2007 and the projected amounts from 2008 to 2017.  

1. The average student loan amount almost doubled between 1994 to 2005, from $3,543 in 1994 to $7,311 in 2005, and reached a peak of $8,706 in 2006.  

2. Following declines in 2007 and 2008, average loan amount started increasing again in 2009, and is projected to top $8,000 again by 2015.  

Of course, the dollar amounts above have not been adjusted for inflation or compared to income levels, so the chart below shows the average student loan amount as a share of median household income, from 1994 to 2008.

1. After remaining stable at about 11-12% of median household income between 1994 and 2001, student loans as a share of income climbed to more than 18% in 2006, before declining to 15.5% in 2007 and 13.6% in 2008. 

2. Another way to look at student loans: In 1994, median household income ($32,264) was about 9 times the average student loan amount of $3,543, but by 2006 median household was earning income ($48,201) that was only 5.5 times the average student loan amount of $8,706. 

From Glenn Reynolds in the Washington Examiner:

"As with the housing bubble -- cheap and readily available credit has let people borrow to finance education. They're willing to do so because of: 1) consumer ignorance, as students (and, often, their parents) don't fully grasp just how harsh the impact of student loan payments will be after graduation; and 2) a belief that, whatever the cost, a college education is a necessary ticket to future prosperity.

Bubbles burst when there are no longer enough excessively optimistic and ignorant folks to fuel them. And there are signs that this is beginning to happen already.

Student loan demand, according to a recent report in the Washington Post, is going soft, and students are expressing a willingness to go to a cheaper school rather than run up debt. Things haven't collapsed yet, but they're looking shakier -- kind of like the housing market looked in 2007."

MP: The data in the charts above do support the fact that student loan demand has been going soft in both 2007 and 2008, and part of that might be the effects of the recession.  But hopefully it's also because reality is setting in, and students and their parents are becoming more cost-conscious and now less willing to run up huge amounts of student loan debt.  When just the average student loan amount (and many students have more than just one student loan) is approaching 20% of median household income, like in 2006, that seems like an unsustainable situation.  As Michael Barone wrote recently:

"Government-subsidized loans have injected money into higher education, as they did into housing, causing prices to balloon. But at some point people figure out they're not getting their money's worth, and the bubble bursts." 

Hopefully, the recent declines in student loans (the average loan declined by almost $2,000 from $8,706 in 2006 to $6,830 in 2008), means that the higher education bubble might be deflating just a little bit.  

Friday, September 10, 2010

Hotel Industry Improves for 13th Straight Week

HENDERSONVILLE, Tennessee -- "The U.S. hotel industry reported increases in all three key performance metrics during the week of 29 August-4 September 2010, according to data from STR. In year-over-year comparisons, occupancy increased 7.5 percent to 57.4 percent, average daily rate (ADR) was up 2.1 percent to $94.37, and revenue per available room rose 9.7 percent to $54.16.

This was the 13th consecutive week the U.S. reported overall ADR increases. Before this trend emerged, ADR decreased 74 of the past 76 weeks. “Thirteen consecutive weeks of ADR improvement show that the industry now trusts the positive demand trends that emerged earlier in the year,” said Chad Church, director of special services at STR. “Hoteliers have raised their rates, and the consumer continues to travel."

HT: Calculated Risk

Lumber Futures Extend Rally to A Three-Month High on Positive Outlook for the U.S. Economy

BLOOMBERG -- "Lumber prices climbed, extending a rally to a three-month high, on signs of optimism in the U.S. economy (see chart above, data here).

U.S. wholesale inventories rose in July by the most in two years as a rebound in demand spurred companies to add to stockpiles, Commerce Department data showed. The amount of goods on hand compared with sales indicated that manufacturing gains will be sustained in coming months. Lumber soared as much as 6 percent after jumping the most allowed in Chicago in the past two days.

“Some reasonably good economic news” gave confidence to lumber buyers, said Hakan Ekstrom, the president of Wood Resources International LLC in Bothell, Washington."

Adjusted for Vehicle Miles, Highway Deaths in 2009 Were the Lowest Ever Recorded, Back to 1921

"U.S. Transportation Secretary Ray LaHood yesterday released updated 2009 fatality and injury data showing that highway deaths fell to 33,808 for the year, the lowest number since 1950 (see top chart above). The record-breaking decline in traffic fatalities occurred even while estimated vehicle miles traveled in 2009 increased by 0.2 percent over 2008 levels.

In addition, 2009 saw the lowest fatality and injury rates ever recorded: 1.13 deaths per 100 million vehicle miles traveled in 2009, compared to 1.26 deaths for 2008 (see bottom chart above)."

From the Detroit News:

"Barbara Harsha, executive director of the Governors Highway Safety Association, attributed the improvement in traffic statistics "to a host of factors, including increased seat belt use, stronger enforcement of drunken driving laws, better roads, safer vehicles and an increasingly well-coordinated approach to safety."

But the automakers also claimed a share of the credit.  "What we are seeing now is the payoff from years of manufacturer-driven safety improvements, like anti-lock brakes and electronic stability control systems coupled with high visibility enforcement safety efforts by law enforcement," said Alliance of Automobile Manufacturers President and CEO Dave McCurdy."

Quote of the Day

"A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings."

Ludwig von Mises writing in "Human Action"

HT: Dennis Gartman in today's "The Gartman Letter"

There's One Thing We Can Always Count On in the Long-Run: 2% Growth in Per-Capita Real GDP

Over the last 200 years going back to 1809, the chart above shows that the growth in real GDP per capita in the U.S. has been amazingly constant at an average of 2% year, with fluctuations around that long-term secular trend.  The National Bureau of Economic Research has documented 33 recessions since 1857, including a few major ones that are easily identifiable in the chart above: a) three severe contractions in the 1865-1880 period following the Civil War (with the third one lasting more than five years) and accompanied by a 20-year period of below-average economic growth, and b) the Great Depression with two official recessions (August 1929 to August 1933; and May 1937 to June 1938) and a ten-year period of below trend growth in output.  

Despite the vagaries of the business cycle, unexpected periods of recessions, a civil war, two world wars, a Great Depression, etc., there's one thing we can always count on in the long-run: 2% real growth in per-capita GDP, meaning that that output per person in the U.S. doubles every 35 years, or about twice during the average person's lifetime.  There's nothing happening right now that will change that long-term trend, and for that we can be thankful. 

Rhode Island Tax Revenues Up by 11.2% vs. 2009

PROVIDENCE, R.I. — "Rhode Island tax revenues are up after a lengthy period of decline, a sign that the state’s economy may at long last be rebounding.

A state Department of Revenue report issued Thursday shows that, for the two months ended Aug. 31, state tax revenues totaled $358 million, up 11.2 percent compared with the same period a year ago. There were increases in withholding tax, sales tax, general business taxes and other categories."

MP: Rhode Island is now the 12th state to report increases in tax revenues in August, see the full list here, as a result of improving economic activity.

Thursday, September 09, 2010

Initial Jobless Claims Fall to 2-Year Low

As both Scott Grannis and Brian Wesbury/Bob Stein pointed out today, unadjusted initial jobless claims fell to a 2-year low last week of 376,558, the lowest level since the first week of September 2008 (see chart above). 

Weekly Rail Traffic Continues to Improve, Rail Volume Now At Highest Level Since 2008

WASHINGTON , D.C. – Sept. 9, 2010 – "The Association of American Railroads (AAR) today reported weekly rail carload volume set a new 2010 record for the second consecutive week. U.S. railroads originated 305,000 carloads during the week ending Sept. 4, 2010, up 6.9 percent compared with the same week in 2009, and at comparable levels to the same week in 2008 (see charts above). The 2008 comparison week included the Labor Day holiday while the corresponding weeks in both 2010 and 2009 did not. In order to offer a complete picture of the progress in rail traffic, AAR reports 2010 weekly rail traffic with comparison weeks in both 2009 and 2008.

Intermodal traffic totaled 237,006 trailers and containers, up 18 percent from the same week in 2009, and up 18 percent compared with 2008 (see charts above). Compared with the same week in 2009, container volume increased 19.4 percent and trailer volume rose 10.7 percent. Compared with the same week in 2008, container volume increased 27.1 percent and trailer volume declined 16.9 percent."

MP: This marks the 34th straight week of improvements in intermodal rail traffic compared to the same week in 2009.  Except for a holiday-related decline in July, carload volume has increased for the last 28 weeks compared to the same week last year.

Rail carloads and intermodal volume are now at their highest levels since 2008. Based on the steadily increasing volume of raw materials, natural resources, lumber, coal, grains, chemicals, metals, motor vehicles and paper products moving around the country by rail (and Canada and Mexico), the economic picture continues to get a little brighter every week.  Warren Buffett's favorite economic indicator indicates that a double-dip recession is a pretty remote possibility. 

The Great Depression vs. 2007-2010

The chart above shows monthly unemployment rates from: a) January 1931 to December 1940 (120 months) and b) January 2007 to August 2010.  We hear a lot of comparisons between the recent recession and the Great Depression, and the chart above shows that those comparisons are hugely exaggerated.  Consider the fact that there were 127 consecutive months of double-digit unemployment rates between November 1930 and May 1941, and 21 consecutive months with unemployment above 20% from April 1932 to December 1933, with a maximum of 25.6% in May of 1933.  Then compare that to the recent recession, where there were only three consecutive months of double-digit unemployment rates, with a maximum rate of 10.1% in October 2009.  

Bottom Line: As bad as the recent recession might have been, it was never anywhere close to the disastrous economic conditions of the 1930s.   

Wednesday, September 08, 2010

There's New Evidence That Employers Do NOT Discriminate Against Single, Childless Women. But Do They Then Discriminate Against Mothers?

A recent CD post highlighted the new "reverse gender gap," based on a recent study that found evidence that young women's median full-time salaries are 8% higher than those of their male counterparts.

Heather Boushey, senior economist at the Center for American Progress, writes in Slate.com that "young women are earning more than young men because young women are acquiring more skills than the men are."  That makes perfect sense, as Heather explains further: 

"Among women aged 22 to 30, a third (34 percent) have some college education and a third (35 percent) have a college degree or more. Among men in that age group, less than a third (30 percent) spent some time in college, and just over a quarter (28 percent) have a college degree. If one group (women) has more workers with more education, then they should out-earn the other group. That's what the Reach Advisors study shows—that because there are more young women with college degrees, women now out-earn young men."

In other words, Boushey agrees that labor markets are generally efficient, wages are based on experience and skills, employers pay single, childless women more than single men on average because women have superior skills and education, and there is NO gender discrimination. Agreed. After all, if there were discrimination against women in the labor market, then we would expect to find equal pay for childless, single workers under 30, even though young women are now better educated on average than young men. But we find exactly the opposite - women make more than men on average, because of their superior educational credentials. Conclusion: no gender discrimination.

But gender activists like Ms. Boushey find that conclusion unacceptable - there has to be some kind of gender discrimination; if not against single women, then against some other group of women, and Ms. Bousey easily identifies that other group: mothers.  So at the same time that Ms. Boushey apparently agrees that there is no discrimination against single, childless women, there apparently is discrimination against married women with children. According to Boushey, "Research has shown that discrimination against mothers remains widespread."

But that conclusion is inconsistent.  How could wages for single women be determined competitively by market forces, free of gender discrimination, but wages for married women with children be distorted by discrimination?  Stated differently, is it realistic to assume that employers are gender-neutral when it comes to single workers, but they turn into gender-discriminators if some of those single females get married and have children?  

A more consistent position would be to assume that either employers discriminate against women or they do not.  If they don't discriminate against childless, single women (which is supported by recent evidence), then they probably don't discriminate against married women with children.  If they do discriminate against women, then they would discriminate against all women, regardless of marital and motherhood status. 

If married women with children make less than: a) married men with children, or b) single, childless women, then perhaps it's because married women with children work fewer hours than their married male counterparts and single female counterparts, elect not to work overtime or accept out-of-town assignments that require travel, elect not to apply for promotions that require additional responsibilities and increased hours, etc.  In other words, when a decision involves more work and greater pay, or less work and lower pay, it's perfectly plausible that married women with children voluntarily accept the lower-paying options. 

Bottom Line:  The fact that single, childless women earn more than their male counterparts due to having greater educational qualifications demonstrates the reality that labor markets are efficient and that wages are based on the value an employee creates for the employer.  The fact that married women with children earn less than married men with children or single, childless workers of either sex doesn't necessarily prove gender discrimination.  It might just prove that married women with children don't create as much value for employers as married or single men, or single women.      

Update: From a comment by Milton Recht, "Women represent about half of the 130-135 million workers in the US. Given the large size of the US workforce, for there to be any measurable wage discrimination in average salaries, there has to be millions of women who are underpaid and who have the legal right to file discrimination charges against their employers. Where are the numerous lawsuits and Department of Labor complaints? Who are the employers who are discriminating against women?  If there is truly gender wage discrimination in the U.S., the organizations (MP: Like the Center for American Progress) should name the employers responsible (MP: And bring legal action)."

If Boushey is confident of "widespread" discrimination against mothers, that should mean huge opportunities for "widespread" legal action against hundreds, if not thousands, of employers across the U.S. Why doesn't the Center for American Progress, or the AAUW, or one of the dozens of other women's advocacy groups, start filing complaints and legal action on behalf of the thousands or millions of mothers who are alleged victims of discrimination?

How To Tie Your Shoes Really Fast/Quickly

Economic lesson: Opportunity cost.

Gotta Love Wal-Mart

Walmart and Sam's Club to Offer $24 Flu Shots in More Than 4,100 Stores and Clubs Across U.S.

BENTONVILLE, Ark., Sept. 1, 2010 – Walmart and Sam’s Club announced today that flu shots powered by Mollen Immunization Clinics will be available in more than 4,100 select stores and clubs nationwide for $24 beginning today. Customers can visit www.walmart.com/flushots or http://www.samsclub.com/ to find specific dates, times and locations for the flu vaccination clinics.

Economic Picture Brightens in GA, 10 Other States

I've been reporting on the significant gains in state tax revenues for the month of August (as of today, eleven states have reported gains, see this CD post), as a sign of solid economic recovery that is generating higher state collections from personal income taxes, sales taxes, excise taxes, etc.  Here's another example from Georgia, which just reported August tax revenues this afternoon:

"Georgia’s economy is showing signs of awakening from a nearly three-year slumber.Gov. Sonny Perdue on Wednesday announced that state tax and fee collections in August were nearly 13 percent above the same month a year ago. It is the third consecutive month of positive revenue collections, but the first to show double-digit gains. Revenues were up 3.8 percent in June and 4.7 percent in July. The biggest improvement in August came from one of the most important sources: individual income taxes, which were up 24 percent over August 2009, a difference of more than $120 million.

Gross sales tax collections were also up 3.3 percent, but corporate income taxes actually fell by 158 percent to the point the state refunded more money to businesses than it took in.
Other gains were made in tobacco taxes, up 12.4 percent, and motor fuel taxes, which were up 22 percent.

The news is good, too, for the fiscal year, where tax collections are up 8.6 percent over the same period last year. The state budget for fiscal 2011, which began July 1, is predicated on a 4 percent growth in tax collections."

Job Openings Up by 744,000 (30%) Since Last Year

Today the BLS released its latest figures on Job Openings and Labor Turnover, and reported that job openings increased by 178,000 in July, following decreases of 75,000 in May and 363,000 in May. However, since the first of the year job openings have increased by 511,000, and by 704,000 since last July (+30%).

Private-sector job openings have improved by 677,000 over the last year, from 2.04 million in July 2009 (the trough) to 2.72 million in July of this year, representing a 33% increase.  Most private sectors have registered large gains in jobs openings over the last year, including construction (+69%), manufacturing (+109%), retail trade (+42%), professional and business services (+22.5%), and leisure/hospitality (+34%).  

As the chart above shows, the number of job openings typically lead the number of civilian jobs by about six months, so the ongoing gains in job openings over the last 12 months suggests corresponding, ongoing gains in employment through the rest of the year, and continuing into 2011.    

Turn Out the Lights: Green Regulation Causes U.S. Light Bulb Factory to Close, 200 Jobs Are Gone

From today's Washington Post, a good example of the Law of Unintended Consequences:

"During the recession, political and business leaders have held out the promise that American advances, particularly in green technology, might stem the decades-long decline in U.S. manufacturing jobs. But as the lighting industry shows, even when the government pushes companies toward environmental innovations and Americans come up with them, the manufacture of the next generation technology can still end up overseas.

What made the plant here vulnerable is, in part, a 2007 energy conservation measure passed by Congress that set standards essentially banning ordinary incandescents by 2014. The law will force millions of American households to switch to more efficient bulbs.

The resulting savings in energy and greenhouse-gas emissions are expected to be immense. But the move also had unintended consequences. Rather than setting off a boom in the U.S. manufacture of replacement lights, the leading replacement lights are compact fluorescents, or CFLs, which are made almost entirely overseas, mostly in China."

ASA Staffing Index Reaches 100-Week High

The American Staffing Association (ASA) Staffing Index for temporary and contract employment activity reached a 100-week high of 97 for the week of August 23-29, the highest index level since a reading of 97 in the week of September 29, 2008 (see chart above, data here).

Compared to the same week last year, the ASA Staffing Index has improved 28% for Week 35. This marks the 19th week in a row with percentage gains in the staffing index above 20% compared to the same week in 2009 and the 28th straight week of double-digit percent increases vs. 2009. At a current index value of 97, U.S. staffing employment is 41% higher than the level reported for the first week of 2010.

The ongoing improvements in the ASA Staffing Index in every single week this year compared to the same week in 2009, along with today's announcement of a 100-week high in temporary employment suggest that the labor market continues to recover from the recession. In the past, increased demand for temporary and contract employment has been a leading economic indicator of future broader-based gains in full-time employment, and we can therefore expect continued improvements in private-sector employment in the coming months.

Tuesday, September 07, 2010

The Unsustainable College Textbook Bubble

I've been covering the "higher education bubble," see posts here and here.  One reason for the still-inflating higher education bubble for college tuition and fees is administrative bloat, see CD post here.

A direct partner in the "higher education bubble" is the unsustainable "college textbook bubble," captured graphically in the chart above.  To put the textbook bubble in perspective, consider that the unsustainable housing bubble started in the late 1990s when home prices started appreciating much faster than the consumer price index, and the housing bubble peaked in 2007 when median home prices had increased by a factor of about 4 since 1978. By comparison, increases in the price index for educational books and supplies have outstripped rises in the general price level for the last three decades, and are now more than 8 times higher than in 1978. Simply put, the textbook bubble displayed graphically has inflated to more than twice the size of the house price bubble.

Prediction: Just like the unsustainable housing bubble eventually peaked and crashed, the textbook bubble is likewise unsustainable and is set to crash.  As Michael Barone wrote about the higher education bubble, "The people running America's colleges and universities have long thought they were exempt from the laws of supply and demand and unaffected by the business cycle. Turns out that's wrong."  I think the exact same thing can be said about the people running today's college textbook companies. 

August State Tax Revenues Booming: Double-Dip?

Updated: 13 States Now Report August Tax Increases

1. Mississippi Tax Collections Beat Expectations in August

2. Kansas Taxes in August $38M More Than Expected

3. Pennsylvania Sees Signs of Growth in Its August Tax Collections

4. Maine Tax Revenue Bounces Back in August

5. Arkansas Governor Says State's Finances Looking Better

6. Aug. Tax Revenue Collections Increase in West Virginia

7. Iowa: State Revenues Rosier Than Projected

Update: These are the only states that have reported August tax revenues, and I'll update the list as more states release tax collections.  It seems encouraging though that all 7 states that have released data so far for August are reporting increases in sales and income tax collections.

8. West Virginia Sees Economic Growth in August Tax Revenues

9. Indiana Revenue up 8.4% in August from Year Ago

10. Increase in Missouri Tax Revenue Collections in August

Here's more:

11. Georgia revenue collections jump in August as economic picture brightens

12. Rhode Island Tax Revenues Rise in July-August

13. Nebraska Tax Revenue Beats Projections in August

Dulles Airport Has Busiest Month in 5 Years

July is always the single busiest month of the year for passenger travel at Washington Dulles International Airport, but July this year was even busier than usual.  Passenger traffic reached almost 2.3 million travellers in July, which was 2.2% above traffic in July of last year, and was the highest passenger count in any month since August of 2005 (data here), almost five years ago (see chart above).  Compared to last year, both domestic and international traffic rebounded by more than 2% in July. 

Freight volume at Dulles Airport was also up in July, by almost 18% above last year, with more than 25 tons of cargo passing through Washington's international airport.

The gains in July follow similar gains in June (2.8% growth in passengers, 24% growth in freight) and May (3.8% growth in passengers, 26.6% growth in freight).  Over the last 12 months from August 2009 to July 2009, passenger traffic is up by about 1%, with international traffic growth (2.5%) ahead of domestic traffic growth (0.30%), and freight cargo is up by 13% over that period. 

Welcome Univ. of Michigan-Flint MBA Students

To the students in the NetPlus! MBA program at the University of Michigan, Flint campus, who are enrolled in MGT 551 (Business Economics) for the fall term 2010 which started on Saturday:


Professor Perry

Christina Sommers: Where the Boys Are(n't)

"If boys are in trouble, it's a women's issue - we're all in trouble."

Christina Sommers talks about the effects of a philosophy that can be somewhat hostile to young men: Women's Rights. Advocating for recognition of gender differences while maintaining equality, Sommers discusses the implications, risks, and consequences of consistently supporting and encouraging females only.

Monday, September 06, 2010

Yoani Sanchez, Could Help Bring Down the Castro Regime With Her Award-Winning Blog in Cuba

Courageous Cuban blogger Yoani Sanchez (pictured above), whose regular posts on her blog Generation Y "offer punchy accounts of the day-to-day environment" in Cuba (frequently featured on CD), can add two new awards to the many she has previously received:

1. The International Press Institutes's (IPI) 60th World Press Freedom Hero:

 “Sanchez’s tremendously important work provides a glimpse into what is otherwise a closed world,” said IPI Interim Director Alison Bethel McKenzie. “It is perhaps fitting that our 60th and final World Press Freedom Hero represents a future where the power of the internet can be harnessed to promote free speech. We are proud to know Yoani and to award this prestigious prize to her.”

The other IPI prize winning press heroes ("Symbols of courage in global journalism") are listed here.
2. The Prince Claus Award for Yoani's courageous efforts to raise "global awareness of daily Cuban realities through her blog, for her inspiring and courageous example in giving a voice to the silenced, and for demonstrating the immense impact internet communications technologies can have as tools for social change and development."
See these related posts:
1. CD post: "How Cuba's "Blogostroika," the Internet, and Social Media Could Bring Down the Castro Regime."  
2. Enterprise Blog post: "Revolutionary Blogger and Freedom Fighter: Yoani Sanchez," where I concluded that:
"When the history of Cuba’s freedom movement is written, it’s likely that Yoani Sanchez will be recognized as a national hero and freedom fighter, the equivalent of Lech Walesa in Poland or Vaclav Klaus in the Czech Republic. Yoani Sanchez demonstrates that we should never underestimate the power of one courageous individual with a computer, a blog, and intermittent access to the Internet (Sanchez says she has not actually been able to see her own blog since 2007), or the individual’s power to change the world in the Information Age, especially with a message of freedom and individual liberty. Intellectual figures like Milton Friedman, Friedrich von Hayek, and Thomas Jefferson would be proud of Yoani and her powerful message of individual freedom in one of the only remaining regimes of totalitarianism left in the world."

How To Start A Fire With Nothing But Ikea Products

HT: Ron A.

Two Market Measures of Risk Show Improvement

The charts above over the last 12 months of: a) the Bloomberg U.S. Financial Conditions Index (data here) and the S&P 500 Volatility Index (data here) show that the financial markets went through a rough patch in May, June and July of slightly elevated risk, but have now recovered to the conditions that prevailed in the spring.  The recent improvements in these two daily market measures of risk should probably mean that the chances of a double-dip recession are much less likely now than at any time over the last four months.

Bad News for Labor This Labor Day

From Linda Chavez:

"The labor movement doesn't have much to celebrate this Labor Day. Congress first established the national holiday in 1894 at unions' behest. Since then, the American labor movement's fortunes rose to their zenith in 1956, when more than three-in-10 workers were union members, only to decline each year after. Today, only 12 percent of workers hold union cards (see top chart). And if you discount union members who are public employees, barely 7 percent of private-sector workers are union members (see bottom chart).

So why has labor unions' membership declined so far?

Some of it has to do with the changing work trends in the United States. We've moved from large-scale industry to service and white-collar jobs, from big employers to small business, and from lifetime tenure to job insecurity and frequent career changes -- all of which makes union organizing more difficult.

But the biggest problem for unions has been their own leadership, which has grown out of touch with the very people those unions hope to represent."

Read more here

Interesting Union Facts:

1. Half of all American union members live in just six states: California, New York, Illinois, Michigan, Pennsylvania, and New Jersey (from Linda Chavez's article). 

2. The bottom chart above shows that in 2009 there were more public-sector union members (7.89 million, 37.4% of all government workers) than private-sector members (7.43 million, 7.2% of all private workers) for the first time ever.   

Sunday, September 05, 2010

Back to School

1. Greg Mankiw has some advice for college freshman, although given the reality that there are 150 women in some "freshman classes" this year for every 100 men (see this CD post), can we really still call first-year college students "freshman?"

2. Via Cuban blogger Joani Sanchez, here's the handwritten draconian dress code for a typical high school in Cuba (pictured below in Spanish), including "The skirts should be 4 centimeters (1.5 inches) above the knee," and "Males must not have hair longer than 4 centimeters (1.5 inches)."  Although not specifically mentioned, I think it's safe to say that tattoos and baseball caps worn backwards would be completely out of the question. 

3. A New York Times article asks if it's time for "The End of Tenure?"

4. Michael Barone says that the "Higher education bubble is poised to burst."

Administrative Bloat at American Universities

Why is college tuition rising so much faster than prices in general, faster even than the unsustainable rise in home prices that led to a housing bubble (see top chart above)?  Well, here's one explanation from the Goldwater Institute's report "Administrative Bloat at American Universities: The Real Reason for High Costs in Higher Education":

"Enrollment at America’s leading universities has been increasing dramatically, rising nearly 15 percent between 1993 and 2007. But unlike almost every other growing industry, higher education has not become more efficient. Instead, universities now have more administrative employees and spend more on administration to educate each student. In short, universities are suffering from “administrative bloat,” expanding the resources devoted to administration significantly faster than spending on instruction, research and service.

Between 1993 and 2007, the number of full-time administrators per 100 students at America’s leading universities grew by 39 percent, while the number of employees engaged in teaching, research or service only grew by 18 percent.  Inflation-adjusted spending on administration per student increased by 61 percent during the same period, while instructional spending per student rose 39 percent. Arizona State University, for example, increased the number of administrators per 100 students by 94 percent during this period while actually reducing the number of employees engaged in instruction, research and service by 2 percent. Nearly half of all full-time employees at Arizona State University are administrators (emphasis added).

A significant reason for the administrative bloat is that students pay only a small portion of administrative costs. The lion’s share of university resources comes from the federal and state governments, as well as private gifts and fees for non-educational services. The large and increasing rate of government subsidy for higher education facilitates administrative bloat by insulating students from the costs. Reducing government subsidies would do much to make universities more efficient."

MP: For public universities the administrative bloat is much worse than at private colleges - administrative positions grew by 39% between 1993 and 2007, almost four times the 9.8% increase for instructional positions, see bottom chart above.  At private universities, without access to the public largess, administrative and instructional positions increased at about the same rate. 

HT: Chris Douglas

Saturday, September 04, 2010

WSJ Interactive Graph of the Great Mancession

Here's a great WSJ Interactive Graphic that allows you to watch: a) monthly job losses by sector from December 2007 to August 2010, and b) monthly changes in the number of unemployed workers by gender and race over the same period. 

When watching the job losses by sector, you'll see that that: a) construction and manufacturing were the two sectors hit with the most job losses during the recession (combined loss of almost 4 million jobs through August 2010), and b) education and health care were the only two private sectors that continued to add jobs during the entire recession (more than 1 million jobs combined through August).

Then watch the interactive graph of the monthly number of unemployed workers by gender and you'll see that men were disproportionately affected by job losses, to the extent that in many months there were two men unemployed for every female who was unemployed. Even now that the recession has ended, there were still 172 unemployed men in August for every 100 women who were unemployed.

These two trends in sector job losses/gains and unemployment by gender are directly related by these facts about employment shares by gender:

Education: 74.3% female, 25.9% male
Health Care: 74.6% female, 25.4% male
Construction: 4.4% female, 95.6% male
Manufacturing: 21.4% female, 78.6% male

In other words, these two interactive graphs help tell the story of the Great Mancession of 2007-2010 and how men were disproportionately affected by the recessionary conditions that adversely impacted male-dominated industries (construction and manufacturing), while employment in female-dominated industries actually increased throughout the entire recession.  And according to the employment report yesterday, there is still a 2% male-female jobless rate gap of 10.6% for men and 8.6% for women, so the Great Mancession is not yet close to ending.  

Bottom Line: Maybe it's not such a good time to be man, now that men are on the wrong side of the jobless rate gap by 2%, the wrong side of the college degree gap (142 women graduated from college in 2010 for every 100 men) and now even the wrong side of the wage gap.