Tuesday, November 09, 2010

Illinois Loses 1,000 More Union Jobs, and Another Manufacturing Plant to Right-to-Work Mississippi

EAST ALTON, ILLINOIS -- "Some union workers were making plans Wednesday to hit the bricks to look for new jobs after Olin Corp. announced it will move its Winchester Centerfire Operations and 1,000 jobs from Illinois to Oxford, Miss.  The company made the announcement one day after members of District 9 of the International Association of Machinists (IAM) and Aerospace Workers rejected a contract that would have frozen wages for seven years.

The company told the union leaders in August that it was considering relocating to Mississippi to make the operation more competitive. The company and union leaders negotiated a concession deal for two months.

"Our focus always has been on ensuring that we continue producing high-quality products for our customers in an increasingly competitive marketplace," said Joseph D. Rupp, chairman, president and chief executive officer of Olin Corp.

"While I am disappointed that employees represented by IAM chose to reject a proposal that would have allowed us to remain competitive in East Alton, we look forward to expanding our existing operations in Mississippi," Rupp said."


Even The Michigan Economy is Coming Back

DALLAS/November 9, 2010 – "Comerica Bank’s Michigan Economic Activity Index rose two points in September to a level of 89, the highest Index reading since June 2008. September’s reading is up 14 points from the year-ago level, and up 18 points, or 25 percent, from the Index cyclical low (see chart). September marks the seventh month of consecutive double digit year-on-year increases in the Index. Year-to-date the Index has averaged 11 points, or 15 percent, above the Index average for all of 2009."
 
“Over the three months through September, our Index showed a renewed uptrend after having stalled from February through June,” said Dana Johnson, Chief Economist at Comerica Bank. “My sense is that Michigan’s economy was re-accelerating along with the national economy as the summer drew to a close. Looking ahead, the Michigan economy should continue to make modest gains over the last quarter of 2010, against a background of sluggish but sustained national growth.”

MP: In another sign that the Michigan economy is slowly coming back, average statewide home prices increased in September by 6.9% compared to last year, and year-to-date home prices through September have increased by 9.3% compared to 2009.   

Another Company That Might Leave California

158 companies have left California this year to relocate to other states, and here's a new story about another one that is seriously considering leaving after evaluating six key issues of concern. 

Debunking Pro-Tax Increase Propaganda





Oct. Monster Employment Index Europe Up By 23%

The Monster Employment Index Europe increased by 23% on an annual basis to a level of 122 in October, a strong improvement from the 99 index level last October, and an increase from the 21% gain in September.  There was relatively strong online recruitment activity across most European Union countries, with especially strong growth in Germany (30% growth in October, the largest gain in online recruitment demand since late 2005), Sweden (36% annual gain in hiring activity). By sector, transportation (+50%), manufacturing (+44%), tourism (32%) and automotive (30%) registered the largest annual gains in hiring activity.  

Overall, a very positive report for a steadily improving European labor market that is gaining strength and momentum as the European economies recover. In related news, Reuters reported recently that German unemployment in October fell to its lowest level (2.945 million) in 18 years (since October 1992).  

Monday, November 08, 2010

Sneaky Trick Football Play


Markets in Everything. Or Not: Criminal Barbering

Orlando Sentinel -- "As many as 14 armed Orange County deputies, including narcotics agents, stormed Strictly Skillz barbershop during business hours on a Saturday in August, handcuffing barbers in front of customers during a busy back-to-school weekend.

It was just one of a series of unprecedented raid-style inspections the Orange County Sheriff's Office recently conducted with a state regulating agency, targeting several predominantly black- and Hispanic-owned barbershops in the Pine Hills area.

In "sweeps" on Aug. 21 and Sept. 17 targeting at least nine shops, deputies arrested 37 people — the majority charged with "barbering without a license," a misdemeanor that state records show only three other people have been jailed in Florida in the past 10 years."

HT: Stuart Anderson

NY Fed Reports Q3 Declines in Consumer Debt, Delinquency Rates, Foreclosures and Bankruptcies

Some highlights from the NY Fed's quarterly report on "Household Debt and Credit," released today with third quarter updates:

1.  Aggregate consumer debt continued to decline in the third quarter, continuing its trend of the previous seven quarters. As of September 30, total consumer indebtedness was $11.6 trillion, a reduction of $922 billion (7.4%, and almost $1 trillion) from its peak level at the close of 2008Q3.

2.  Total household delinquency rates declined for the second consecutive quarter in 2010Q3. As of September 30, 11.1% of outstanding debt was in some stage of delinquency, compared to 11.4% on June 30, and 11.6% a year ago. Compared to a year ago, delinquent balances are down 8.2%, and serious delinquencies have fallen 4.6%.

3. About 457,000 individuals received home foreclosure notices on their credit reports between July 1 and September 30, 2010, a 5.5 percent decrease from the second quarter and a 6.4 percent drop from a year earlier.

4. The number of new bankruptcies noted on credit reports fell 16 percent from the previous quarter (from 621,000 to 522,000), but is 1 percent higher from a year earlier.

5. The proportion of current mortgage balances that transitioned into delinquency rose slightly from 2.6 percent to 2.7 percent, after about a year of decline. Given the similar pattern observed in the third quarter of 2009, one might suggest this is a seasonal effect.

MP: Except for the slight, seasonal  uptick in mortgage delinquencies, there are a number of positive trends reported for household debt and credit in Q3 that provide further evidence of an economy that is gradually recovering.   

One Vote Can Decide Outcome

A "wet-dry" vote in Alabama was decided by a single vote: 219-218. 

HT: Division of Labour

Percent of Population on Facebook By State

Via Google Fusion Tables, showing that the percent of state populations on Facebook ranges from 16.04% in New Mexico to 40.45% in Kansas.

Saturday, November 06, 2010

Chart of the Day: The True Size of Africa

The land area of Africa would include the entire U.S., China, India, Japan, U.K., Eastern Europe and much of Western Europe, see chart above (click to enlarge), link here.  

Global Stock Market Rallies to 25-Month High

The MSCI World Stock Market Index closed at a 25-month high on Friday of 1,264.73, which was the highest level for world stock markets since late September 2008.  Emerging markets have been doing especially well lately, with one-year returns 72.5% in Thailand, 67% in Colombia, 56% in Chile, 57.5% in Turkey, 48% in Indonesia, and 47.8% in the Philippines.  

Friday, November 05, 2010

Why Can't Chuck Get His Business Off the Ground?

 
From the Institute for Justice.  

More Than 1 Million Jobs Added So Far This Year, Strongest 10-Month Gain in More Than 3 Years

Private-sector payroll jobs increased in October for the 10th straight month, as private employers have added 1,115,000 jobs so far this year, according to today's BLS report (see chart above). The last time there were 10 consecutive months of private employment gains was in the 2006-2007 period before the recession started, which was also the last time that more than 1 million jobs were added in a 10-month period.   

The Pickup Truck Indicator: The Recovery is Real

In October, overall vehicle sales increased by 13.4% compared to October 2009, but that increase was largely because light truck sales increased by 23.5%, more than six times the 3.9% increase in passenger car sales.  Year-to-date, truck sales are up by 16.7%, more than three times the 5.3% increase in passenger car sales so far this year.

What does that signal? The economic recovery is real.  Here's some background: 

AutoNation Chairman and CEO Mike Jackson (featured on a CD post in June): "I've always said, when you want to know when this economy is going to turn, just watch the pickup sales.  All those sales are small businesses and entrepreneurs, and when they see the prospect for better business, they're going to go out and finally buy a new pickup truck. So this is a key indicator of what's going on in the U.S. economy.  This is small business America saying that the worst is over, I see opportunities in the future, I feel confident enough to go out and buy a new truck.    

Pickup trucks are bought by small business entrepreneurs who have their finger on the pulse of the U.S. economy. It's an expression of confidence in future of economy. They don't buy until they see the prospects for business are brighter."


"Trucks outsold cars by the highest margin in nearly five years in October, a sign the economy may be starting to improve. These trucks aren't the tractor-trailers that haul freight. They're pickups, SUVs, minivans and smaller SUVs. The category — known as light-duty trucks — made up 54 percent of all new U.S. vehicle sales last month, compared with 46 percent for cars, according to industry tracker J.D. Power and Associates. 

It's the biggest difference since December 2005, when trucks accounted for 56 percent of sales. Strong truck sales make economists giddy because they mean people are willing to spend money again. Small business owners feel comfortable enough to buy a new pickup truck or delivery van for their company; and regular folks are confident enough in their jobs and finances to take on beefy SUV payments."

HT: John Jarrard.  

Thursday, November 04, 2010

Bull Markets: Taxi Medallions and Fine Art


1. Taxi medallions in New York City reached an all-time record high of $614,000 in October for indvidual licenses. 

2. Reuters -- "Less than two years after a precipitous fall, the art market is flexing its muscles again, emboldened by recent auction records and an influx of determined international collectors rich with cash. Hordes of wealthy new buyers, ready to spend and anxious to build collections, are injecting life into a market hard-hit by the global financial crisis, experts said.

"The whole market has changed," said Philip Hoffman, chief executive of The Fine Art Group, a London-based art investment house. "There's a huge new group from six or seven countries who are shifting the market." New collectors from Russia, India, China and Hong Kong, and Mideast wealth centers such as Qatar and Abu Dhabi have made fortunes in oil, gas or commodities such as gold, he said."

Emerging Markets Rally to 29-Month High

Bull Market Rally for the Emerging Markets: The MSCI Emerging Markets Index reached a 29-month high today of 1151.08, the highest level since early June 2008 (see chart). 

Coming Soon to a Pharmacy Near You: The “Retailization” of the Nation’s Health Care System

"Walgreens chief executive officer Greg Wasson this morning said the drugstore chain will step up investments in services to help Americans manage chronic diseases, saying the company wants to capitalize on what he called the “retailization” of the nation’s health care system.

The Deerfield, IL.-based pharmacy giant, meeting with Wall Street analysts and investors, said it wants to continue to expand its network of medical care providers and the services they provide. Walgreens increasingly has been lobbying to give pharmacists a greater role in medical care such as providing immunizations in its stores as well as establishing retail health clinics staffed by nurse practitioners. 

Wasson and his team say they see a booming market of aging baby boomers, citing one in three Americans who will turn 65 in the next decade. He said Walgreens pharmacies are trying to establish their pharmacists and other health professionals as an option to help provide certain primary medical care service amid a national shortage of primary care doctors.

Walgreens pharmacists, he said, can help patients “manage” their chronic conditions like diabetes, hypertension and high cholesterol. The health care overhaul law will bring more than 30 million Americans coverage in the next four years and therefore give these uninsured people money to buy Walgreens services."

Weekly Rail Traffic Continues To Improve

WASHINGTON, D.C. – "The Association of American Railroads (AAR) today reported that weekly rail traffic continues to gain over 2009 levels with U.S. railroads originating 292,884 carloads for the week ending Oct. 30, 2010, up 6.3 percent compared with the same week last year. AAR will no longer report 2010 weekly rail traffic with 2008 weekly comparison data since October 2008 marked the beginning of the recession-related downturn in rail traffic.

Intermodal traffic for the week totaled 232,717 trailers and containers, up 14.2 percent compared with the same week a year ago, with container volume up 15.7 percent and trailer volume up 6.5 percent."

Hayek vs. Keynes Sequel Sneak Peak Preview


Passengers at Dulles in Sept. Highest Since 2006

In the month of September, 1,958,511 passengers traveled through Dulles Airport, which was 4.5% above passenger traffic in the same month last year, and marked the highest monthly passenger count for the month of September since 2006.  Cargo traffic at Dulles in September was 5.6% above last year.
 
Over the 12-month period from October 2009 to September 2010, passenger traffic at Dulles has improved by 1.2% compared to the same period a year ago, and cargo traffic is up by 17.6%. 

Monster Employment Index: 9th Mo. of Annual Gain

"The U.S. Monster Employment Index annual growth rate continued to be positive with a 13 percent increase year-over-year, although at a slower rate compared to early summer (see chart above). The Index dropped two points (1 percent) on a monthly basis, as online job demand continued to fluctuate within a two-point margin for the fourth consecutive month.

“Despite the contraction in the annual growth rate, expansion continues in a sustained manner for several large industries and markets over the long term,” said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. “Conditions also continue to be favorable across the country, with opportunities rising above the levels they were last year in all major metro markets monitored by the Index.”

Highlights include:

1. Compared to year-ago levels, 17 out of 20 industries are showing positive growth trends, with a majority of the industries recording accelerated growth from September. 

2. October marks the ninth consecutive month of positive annual growth rate in online job demand, and marks the seventh consecutive month of double-digit growth staring in April  

3. All major metropolitan markets tracked by the Index are exhibiting positive annual growth compared to last October.

Wednesday, November 03, 2010

U.S. Car Sales Top 12 Million Units in October for the First Time in Two Years, Except for CFC Month

Except for the "cash for clunkers" jolt that boosted car sales in August 2009 to an artificially high 14.17 million units (on a seasonally adjusted annual rate basis), auto sales in October reached a two-year high in October of 12.26 million vehicles.   That was the strongest month for auto sales since September 2008 when 12.52 million vehicles were sold.  Chrysler and Ford helped fuel strong October car sales with two of the largest year-over-year gains of 37% and 19.3% respectively.  As a whole, the industry registered sales gains of 17.5% in October compared to last year, following a September gain of 25.4%. Year-to-date car sales are ahead of last year's sales by 10.6%.   

Although there still's a long way to go before car sales reach the pre-recession levels of  16-17 million units per year, there's been a lot of progress in the last 20 months - October sales of 12.26 million car sales were more than 3 million units above the cyclical low of 9.14 million autos sold in February 2009. 

Wikio: Top 20 Business Blogs in October

1.The Conscience of a Liberal
2.The Big Picture
3.DealBook - New York Times blog
4.Techdirt
5.Calculated Risk
6.Grasping Reality with Both Hands: Brad DeLong's Se
7.naked capitalism
8.felixsalmon.com
9.Company Town - L.A. Times
10.Seth Godin's Blog
11.EconLog
12.Freakonomics - New York Times Blog
13.Economist's View
14.Greg Mankiw's Blog
15.Vox
16.Clusterstock
17.Mish's Global Economic Trend Analysis
18.The Baseline Scenario
19.CARPE DIEM
20.A VC

From Wikio.

ISM Business Activity Index for Services Shows Expansion for the 11th Straight Month in October


"ISM's Non-Manufacturing Business Activity Index in October registered 58.4 percent, an increase of 5.6 percentage points when compared to the 52.8 percent registered in September (see chart above). Ten industries reported increased business activity, and three industries reported decreased activity for the month of October. Five industries reported no change from September."

Comments from respondents include: "Continued strength in core businesses and capital expenditures for balance of 2010" and "Increase in service calls/requests for service."

MP: The 5.6 point increase in October was the largest monthly gain in the Business Activity Index since a 10.6 point jump in February 2008, and the third highest gain in the last decade. October marked the 11th consecutive month of expansion in business activity in the service sector of the U.S. economy.   

Two More States (AR and OK) Are Reporting Double-Digit Tax Revenue Gains for October

1. "October's sales tax report for Oklahoma continued an encouraging trend, prompting some cautious optimism Tuesday from Oklahoma City officials. Sales tax revenue was up 16.7 percent over expectations and 19.2 percent over last year's collections for the same period. It is the sixth straight month of sales tax growth over the previous year."

2.  "Arkansas tax collections for October were above the monthly forecast and above collections from a year ago, the state’s top fiscal officer said today.October marked the sixth consecutive month that gross receipts, mostly from sales tax revenue, topped collections from a year ago.Net available general revenues in October were $354.5 million, up 41 million, or 13.1 percent, from last year and $4.2 million, or 1.2 percent, above the monthly forecast."


Tuesday, November 02, 2010

Elections and Blood Tests

Earlier today, I made the case for low voter turnout and argued high voter turnout is overrated, wasteful and inefficient because we would almost always get the same exact election results with a significantly lower voter turnout.  I compared elections to a blood test - in both cases you only need a small sample, and the results won’t change with a larger sample.

Here's a good quote I found today to help illustrate the point:

“Next time someone tells you they don’t believe a small sample poll can possibly tell you anything, just say to them ‘OK, then. Next time you have to have a blood test, why don’t you ask them to take the whole lot?’”

British opinion pollster Nick Moon, in Significance, March 2010


ASA Staffing Index: Highest Level Since Dec. 2007


"During the week of Oct. 18–24, 2010, temporary and contract employment increased 0.75%, pushing the ASA Staffing Index up one point to a value of 101.  At a current index value of 101, U.S. staffing employment is 46% higher than the level reported for the first week of the current year and is 22% higher than the same weekly period in 2009 (see chart)."

MP: The 101 index reading for the Week 43 matches the same level for two weeks in March 2008, and reflects the strongest demand for contract, freelance and temporary employment since December 2007.  As a leading indicator of nonfarm employment, the ongoing improvements in the nation's key barometer of temporary help signal future gains in permanent employment opportunities. 

Is Obama A Keynesian?


October State Tax Revenues Coming In Strong

State tax revenues for October are starting to get reported, and like September, are showing improvements in economic conditions around the country, here are some examples:

1. "State revenues in Massachusetts for the month of October were up $117 million, or 9.5 percent, from the same period a year ago, a sign of an improving economy, the state Revenue Department said today."

2. "The state of West Virginia has collected nearly $96 million more than it thought it would through the first four months of the fiscal year. State Deputy Revenue Secretary Mark Muchow says several key areas showed growth in October. There was growth in income taxes, growth in sales taxes, growth in severance tax."

Making The Case for Low Voter Turnout

People often complain about low voter turnout in the U.S., which has declined over time and is much lower than voter turnout in other countries. Notice at the first link that voter turnout in the U.S. has generally decreased over time, from greater than 60% in every presidential election year during the 1960s, to less than 60% in every presidential election since, and below 50% in 1996. The pattern is the same for midterm elections - voter turnout was close to 50% in the 1960s, and fell to below 40% starting in the 1970s.  The second link shows that the U.S. ranks #120 (with 66.5% turnout) out of 169 countries in an international voting comparison by International IDEA

Many people are upset by low U.S. voter turnout, but maybe they shouldn't be, and here's why: In almost all cases, higher voter turnout would NOT have changed the outcome of the election, and we therefore get the same election results at a lower cost to society, measured in the opportunity cost of our time.

Those who complain about low voter turnout almost never make the argument that higher voter turnout would CHANGE the outcome of the election; their position is usually that more people should vote for other reasons: to exercise our right to vote, to fulfill our civic duty, or to participate in democracy. But I have never heard anyone say "More people should vote because low voter turnout leads to unreliable results," or "more people should vote because that would change the outcome of the election."

Mostly, I think people would simply "feel better" with a 90% turnout, compared to having the same election results with only 40% turnout.  But think about this - would you feel any better about a blood test if they took two pints of your blood instead of just 20 ccs?  Probably not.

There are about 160 million registered voters in the U.S.  From statistics, we know that a sample size of 16,639 would accurately and reliably represent the entire population of 160 million at a 99% confidence level, with an error of only 1%.  What this means is that if the first 16,000 people who vote when the polls first open in the morning are random voters who represent the population of voters, almost all elections are already decided by 9 a.m. or so in the morning.  The rest of the voters are really just wasting their time, in the sense that their votes will not affect the outcome of the election. It is like a blood test - the results won’t change with a larger sample.

Voting is expensive when measured in its full cost: our time. An hour spent researching the candidates, attending or watching debates, and waiting in line to vote at the poll (see photo above), is an hour lost forever doing something else. Therefore, a case can be make for low voter turnout, because the election results are almost always exactly the same as an election with high voter turnout.  Low voter turnout saves our most precious non-renewable resource: our time, and therefore it is socially more efficient than high voter turnout.  We should be proud of, not ashamed of America’s international ranking at #120 for voter turnout - it shows we're serious about conserving scarce resources. 

Monday, November 01, 2010

ISM Manufacturing Index: Economic Recovery is Real, and Consistent With Real GDP Growth of 5.2%

"Economic activity in the manufacturing sector expanded in October for the 15th consecutive month, and the overall economy grew for the 18th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business":

Highlights include:

1. The last time the ISM Manufacturing Index (PMI) remained above 50% (signaling expansion) for 15 straight months was back in the 2005-2006 period (see chart above).

2. Compared to the 16-months following the 2001 recession, the recovery of the manufacturing sector has been much stronger in the recent 16-month period from June 2009 to October 2010 (see chart above).  The ISM Index has now been at a level of about 54 or above for the last 12 months, and that marks the strongest 12 month expansion in manufacturing since 2004.

3.  ISM's New Orders Index was 58.9 percent in October, an increase of 7.8 percentage points compared to the 51.1 percent in September. This is the 16th consecutive month of growth in the New Orders Index and the largest month-over-month improvement in almost two years.

4. ISM's Employment Index was 57.7 percent in October and 1.2 percentage points higher than the 56.5 percent in September. This is the 11th consecutive month of growth in manufacturing employment.

5. The past relationship between the ISM Index and the overall economy indicates that the average index for January through October (57.4 percent) corresponds to a 5.2 percent increase in real GDP. In addition, if the index for October (56.9 percent) is annualized, it corresponds to a 5 percent annual increase in real GDP.

Online Ads Increase to 26-Month High in October, and By 1.1 Million Since the End of the Recession

In another sign that the U.S. labor market is gradually improving, the Conference Board reported today that online job demand reached its highest level in more than two years at 4,409,800 advertised vacancies in October.  Online job demand last month was the highest since August 2008, and improved by 113,700 vacancies compared to the September level, a 2.65% increase, and follows a 59,900 increase in September. Other highlights include:

1. Since the end of the recession in June 2009, online vacancies have increased by 1.1 million.

2. 40 out of 50 States posted gains in online job demand for October. 

3. The nation’s Supply/Demand rate stood at 3.44 unemployed for every advertised vacancy in September (the last available unemployment data), a figure that is down from a peak of 4.73 in October 2009.

4. Washington, D.C. is the one area in which the number of advertised vacancies exceeds the number of unemployed, reflected in the Supply/Demand ratio of 0.97 (100 vacancies for every 97 unemployed).

5. The West experienced the largest October gain, 47,800. California was the largest contributor with an increase of 32,100. California’s gain was largely due to increases in demand for computer and math jobs and management jobs.

Real Consumer Spending in September Bounces Back to Pre-Recession Level of $9.35 Billion


The BEA reported today that real personal consumption expenditures reached $9.349 billion in September, the highest level of U.S. consumer spending since the recession started in December 2007, 33 months ago (see chart above).  On a year-over-year basis, September's 2.3% increase in consumer spending was the largest percentage increase in three years, since September of 2007 (see bottom chart above).   

Higher Education Bubble Update: A Public University Joins the Expanding $50K Club


Chronicle of Higher Education -- "The ranks of the most expensive colleges have grown again: 100 institutions are charging $50,000 or more for tuition, fees, room, and board in 2010-11, according to a Chronicle analysis of data released last week by the College Board (see the top 20 above). That's well above the 58 universities and colleges that charged that much in 2009-10, and a major jump from the year before, when only five colleges were priced over $50,000.

This year marks a milestone as the first public institution has joined that elite club: the University of California at Berkeley is charging out-of-state residents $50,649 for tuition, fees, room, and board. (The price for in-state residents is only $27,770.) To be sure, many students at the most-expensive institutions are paying significantly less than the sticker price, thanks to financial aid."

MP: The College Board also reported last week that tuition at public universities has been increasing even faster than tuition at private universities (see CD post here), so it's not surprising that a public university made it into the "50K Club."  Over the last decade the average annual real increase in public college tuition of 5.6% is almost double the 3% average real increase in private college tuition.

And it's highly likely that the increases in taxpayer-funded financial aid is the "enabling force" that allows colleges, both public and private, to continually raise tuition well above the rate of inflation year after year, fueling the unsustainable higher education bubble shown below:  



Gordon Tullock Makes The Case for Not Voting

 
In a heretical, irreverent look at voting, George Mason economist Gordon Tullock explains in this video why he doesn't vote, and why he believes you're better off avoiding the polls altogether on Election Day.

"It's more likely that you'll get killed driving to the polling booth, than it is that your vote will change the outcome of the election."

But what if nobody voted? Professor Tullock answers...

Sunday, October 31, 2010

Random Halloween Links

1. Bedbug Registry -- Traveling soon? Check out this free, public database of user-submitted bed bug reports from across the United States and Canada. HT: Mike Carlson

2. Families avoid flying from U.K. to Egypt and Caribbean as air taxes increase. If you tax something.....

3. Hells Angels sue over the use of their logo.

4. The bottom is falling out of global ocean surface temperatures, are we headed for global cooling?  

5. Mount Everest gets 3G.

The Power of Freedom Overcomes All Obstacles

Don Boudreaux explains how the immense strengths behind freedom and the human spirit provide the power to triumph over all obstacles - both those obstacles that result from natural disasters like earthquakes, and man-made obstacles like taxes and regulation.  Call it a "Ganesha-like" power of freedom to overcome all obstacles: 

"Freedom is a beautiful flower with more robustness than crabgrass. Freedom is not delicate or easily uprooted, and is not a frail institution that collapses and dies the moment it is attacked by some element foreign to its nature. If it were, we all would long ago have been well and truly enslaved.

The human spirit seizes opportunities to flourish even with less-than-maximum scope; it naturally resists being confined to the arbitrary will of others. We do not all fall in line behind the commissar or Congress’s commands simply because we’re ordered to do so. (How many Americans really care if the busboy at a restaurant is an “illegal” alien?) And even when we abide by the letter of legislation, we are wonderfully crafty at violating its spirit if that legislation is felt to be inappropriate.

So, too, with the free market. It is perhaps the most remarkably vigorous of all human institutions. Heavily taxed and loaded with arbitrary regulations, the market keeps on keeping on. Entrepreneurs creatively find ways around government intrusions or they discover techniques for reducing the intrusions’ ill effects.

Everyone who understands the logic of markets knows that, say, the unexpected destruction of a factory by an earthquake will barely slow the market’s relentless push to improve living standards. We understand that markets are remarkably resilient at dealing with natural obstacles such as mountains that separate suppliers from customers, or weather disasters that destroy existing inventories and supply lines.

Although we’d be even wealthier if these obstacles and weather disasters never materialized, their existence does not condemn us to everlasting poverty. Entrepreneurs—given sufficient freedom—are guided by prices and profits to overcome these obstacles. Likewise, entrepreneurs—given sufficient freedom—are guided by prices and profits to overcome government-erected obstacles.

To point out that freedom can be hobbled and hamstrung by a predatory State and nevertheless continue to shower blessings on ordinary men and women is to praise freedom—to applaud it loudly and lovingly."

Saturday, October 30, 2010

Restaurant Performance Index Rises Above 100 For 1st Time in 5 Mos., Current Index Highest in 3 Yrs.

"Driven by improving same-store sales and customer traffic levels as well as growing optimism among restaurant operators, the outlook for the restaurant industry improved in September. The National Restaurant Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.3 in September, up a solid 0.8 percent from its August level (see chart above). In addition, the RPI rose above 100 for the first time in five months, which signifies expansion in the index of key industry indicators.

The RPI’s solid gain in September was the result of broad-based improvements among both the current situation and forward-looking indicators. Restaurant operators reported positive same-store sales and customer traffic levels for the first time in six months, which propelled the RPI’s Current Situation Index to its highest level in nearly three years."

MP: On a year-over-year basis, the RPI increased by 2.87% in September, the highest annual increase in at least four years (see bottom chart above). 

Happy Halloween



HT: Coyote Blog

How To Carve a Pumpkin

without getting your hands messy......


HT: Andy Roth

Higher Education Bubble Update; New York Daily News Calls It a "Government-Sanctioned Racket"

The College Board released new data this week on "Trends in College Pricing" for 2010, and reported that four-year public universities raised tuition this year by 8%, almost twice the 4.5% average increase for tuition at America's private universities.  That differential follows a well-established pattern over the last decade of higher tuition increases at America's public universities than at private schools (see the chart above).  Public university tuition has increased faster than private tuition in each of the last four years, and in eight out of the last nine years, by an average of 3% per year.  As the chart above shows, the trajectory of college tuition in the U.S. is on a path that makes the recent housing bubble seem like a minor historical footnote by comparison. 

In assessing the College Board data, a NY Times article "As College Fees Climb, Aid Does Too" finds some "good news," but only by reversing cause and effect:

"The good news in the 2010 “Trends in College Pricing” and “Trends in Student Aid” reports is that fast-rising tuition costs have been accompanied by a huge increase in financial aid, which helped keep down the actual amount students and families pay."

The New York Daily News does a much better job of reporting the true causal relationship in an editorial that could be titled "As College Financial Aid Climbs, Tuition Follows:"

"College financial aid comes largely from the federal government. Meaning, out of your pocket. And ours. And out of the pockets of families scraping to raise that extra 8% for tuition. A government-sanctioned racket is what it is. States cut back on assistance to schools, so the schools raise tuition. Then the feds jump in, dish out billions in taxpayer dollars in student aid, and tuition goes up again. And again (see chart above).

Meanwhile, those fortunate folks who inhabit the groves of academe feel absolutely no need to hold the line on expenses. They ought to be ashamed, most of all for sending so many graduates out into the world with diplomas and loan statements showing a near-lifetime's worth of debt."

And this ongoing "higher education bubble" is especially troubling at a time when economist Richard Vedder reported recently that millions of students with college degrees not only graduate with debt, but "are doing jobs that the BLS says require less than the skill levels associated with a bachelor’s degree."  Some of those jobs include bartenders, janitors, and food preparation workers, all the more reason to call it a "government-sanctioned racket."

Thanks to Gregory Tetrault. 

Hispanics: Longer Life Expectancy, Less Insurance

John Goodman points out on The Health Care Blog that Hispanics live longer than non-Hispanic whites on average, and the table above based on CDC data shows that life expectancy is greater for Hispanics than for whites both at birth (by 2.5 years), but also at other selected ages (20, 40, 60 and 80 years).  At the same time, Census data for 2009 shows that only about two out of every three Hispanics is covered by health insurance, compared to 88% of whites being covered, so that Hispanics are almost three times as likely as whites to be uninsured (32.4% vs. 12%).  

John concludes that these findings "make mincemeat out of the oft-repeated idea that the uninsured get less health care and die earlier than everyone else."

Friday, October 29, 2010

Global Economic Recovery Watch

1. The Conference Board Leading Economic Index for Australia increased 0.2% and the Conference Board Coincident Economic Index increased 0.3% in August.

2. The Conference Board Leading Economic Index for Mexico increased 0.8% and the Conference Board Coincident Economic Index increased 0.5% in August.

Average GDP Growth of 2.81% Over Last 5 Quarters Compares Favorably to the Last Two Expansions

We're now in the fifth quarter of economic expansion since the recession officially ended in June 2009.  How does this economic expansion compare to the last two?  Most reports describe the recovery as "sub-par," "weak," "fragile," and "anemic," etc.  

And yet real GDP growth over the last five quarters of expansion (1.6%, 5%, 3.7%, 1.7% and 2% for an average of 2.81%) compares very favorably with the five-quarter periods following the 2001 recession (3.5%, 2.1%, 2%, 0.1% and 1.6%, for an average of 1.87%) and the 1990-1991 recession (2.7%, 1.7%, 1.6%, 4.5% and 4.3% for an average of 2.96%).  Based on average real GDP growth (subject to revisions of third quarter GDP) for the five quarters following recession, this expansion is stronger than the 2002 expansion by almost a full percentage point (2.81% vs. 1.87%), and just slightly below the 1991-1992 period (2.96%). 


Strongest Consumer Spending Growth Since 2006

The BEA reported today that real GDP grew at 2.0% in the third quarter, boosted by a 2.6% rise in inflation-adjusted consumer spending, the highest quarterly increase since the 4.1% growth in the fourth quarter of 2006, 15 quarters ago.  This healthy growth in consumer spending from July through September is consistent with:  a) the many states that have been reporting increases in tax revenues in the third quarter from sales, individual income and corporate income taxes, and b) the stronger-than-expected retail sales report for September (7.2% annual growth).   

Thursday, October 28, 2010

Food Trucks Spice Up the Nation's Capital

About 20 food trucks are currently operating in the Washington, D.C. area, with another five coming soon, according to the Food Truck Fiesta blog, which also provides a daily, real-time automated "DC Food Truck Tracker" map and updated Twitter feeds with information about where the trucks are located on a given day.  The trucks typically move around each day, and about three locate daily at Farragut Square (conveniently located just down the block from AEI), often with blankets for a full picnic experience (see top picture), and often with ridiculously long lines at the Lobster Truck (see bottom picture), which currently ranks #1 among DC food trucks for having the most Twitter followers.  

Some of the food trucks offer limited State-fair type junk food menus like Fry Captain (fries and milk shakes only, menu here), and others have a more sophisticated international street food menu like Sauca, which sells Mumbai butter chicken, Vietnamese pork banh mi, beef Shawarma, Italian salsiccia con Puttanesca, and Mexicali fish tacos (they come to Farragut Square every Tuesday).

With long, Soviet-style queues like those at the Lobster Truck, it's no surprise that according to the Wall Street Journal:

"A small but growing number of chains—such as Cousins Submarines Inc., Tasti D-Lite LLC and Toppers Pizza Inc.—are following in the tire tracks of those local food-truck businesses popping up on city streets around the U.S. Many brick-and-mortar eateries have added mobile units in recent years, and more are expected to do the same, including national brands. 

Sites like Twitter, Facebook and FourSquare are making it easy for consumers to track mobile vendors' whereabouts, says Hudson Riehle, senior vice president of research for the National Restaurant Association in Washington, D.C."

Jobless Claims Fall to Second-Lowest Level Since Aug. 2008, German Jobless Rate Lowest Since 1991

WASHINGTON (AP)  -- "Fewer people applied for unemployment benefits last week, the second drop in a row and a hopeful sign the job market could be improving.The Labor Department said Thursday that initial claims for jobless benefits dropped 21,000 to a seasonally adjusted 434,000 in the week that ended Oct. 23 (see chart above).  It was the second-lowest number for claims this year. The only time it was lower was during the July 10 week, and that week was affected by the Independence Day holiday when state unemployment offices were closed."

MP: Except for the holiday-related July 10 low, last week's 434,000 seasonally-adjusted weekly claims for unemployment insurance was the lowest since the week of August 23, 2008, more than two year ago (see chart).

In some positive labor market news from Europe, the German unemployment rate fell in September to an 18-year low of 7.5%, the lowest jobless rate since 1991, and analysts expect the positive trend to continue.   

Weekly Rail Traffic Continues Upward Trend

WASHINGTON, D.C. – Oct. 28, 2010 – "The Association of American Railroads (AAR) today reported that weekly rail traffic remains up over 2009 levels with U.S. railroads originating 302,855 carloads for the week ending Oct. 23, 2010, up 9.6 percent compared with the same week last year (see chart).  Intermodal traffic for the week totaled 235,606 trailers and containers, up 13.6 percent compared with the same week a year ago, with container volume up 14.6 percent and trailer volume up 8.2 percent."

MP: Rail traffic continued on an upward trend for the week that ended last Saturday, with both carloads and intermodal traffic registering solid gains versus the same week last year of 9.6% and 13.6% respectively.  The trend lines in the graph above show the steady improvements in both measures of rail traffic over the last 22 months.  Compared to January 2009, carload volume is up by 16.6% and intermodal volume by 26%.  The ongoing gains in the demand for raw materials, inputs and commodities will eventually translate into gains in final output and employment.     

Wednesday, October 27, 2010

Food is Now More Affordable Than Ever, Thanks in Part to International Trade

Charles Campbell, retired senior VP of Gulf Oil, cooks up quite "a stew of errors, misunderstandings, and non sequiturs" about free trade, according to Don Boudreaux, in this Baltimore Sun editorial "Free Trade Has Failed the U.S."

Some of the errors appear in this discussion on U.S. food export and imports:

"In 1970, U.S. technology was superior to that of every other nation in the world; we manufactured nearly everything we consumed; we were essentially self-sufficient in energy; we exported food; and we imported little of consequence.  Over the last 40 years, we have hollowed out our industrial base and .... we now import more food than we export."  

In fact, we typically export more food than we import in most years, and have run trade surpluses for food in 2007, 2008 and 2009.  And we have always imported billions of dollars of food each year (think bananas, coffee), see chart above.  Partly as a result of increasing international trade, food is more affordable than any time in U.S. history, when measured as a share of disposable income (see chart).  Free trade has not failed the U.S., it has contributed to a rising standard of living for all Americans, and the increasing affordability of food is just a small part of the story.     

Global Economic Recovery Watch

1. "The Conference Board's Leading Economic Index (LEI) for Europe remains on an upward trend, and increased 0.3 percent in September, following a 0.7 percent increase in August, and a 0.9 percent increase in July. After increasing in September, the LEI for the Euro Area is 18.4 percent above its March 2009 trough."

2. From the WSJ: "Britain's economy grew more briskly than expected during the third quarter (3.2% at an annual rate), damping fears that the U.K. could tip back into recession and, for now, buttressing the government's move to attack the country's huge deficit with public-spending cuts."

Election Watch 2010

1. Ireland's largest bookie Paddy Power said today it has already paid off all bettors who wagered the GOP would capture the chamber, saying there's no way Democrats can keep control of the House. (Source)

2. From P.J. O'Rourke "This is not an election on November 2. This is a restraining order."

3. Current Intrade odds: 2:1 that Harry Reid will lose in Nevada, 5:1 that Barbara Boxer will win in California, and 13:1 that Jerry Brown will win in California.  

Markets/Websites in Everything

It's not exactly a "market," but here's a free website (donations are accepted) that helps you when you're saying "I Can't Find My Phone."

HT: Nicholas Bretagna II

Sept. Durable Goods Orders Reach Two-Year High

New orders for durable manufactured goods in September reached the highest level ($199.1 billion) since September 2008, two years ago (see top chart above). The 12.2% increase in durable goods orders in September compared to the same month last year was the ninth consecutive double-digit increase starting in January of this year.  From the cyclical low of $160 billion in March 2009, new orders for manufactured goods have increased by about 25% to almost $200 billion last month.  

MP: We haven't heard much lately about a V-shaped recovery, but this 25% surge in orders for durable goods over the last 18 months to a two-year high in September sure seems like solid evidence of a V-shaped recovery for the manufacturing sector of the U.S. economy.  And since two out of the ten economic variables in the Leading Economic Index are based on manufacturers' new orders, this V-shaped increase in durable goods signals future increases in manufacturing output.  

Tuesday, October 26, 2010

Kauffman Foundation Quarterly Survey of Bloggers



There are lots of economic indicators to track the U.S. economy, but Tim Kane at the Kauffman Foundation came up with a new one about a year ago—a quarterly survey of economics bloggers, and he invited me to join the 13-member board of advisors for the project. The most recent survey was conducted in mid-October, and the results of the fourth “Quarterly Survey of Leading Economics Bloggers” were just released by the Kauffman Foundation (press release here, full report here). 

Tim Kane is featured on the CNBC segment above, where he discusses the background and details of the bloggers survey, and I summarize some of the key findings here at the Enterprise Blog

ASA Staffing Index Holds Steady at 100 for 4th Wk.


"During the week of Oct. 11–17, 2010, temporary and contract employment increased 0.45%, maintaining the ASA Staffing Index at a value of 100. At a current index value of 100, U.S. staffing employment is 45% higher than the level reported for the first week of the current year and is 20% higher than the same weekly period in 2009."

From the monthly report:

"Staffing employment in October is 20% higher than in the same month last year, according to the ASA Staffing Index. The index for October is 100, up four points from 96 for September, suggesting that staffing employment has increased about 4% over the past month."

From an ASA Backgrounder

"Jobs, flexibility, a bridge to permanent employment, alternative employment arrangements, training—these are the benefits staffing firms offer today's workers. Work force flexibility and access to talent—these are the benefits staffing firms bring to businesses. Jobs, labor market flexibility, efficient bridging to permanent jobs, and training—these are the benefits the industry brings to the economy." 

MP: The ASA Staffing Index has remained at a level of 100 for the last four weeks, which is the first time since April-May 2008, almost 2 and a half years ago, of four consecutive weeks at 100 for the nation's key barometer of the demand for contract, temporary and freelance employment.  As a leading indicator of nonfarm employment, the ongoing improvements in temporary help signal future gains in permanent employment opportunities.