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
5.Calculated Risk
6.Grasping Reality with Both Hands: Brad DeLong's Se
7.naked capitalism
9.Company Town - L.A. Times
10.Seth Godin's Blog
12.Freakonomics - New York Times Blog
13.Economist's View
14.Greg Mankiw's Blog
17.Mish's Global Economic Trend Analysis
18.The Baseline Scenario
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."