Tuesday, February 08, 2011

There's No Food Inflation in the U.S.

We hear a lot lately about how the prices for commodities, metals (gold and copper), agricultural products and food are rising, but it sure hasn't started showing up yet in the CPI for Food and Beverages, see chart above of annual price inflation for that series.  Annual food inflation through December 2010 was only 1.5%, more than a full percent below the ten-year average of 2.72%. 

Treasury Spread Shows No Sign of Inflation

The current spread between nominal 10-year Treasuries at 3.68% (data) and 10-year TIPS (data) at 1.30% has increased slightly over the last few months, to the current level of 238 basis points as of February 4.  But the current spread is still below the 250 basis point average during 2004, 2005, 2006, 2007 and the first half of 2008 (see chart above).  At least by this Treasury bond-market derived estimate of future inflation, there don't appear to be any inflationary pressures building yet.

Monster Employment Index Gains 25% in January

The Monster Employment Index Europe increased in January by 25% from its year-ago level, the largest year-over-year increase of the current economic expansion (see chart above), and above the 22% gain in December.  There were especially strong annual gains for online job demand in Germany (+37%), Sweden (+32%), France (+23%) and the U.K.'s IT sector (+34%).  

Markets in Everything: Polish Board Game Recreates Communist Shopping Hell

BBC -- "Poles have been queuing to buy a new board game called "Kolejka" (The Queue), which recreates the tedious shopping experience of communist-era Poland. Crowds of people, including those who remember standing for days in queues and teenagers who were not even born in the 1980s, lined up at the state-run Institute of National Remembrance (IPN) to buy the game.

The game's functional box (pictured above) also mimics no-frills communist shopping."   

MP: Interesting that the Poles are lining up in queues today to buy a board game called "The Queue" about the queues of the past.  

HT: Colin Grabow

Will Cuba Be the Next Egypt or Have Market-Based Reforms There Delayed an Egyptian-Like Rebellion?

Mary Anastasia O'Grady asks in yesterday's WSJ: "Will Cuba Be the Next Egypt?", here are the opening and ending paragraphs:

"Developments in Egypt over the last two weeks brought Cuba to my mind. Why does a similar rebellion against five decades of repression there still appear to be a far-off dream? Part of the answer is in the relationship between the Castro brothers—Fidel and Raúl—and the generals. The rest is explained by the regime's significantly more repressive model. In the art of dictatorship, Hosni Mubarak is a piker.

With very limited access, Cubans are already using the Internet to share what has until now been kept in their heads: counterrevolutionary thoughts. If those go viral, even a well-fed military will not be able to save the regime. But for now, Cubans can only dream about the freedoms Egyptians enjoy as they voice their grievances."

From Hernando De Soto's editorial about Egypt in the WSJ last week:

"As in most developing countries, Egypt's legal institutions fail the majority of the people. Due to burdensome, discriminatory and just plain bad laws, it is impossible for most people to legalize their property and businesses, no matter how well intentioned they might be.

The examples are legion. To open a small bakery, our investigators found, would take more than 500 days. To get legal title to a vacant piece of land would take more than 10 years of dealing with red tape. To do business in Egypt, an aspiring poor entrepreneur would have to deal with 56 government agencies and repetitive government inspections.

All this helps explain who so many ordinary Egyptians have been "smoldering" for decades. Despite hard work and savings, they can do little to improve their lives."

From Cuban blogger Yoani Sanchez:

"In just the few months since the announcement of the expansion in the number of licenses for independent work, the results are encouraging. We have begun to recover lost flavors, longed-for recipes, hidden comforts. More than 70,000 Cubans have taken out new licenses to work for themselves and at their own risk, and thousands more are seriously considering the advantages of opening a small family business.

Despite the caution of many, the still excessive taxes, and the absence of wholesale markets, the brand new businesses have started to be noticed in a society marked by stagnation. You see them building their little stands, hanging colorful signs announcing their merchandise, rearranging their homes to accommodate a snack bar or to offer haircuts or manicures. Most are convinced that this time they are here to stay, because the system that so suffocated and demonized them in the past, has lost the ability to compete with them."

MP: Whether it was intentional or not, perhaps the Castro brothers have prevented Cuba from being the next Egypt by introducing market-based reforms that have apparently been well-received by entrepreneurial Cubans.  Even without the access to the Internet that Egyptians enjoy, the new freedom for Cubans to start small businesses may prevent the "smoldering" frustration that led to the Egyptian rebellion.   

Another Gender Gap: Book Reviews in 2010

The organization VIDA: Women in Literary Arts was founded in August 2009 "to address the need for female writers of literature to engage in conversations regarding the critical reception of women’s creative writing in our current culture."

The organization has completed a gender analysis of book reviewers and books reviewed for 2010, and has uncovered gender gaps for both - a disproportionate number of book reviewers are male, and a disproportionate number of books reviewed are written by men (see NY Times breakdown above, 60% of book reviewers were male, and 65% of book reviews were of books authored by men).  Here's what VIDA says:

"We know women write. We know women read. It’s time to begin asking why the 2010 numbers don’t reflect those facts with any equity. Many have already begun speculating; more articles and groups are pointing out what our findings suggest: the numbers of articles and reviews simply don’t reflect how many women are actually writing. VIDA is here to help shape that discussion. Please tell us about the trends you’ve witnessed in your part of the writing world. Let us know what you think is going on. We’re ready and anxious to hear from you. We’re ready to invest our efforts and energy into the radical notion that women are writers too."

MP: Another example of perfect statistical gender parity being the goal? Except in those cases where women are over-represented (e.g. college degrees), and the concern about gender imbalances disappears? 

Monday, February 07, 2011

Employment Trends Index Gains in January

The Conference Board reported today that its composite Employment Trends Index, based on eight individual labor-market indicators (including both hard economic data and confidence measures), increased in January for the fourth consecutive month. The index increased to 100.5 in January from 100.3 in December, and is now above its year-ago level by 7%, and above its cyclical mid-2009 low by 20 points (see chart above).

Says Gad Levanon, Associate Director, Macroeconomic Research at The Conference Board: “Despite anemic job gains in January, the Employment Trends Index suggests that employment growth is poised to accelerate. Both hard economic data as well as confidence measures have improved, and since employment growth typically lags, we expect larger numbers of jobs to be added back into the economy in the coming months.”

MP: The Employment Trends Index has been an accurate leading indicator of trends in payroll employment back to 1973. In that case, the ongoing gains in the index and the 20-point gain since mid-2009 predict that we can look for gradual improvements in labor market conditions in the months ahead. 

Occupational Licensing Totally Out of Control

On the front page of today's WSJ, an excellent article about the rising occupational licensure in some states for some professions (see chart above, click to enlarge): "A License to Shampoo: Jobs Needing State Approval Rise," here are some key paragraphs:

"Mr. Kleiner, labor professor at the University of Minnesota, looked at census data covering several occupations that are regulated in some states but not others, including librarians, nutritionists and respiratory therapists. He found that employment growth in those professions was about 20% greater, on average, in the unregulated states between 1990 and 2000.

Licensing can also drive up costs to consumers. Licensed workers earn, on average, 15% more than their unlicensed counterparts in other states—a premium that may be reflected in their prices, according to a study published by the National Bureau of Economic Research and conducted by Mr. Kleiner and Alan Krueger, an economist at Princeton University.

Mr. Kleiner estimates that across the U.S. economy, occupational licensing adds at least $116 billion a year to the cost of services, which amounts to about 0.1% of total consumer spending. In a look at dentistry, Mr. Kleiner found that the average price of dental services rose 11% when a state made it more difficult to get a dental license.

In many service trades, licensure "is totally out of control," says Charles Wheelan, a lecturer in public policy at the University of Chicago. He says the marketplace might be a better judge than the government of whether a barber or a yoga instructor is competent. "It's fairly easy for you to tell whether you've gotten a bad haircut or not, and if quality turns out to be bad, it's not a big social problem," says Mr. Wheelan.

When a trade group does succeed in getting a licensing law passed, it sometimes exempts existing workers from the testing requirements. In Michigan, for instance, it will soon be a felony to practice massage without a license. Newcomers to the field must take 500 hours of classes and pass an exam to get that license. But a grandfather clause exempts most current massage therapists, including those who may never have taken a class at an accredited school."

MP: See Chapter IX ("Occupational Licensure") of Milton Friedman's book "Capitalism and Freedom."

Markets in Everything: "Cash for Keys" in NYC

In New York City, there is a whole industry built around real estate developers paying tenants to move out of the one million NYC apartments that are still rent-stabilized.  One tenant was able to squeeze $400,000 from an anxious developer for turning over the keys and moving out.

HT: Greg Mankiw

Retail Clinics in the U.S. Could Triple in 5 Years

According to Merchant Medicine's "2011-2015 Walk-In Clinic Market Forecast," the number of retail clinics in the U.S. could almost double from the current level of 1,220 clinics to 2,315 by 2015 under a "mid-case scenario," and the number could more than triple to 3,380 under the "best-case scenario (see chart above).  Even under the "worst case scenario," the number of retail clinics would increase by 33% during the next five years.  The report identifies some key factors that will influence the growth in retail clinics through 2015:

1. "Our take on the insurance mandate portion of health reform is it will have a negligible effect, if any [on retail clinic growth]. What we believe to be more important to watch is the development of accountable care organizations (ACOs) and how those ACOs will impact retail and urgent care.

On the positive side, we see ACOs partnering with retail pharmacies in different ways. One example is the partnerships MinuteClinic is forming with large health systems like the Cleveland Clinic, Allina and Catholic Healthcare West (CHW). The CHW/MinuteClinic partnership is more than a simple exchange of collaborative physicians from CHW for the referral of patients from MinuteClinic that are outside of the limited-scope model.

Beyond these partnerships, where the ACOs don’t bring retail pharmacies into the fold, large health insurance companies will, as evidenced by recent deals between CVS and Aetna, and United Healthcare and Walgreens. All of these partnerships, which Walgreens Health and Wellness Division President Hal Rosenbluth refers to as “health care ecosystems,” will benefit large operators like MinuteClinic (CVS), Take Care Health (Walgreens) and The Little Clinic (Kroger).

2. Market forces have been driving walk-in medicine and will continue in the industry’s favor: cost, convenience, quality and flexibility.

3. Because of the primary care physician shortage in the U.S., there is no question that retail and urgent care clinics will step in where patients have trouble finding access to good primary care physicians. In Baltimore/Washington/Northern Virginia, Patient First has evolved from an urgent-care-only clinic network to become an equally powerful brand for primary care. And retail clinic nurse practitioners are beginning to develop a following as primary care providers in markets where there is a primary care physician shortage."

Sunday, February 06, 2011

January State Tax Revenues Coming in Strong

1. The Massachusetts Department of Revenue collected $2.053 billion in January, an 11.3 percent increase over January 2010.

2. The Pennsylvania Department of Revenue’s tax collections last month showed signs of economic improvement for businesses and the state’s fiscal health, countering the situation this time last year. Overall, the state’s general fund received $2.2 billion from taxes and fees in January, more than 3 percent above what the state estimated it would receive.

3. Indiana reports it took in $41 million more than expected in January. State Budget Agency Director Adam Horst says state tax collections have now increased on a year-over-year basis for 11 consecutive months. Horst says January was the first month in state history when sales tax collections exceeded $600 million in a single month.  Individual income tax collections for the month were 15 percent above the same period last year.

4. With the fiscal year now half over, Hawaii state tax revenues are running 6.3 percent above year-before levels, a sign of economic recovery in a state that gets most of its revenue from excise taxes on consumer and business spending.

5. Net general revenue collections in Missouri increased 6.3 percent in 2011 fiscal year-to-date, starting July 1 and ending Jan. 30, to $4.13 billion compared to $3.88 billion last year in the same period.

6. The Arkansas Department of Finance and Administration said that the state's net available revenues in January totaled $459.8 million. That's $19.7 million more than 2010 and $4.4 million above the forecast.

7. West Virginia general tax revenues topped their January estimate by a whopping $81 million. Tax collections totaled $425 million for the month. The excess puts state government $241 million above revenue projections for the budget year that began July 1.

8. Virginia Gov. Bob McDonnell said Virginia may collect as much as $152 million more than expected for the current two-year budget because of strong tax collections and lower-than-anticipated refunds to taxpayers. Individual withholding collections through January were up 5.2 percent, ahead of the budget estimate of 3.4 percent, suggesting a rebound in small business hiring and wages. 


9. State tax collections in Georgia increased by 8 percent in January, the eighth straight month of growth. For the fiscal year that began July 1, tax collections are also up 8 percent to $9.4 billion."Our state continues its recovery, as many Georgians who have suffered during this downturn return to employment and being paying taxes again," said Gov. Nathan Deal.

10. Minnesota tax collectors did better than expected last month as individual taxpayers withheld and paid more income taxes. Minnesota Management and Budget said that the state collected $137.4 million more than anticipated in January. That's 9.3 percent higher than forecast.  The extra cash puts the state $165.5 million ahead of projected revenues seven months into the current fiscal year.

11. Nebraska collected more tax revenue than predicted for a third month in a row, according to a report released Thursday. The report eases worries that the the state budget situation will worsen, and it contains hopeful signs of economic recovery.

12. Texas sales tax revenue for last month jumped more than 10 percent compared to a year ago as the Texas economy improves.  Sales tax revenues in Texas have improved for the last ten months, reflecting increased activity in almost all major economic sectors.

Believing in the "Magic of the Marketplace"

President Reagan’s visit to the NYSE in 1985 marked the first time a sitting president had visited the Exchange.
On its website, the NYSE has "A Tribute to President Ronald Reagan," highlighting President Reagan's two visits to the"nerve center of entrepreneurial capitalism," and featuring Reagan's core beliefs  as communicated to members of the IMF and the World Bank in September 1981 during Reagan's first administration:

"We who live in free market societies believe that growth, prosperity and, ultimately, human fulfillment are created from the bottom up, not the government down. Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefiting from their success – only then can societies remain alive, dynamic, prosperous, progressive and free.

Trust the people. This is the one irrefutable lesson of the entire post-war period, contradicting the notion that rigid government controls are essential to economic development. The societies that have achieved the most spectacular, broad-based progress are neither the most tightly controlled, nor the biggest in size, nor the wealthiest in natural resources. No, what unites them all is their willingness to believe in the magic of the marketplace."

Made in the USA

From Jeff Jacoby's column in today's Boston Globe "Made in the USA":

"There’s just one problem with all the gloom and doom about American manufacturing. It’s wrong.

Americans make more “stuff’’ than any other nation on earth, and by a wide margin. According to the United Nations’ comprehensive database of international economic data, America’s manufacturing output in 2009 (expressed in constant 2005 dollars) was $2.15 trillion. That surpassed China’s output of $1.48 trillion by nearly 46 percent (see chart above). China’s industries may be booming, but the United States still accounted for 20 percent of the world’s manufacturing output in 2009 — only a hair below its 1990 share of 21 percent.

Perceptions also feed the gloom and doom. In its story on Americans’ economic anxiety, National Journal quotes a Florida teacher who says, “It seems like everything I pick up says ‘Made in China’ on it.’’ To someone shopping for toys, shoes, or sporting equipment, it often can seem that way. But that’s because Chinese factories tend to specialize in low-tech, labor-intensive goods — items that typically don’t require the more advanced and sophisticated manufacturing capabilities of modern American plants.

A vast amount of “stuff’’ is still made in the USA, albeit not the inexpensive consumer goods that fill the shelves in Target or Walgreens. American factories make fighter jets and air conditioners, automobiles and pharmaceuticals, industrial lathes and semiconductors. Not the sort of things on your weekly shopping list? Maybe not. But that doesn’t change economic reality. They may have “closed down the textile mill across the railroad tracks.’’ But America’s manufacturing glory is far from a thing of the past."

Update: The chart above was prepared using the United Nations data on international GDP, including a breakout for manufacturing output, on an annual basis for most countries in the world from 1970-2009.  For most advanced countries, manufacturing data are provided for both: a) manufacturing, and b) total manufacturing including mining and utilities.  Total manufacturing would be a measure consistent with the Federal Reserve's (and other countries') measure of monthly "industrial production," which is for total manufacturing output including mining and manufacturing.  For China, the only measure available from the UN is for total manufacturing, including mining and utilities.  Therefore, the only way to compare manufacturing output in China to the U.S. and other countries using the UN data is to use the measure of total manufacturing (including mining and utilities). 

Saturday, February 05, 2011

Year-End 2010 Real Estate Market Improves

1. The number of California homes going into foreclosure dropped again during the fourth quarter of 2010 to its lowest level in more than three years, the result of shifting market conditions as well as evolving lender and mortgage servicer policies.

2. Las Vegas region December home sales rose 16.4% from November but fell short of both a year ago and the historical average for the month. The share of homes bought by investors hit a new high as foreclosure resales and sub-$100,000 transactions rose, helping to drive down the median sale price.   

3.  A total of 8,706 new and resale houses and condos closed escrow during December in the Phoenix metropolitan area, an increase of 22.1% from November, and a 1.4 percent decline from a year earlier.

4. Miami area December home sales rose to a four-year high for that month thanks to robust condo sales. December sales increased 28.7% from November, and 4.2% from a year earlier.

Challenge to Attorney General Eric Holder: Correct the Misinformation on the DOJ Website

According to data available from the Centers for Disease Control and Prevention for 2007 (most recent year available), the top five leading causes of death for black females ages 15-44 are listed above.  Note that the 838 homicides include murders by family members, intimate partners, acquaintances and strangers. 

And yet the Attorney General of the United States Eric Holder claimed on the Department of Justice website (October 19, 2009) that "Disturbingly, intimate partner homicide is the leading cause of death for African-American women ages 15 to 45."  He actually made that claim earlier in a speech on August 3, 2009, where he said "Intimate partner homicide is the leading cause of death for African-American women ages 15 to 45. These statistics are shocking and completely unacceptable."

Christina Sommers points out in her USA Today editorial that it would be shocking and completely unacceptable if it were true, but it isn't true (see table above).  Instead, it's shocking and completely unacceptable for the Attorney General of the United States to spread false statistics that aren't even remotely close to being true or accurate.  Shocking, indeed.  Especially when you see how that misinformation has spread and been quoted as fact by an institute at the University of Minnesota, on YouTube, in books like this one,  and in newspaper articles like this story in the Philadelphia Tribune

Thanks to Christina Sommers for exposing this false claim that has remained on the Department of Justice website for more than a year, and her challenge to Eric Holder:

"Victims of intimate violence are best served by the truth. Eric Holder should correct his department's website immediately."

Commercial Real Estate Makes a Comeback, Defying Predictions of a Meltdown, Crash and Crisis

February 2010 in the Huffington Post --  "There is a commercial real estate crisis on the horizon, and there are no easy solutions to the risks commercial real estate may pose to the financial system and the public," says a report issued Thursday by the Congressional Oversight Panel, the bailout watchdog led by Harvard Law professor and middle-class advocate Elizabeth Warren.

MP: Around that time, there were many other similar predictions with headlines like "A Commercial Real Estate Bubble Set to Burst," the "Coming Collapse of Commercial Real Estate," and "Commercial Real Estate Collapse Bigger than Subprime Implosion," and "Commercial Real Estate Will Collapse (Forbes)."

Now we get a much different story from recent data released by MIT on commercial property transactions in 2010:

MIT Center for Real Estate (Feb. 2011)— "Transaction prices of commercial properties sold by major institutional investors gained 11.9 percent in the fourth quarter, and 19.3 percent for all of 2010, according to an index developed and published by the MIT Center for Real Estate.

Both of these returns were the second highest in the history of the index, which goes back to 1984. (The record-holding quarter remains the second quarter 2005 which had a 17.8 percent gain, and 2005 was the record year with a 27.2 percent price increase.) Measured on a total return basis, including net income generated by the properties (as well as the price gain), the 2010 result was 25.2 percent, which was also second highest after 2005’s 32.2 percent.
These results put the price index now within 27.9 percent of its 2nd-quarter 2007 peak value (measured as a fraction of that peak price, see chart above).

On a dollar value basis, fourth quarter index sales totaled over $3.7 billion, up $800 million over third quarter, and for all of 2010 index sales were $10.5 billion, more than double 2009’s extremely low $4.4 billion. This reflects a substantial increase in liquidity in the institutional property marketplace compared to 2009."

Bloomberg -- "From Manhattan office towers to apartments in Florida to retail properties in Washington, commercial real estate values are rising, defying predictions of a collapse that would drag the U.S. economy back into recession.

Prices of commercial properties sold by institutional investors surged 19 percent in 2010, the second-biggest gain on record, according to an index developed by the MIT Center for Real Estate. Investments in office properties, the largest part of the market, more than doubled last year to $41.6 billion, according to Real Capital Analytics Inc., which tracks commercial property sales globally.

Near record-low interest rates are luring buyers with the prospect of cheaper financing and higher returns. Lenders are beginning to sell distressed properties and loans as rising earnings give them a cushion to absorb losses. Investors, convinced the worst is over, have pushed prices on commercial mortgage-backed bonds to the highest level in two years."

Friday, February 04, 2011

Politicians Opposing Free Trade: It's All About Politics, NOT Economics, Benefits and Jobs

From a great editorial in yesterday's Houston Chronicle by Christopher Sabatini titled "Economic Logic Supports Free Trade Agreements," here are some key points:

"It's been two years in a row now that President Barack Obama has mentioned the pending U.S.-Panama and U.S.-Colombia free trade agreements in his annual State of the Union address. Will 2011 be the year that they are finally presented to Congress and approved? 

Economic logic would certainly support it. But as we all know, when it comes to matters of policy — especially trade policy - political logic (or illogic) often enters, twisting the facts and the debate. But the facts in this case are pretty straightforward: In markets opened up by previous free trade agreements (FTAs), the overwhelming majority of states have seen the exports grow - in some cases exponentially.

Based on research conducted by the Americas Society, even the states whose representatives have voted against nine of the recent trade pacts that have come before Congress have - by a large margin - seen their exports increase. 

Just look at some of the examples of the FTAs signed with partners south of our border.

While a majority of Alabama's congressional representatives voted against the North American Free Trade (NAFTA) agreement in 1993, the state's exports to NAFTA markets have grown by more than 250 percent since then. Nevada and West Virginia's representatives all voted against the expanded North American market and yet saw their exports boom, by 535 percent and 294 percent respectively.

To take the case of our FTA with Chile, Alaska, despite its solid opposition to the agreement in 2003, has enjoyed a near 700 percent increase in its exports to the South American country, and Vermont, which also opposed it, has seen its exports shoot up by more than 1,000 percent. This is more than Ben and Jerry's ice cream and maple syrup. These are high-end goods and jobs."

MP: In other words, when it comes to opposing free trade, it's all about politics, and not about proven and certain economic benefits (more jobs) of free trade agreements.  Due to political blindness and pandering to well-organized special-interest groups, politicians apparently don't even know what's good for them and their states.  

Manufacturing Remains "Shining Star" of Recovery

From today's BLS report: "Manufacturing added 49,000 jobs in January. Over the month, job gains occurred in durable goods, including motor vehicles and parts (+20,000), fabricated metal products (+13,000), machinery (+10,000), and computer and electronic products (+5,000)."

MP: That's the largest monthly increase in manufacturing employment since August of 1997 ( except for the +142,000 spike in August 1998 after the UAW strike ended following a -188,000 decline in July, see chart above).  

The Monster Employment Index for January offers some additional encouraging news for the U.S. labor market, showing positive annual gains in online job demand in all 28 metro markets, with especially strong growth in IT, business and healthcare occupations, along with an "unprecedented decline in public administration sector."

Thursday, February 03, 2011

Top 500 U.S. Manufacturing Firms Had Sales in 2010 of $4.5 Trillion, Greater Than Germany's GDP

IndustryWeek recently released its 2010 annual report for the 500 largest publicly held U.S. manufacturing companies based on revenue.  Here are some factoids:

1. The combined sales revenue (including global sales) of the top 500 U.S.-based manufacturing for 2010 was $4.55 trillion.  To put that in perspective, that amount of revenue would put that group of U.S. manufacturing companies between the entire $5.4 trillion GDP of Japan in 2010 (world's third largest economy) and the $3.3 trillion GDP of Germany in 2010 (world's fourth largest economy).  

2. The top ten largest U.S. manufacturing companies (Exxon, Chevron, GE, Conoco, Ford, H-P, IBM, Proctor and Gamble, ADM and Boeing) had combined revenues of $1.3 trillion, almost as much as Spain's GDP in 2010 of $1.374 trillion.  

3. By manufacturing industry, "Computers and Other Electronic Products" (HP, IBM, etc.) was the second largest sector with almost $600 billion of sales behind #1 ranked Petroleum and Coal Products (Exxon, etc.), chemicals (Proctor & Gamble, Dow) was #3 with $387 billion in sales, pharmaceuticals was #5 (Johnson & Johnson, Pfizer, etc.), aerospace and defense was #6 (Boeing, etc.). 

4. The company ranked #500 for 2010 was Polymer Group with $883 million in sales, so there are probably thousands of additional medium- and small-sized manufacturers in U.S. that employ thousands of employees and with annual revenues below $883 million, but that generate billions of additional dollars in sales for American manufacturers. 

And yet don't we hear all the time about the decline of U.S. manufacturing, and how "nothing is made here any more?" 

Structural Shifts in the U.S. Labor Market

Two articles from yesterday about some possible "structural shifts" in the U.S. labor market:

1. Washington Post (Fresno) -- "This city is grappling with one of the most troubling contradictions of the new economy: Even as it has one of the nation's highest unemployment rates, it has thousands of job openings. 

The dilemma is becoming more common across the country as employers report increasing numbers of job openings (see chart above). But many of those jobs are not a good fit for those who are out of work. The reason, economists say, is that the recession accelerated the decline of some industries, such as housing construction, as others that require far different skills, including health care, emerged stronger. Some economists predict that this disconnect is likely to grow as the economy develops jobs that require more training."

2. Wall Street Journal -- "U.S. companies have commitment issues. Since the labor market hit bottom in December 2009, 27% of the 1.1 million jobs added have been temporary ones—triple the ratio of temps hired after the last recession ended in 2001. That could be great news for the labor market, since companies typically hire temps before expanding permanent staff. Or it may illustrate a shift in the U.S. work force."

MP: Although the 27% ratio of temps hired since December 2009 might be higher than in 2002, that might be only because the ratio of temporary-to-total private sector jobs fell to a lower level in 2009 than in 2001 (see chart).  As a percent of total private jobs, the 2.04% in December 2010 is about the same as the 2002-2003 post-recession period.

Taken together, there probably will be two structural shifts in the labor market moving forward: a) increases in labor demand that won't necessarily match the skills of the currently unemployed workers, meaning that many of those unemployed will need re-training and more education to gain the skills required by employers in 2011 and 2012, and b) increased reliance on contract, temporary and freelance workers going forward, to give companies greater flexibility in their workforce and staffing needs.  

Some New Gender Gaps/Gender Disparities

1. Wikipedia - The NY Times reports that "less fewer than 15 percent of its hundreds of thousands of contributors are women," and the reporter describes that outcome "as an intractable obstacle for the online encyclopedia."

And Sue Gardner, executive director of Wikimedia/Wikipedia, "Has set a goal to raise the share of female contributors to 25 percent by 2015, but she is running up against the traditions of the computer world and an obsessive fact-loving realm that is dominated by men and, some say, uncomfortable for women."

2. National Geographic Bee - GW law professor Jonathan Turley reports that Minot State University professor emeritus Eric Clausen has been battling the National Geographic Society (NGS) in federal court over his claims that the national contest discriminates against girls because virtually no girls have won the national title, and because he was subject to retaliation from the National Geographic Society when he complained about the gender disparities in state winners and national finalists.

According to Professor Clausen only 2 out of the state winners in 2009 were girls and only one girl advanced to the national finals in 2010. Clausen also claims that the “NGS knows and has known since the Geographic Bee competitions began that the contests do not provide girls with an equal opportunity to participate in the higher-level competitions.”

Take a daily National Geographic Quiz here, at "apprentice" or "expert" level, quiz changes daily. See if you can detect any gender bias.

MP: Maybe it's all of the boys who have won the National Geographic Bee contests over the years who grow up and become Wikipedia contributors. According to one way of thinking, perfect, statistical gender parity is always the ultimate goal for all outcomes, competitions, contests, job choices, wages, etc. whether it's Wikipedia entries or winners of the Geographic Bee. Except of course for those outcomes for which women are over-represented like for earning associate's degrees, bachelor's degrees, master's degrees, and doctoral degrees, see previous CD posts on the selective concern for sex imbalances here, herehere, here, and here.

Wednesday, February 02, 2011

Super Bowl Is One of the Top 5 Pizza Days

Super Bowl Sunday is coming and pie-makers across the country are bracing for a pizza reaction. Turns out this is one of the five big pizza days of the year. The other four? Find out here.

Snow and Snow Days: Chicago vs. Washington, D.C.

Average Snowfall 

1. Chicago: 38 inches 

2. Washington, D.C.: 14.7 inches 

Number of Days School is Canceled Due to Snow

1. Chicago: About once every 12 years 

2. Washington, D.C.: About 12 times every two years (7 last year and 4 so far this year, even though it's been a relatively mild winter)

The Amazing Gains in Worker Productivity = Record Output in Q4 2010 With 7 Million Fewer Workers

I reported last week that real GDP finally increased above its pre-recession level in the fourth quarter of 2010, and the $13.38 trillion of real GDP (2005 dollars) was the highest-ever quarterly output in U.S. history, slightly higher than the previous record of $13.36 trillion in the fourth quarter of 2007 (see top chart above).

But here's what's really amazing and is illustrated in the bottom chart: The U.S. produced slightly more output in Q4 2010 (by 0.14%) than in Q4 2007 when the recession started, but with 7.2 million fewer workers (almost 5%)!  Read more here at The Enterprise Blog

El Paso's Attack on Street Vendors

"Should the city of El Paso, Texas, be allowed to turn itself into a No-Vending Zone in order to protect brick-and-mortar restaurants from competition? That's the question to be answered by a major federal lawsuit filed January 26, 2011 by the Institute for Justice and four El Paso mobile food vendors. The lawsuit launches a National Street Vending Initiative, a nationwide litigation and activism effort to vindicate the right of street vendors to earn an honest living.

Street vending is more popular than ever. The Economist magazine predicted that in 2011 "some of the best food Americans eat may come from a food truck." Vendors are the darlings of many food critics, and they even have their own reality show on the Food Network.

But El Paso, Texas, has recently made it illegal for mobile food vendors to operate within 1,000-feet of any restaurant, convenience store, or grocer. The city even prohibits vendors from parking to await customers, which forces vendors to constantly drive around town until a customer successfully flags them down--and then be on the move again as soon as the customer walks away.

Thus, while people across the country embrace mobile vendors for the vitality and creativity they bring to a local restaurant scene, El Paso has decided to threaten vendors with thousands of dollars in fines and effectively run them out of town. El Paso's No-Vending Zone scheme is in place for one reason: to protect brick-and-mortar restaurants from honest competition. But economic protectionism is not a valid use of government power.

That is why four mobile venders teamed up with the Institute for Justice to file a federal lawsuit in the Western District of Texas, El Paso Division, against the city of El Paso challenging the constitutionality of its economic protectionism and fighting for their right to keep vending on the streets of El Paso."

Tuesday, February 01, 2011

Except for CFC, Auto Sales Reach 2.5 Year High

January vehicle sales were released today, and here are some highlights:

1. On a "seasonally-adjusted annual rate" basis, total U.S. light vehicle sales increased to 12.62 million units in January, which was 0.56% higher than December, and 17.4% higher than January last year (see chart above). 

2. Except for the artificial sales stimulus of "cash-for-clunkers" (CFC) in August 2009 when sales topped 14 million (at an annual rate), January vehicle sales reached the highest monthly level since August 2008, almost two and-a-half years ago. 

3. Both GM and Chrysler had sales increases of 22.7% in January compared to the same month last year, and almost all of the major automakers had double-digit increases, e.g. Ford (+13.2%), Toyota (+17.3%), Honda (+13%), and Nissan (+14.8%).

4. Light truck sales were once again especially strong in January, with a 28.5% increase over last year compared to a 7.0% increase in passenger cars. See related CD post "The Pickup Truck Indicator: Recovery is Real."

Facts About India and China To Blow Your Mind

1. 15 Facts About India That Will Blow Your Mind (HT: Craig Newmark)  


2. 17 Facts About China That Will Blow Your Mind

Manufacturing Continues as Recovery's Shining Star

The Institute for Supply Management (ISM) released its monthly report today on economic activity in the manufacturing sector for the month of January, with the following highlights:

Economic activity in the manufacturing sector expanded for the 18th consecutive month in January, and the overall economy grew for the 20th consecutive month.

2. The composite PMI increased last month to 60.8%, a 2.3 point increase from 58.5% in December, and the highest level  for the PMI since May 2004 (see chart above). 

3. According to the ISM, "The continuing strong performance is highlighted as January is also the sixth consecutive month of month-over-month growth in the sector. New orders and production continue to be strong, and employment rose above 60 percent for the first time since May 2004. Global demand is driving commodity prices higher, particularly for energy, metals and chemicals."

4. The ISM Employment Index increased in January to 61.7%, which is the 16th consecutive month of growth in manufacturing employment and the highest reading for the ISM manufacturing employment index since April of 1973.

5. The New Export Orders Index increased to 62% in January, marking the 19th consecutive month of growth in export orders.

Monday, January 31, 2011

The "Detroitification" of Detroit

From James Hohman at the Mackinac Center:

"Mackinac Center analyst Jack McHugh has called the long process of hollowing out a private economy to prop up an unsustainable government "Detroitification." Detroit's most recent comprehensive annual financial report shows just how much the title-city itself has been hollowed.

The report lists the number of jobs provided by the city's largest employers, which indicates how sensitive its finances are to the actions of a particular firm. In Detroit's case, six of the top 10 employers are not private businesses at all, but government entities: public schools, the city government, the U.S. government, Wayne State University, the State of Michigan and the U.S. Post Office (see chart above). Two others are health care providers intrinsically tied to government policy, the Detroit Medical Center and the Henry Ford Health System. The remaining two are automaker recipients of federal bailouts, GM and Chrysler.

This is a double blow to the city. Not only is it no longer the home of large businesses that have helped the city prosper, the governments that are now the city's largest employers are struggling."

HT: Colin Grabow

Dec. Restaurant Performance Index Back to Pre- Recession Level: Recovery is Gaining Firm Foothold

"Driven by expanding same-store sales and customer traffic levels as well as growing optimism among restaurant operators, the outlook for the restaurant industry improved in December. 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 101.0 in December, up a strong 1.1 percent from its November level (see chart). In addition, December marked the third time in the last four months that the RPI stood above100, which signifies expansion in the index of key industry indicators.

The RPI’s solid gain in December was driven by improvements in each of the eight current situation and forward-looking indicators. Overall, the RPI stood above 100 for the third time in the last four months, which suggests that the recovery is gaining a firm foothold."

MP: The Expectations Index reached 102.4, the highest level for that indicator of future restaurant performance since March 2007, almost four years ago.  Expect 2011 to be a very good year for restaurants. 

Subway Escalators: Moscow vs. Washington D.C.

Anybody who uses the DC Metro system on a regular basis, like I have on almost a daily basis for the last 16 months, will appreciate this story from the Washington Post. The dependability and reliability of the Moscow escalators (Soviet efficiency?) seem almost too good to be true after experiencing the frequent (almost daily) breakdowns of the DC Metro system (capitalist inefficiency?):

"The trains get to stop every few minutes. Not the escalators. In a city tied together by its phenomenally jampacked subway system, the escalators here just keep on rolling - morning, noon and half the night. 

There are 643 of them in the Moscow Metro. This is a system, like Washington's, with deep, deep stations, but, unlike in Washington, passengers here are rarely left to hoof it on their own up or down immobilized stairways. It wouldn't work, because people don't walk fast enough. At rush hours fully loaded trains run on 90-second intervals; it's up to the escalators to get the passengers delivered, but just as important, to whisk them away again before they start bunching up and spilling off the platforms and onto the tracks.

"In my opinion, they're much more important than trains," says Sergei Likhachev. He would say that, though. He's the chief mechanic of the Moscow Metro's escalator division. 

HT: Lauren Johnson

Markets in Everything: ER Reservations?

KTLA News -- "Instead of showing up at the emergency room and risking a wait, why not make a reservation? Lakewood Regional Medical Center announced on Thursday that you can do just that.

Patients with non-emergency conditions can make an appointment for 90 minutes to 2 hours in advance using InQuickER at www.LakewoodER.com.

Non-emergency patients can wait up to 2 hours if they just showed up at an emergency room, according to hospital officials. Those who use the online service will pay a $14.99 fee."

MP: Maybe I'm a little slow here, but why are people using the Emergency Room for Non-emergency conditions in the first place?

2010 United Van Lines Annual Migration Study

Highlights from the 2010 United Van Lines Annual Migration Study, released earlier this month (see map above, click to enlarge):

1. In 2010, the District of Columbia (64.3%) was once again the top destination in the United States for the third consecutive year. North Carolina (57.8%) was the only other mid-Atlantic state to experience high-inbound traffic, rising from No. 10 on the list in 2009 to No. 3 in 2010.

2. In the South, South Carolina (56%) appeared on the high-inbound list for the first time since 2008.

3. In the Western, region, only two states, down from six in 2009, captured high-inbound rankings. Oregon (59.5%) once again came in second and celebrated its 23rd year of high-inbound migration. Idaho (57.6%) appeared on the high-inbound list for the second consecutive year.

4. New Jersey (62.5%) claimed the top spot on the high-outbound traffic list. Also in the North East, New Hampshire (55.6%) had the seventh highest out-bound traffic.

5. The Great Lakes region continued to have the highest out-bound traffic levels in the nation, with four of the region’s states experiencing high outbound traffic. Michigan (62%), which was the top outbound state from 2006-2009, fell to No. 2 in 2010. Illinois (57.3%), Ohio (55.6%) and Pennsylvania (55.4%) also experienced high out-bound traffic.

MP: The number of interstate United household moves last year (146,837) was 2.5% above 2009 (143,194), but way below the numbers in 2008 (198,962) and 2007 (212,917). 

America's Poorest 5% = India's Richest 5%

Catherine Rampell features the chart above today on the Economix blog, taken from a new book "The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality" by Branko Milanovic.  The chart shows the relationship between a) the distribution of income by "ventiles" (5% groups) for the U.S., Brazil, China and India on the horizontal axis and b) the percentile of world income distribution on the vertical axis.  As Catherine comments:

"Notice how the entire line for the United States resides in the top portion of the graph? That’s because the entire country is relatively rich. In fact, America’s bottom ventile is still richer than most of the world: That is, the typical person in the bottom 5 percent of the American income distribution is still richer than 68 percent of the world’s inhabitants (see dashed line in graph).

Now check out the line for India. India’s poorest ventile corresponds with the 4th poorest percentile worldwide. And its richest? The 68th percentile. Yes, that’s right: America’s poorest are, as a group, about as rich as India’s richest. Kind of blows your mind, right?"

MP: Yes, and shouldn't it also blow away a lot of our misguided concern about rising income inequality in the U.S.?

There's Hope: Online Job Demand Rises Above Pre-Recession Levels: Highest Since June 2007

"Online advertised vacancies rose 438,000 in January to 4,273,000 according to The Conference Board Help Wanted Online (HWOL) Data Series released today. With the January increase, labor demand has risen 1.44 million since the series low point in April 2009 (see chart). This increase now offsets approximately 80% of the 1.76 million drop in ad volume during the 2-year downturn period from April 2007 through April 2009."

“The very strong seasonal gain to start 2011 is welcome news following seven months of essentially flat U.S. labor demand,” said June Shelp, Vice Pres. at The Conference Board. “Last year, after a promising start (up about 350,000 in January 2010), labor demand fizzled, and the last half of 2010 was actually flat with no appreciable gains in job demand (see chart above). Hopefully the January 2011 increase suggests that employers are seeing a pickup in their businesses and labor demand will continue to improve throughout this year.”

List of 178 Cuban Private-sector Jobs

License now required for this Cuban guy.
"Cubans can now seek licenses 178 private-sector jobs, under economic reforms announced last year by President Raul Castro," see the full list here from the Associate Press, including:

6. Door-to-door knife and scissors sharpener
8. Mule Driver
14. Wagon or Pushcart Operator (to help move things)
17. Wheelbarrow Operator 
29. Public Bathroom Attendant 
62. Spark Plug Cleaner and Tester 
111. Automobile Battery Repair
116. Mattress Repair 
124. Umbrella and Parasol Repair
127. Doll and Toy Repair 
158. Fresh Fruit Peeler

MP: My personal favorite is the license for a wheelbarrow operator (see photo above). 

Wash Post Supports DC School Voucher Program

"An effort is being launched in Congress, aided by the considerable clout of House Speaker John A. Boehner (R-Ohio), to revive the District's unique program of federally funded private school vouchers. No sooner was it announced than Mayor Vincent C. Gray (D) attacked it as an assault on D.C. home rule. Others with opposing views called it a test of the Obama administration's promise to work across party lines for the good of the country. Both claims are unfair burdens for a program that should be judged by the only criterion that matters: whether it helps children. 

Too many parents in the District still have little choice but to send their sons and daughters to failing schools. If Congress is willing to give them an alternative, at no cost - in fact, at great benefit - to traditional and charter schools, what's the argument against? We'd like to hear Mr. Gray's explanation to those parents."

Sunday, January 30, 2011

Chart of the Day: Union Membership in the U.S. Falls Below 12% in 2010 for the First Time

Union membership in the U.S. fell to an all-time historical low of 11.9% of all workers in 2010, which is less than half of the 24.5% share in 1979, according to new data from the BLS.  I'll provide some additional charts later on the breakdown between private and public sector unions. 

Road Trains: Future of Highway Driving?

Reuters - "With the recent successful test of road-train technology in Sweden, developers say convoys of cars on Europe's motorways could become a reality within 10 years provided car makers can agree on a common standard."

HT: Bob Wright

Doubling U.S. Exports = Doubling U.S. Imports

Steven Landsburg points to the opening paragraph from Chapter 12 ("The Drive for Exports") in Henry Hazlitt's classic book "Economics in One Lesson":

"Exceeded only by the pathological dread of imports that affects all nations is a pathological yearning for exports.  Logically, it is true, nothing could be more inconsistent. In the long run imports and exports must equal each other (considering both in the broadest sense, which includes such “invisible” items as tourist expenditures, ocean freight charges and all other items in the “balance of payments”).  It is exports that pay for imports, and vice-versa. The greater exports we have, the greater imports we have, if we ever expect to get paid.  The smaller imports we have, the smaller exports we can have.  Without imports we can have no exports, for foreigners will have no funds with which to buy our goods. When we decide to cut down out imports, we are in effect deciding also to cut down our exports. When we decide to increase (double) out exports, we are in effect deciding to increase (double) our imports."

Professor Landsburg points out that "Encouraging exports is exactly the same thing as encouraging imports. And wouldn’t you expect that if you were out to encourage imports, your first step might be to stop discouraging imports, say by declaring an end to all tariffs and quotas on foreign-made goods? In a sane world, that’s indeed what you might expect. But somehow I don’t expect it."

Another thing that might happen in a sane world would be for Obama to push for finalizing the free trade agreements (FTAs) with Colombia and Panama, which Obama claims to support.  The Colombia FTA was signed in 2006, and languishes into its sixth year without getting final approval from Congress.  According to the Latin America Trade Coalition, more than $3 billion in tariffs have been imposed on U.S. exports to Colombia in the 1,531 days since the FTA was signed, but not finalized.  Under the FTA, most tariffs would be eliminated, and the U.S. could boost trade with a country that now has finalized FTAs with both Canada and Europe.