Professor Mark J. Perry's Blog for Economics and Finance
Saturday, January 29, 2011
New Mich. Governor Wants to End Tax Credits and Subsidies for Failed "Job Announcement Programs"
Santana Saturday: 1969 Woodstock v. 2007 Mexico
From the Plastic Age of Vinyl Records to the Digital Age: Your Phone is Now Becoming Your Wallet
NEW YORK (CNNMoney) -- "Credit cards may soon be as outdated as vinyl records. (Remember those?) And this is the year that the slow, steady march to oblivion begins.
You can already use your iPhone, Droid or BlackBerry to buy a hotdog at the ballgame, buy your Starbucks latté, or give a friend a few bucks by Bumping phones. But by the end of the year you may not even think twice about reaching for your phone to pay at the register instead of fumbling for your credit card."
HT: Upside Trader
School Choice: USA (0) vs. Sweden (1)
1. USA: Convict an Akron, Ohio mother of a felony and sentence her to 10 days in jail for illegally sending her children to a school in a better school district.
U.S. Real GDP Now Above Pre-Recession Level
WSJ -- "U.S. economic output finally regained the level reached before the recession, as growth sped up on stronger consumer spending and exports (see chart above).
Friday, January 28, 2011
Frightening Satellite Tour Of U.S. Foreclosures
Pretty scary satellite photo (click to enlarge) of Phoenix's foreclosures, each red dot represents a home currently in foreclosure, see more cities here.
Interactive Map of the Day
Charts of the Day: U.S. Adds Manufacturing Jobs in 2010 For the First Time in 12 Years, Since 1997
Following 12 straight years of declines, U.S. manufacturing employment increased last year by 136,000 jobs - the first annual increase in manufacturing employment since 1997 when 304,000 manufacturing jobs were added to the nation's payrolls. Also notice that there were more manufacturing jobs lost during the 2001 recession (almost 1.5 million) than in 2009 (almost 1.3 million jobs). And during the 2001-2003 recession and post-recession period, more jobs were lost (almost 2.9 million) than in the 2007-2009 period (almost 2.5 million).
As incessantly as we have heard about the "worst economic crisis since the Great Depression," the manufacturing losses illustrated above suggest that the 2001 recession was much worse for the manufacturing sector than during the most recent recession.
See related WSJ article about manufacturing being the "shining star of this recovery."
"Big Short" Paulson Continues to Be "Big Long"
The Near-Term Economic Outlook Has Improved
From the conclusion of the Dallas Fed's National Economic Update released yesterday:
"Recent data indicate that the risks of a double-dip recession and deflation have ebbed. Although the regenerating channels of credit and finance remain vulnerable to shocks, renewed signs of a self-sustaining recovery in consumer and business spending are growing as the underlying factors behind the recession and subpar recovery continue to unwind. While housing, municipal finance and labor market slack continue to detract from a more robust recovery, the near-term outlook has improved."
HT: CME Group
The U.S. Consumer is Back: 4.4% Growth in 2010:Q4 Consumer Spending Is Highest in 5 Years
Boosted by the strongest quarterly growth in real consumer spending (4.4%) in almost five years (see top chart above), real GDP growth rose 3.2% in the fourth quarter of last year (see bottom chart). The 2.9% real GDP growth for all of last year was the highest annual growth in real U.S. output since a 3.3% growth rate in 2006.
See news reports from the Wall Street Journal ("U.S. GDP Growth Accelerates") and Washington Post ("Growth Strengthened to 3.2 pct in Q4 of 2010").
Thursday, January 27, 2011
204 Businesses Left California in 2010, That's Four Times the Number in 2009, and Sets A New Record
According to relocation expert Joe Vranich, a record-setting number of business - 204 in total - left California in 2010, or re-directed substantial capital to build facilities in other states that would have expanded in California in earlier, more business-friendly years (see chart above). That number of businesses leaving California is four times the number of businesses that left in 2009 (51).
Amazon Has First $10B Quarter and It Totally Dominates the Retail Book Market by Market Cap
Founder and CEO of Amazon, Jeff Bezos said in a statement: "We had our first $10 billion quarter, and after selling millions of third-generation Kindles with the new Pearl e-ink display during the quarter, Kindle books have now overtaken paperback books as the most popular format on Amazon.com. Last July we announced that Kindle books had passed hardcovers and predicted that Kindle would surpass paperbacks in the second quarter of this year, so this milestone has come even sooner than we expected – and it’s on top of continued growth in paperback sales."
Actually, Amazon sales last were quarter were $12.95 billion, an increase of 36% from the fourth quarter 2009 ($9.52 billion). Net income increased 8 percent to $416 million in the fourth quarter compared with net income of $384 million in the fourth quarter 2009, an increase of 8.3%.
Quiz on a Legalization of Marijuana Poll
1. Which age group do you think would be most likely to favor the legalization of marijuana?
a. 18-34 years
b. 34-49 years
c. 50-64 years
d. 65+ years
2. What percent of Democrats and what percent of Republicans favor legalization of marijuana?
a. 75% of Democrats and 20% of Republicans
b. 68% and 28%
c. 62% and 32%
d. 55% and 38%
Find out here, based on a recent survey in the state of Washington.
Obama Is Now Pro-Business. And That's Dangerous Because Businesses Really Don't Like Competition and They'll Use Government to Try to Restrict It
Microsoft Employees 1978: Where Are They Now?
Euro Leading Index Reaches 3.5 Year High
The Conference Board announced today that its "Leading Economic Index (LEI) for the Euro Area increased 0.8 percent in December to 107.3, following a 0.6 percent increase in November and 0.2 percent increase in October," which was the highest level in three and-one-half years going back to the summer of 2007 (see chart above).
Said Jean-Claude Manini, The Conference Board senior economist for Europe: “December brought a further increase in the Euro Area LEI, and all components rose during the latter half of 2010. But, the index remains on a slower growth path than in the prior 18 months, and current conditions, as measured by the Coincident Economic Indicator, remain very weak. Meanwhile, consumer expectations are weakening; particularly when viewed in the context of fiscal consolidation and rising inflation, this is a strong reminder that the Euro Area economy continues to face strong downside risks. The U.S. LEI showed even larger increases over the same two months, but it signals a more volatile growth path.”
Earlier this week, the Conference Board announced that the Leading Economic Index for Germany increased 0.9% in November.
Markets in Everything: Smart Parking Meters
San Francisco is installing state-of-the-art 'smart' parking meters that will alert drivers to available meters via a smartphone app, which also lets folks add time to their meter from anywhere in the city. They'll also use dynamic pricing to try to make sure that 15% of the spaces in a given neighborhood are always available.
Wednesday, January 26, 2011
TED: Understanding the Rise of China
Tuesday, January 25, 2011
We're In A New Super-Cycle of Global Economic Growth. World Economy Could Double by 2027
The Standard Chartered Bank in London recently released an interesting study called "The Super-Cycle Report, which suggests that in 2000 we entered a new "super-cycle" of global economic growth that will last until 2030, where "super-cycle" is defined as:
“A period of historically high global growth, lasting a generation or more, driven by increasing trade, high rates of investment, urbanization and technological innovation, characterized by the emergence of large, new economies, first seen in high catch-up growth rates across the emerging world.”
From the paper's introduction:
These are big numbers. Really big."
MP: If these estimates are accurate, it would mean that the global economy will double from its current size of $62 trillion to $126 trillion by 2027.
MinuteClinic Goes Viral, It Plans to Double the Number of Its Retail Clinics Over the Next 5 Years
IEA: A New Superabundance of Game-Changing Shale Gas Will Provide 250 Years of Natural Gas
BBC News - "The world may have twice as much natural gas than previously thought, according to the rich nations' think tank the International Energy Agency (IEA). The world may have 250 years of gas usage at current levels thanks to "unconventional gas" from shale and coal beds, Anne-Sophie Corbeau, senior gas expert at the IEA told BBC News. Estimates may even be revised upwards.
Studies are underway into newly-recoverable sources, Ms. Corbeau said. "The gas story is huge. A few years ago the United States was ready to import gas. In 2009 it had become the world's biggest gas producer. This is phenomenal, unbelievable."
HT: CME Group Twitter
Occupational Licensing Gone Wild
An 82-year old Oregon barber (pictured above) with more than half a century of experience cutting hair (he was first licensed in 1957) is accused by government authorities in Oregon of "criminal barbering" because his government license to cut hair inadvertently expired in 2006. Now state regulators want him to go back to barber school and pass a series of exams before he will be allowed to cut hair again legally. His barber shop is currently shut down to protect the public from getting their hair cut by this unlicensed, criminal barber.
HT: Wayne Sanman
See related CD post here of armed government SWAT team raids on Florida barber shops last November.
Monday, January 24, 2011
Copper Prices Rise to Record Highs, Thefts Rise Too
Paul Kedrosky reported yesterday that copper thefts are rising again, due to the all-time record high prices in recent months. The chart above displays monthly copper prices back to 1980, and shows that copper prices have tripled from $1.40 per pound at the end of 2008 to recent highs this month approaching $4.50 per pound.
According to a Google News search, there have been 545 news stories in just the last week containing the phrase "copper theft," and that compares to 665 stories during the entire year of 2009 when copper prices were between $1.50-$3.00 per pound, and 1,750 stories last year as prices rose above $4 per pound by the end of the year.
NABE Survey: Economic Recovery Gaining Strength; "Net Rising Index" for Jobs Highest in 12 Years
Dopey Strange: Protecting Us from Low Prices
"Big Sugar" Cartel Cost Consumers $4.5B Last Year
In a recent Wall Street Journal letter titled “The Sugar Program Makes Sense,” the American Sugar Alliance’s chief economist claimed that “sugar policy operates at no cost to the government and is projected to do so for the next decade.” While it’s true that U.S. sugar producers haven’t tapped American taxpayers directly since the beet sugar farmers raked in more than $240 million in farm subsidy payments from 2000 to 2005, U.S. sugar policy did force American consumers to pay out $4.5 billion last year in higher sugar prices to support the “Big Sugar” cartel.
New Journal: The Journal of Universal Rejection
- You can send your manuscript here without suffering waves of anxiety regarding the eventual fate of your submission. You know with 100% certainty that it will not be accepted for publication.
- There are no page-fees.
- You may claim to have submitted to the most prestigious journal (judged by acceptance rate).
- The JofUR is one-of-a-kind. Merely submitting work to it may be considered a badge of honor.
- You retain complete rights to your work, and are free to resubmit to other journals even before our review process is complete.
- Decisions are often (though not always) rendered within hours of submission.
There's A Coming Doctor Shortage. But Why?
And whatever those restrictions are that have kept the number of medical graduates fixed at the same level for thirty years in the face of a rising and aging population, they have to be a major factor in the rising costs of medical care. If we had artificially restricted the number of auto mechanics or hair stylists at early 1980 levels, we'd be complaining today with the rising costs of car repair and hair cuts.
Sunday, January 23, 2011
International Study: Most Affordable Housing? Saginaw, MI. Least Affordable Housing? Hong Kong
1. Housing affordability in 2010 was little changed from previous years, with the most affordable housing markets being in the United States and Canada. The United Kingdom, Australia and New Zealand continue to experience pervasive unaffordability.
2. The most affordable major market was Atlanta, with a median house price of $129,400, and a Median Multiple of 2.3 (see chart above). Indianapolis ($120,200) and Rochester, N.Y. ($121,500) tied for 2nd most affordable major market, at a Median Multiple of 2.4. Cincinnati, Cleveland and Detroit tied for 4th most affordable, with a Median Multiple of 2.5, followed by Buffalo, Las Vegas and St. Louis at 2.6. Eleven other US major markets were rated affordable, including fast growing Dallas-Fort Worth, Houston, Jacksonville and Nashville.
3. All major markets in Australia and New Zealand, as well as Hong Kong were severely unaffordable. Hong Kong ranked as the least affordable major market (82nd), with a median multiple of 11.4 (see chart above). Sydney ranked second most unaffordable, at a Median Multiple of 9.6 (81st), having slipped behind last year’s most unaffordable market, Vancouver at 9.5 (which ranked 80th). Melbourne ranked 79th, with a Median Multiple of 9.0. Plymouth & Devon, San Francisco, London and Adelaide all had Median Multiples of more than 7.0.
Why does housing affordability matter?
"The cost of unaffordable housing extends to metropolitan area competitiveness. This is illustrated by an analysis of housing costs, using the Median Multiple, for more than 500 United States metropolitan areas. Between 2000 and 2009, the more unaffordable metropolitan areas lost 9.6 percent of their residents (4.7 million) by domestic migration to other areas, nearly 10 percent of their 2000 population. By contrast, the less expensive metropolitan areas gained 4.2 million domestic migrants (2.3 percent of their population). Of course the migration of households between metropolitan areas is the result of a number of factors. But the unprecedented housing affordability differences that have developed in US metropolitan areas are strongly associated with domestic migration trends. All things being equal, households will be drawn to less costly metropolitan areas and away from more costly metropolitan areas, as they seek to enhance their overall standard of living."
What cities in the U.S. have the most affordable housing? See chart below, Saginaw, Michigan is #1, Flint, Michigan is #2 and four out of the top six cities are in Michigan:
Quote of the Day
Port of L.A. Sets New Export Record in 2010
"Year-over-year container traffic at the Port of Los Angeles surged 16 percent in 2010, with a record number of exports leading the way. Port exports rose 10.3 percent in 2010 to 1,841,274 TEUs compared to 1,668,911 in 2009 and surpassed the previous container export record of 1,782,502 TEUs in 2008 (see chart above). Meanwhile, imports increased 12.8 percent in 2010 (3,973,933 TEUs) compared to 2009 (3,524,386 TEUs)."
With this 16 percent increase in 2010 container volumes, the Port of Los Angeles is putting people back to work and doing its part to help President Obama meet his goal to double national exports over the next five years,” said Mayor Antonio Villaraigosa. “This is good news not only for Los Angeles, but cities across the nation."
See related CD post here.
World Industrial Output is Above Pre-Recession Level and International Trade Is Not Far Behind