The Higher Education Bubble Explained
Created by John Warren.
Professor Mark J. Perry's Blog for Economics and Finance
From the 2008 BLS Study "Addressing Misconceptions About the Consumer Price Index" written by John Greenlees and Robert McClelland, research economists in the BLS Division of Price and Index Number Research:
In a recent CD post, I posed the question: "Can We Have Inflationary Pressures Building in the U.S. With Falling Home Prices and 2% Wage Increases?" I also recently observed on CD that "MIT's BPP Monthly Inflation Rate Has Been Falling." Little did I know that I was apparently channeling Paul Krugman, or maybe he's channeling me now (kinda scary either way), because he makes the exact same two points on his blog today:
The chart above shows the annual inflation rates for: a) crude foodstuffs and feedstuffs (e.g. wheat, corn, animals for slaughter, peanuts, cottonseed, and soybeans), and b) finished consumer foods (pasta products, processed meats, bakery products, fresh fruits and vegetables, tree nuts, and eggs), based on yesterday's BLS report on Producer Price Indexes through March. I featured a similar chart back in February and it got a lot of attention and comments, so this is an update.
The BLS released its Consumer Price Index report for March, with the following highlights:
The Port of Los Angeles released data today on March shipping volume, and the number of loaded outbound export containers in March surged to a new, all-time record high of 192,849 TEUs (20-foot-long cargo containers), far surpassing the previous record of 175,262 TEUs set back in August of 2008 (see chart above). Total shipping volume at the Port of Los Angeles in March was 600,796 TEUs, which was the highest shipping activity for the month of March in four years, since the 629,000 TEUs in March of 2007 before the recession started.
The general public, politicians, the media, and even some economists have bought into a false mercantilist doctrine that: a) exports are good for the economy and b) imports are bad for the economy, which therefore implies that: c) trade deficits are bad for the economy and d) trade surpluses are good for the economy. In a recent paper from the Cato Institute titled "The Trade-Balance Creed: Debunking the Belief that Imports and Trade Deficits Are a 'Drag on Growth,'" Daniel Griswold debunks that "consensus creed," here's a key excerpt:
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The BLS reported today that private job openings in the U.S. increased to 2,759,000 in February, the highest level since August 2008, almost two and-a-half years ago (see red line above). Total job openings increased to 3,093,000 in February, which is the highest level since September 2008 (see blue line) and "provides evidence that hiring is picking up as the economy grows," according to the Associated Press:
Last August, I reported on the monks from Saint Joseph Abbey, who are trying to get Louisiana’s casket licensing law overturned with legal help from the Institute for Justice. Under Louisiana law, it is a crime for anyone but a licensed funeral director to sell “funeral merchandise,” which includes caskets. Here's an update from yesterday's Times Picayune:
Today (April 12, 2011) is Equal Pay Day. According to the National Committee on Pay Equity:
For the 2011 season in Major League Baseball, the average salary for the top 25 highest-paid baseball players is $19,751,000, with Alex Rodriguez of the New York Yankees leading MLB at a salary of $32 million, according to the USA Today Salaries Database. In comparison, during the 1988 season the average salary for the top 25 highest-paid players was $1.955 million, or $3.657 million in today's dollars. The highest paid player that year was New York Mets catcher Gary Carter, who made $2.36 million that year, or $4.41 million in 2011 dollars.
Or, as the authors of the study put it: “While the share of income of the top 1 percent is higher than in prior years, it is not a fixed group of households receiving this larger share of income.”
- Income mobility of individuals was considerable in the U.S. economy during the 1996 through 2005 period with roughly half of taxpayers who began in the bottom quintile moving up to a higher income group within ten years.
- About 55 percent of taxpayers moved to a different income quintile within ten years.
- Among those with the very highest incomes in 1996 — the top 1/100 of one percent — only 25 percent remained in the group in 2005. Moreover, the median real income of these taxpayers declined over the study period.
- The degree of mobility among income groups is unchanged from the prior decade (1987 through 1996).
- Economic growth resulted in rising incomes for most taxpayers over the study period: Median real incomes of all taxpayers increased by 24 percent after adjusting for inflation; real incomes of two-thirds of all taxpayers increased over this period; and median incomes of those initially in the lower income groups increased more than the median incomes of those initially in the high income groups.
From Bloomberg/BusinessWeek, a great story about the success of a new industry that has brought low-cost, dependable, convenient, market-based, Wi-Fi-enabled bus service to millions of Americans, despite rising gas and oil prices, and without any government subsidies, tax breaks or taxpayer funding: