Saturday, February 18, 2012

Quote of the Day on U.S. Manufacturing

UT-San Diego -- “When you look at the full cost of doing business abroad, U.S. factories can compete on price, delivery and quality. People would be surprised to learn how many things we still manufacture in the U.S.

Many companies have already brought production lines back from foreign lands, breathing new life into long-ailing U.S. factories." 

MP: Note that the "reshoring" of manufacturing production and jobs to the U.S. has been happening naturally due to market forces, without any government support, assistance, tax breaks, subsidies, public policy, etc., and the manufacturing sector was so successful last year that industry profits set a new record.  In most cases, the "laissez-faire" approach works much better than politically-motivated policies that "pick winners" and target certain politically-favored industries with special subsidies, loan guarantees, and tax breaks, e.g. farming, or solar and wind energy.     

Saturday Energy Links

1. "Airline boardings at North Dakota's eight large airports in January were up 19 percent over the year. The jump was due in large part to booming business at the Dickinson and Williston airports in western North Dakota's oil patch. Boardings at Dickinson were up nearly 78 percent, and they rose more than 172 percent in Williston."

2. Delta Airlines plans more flights and larger planes that could mean more boardings at Minot International Airport. Boardings in January already were up 63 percent from January 2011.  Andrew Solsvig, airport director, said that Delta will be bringing in an Airbus A-319 aircraft beginning the evening of March 4. The aircraft will be the first plane operated by the mainline company rather than by a regional carrier to fly out of Minot in almost three years." (ht: BakkenBlog News)

3.  From a new report from Citigroup Global Markets: "The concept of peak oil is being buried in North Dakota, which is now leading the US to be the fastest growing oil producer in the world.  We expect oil production in the U.S. to surprise to the upside. We expect industry expectations to lag behind reality, just as they did with shale gas for many years." (ht: BakkenBlog News)

Meanwhile, things aren't as bright for green energy....

4. "The wind power industry is predicting massive layoffs and stalled or abandoned projects after a deal to renew a tax credit failed Thursday in Washington.  Up to 37,000 jobs, many in Illinois, could be lost as projects are halted or abandoned."  Peak wind subsidies?  

U.S. Manufacturing Is Open for Business and Doing Well; Despite, Not Because of, Government Policy

"Manufacturing is not the basket case of political lore, and America really is still "making things." There's another, subtler myth too—that this industrial decline is inevitable, by economic determinism or business mistakes. That's some of it, but the truth is that America would probably be making many more things if not for bad but deliberate political choices.

The manufacturing crisis, if that's the word, has been jobs. Industry employed one of three workers after the war. Today, it's one of eight. Yet this, too, is largely a measure of economic progress—because it is the result of productivity gains. Productivity is the basic measure of how much we can do with our resources, human and monetary, and increasing it is what drives wage gains and higher standards of living.

Real manufacturing output stood at about $35,000 per worker in 1947, in constant dollars. It doubled by 1980 as companies became more efficient. Today this measure is an astonishing $150,000 (see chart above). Manufacturing productivity has increased by 103% since the late 1980s, outpacing every other industry and double the 53% in the larger business economy.

This translates to gains for consumers: Prices for manufactured goods have declined 3% since the 1990s, even as overall prices rose 33%. One reason manufacturing is shrinking as a share of GDP is that its costs are falling—unlike, say, in health care, with its negative productivity rate in the official statistics.

U.S. manufacturing has problems, but it is strong enough to succeed both at home and abroad merely with reforms that all companies ought to enjoy: a corporate tax code with lower rates and fewer loopholes that is competitive with the rest of the world; fewer regulatory hobbles; an education system that better prepares the work force with 21st-century skills; an immigration policy that invites the world's brightest.

This election-year debate will be more constructive if it is less about how to help manufacturers and more about how to fix government."

Chart of the Day: Drill, Drill, Drill = Jobs, Jobs, Jobs

While the overall economy struggles to create jobs during another "jobless recovery," it's been a much rosier employment picture in one of America's most successful "shovel-ready" job-creating industries: Oil and Gas Extraction.

The chart above displays the monthly percentage changes in employment levels since January 2007 for oil and gas extraction jobs compared to total nonfarm payroll jobs.  As of January 2012, payroll employment is 3.3%, and 4.7 million jobs, below the month of January five years ago.  In contrast, the explosion of new oil and gas jobs has increased employment in that industry by about 1/3 since January 2007.  Over the last 12 months, oil and gas companies have added 23,200 new workers, at a rate of almost 100 new hires every business day

Markets in Everything: Linsanity Trademark

Huffington Post -- "Jeremy Lin is going on offense to protect Linsanity. The Knicks sensation this week applied for trademark rights to Linsanity. Lin paid a filing fee of $1,625 to cover use of the trademarked term on all manner of apparel, including underwear. In a detailed listing of goods, the filing seeks to protect its use on everything from action figures to beverage sleeves and backpacks.

According to the document, Lin filed his application on Feb. 13, several days after two California men entered the cash-in derby to trademark Linsanity. Lin's move with the U.S. Patent and Trademark Office could also jeopardize an online venture of one of the men, Andrew Slayton. By selling "Linsanity" T-shirts on his website (see photo above), Slayton is playing fast and loose with certain protections, trademark attorney Josh Gerben said. He believes the marketing tactics of Slayton and his website potentially violate the trademark rights of the New York Knicks and the publicity rights of Lin, whose sudden success with the Knicks has generated the term Linsanity."

Friday, February 17, 2012

Cleveland Federal Reserve: Ten-Year Expected Inflation is Only 1.34%, the Lowest in 30 Years

"The Federal Reserve Bank of Cleveland reported today that its latest estimate of 10-year expected inflation is 1.34 percent. In other words, the public currently expects the inflation rate to be less than 2 percent on average over the next decade.

The Cleveland Fed’s estimate of inflation expectations is based on a model that combines information from a number of sources to address the shortcomings of other, commonly used measures, such as the "break-even" rate derived from Treasury inflation protected securities (TIPS) or survey-based estimates. The Cleveland Fed model can produce estimates for many time horizons, and it isolates not only inflation expectations, but several other interesting variables, such as the real interest rate and the inflation risk premium."

Documentary Coming (Maybe): "FrackNation"

"FrackNation is the film that will tell the truth about fracking.

$150,000 is the absolute minimum we need to finish FrackNation - the more we get - the better the film will be. Also it is important to know if we don't reach the full amount of $150,000 within the 60 days, Kickstarter will return all pledged money to the backers and NOTHING will go to FrackNation. So please send what you can, help us reach the $150,000 target within the 60 days and become an Executive Producer of FrackNation the documentary.

People across the US told us that everything we had heard about fracking was wrong. They say that anti-fracking campaigns, one-sided media coverage and moratoriums and bans have damaged the lives of thousands of people who are now desperate to have their voices heard."

Note: They're halfway to their goal, with $73,500 raised so far, and 48 days to go.   

HT: Matt B.

Leading Economic Index Points to Ongoing Growth

The Conference Board reported today that its Leading Economic Index (LEI) increased in January for the fourth consecutive month, reaching and index level of 94.9, the highest level since July of 2008, three and-a-half years ago (see chart above).  The 0.4% increase in January followed a 0.5% increase in December. 

From the report, Ataman Ozyildirim, economist at The Conference Board commented: 

“This fourth consecutive gain in the LEI reflected fairly widespread strength among its components, pointing to somewhat more positive economic conditions in early 2012. The LEI’s increase in January was led not only by improving financial and credit indicators, but also rising average workweek in manufacturing. These both offset consumers’ outlook about the economy, which remained pessimistic, though slightly less so. Meanwhile, the Coincident Economic Index rose again in January as employment, income, and sales data all point to improving current economic conditions despite a lack of contribution from industrial production.”

Inflationary Pressures Were Falling at Year-End

The chart above (click to enlarge) shows some interesting data from Table 2 in today's CPI report on seasonally adjusted, annualized inflation rates for the three and six month periods ending July 2011 compared to comparable periods ending January 2012.  For example:

1. For the six month period ending July 2011, the annualized inflation rate for CPI: All Items was 4.1%, and that fell to only 1.8% for the six month period ending last month.

2. For the three month period ending July 2011, the annualized inflation rate for "food at home" was 5.5% and for the three month period ending January 2012, the annualized inflation rate was only 1.0%.

Bottom Line: Compared to last summer for the three and six month periods ending in July 2011, inflationary pressures fell significantly towards the end of last year and in the first month of 2012 for the three and six month periods ending in January.  Inflation for food at home has fallen to only 1% (at an annual rate) for the November-January period.  

Thursday, February 16, 2012

George Will: Rent Control is Unconstitutional

"Most tenants in rent-controlled units can renew their leases forever. Tenants can bequeath their rent-controlled apartments — they have, essentially, a property right to their landlord’s property — to their children, or to a friend who lives with them for two years . This is not satire; it is the virtue of caring, as understood by liberal government.

Rent control is unconstitutional because it is an egregious and uncompensated physical occupation of property. The Constitution says that private property shall not 'be taken for public use, without just compensation.'"

~George Will's latest column

Great Moments in Bureaucratic Excess

RAEFORD, NC — "A preschooler at West Hoke Elementary School ate three chicken nuggets for lunch Jan. 30 because the school told her the lunch her mother packed was not nutritious. The girl’s turkey and cheese sandwich, banana, potato chips, and apple juice did not meet U.S. Department of Agriculture guidelines, according to the interpretation of the person who was inspecting all lunch boxes in the More at Four classroom that day.

The Division of Child Development and Early Education at the Department of Health and Human Services requires all lunches served in pre-kindergarten programs - including in-home day care centers - to meet USDA guidelines. That means lunches must consist of one serving of meat, one serving of milk, one serving of grain, and two servings of fruit or vegetables, even if the lunches are brought from home.

When home-packed lunches do not include all of the required items, child care providers must supplement them with the missing ones. The girl's mother - who said she wishes to remain anonymous to protect her daughter from retaliation - said she received a note from the school stating that students who did not bring a "healthy lunch" would be offered the missing portions, which could result in a fee from the cafeteria, in her case $1.25."

Another Spelling/Grammar/Punctuation Rant on It's vs. Its: Maybe It's Time to Just Change the Rule?

From the comments section:

...convinced the agency to now give energy it's due....

...has been abandoning it's libertarian bearings over the last couple of years... Cuba is prepared to allow it's citizens…

… or what it’s impacts are likely to be...

...The Fed has the ability to manipulate the rate toward it's target... it's current incarnation, wind power makes no sense... definitely it's own economy...

...more than twice it's current value...

...which abandoned it's socialist leadership...

Bottom Line: Since this simple spelling/punctuation rule seem's so difficult for so many, maybe its' time to just change the rule?

Update: I don't know if anybody has ever done research on this, but I would think that the misuse of "it's" has to be the most frequent grammar/spelling/punctuation mistake in the English language, and it's become a hobby of mine to document it.  There's actually an organization in the U.K. called the Apostrophe Protection Society, with "the specific aim of preserving the correct use of this currently much abused punctuation mark in all forms of text written in the English language," so at least I'm not the only one fascinated/obsessed about this.....

Producer Price Inflation Lowest in a Year; For Finished Goods, 0% Over the Last Four Months

Some highlights of the BLS report today on Producer Prices for January:

1. The annual inflation rate for crude goods (including crude energy materials and crude foodstuffs and feedstuffs) fell to 4.5% in January, the lowest rate in more than two years, since a 4.8% rate in November 2009.  As recently as June 2011, inflation for crude goods was more than 26% (see chart).

2. The annual inflation for intermediate goods fell to 4.2% in January, the lowest rate since December 2009, and down from a recent high of 11.5% in July (see chart).  On a monthly basis, the prices for intermediate goods have fallen or remained flat for five out of the last six months. 

3. Producer price inflation for finished goods fell to 4.1% in January on an annual basis, the lowest rate in a year, since a 3.6% inflation rate in January 2011 (see chart).  The annual inflation rate for finished goods reached a three-year high of 7.1% last July, and has fallen in five out of the last six months since then.  On a monthly basis, prices for finished goods have fallen in two out of the last four months.  The price index for finished goods in January 2012 at 193.5 was slightly below the index level in September 2011 of 193.6, so there has been a very slightly downward pressure on prices for finished goods over the last quarter.

Bottom Line: At the producer level, there don't appear to be any inflationary pressures; and in fact, the trend in annual inflation for crude and intermediate goods has been generally downward for the last several years, which will likely translate into lower inflation for finished goods over the next several months.

Update: The chart below shows that the price index for finished goods (seasonally adjusted) has been flat for the last five months, with an inflation rate of 0% since September.

Markets in Everything: iPhone Repair

Boston Globe -- "Curt Ingram ( is part of the expanding mini-industry of repairmen working outside the realm of Apple, whose warranty does not cover “damage caused by accident,’’ such as liquid contact (i.e. dropping it in the toilet) or broken screens.

In this growing age of smartphone dependence, the 45-year-old Ingram says, a broken iPhone is an emotionally stressful problem that must be fixed, immediately. “There are lots of people who won’t leave the room while we’re working on their phones,’’ he said. “They’re so attached to their phone they don’t know what to do without it.’’

Ingram, who has the wholesome handsomeness of a cartoon quarterback, has become a mini-celebrity in Brighton, which is known for, among other things, young people behaving like young people. “I always get recognized in bars,’’ he said; that’s also where a lot of his business originates."

Coming This Spring: "Testing Milton Friedman"

Free to Choose Network -- "2012 is the 100th anniversary of Milton Friedman’s birth. His work and ideas continue to make the world a better place. As part of Milton Friedman’s Century, a revival of the ideas featured in the landmark television series Free To Choose are being revisited in a new 3-part PBS broadcast. It will air across the country this spring and summer. Watch a preview above."

Jobless Claims Fall to Lowest Level Since Apr. 2008

In another positive sign that the U.S. labor market is gradually improving, the Labor Department reported today that the four-week moving average for initial jobless claims fell to 362,250 for the week ending February 11, which is the lowest level since the week of April 26, 2008, almost four years ago (see chart above). This marks the fifth consecutive weekly decline in the four-week moving average, and the tenth decline in the last eleven weeks. The number of seasonally-adjusted initial claims (not the four-week average) fell to 348,000, the lowest level since early March 2008.  

If the current rate of decline in jobless claims over the last few months continues (-3,100 average per week since December), the four-week moving average for initial jobless claims will be back to pre-recession, November 2007 levels by mid April. 

Great Moments in Socialism

1. "Imagine a city where all the major economic planks of the statist or "progressive" platform have been enacted: living wage laws, strong public-sector unions that militantly protect above-market wages and benefits, high taxes that redistribute income from businesses and the wealthy to the poor and bloated government bureaucracies. 

Would this be a shining city on a hill, exciting the admiration of all? We don't have to guess, because there is such a city right: Detroit."

2.  "The founding principle of the U.K.'s National Health Service, that care should be free to all regardless of ability to pay, has great merit. But so attached to that worthwhile idea are the English that many recoil in horror when words such as efficiency and profit are even mentioned in the field of healthcare. 

All that various reformers in both major parties have been trying to achieve in the past four decades is the creation of a system more responsive to consumer demands, to drive efficiency, innovation and quality while making scarce resources go further."

But alas, so entrenched is socialized medicine in the U.K. that any attempt to introduce competition or market forces is immediately rejected by socialism's "sick patient."

HTs: Small Dead Animals and Pete Krieger 

Wednesday, February 15, 2012

New January Record for U.S. Exports from L.A. Port

Following up on a record-setting year in 2011 for U.S. export containers shipped from the Port of Los Angeles, another record was set last month, this time for the most ever loaded outbound containers shipped in the month of January, at 168,427.   That was a 5.9% increase over last January, and a 19% increase over two years ago.     

Durable Manufacturing Leads the U.S. Economy

  Jan. 2011 to   
Jan. 2012
Total Industrial Production3.4%
1. Manufacturing 4.5%
a.  Durable manufacturing 8.3%
    Wood products 1.0%
    Nonmetallic mineral products 4.1%
    Primary metals 7.4%
    Fabricated metal products 9.4%
    Machinery 8.2%
    Computer and electronic products 4.5%
    Electrical equip., appliances,0.3%
    Motor vehicles and parts 16.9%
    Aerospace Equipment13.3%
    Furniture and related products 5.2%
b. Nondurable manufacturing 1.1%
   Food, beverage, and tobacco products -0.6%
   Textile and product mills 6.1%
   Apparel and leather -0.4%
   Paper -1.8%
   Printing and support -0.1%
   Petroleum and coal products 5.7%
   Chemicals 1.5%
   Plastics and rubber products 2.7%
2. Mining 5.8%
3. Utilities -7.5%
   a. Electric -6.2%
   b. Natural gas -15.2%

The chart above is based on data from Table 1 in today's industrial production report from the Federal Reserve, and shows annual percentage gains through January by industry group (manufacturing, mining and utilities and sub-groups within those three main categories).  The annual growth in manufacturing output at 4.5% was more than a full percentage point higher than the overall growth in industrial production of 3.4% (which includes mining, manufacturing and utilities). And the durable manufacturing group showed an especially strong annual gain of 8.3%, almost twice the growth rate of total manufacturing, and was led by strong output growth in the industry groups: motor vehicles (16.9%), aerospace equipment (13.3%), fabricated metal products (9.4%) and machinery (8.2%).  

The chart also shows utility output (electric and natural gas) decreased sharply, due to the unseasonably warm winter this year. Nondurable manufacturing increased by only 1.1% overall, but there were some strong gains within that category for petroleum and coal production at 5.7% and textiles at 6.1%.  

A Reuters article on today's Fed report commented that "Manufacturing remains the main pillar of the economy," and it's true that today's industrial production report provides further confirmation that American manufacturing is at the forefront of the economic recovery.  

Empire State Manufacturing Expands in February

"The February Empire State Manufacturing Survey indicates that manufacturing activity in New York State expanded for a third consecutive month. The general business conditions index rose six points to 19.5, its highest level in more than a year (see brown line in graph). The index was last negative in October, then rose to a level of around zero in November; subsequently, the readings have become increasingly positive, suggesting that the expansion in business activity for New York manufacturers has gained momentum in recent months.

Indexes for the six-month outlook, while somewhat lower than last month, conveyed a widespread expectation that conditions would improve in the months ahead. The future general business conditions index fell four points to 50.4 (blue line), with 58 percent of respondents expecting conditions to improve over the next six months and 7 percent expecting conditions to worsen."

Tuesday, February 14, 2012

1989 Radio Shack Cell Phone Commercial

In today's dollars, the $799 sale price would be about $1,450, and the full price of $1,139 would be more than $2,000.

HT: Peter Krieger

NY Times on the Minimum Wage: 1987 vs. 2012

New York Times editorials on raising the minimum wage:

"Raising the minimum wage by a substantial amount would price working poor people out of the job market. A far better way to help them would be to subsidize their wages or - better yet - help them acquire the skills needed to earn more on their own.

An increase in the minimum wage to, say, $4.35 would restore the purchasing power of bottom-tier wages. It would also permit a minimum-wage breadwinner to earn almost enough to keep a family of three above the official poverty line. There are catches, however. It would increase employers' incentives to evade the law, expanding the underground economy. More important, it would increase unemployment: Raise the legal minimum price of labor above the productivity of the least skilled workers and fewer will be hired.

The idea of using a minimum wage to overcome poverty is old, honorable - and fundamentally flawed. It's time to put this hoary debate behind us, and find a better way to improve the lives of people who work very hard for very little."

2. From 2012, "Raise New York's Minimum Wage":

"It is time for New York to raise its minimum wage enough to help more than 600,000 struggling workers. Assembly Speaker Sheldon Silver is vigorously pushing a bill to raise the minimum to $8.50 an hour immediately and to adjust it each year for inflation. This should not be a controversial measure. 

Gov. Andrew Cuomo supports an increase, as does Mayor Michael Bloomberg. Only Republican state senators are resisting, using the same stale argument that a minimum wage increase is bad for business. The Senate Republican leader, Dean Skelos, argues that the measure “could be a job killer rather than a job promoter.” That contention has been proved wrong time and again."

MP: How to explain this regression in economic reasoning over the last 25 years at the New York times? Paul Krugman joined the NY Times in 1999? Economic amnesia? None of the current editorial staff ever took high school or college economics?

Related: See Don Boudreaux's response to the most recent NY Times editorial.  

We Should All Get Valentine's Day Cards from Big Sugar for the $4B We Paid Them in Higher Prices

In an article today on today titled “Bitter Sweet: How Big Sugar Robs You,” Michael Wohlgenant and Vincent Smith provide some timely Valentine’s Day commentary and report that:

“For decades, sugar beet and sugar cane farmers and processors have been the beneficiaries of a sugar program that stealthily drives up sugar costs—and, consequently, the cost of that heart-shaped box of chocolates (see chart above of U.S. sugar prices vs. world prices). Over the past 30 years, the annual burden on U.S. consumers has averaged over $3 billion in higher food prices.”

On Valentine’s Day, it’s appropriate that Wohlgenant and Smith remind us that the “hand on your back pocket billfold today is not your sweetheart’s, it’s the sugar lobby’s,” which lifted almost $4 billion from American consumers last year, read more here at The Enterprise Blog.

Auto Affordability is the Highest Since 2009 and Will Boost Car Sales in 2012: Great Time to Buy

From Comerica Bank:

"The purchase and financing of an average-priced new vehicle took 23.1 weeks of median family income in the fourth quarter of 2011, the best affordability reading since the third quarter of 2009. Consumers on average spent $1,050 less (a decrease of 4.0 percent) on new cars in the fourth quarter. 

“Auto affordability improved at the end of 2011, boosted by gains in personal income that were, in turn, supported by stronger job creation,” said Robert Dye, Chief Economist of Comerica Bank in Dallas. “Household credit conditions are also improving, as shown by the low household financial obligations ratio, which measures total debt payments as a percentage of income. When you put those two concepts together, it means that households are increasingly willing to take on a reasonable amount of debt by purchasing an attractively priced automobile. Those favorable trends are allowing consumers to feel more confident about unleashing their pent-up demand for automobiles. Favorable affordability and improved job growth mean more upside potential for auto sales in early 2012.”

MP: See related CD post showing that the household financial obligations ratio fell to an 18 year-low in 2011 at 16.5%, the lowest level since 1993, which will contribute to ongoing gains in car sales in 2012 as mentioned above, along with low interest rates, increased affordability, new models, and improving labor market conditions, which together bode well for making this the best year in auto sales since 2007.  

It's also interesting to note that over the last 15 years, auto affordability has consistently increased, and new cars today are about 20% more affordable than in the mid-1990s.  Reasons for increased affordability over time likely include falling financing costs, rising incomes, and super-competitive pricing.  Add in quality and safety improvements, and better options (OnStar, satellite radio, navigation, etc.), and there's probably never been a better time than today to purchase a new vehicle.     

Natural Gas Boom Energizing The Chemical Industry

"U.S. chemical companies are the latest beneficiaries of the nation's natural gas drilling boom. Long focused on cheap gas sources elsewhere in the world, companies are now looking to expand here. A surplus of natural gas has pushed down prices, making it more attractive for chemical companies that use lots of gas to reopen shuttered plants and build new ones.
"We wouldn't have to go back very far — literally just seven or eight years — and the picture for the industry here in North America was pretty uncertain," says Randy Woelfel, CEO of NOVA Chemicals in Calgary, Alberta. He says high oil prices sent a lot of petrochemical manufacturing overseas to the Middle East and Asia. But now, low natural gas prices and the ethane-rich Marcellus Shale have changed everything.

"That means ... that we'll be back in the hiring business, rather than the consolidation and survival/cost-cutting mode that NOVA was clearly in for much of the last decade," Woelfel says."
Related: This December 2011 study by PriceWaterhouseCoopers, "Shale gas: A renaissance in US manufacturing?" predicts the following:
  • U.S. manufacturing companies (chemicals, metals and industrial) could employ approximately one million more workers by 2025 because of abundant, low-priced natural gas.
  • Lower feedstock and energy cost could help U.S. manufacturers reduce natural gas expenses by as much as $11.6 billion annually through 2025.

Santorum Is Now Leading Romney in the Polls, But Romney Is Still Way Ahead on Intrade: 4.5-to-1

The most recent Real Clear Politics polling average is showing Santorum (30.2%) with a 1.6% lead over Romney (28.6%), while the Intrade odds aren't even close: Romney's odds are 75.5% and Santorum is at 16.5% (see chart above), meaning that Romney is still a 4.5-to-1 favorite over Santorum. 

Monday, February 13, 2012

The Economics of Valentine's Day

Featuring George Mason economist Chris Coyne.

Markets in Everything: Geeky Valentine's Gifts

Including heart-shaped mittens for two pictured above, more here.

Valentine's Day for Economists, Using Graphs

There's more here at "14 Ways An Economist Says I Love You" with graphs and diagrams.

HT: Mike LaFaive

More on a New, Emerging World Energy Map

With America's abundant supply of natural gas selling at close to historic-low levels, it seems natural that the next step would be to export it, and that's exactly what's starting to happen.  A Wall Street Journal article today features one natural and growing market for natural gas, Japan, which has almost doubled its imports of natural gas since 1995, and by 12% in the last year.  Following last year's earthquake and tsunami, Japan has closed 51 of its 54 nuclear and electric utilities have switched to natural gas.
And we can expect increased demand for natural gas from other countries in Asia and Europe, as some countries like Germany are moving away from nuclear power.  

From the WSJ article:

"The growing demand for natural gas around the globe coincides with a transformation of the U.S. market for the fuel thanks to the unlocking of gas in long-untapped shale formations. Officials in Washington expect the U.S. to turn into a net gas exporter over the next few years.

Exporters can take advantage of a gaping price difference. In the U.S. natural gas goes for about $2.50 per million British thermal units. The price in Japan for the same quantity is about $16."

MP: Drill, drill, drill = cheap natural gas = exports, exports, exports

HT: Bob Wright

Higgs: Immiseration of Personal Interest Income

Last week I had a CD post on how the Fed's zero interest rate policy has significantly reduced personal interest income and it generated a lively discussion. Robert Higgs had a related post last Friday titled "The Fed's Immiseration of People Who Live On Interest Earnings," here are some of his comments:

"Fed’s policy of acting to hold interest rates well below free-market rates in recent years has had the effect of greatly diminishing the earnings of people who rely on interest income. Such people include especially many retirees who do not wish to hold risky assets with substantial variability of earnings. In the past, many retired people have held the bulk of their wealth in the form of bank certificates of deposit, bonds, and bond-heavy mutual funds, hoping that their incomes would be secure and predictable when they were no longer working. The Fed’s actions in recent years have taken a heavy toll on such people’s earnings."

MP: Bob refers to a graph showing personal interest income in nominal terms, displays a graph of the PCE price index, and discusses how the effects of reduced personal interest income would be even more dramatic if adjusted for inflation.  The chart above combines those two charts into one, and displays real personal interest income adjusted for inflation, which supports Bob's conclusions that: a) real personal interest income has dropped by more than a third since 2008, from $1.4 trillion to $973 billion, and b) the flow of personal interest income today at $973 billion has only about 77% of the purchasing power of personal interest income in 2000 ($1.26 trillion).

Bob concludes:

"It is plain that the Fed is acting in a way that impoverishes a definite class of persons—those heavily dependent on interest earnings for their income—and, moreover, that a policy of keeping interest rates on low-risk assets near zero must eventually wipe out such persons’ incomes completely. In that event, people who worked and saved over a working lifetime, taking personal responsibility for guaranteeing their self-sufficiency during their elderly, nonworking years, will be able to survive only at the mercy of the providers of private and public charity.

The link between the Fed’s policies and this undeniable effect is too direct and too obvious for anyone, including the Fed’s managers, to overlook or misunderstand. We may only conclude, then, that the Fed’s managers either: 1) want to wipe out the retirees and others who rely heavily on interest earnings, or 2) consider these people’s immiseration an acceptable price to pay in order to achieve other objectives. Can any decent person approve such policy making?"

HT: Warren Smith

Sunday, February 12, 2012

Gender Pay Gap? There's An App For That Coming reported this week that "The Obama administration recently launched a software development competition designed to help achieve equal pay in the workforce for American women. The competition has several prize categories, including five scholarships to attend an 8-week design and entrepreneurship program. Another winner will get $5,000 from a private nonprofit to help further develop their app."

It's called the Equal Pay App Challenge, and here's some information from the competition's website:

"Nearly 50 years after President Kennedy signed the Equal Pay Act, on average women are still paid less than their male counterparts for doing comparable jobs – that’s called the pay gap. It means that each time the average woman starts a new job, she’s likely to start from a lower base salary, but it also means that over time the pay gap between her and her male colleagues is likely to become wider and wider.

For the average working woman, the pay gap means $150 less in her weekly paycheck, $8,000 less at the end of the year, and $380,000 less over her lifetime. For women of color and women with disabilities, the disparity is even bigger. Your challenge is to use publicly available labor data and other online resources to educate users about the pay gap and to build tools to promote equal pay."

Here's an example of how the app might work for some women, based on these salary data:

Enter Your Marital Status: Single

Enter whether you work full-time or part-time: Full-time

Enter the number of children you have: Zero

Do you work in a large U.S. city? Yes

Enter your age: Under 30 years old

Enter your city of employment below, and the Equal Pay App will report the gender pay gap for your demographic group in your geographic area.  A negative (positive) pay gap reflects lower (higher) median full-time salaries for women in your group (single, childless, under 30 years old) compared to your male counterparts.

Atlanta: +20% pay gap in favor of women

Memphis: +20% pay gap in favor of women

New York City: +17% pay gap in favor of women

Los Angeles: +12% pay gap in favor of women

San Diego: +15% pay gap in favor of women

Charlotte: +14% pay gap in favor of women

Warning: You have uncovered a significant gender pay gap in favor of women, and your employer may be paying single, childless women under 30 years old more than men in that same demographic group.  This could be illegal gender discrimination in violation of the Equal Pay Act of 1963, and you should report this potential violation of federal law to your local Equal Employment Opportunity Commission. Thanks for using the Equal Pay App. 

HT: Christina Sommers

Sunday Links

1. Bakken oil boom spreads to Montana as demand increases for commercial property in Billings.

2.  New staggering discovery of 23 billion barrels of oil and gas in Argentina, could double its oil and gas output within ten years. What "peak oil"? Julian Simon is smiling.... (ht: John Sturges)

3. Millions of patients are skipping their primary care doctors, and instead choosing faster, cheaper retail clinics.

4. Stuart Anderson: Analysis of new data obtained from U.S. Citizenship and Immigration Services reveals the agency has dramatically increased denials of L-1 and H-1B petitions over the past four years, harming the competitiveness of U.S. employers and encouraging companies to keep more jobs and resources outside the United States.

5. MIT offers free independent study course in Microeconomics, with video lectures, multiple-choice quizzes, problem sets and exams. 

Whitney Houston, R.I.P

Whitney Houston singing the National Anthem at the Super Bowl in 1991...... What a voice.  It doesn't get any better than this......