Monday, July 02, 2012

More Shockingly Good News from Shale Gas: CO2 Emissions Will Likely Fall This Year to 1991 Levels

John Hanger points out on his energy blog that energy-related carbon dioxide emissions have fallen so sharply in the first three months of 2012 according to new data from the EIA, that total CO2 emissions this year are on track to drop to the lowest level since 1991, see chart above.

The key driver for the "shockingly good news" that CO2 emissions will probably fall this year to a two-decade low according to John is "the shale gas revolution, and the low-priced gas that it has made a reality, especially in the last 12 months. As of April, gas tied coal at 32% of the electric power generation market, nearly ending coal's 100 year reign on top of electricity markets (see related CD post on this energy milestone).  Let's remember the speed and extent of gas's rise and coal's drop: coal had 52% of the market in 2000 and 48% in 2008."

Indeed, as the chart above shows, it took 16 years for CO2 emissions to rise from 5,000 to 6,000 million metric tons, and then thanks to the shale gas revolution, only five years to go from 6,000 back down to 5,000 million metric tons. 

John Hanger's bottom line: "America's carbon emissions may drop back close to 1990 levels this year. That result would have been thought impossible, even at the end of 2011.

But the shale gas revolution makes a reality many things recently thought impossible.  It was thought impossible to slash carbon US carbon emissions back to 1990 levels by 2012.  It was thought impossible to massively, quickly cut carbon emissions and, at the same time, have lower energy bills.

Shale gas production has slashed carbon emissions and saved consumers more than $100 billion per year.  Truly astonishing!"

MP: And unlike renewable energies like solar that reduce carbon emissions but are uneconomical even with billions of dollars of taxpayer dollars, the shale gas revolution has reduced CO2 emissions significantly without any taxpayer support and wasn't even part of any intentional energy policy from Washington, or any regulatory directive from the EPA.

Welcome to the shale gas revolution!

Happy 4th of July and Thanks to China for Saving Americans Millions of Dollars on Flags & Fireworks

And here are some Fourth of July 2012 Facts from the Census Bureau, including the fact that we imported $232 million worth of fireworks and $3.3 million worth of U.S. flags from China last year.  To the extent that China artificially undervalues its currency and overvalues the U.S. dollar as is frequently claimed, China will help the U.S. celebrate the Fourth of July by saving American consumers millions of dollars on the fireworks (China supplies almost all of our fireworks according to the WSJ) and flags we purchase to celebrate Independence Day.  

As I pointed out on CD last year, we should be thankful for the generous foreign aid that China provides to the United States through its undervalued currency, which saves American consumers billions of dollars every year on China's undervalued goods we're able to purchase with an overvalued dollar.  

CoreLogic Home Price Index Rises in May

CoreLogic released its Home Price Index (HPI) report today for May, with the following positive news about the U.S. real estate market:

"Home prices nationwide, including distressed sales, increased on a year-over-year basis by 2.0 percent in May 2012 compared to May 2011 (see red line in chart above). On a month-over-month basis, home prices, including distressed sales, also increased by 1.8 percent in May 2012 compared to April 2012. The May 2012 figures mark the third consecutive increase in home prices nationwide on both a year-over-year and month-over-month basis.

Excluding distressed sales, home prices nationwide increased on a year-over-year basis by 2.7 percent in May 2012 compared to May 2011, see blue line in chart. [MP: This is the largest annual increase since late 2006.] On a month-over-month basis excluding distressed sales, home prices increased 2.3 percent in May 2012 compared to April 2012, the fourth month-over-month increase in a row. 

The CoreLogic Pending HPI indicates that house prices, including distressed sales, will rise by at least another 1.4 percent from May 2012 to June 2012. Excluding distressed sales, house prices are also poised to rise by 2.0 percent during that same time period. The CoreLogic Pending HPI is a new and exclusive metric that was introduced within the April 2012 HPI report. It provides the most current indication of trends in home prices, and is based on Multiple Listing Service (MLS) data that measure price changes in the most recent month.

“The recent upward trend in U.S. home prices is an encouraging signal that we may be seeing a bottoming of the housing down cycle,” said Anand Nallathambi, president and chief executive officer of CoreLogic. “Tighter inventory is contributing to broad, but modest, price gains nationwide and more significant gains in the harder-hit markets, like Phoenix.”

“Home price appreciation in the lower-priced segment of the market is rebounding more quickly than in the upper end,” said Mark Fleming, chief economist for CoreLogic. “Home prices below 75 percent of the national median increased 5.7 percent from a year ago, compared to only a 1.8 percent increase for prices 125 percent or more of the median.”

MP: The home price increases reported today by CoreLogic for May and the last several months are consistent with the gains in the FHFA House Price Index (HPI), featured last Thursday on CD.  The FHFA's HPI increased by 3% in May from a year earlier, which was the third straight monthly increase, and the largest year-over-year gain since November 2006.  Slowly but surely, the U.S. housing market is making a comeback, with more evidence today of rising home prices in May according to CoreLogic's HPI.  

Busy Intersection: No Traffic Lights v. Traffic Lights



The video above shows the same intersection in Auckland, New Zealand at the same time of day.  The video on the left shows the traffic moving through the intersection without traffic signals following a power outage, and the video on the right show traffic the next day after power was restored and the traffic lights were working again. 

HT: Jake W.

Related quote from Dylan Brice: "Developments in traffic engineering show that measures aimed at making roads safer (such as road signs, traffic lights) actually make roads less safe. They signal to drivers that it’s OK not to think through the risks of their behavior."

Online Job Demand Rises in June; Both Total Ads and New Ads Reach New Monthly Record Highs


From today's Conference Board report on online labor demand:

"Online advertised vacancies rose 232,000 in June to 4,947,100, according to the Conference Board's Help Wanted OnLine (HWOL) Index. Following little growth in the first two months of the second quarter, June closed out the quarter with a strong gain. The Supply/Demand rate stands at 2.7 unemployed for every vacancy.

“Online labor demand in the first half of 2012 increased by an average of 104,000 per month, but about one-third of both the States and the 100 largest metro areas are still below their pre-recession highs for labor demand,” said June Shelp, Vice President at The Conference Board. “As of June, almost half of the occupational groups have Supply/Demand rates at or below 2.0. However, most of these are in the professional categories, such as business and finance, healthcare professionals, and management. Although we’ve seen improvement, other categories like construction, building and grounds maintenance, and personal care are still struggling with high Supply/Demand rates.

Other highlights include:

1. All 20 of the largest metro areas posted gains in labor demand in June.

2. Eight of the 20 largest metro areas have supply/demand rates below 2, indicating that there are fewer than two unemployed workers for every online advertised vacancy.

MP: Both total online job vacancies (4.94 million) and new ads (3.16 million) are now well above their pre-recession levels (see chart above) and both set new monthly record highs in June.  June's 232,000 monthly increase in online vacancies follows a 246,000 increase in March, bringing the total increase over the last four months to 524,000, the largest four-month increase in online advertised jobs since early 2007.

The Supply/Demand ratio has been below 3.0 for the last four months in a row for the first time since the fall of 2008, more than three years ago. Today's Conference Board report provides more evidence that the labor market is gradually recovering, and the sharp increase in online job vacancies over the last four months forecasts increased hiring activity in the coming months.

ISM Reports Slowdown in Manufacturing


Today's ISM report suggests that economic activity in the U.S. manufacturing sector contracted slightly in June, as the overall ISM manufacturing index (PMI) fell below 50 for the first time since July 2009 (see chart above).  However, the direction of both the "manufacturing production" and the "manufacturing employment" sub-indexes are still considered to be "growing" according to the ISM, although both are now listed as "slowing" for the "rate of change."  Based on today's report, growth in the overall economy (GDP) could be slowing to 2.4% this year based on May's PMI, but could be as high as 3.5% based on the PMI during the first half of the year. Here are some highlights:

"Manufacturing contracted in June as the PMI registered 49.7 percent, a decrease of 3.8 percentage points when compared to May's reading of 53.5 percent (see chart above). A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June PMI indicates growth for the 37th consecutive month in the overall economy, but indicates contraction in the manufacturing sector for the first time since July 2009, when the PMI registered 49.2 percent.

ISM Chair Bradley Holcomb said, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (53 percent) corresponds to a 3.5 percent increase in real gross domestic product (GDP). In addition, if the PMI for June (49.7 percent) is annualized, it corresponds to a 2.4 percent increase in real GDP annually."

Glenn Reynolds on the History and State of the Blogosphere, the Higher Education Bubble, etc.



Watch Ed Driscoll's Silicon Graffiti video interview with Glenn Reynolds on the history and state of the blogosphere, and the higher education bubble (featuring a "scary-ass" CD chart).

Markets in Everything: Cellphone Escape Services

Trying to make an early exit from your 2-year cell phone contract without paying the $150-200 early termination fee?  Now there are online cellular exchange websites that match cellular subscribers, a seller who wants to get out of a contract early and a buyer who is willing to take over the contract.  Cell phone service providers apparently allow a contract to be transferred without charging an early cancellation fee, and these services facilitate those transfers by matching buyers and sellers online.  

Here are two examples of websites offering cellphone exchange services:

1. Celltrade -  "We have developed the world's first online community that gets dissatisfied cell phone customers out of their service contract. Celltradeusa.com provides this service through an incentive based system that connects millions of cellular customers nationwide that want to Get Out with those that want to Get In."  

Registration is free, and once the "Get Out" seller finds a "Get In" buyer, there is a $19.99 fee for the seller. 

2.  TradeMyCellular is similar to Celltrade: "TradeMyCellular provides service for cellular contract holders who want to get out of their contract early without paying extra charges by listing their plan and cellular phone information on TradeMyCellular.com. Also TradeMyCellular.com provides service to those who seek for taking over a short term contract without paying activation fees and also taking advantage of incentives provided by contract holders."

Sunday, July 01, 2012

Spontaneous Order, Sometimes It Just Happens

No Traffic Lights? No Problem

  
Last Friday, a severe thunderstorm knocked out power for large sections of the Virginia, D.C., and Maryland area; including the traffic lights in one of the more poorly designed intersections in the Arlington/Falls Church section of VA.  But instead of chaos, the video above shows what happened ...

If We're Not in Recession Now, ECRI Was Wrong


"Tomorrow begins July, meaning that we have arrived at midyear, the point by which ECRI [MP: Self-described as the "world's leading authority on business cycles"] predicted we would enter a new recession.  While we don't have the June data, as of May real income, payrolls, and real retail sales continued to rise, although retail sales are below their March peak.  Industrial production was off slightly in May from its post recession peak in April.

In monthly data released last week, new home sales continued their recent improvement, reaching a 2 year high.  The Case-Shiller index of repeat home sales after adjusting for seasonality still improved slightly for the third month in a row.  Durable goods orders increased although their overall trend is still sideways.  The Chicago PMI remained slightly positive.  Consumer confidence continued to fade.  Consumer spending was flat, but as indicated above consumer income improved."

MP: After summarizing about two dozen additional economic indicators, most of which were mildly positive, neutral, or mildly negative, here the conclusion:

"All things considered, it appears that this summer, like the summers of 2010 and 2011, will likely be the weakest point of the year.  Deflation now should set up a rebound later.  Turning to the title of this piece, while I suspect it will be touch and go for a couple more months, I continue to believe that ECRI's prediction will ultimately be proven wrong."

May Las Vegas Home Sales Highest Since 2006

DQ News -- "Las Vegas-area home sales rose to a six-year high for the month of May as the number of transactions above $200,000 increased sharply from last year, making up for fairly flat sales for lower-cost properties. With foreclosure resales at the lowest level since late 2007, the median sale price rose above a year earlier for the second consecutive month, reaching a 17-month high

In May, 4,829 new and resale houses and condos closed escrow in the Las Vegas metro area. That was up 6.1% from a revised 4,550 the month before and up 5.7% from 4,570 sales a year earlier."

MP: With both home sales and median home prices increasing in Las Vegas year-over-year, and with foreclosures at close to a five-year low and sales for the month of May at a six-year high, I think it's safe to say that the Las Vegas real estate market is past the cyclical bottom, and on the way back up.  

Markets in Everything: Bakken Oil Field Basics Class

Missoulian -- An oil field basics class will be offered at Bitterroot College of the University of Montana. The class will teach the “nuts and bolts” of oil and gas field operation and will use both videos and in-person instruction.

The one-day class called “Bakken Oil and Gas Field Basics” will be offered July 13 and 20. The cost is $55 for those who register before July 6.

Poster of the Day: Our New Health Care System

This pretty much sums it up....
 

Photo of the Day: Field of Government Agencies


Ray Charles Sings America the Beautiful



Music starts about 1:30. It doesn't get any better than this.

As a Share of Household Spending, U.S. Has Most Affordable Food in World & It's Never Been Better



We hear reports all the time that real household incomes are stagnant or falling, the middle class is disappearing, household wealth has declined, and income inequality is rising.  All of those reports might make one think that the standard of living for the average American is bad and getting worse.  But here's one basic measure of a country's standard of living that shows Americans are better off than their consumer counterparts anywhere in the world: The share of household consumption expenditure on food consumed at home, see table below (USDA data here).  

Relative to our total household spending, Americans have the cheapest food on the planet - only 6.6% of the average household budget goes to food consumed at home.  European countries like Spain, France and Norway spend twice that amount on food as a share of total expenditures, and consumers in countries like Turkey, China and Mexico spend three times as much of their budgets on food as Americans.  

Another measure of food affordability, total food expenditures in the U.S. as a share of disposable income (see chart above, USDA data here), shows that food has become more affordable in the U.S. over time.  Spending on food has fallen from more than 25% of the average American's income in 1933 to only 9.4% in 2010, an all-time low.  Between 1980 and 2010, the share of disposable income spent on food in the U.S. fell from 13.2% to 9.4%, which is equivalent to almost a 4% increase in the average American's disposable income over the last 30 years.   And a number of countries in the list below spend more on food as a share of household expenditures today than Americans spent on food during the Great Depression. 

Bottom Line: As a share of our disposable income, food in the U.S. has never been cheaper than it was in 2010 (more recent data are not yet available).  And Americans spend less on food as a share of our household expenditures than consumers anywhere else in the world.   

     Share of Household Spending    
on Food, 2010
%
United States6.6
Singapore7.5
United Kingdom9.7
Canada9.8
Ireland10.2
Switzerland10.3
Australia10.7
Germany11.0
Austria11.1
Denmark11.5
Netherlands11.6
Hong Kong, China12.1
Finland12.5
Qatar12.5
Sweden12.6
Belgium12.7
Spain13.1
France13.2
Norway13.4
Malaysia13.9
Bahrain14.3
Kuwait14.5
United Arab Emirates14.5
Japan14.8
Italy14.8
Slovenia14.9
South Korea15.0
New Zealand15.0
Portugal15.6
Czech Republic16.0
Greece17.3
Latvia17.5
Israel17.6
Ecuador17.8
Slovakia17.9
Hungary17.9
Uruguay18.6
Colombia18.8
South Africa19.6
Poland20.2
Argentina20.2
Estonia20.3
Bulgaria21.3
Turkey21.4
Lithuania21.7
China22.3
Mexico22.7
Croatia23.2
Chile23.2
Costa Rica23.4
Iran23.4
Saudi Arabia23.7
Taiwan23.9
Brazil24.8
Thailand25.0
Dominican Republic25.1
Turkmenistan25.8
India27.7
Bolivia28.0
Venezuela28.9
Peru28.9
Russia29.0
Romania29.7
Uzbekistan31.4
Indonesia32.2
Bosnia-Herzegovina32.7
Macedonia32.9
Tunisia35.6
Kazakhstan35.9
Philippines36.4
Egypt38.0
Guatemala38.0
Vietnam38.0
Nigeria39.8
Morocco40.5
Jordan40.6
Georgia41.3
Ukraine41.7
Kenya41.7
Pakistan41.9
Belarus42.1
Algeria43.7
Azerbaijan45.3
Cameroon46.9

Saturday, June 30, 2012

Boys vs. Girls on the 2010 SAT Test


If you haven't already seen it, here's another look at my December 2010 animation "Boys vs. Girls on the 2010 SAT Test," where I have a little fun trying to debunk "The Janet Hyde" at the University of Wisconsin, who claims there "There just aren't gender differences anymore in math performance. So parents and teachers need to revise their thoughts about this." 

See some related CD posts here, here and here.

And here are the results for the 2011 Math SAT Test - the mean score for high school boys was 531 compared to a mean of 500 for girls; and 9,120 boys had perfect scores of 800 compared to 4,683 girls, for a M:F ratio of 1.95-to-1.    

Markets in Everything: ND Oil Patch Tours for $325

Grand Forks Herald -- "For people who drive through North Dakota’s oil country and wonder what the heck they’re looking at, a new tour will erase some of the mystery. The Bakken Field Tours, which launch in July, will give people a chance to take an 11-hour bus tour through the Oil Patch that features an explanation of oil and gas development. The night prior to the tour, participants will get a three-hour educational workshop that lays the groundwork for what they’ll see on the tour. The tours will cost $325, not including the price of a hotel room."

U.S. Restaurants Show Expansion Again in May

The National Restaurant Association reported yesterday that:

"The outlook for the restaurant industry remained positive for the months ahead, as the Restaurant Performance Index (RPI) remained above 100 in May. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.4 in May, down 0.2 percent from April’s level of 101.6 (red line in chart). Despite the decline, May represented the seventh consecutive month that the RPI stood above 100, which signifies expansion in the index of key industry indicators. Restaurant operators reported positive same-store sales in May for the 12th consecutive month.

The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 102.0 in May – down slightly from April’s level of 102.2 (blue line in chart). May represented the ninth consecutive month that the Expectations Index stood above 100, which signifies a positive outlook among restaurant operators for business conditions in the coming months."

MP: The RPI has remained in a range between 101 and 102 for the last six months, and the Expectations Index has remained above 102 over that same period, which is consistent with the ranges and levels for those two indexes back in the pre-recession time frame in late 2006 and early 2007. This is an indication that the U.S. industry has made a full recovery from the recession and the industry's performance has returned to pre-recession levels.  

More evidence of an improving outlook for U.S. restaurants is provided by Census data showing that sales for "Food Services and Drinking Places" improved 7.4% in May from a year ago, following an annual increase of 8.5% in April.  After being flat for most of 2008 and 2009, sales at "Food Services and Drinking Places" in May were running 17% above the June 2009 level when the recession officially ended. Further, sales at "Full Service Restaurants" were up by 8.7% year-over-year in April (data not yet available for May)

All of the key data suggest that the restaurant industry has made a full recovery from the recession and is now operating back above pre-recession levels for inflation-adjusted sales. Regardless of how consumers answer confidence survey questions, the strong improvements in restaurant sales and the RPI in recent months would indicate that tracking actual consumers spending on restaurant meals is reflecting a high level of consumer confidence. 

The NBA and WNBA Get an A+ for "Racial Hiring Practices" Despite Significant Racial Disparities?

 The University of Central Florida praises the NBA for its "commitment to racial equality," despite this significant evidence of racial inequality:
Share of U.S. Population, 2011Share of NBA, 2012   Share of WNBA, 2011
Blacks13.1%    <   78%63%
Whites63.4%    >17%21%
Hispanics16.7%    > 4%3%
Asians5.0%    >3%0%

Based on the data in the chart above, what letter grade would you assign for the "racial hiring practices" of the NBA and WNBA?  When determining your grade, you would obviously consider the fact that the racial shares of professional basketball players diverge significantly from the racial makeup of the U.S. population, suggesting that there might be some racial bias or discrimination when hiring players.  For example, blacks were 13.1% of the U.S. population in 2011, but were significantly overrepresented in professional basketball: 78% of NBA players (2012) and 63% of WNBA players (2011) are black.  Whites are 63.4% of the U.S. population, but are significantly underrepresented in pro basketball: only 17% of NBA and 21% of WNBA players are white.  Likewise, Hispanics and Asians are significantly underrepresented in both the NBA and WNBA compared to their shares of the U.S. population, and Asians have no representation in the WNBA.  

When determining your letter grade for the "racial hiring practices" of the NBA and WNBA consider what would happen if some of the outcomes were reversed, e.g. blacks are 13.1% of the population, but make up only say 5% of some outcome like managerial positions, boards of directors, city payrolls for police or fire workers, teaching positions, coaching positions, etc.  In most cases of gender or racial under-representation, the goal of advocacy groups or government agencies is often perfect statistical gender or racial parity based on shares of the general population (see example here of perfect gender parity being the stated goal of the Commerce Department for STEM jobs and college majors).

Given the statistical outcomes above where whites are underrepresented in the NBA by a factor of 3.7 times compared to their share of the general population (17% vs. 63.4%) and blacks are overrepresented in the NBA by a factor of 6 times (78% vs. 13%) compared to their share of the general population, it would seem that the logical conclusion is that the racial outcomes for the NBA and WNBA depart dramatically from the standard measures of diversity and the racial hiring practices of the NBA and WNBA should earn a letter grade of F. When women or minorities are underrepresented in some outcome (STEM jobs, college enrollment, boards of directors, executive positions, etc.), efforts are made to "increase diversity" by increasing the gender or racial shares of various outcomes to the gender or racial shares of the overall population.  

But when it comes to the NBA and WNBA, much different standards of diversity are apparently applied to the racial composition of professional basketball teams.  According to the "Racial and Gender Report Cards" (released annually by the "The Institute for Diversity and Ethics in Sport" at the University of Central Florida") the NBA got a letter grade of A+ for "racial hiring practices" in 2012 (just released this week) and the WNBA got a letter grade of A+ for 2011 (results for 2012 are not yet available), for the significant over-representation of black players and the significant under-representation of white, Hispanic and Asian players.  

This seems pretty Orwellian in the sense that "all racial and gender groups are equal and important for purposes of diversity, but some groups are apparently more equal than others."  For example, when women are underrepresented in STEM fields, the gender activists invoke the "disparity-proves-discrimination dogma" and mobilize resources and support to address the gender disparity. But when women are overrepresented in earning college degrees (140 females per 100 men), or 7 out of 11 graduate degrees, or outnumber male veterinarians by more than 3:1, those disparities, and the "disparity-proves-discrimination" dogma are ignored.

Likewise, now that whites, Hispanics, and Asians are significantly underrepresented in the NBA and WNBA, the "disparity-proves-discrimination" dogma is abandoned and a new mantra is adopted by the "Institute for Diversity and Ethics in Sport": "racial disparities-prove-success" as long as blacks are over-represented and whites, Asians and Hispanics are under-represented, and deserve letter grades of A+.  In fact, the 2012 report praised the "NBA’s continued commitment to racial equality," despite the overwhelming evidence of  significant racial inequality?  

Interestingly, the "Institute of Diversity and Ethics in Sport" was headed until recently by two white male admininstrators (see photo below).  What grade would they give their own organization for the category of "Top Management" (one of the categories they use for the NBA and WNBA)? Wouldn't this be a letter grade of F for being 100% white and male?


Friday, June 29, 2012

With Our Abundance of Natural Gas, Let's Export

The EIA reported today that U.S. natural gas production set new monthly record highs in April for gross withdrawals and marketed production, on a 12-month moving average basis (to smooth out monthly variations), see chart above. Thanks to fracking technology and the shale revolution, America now has such an abundance of natural gas, that it makes economic sense for producers to export gas overseas to Europe and Japan, where prices are typically 5-6 times higher than in the U.S.

With the EIA announcement that domestic natural gas reached a new record high, it was timely that Reps. Bill Johnson (R-Marietta) and Tim Ryan (D-Youngstown) sent a bipartisan letter today, cosigned by 21 Members of Congress, to the Secretary of Energy, Steven Chu, calling for policies that would allow U.S. companies to export natural gas and capture a greater share of the global market for natural gas.

Rep. Johnson said, “Right now, Eastern Ohio is seeing the benefits of natural gas development in the Marcellus and Utica shale plays. But it’s time to realize the full potential of this abundant natural resource, and one way to do that is to start exporting it onto the global marketplace. In fact, according to the U.S. International Trade Association, America could see tens of thousands of new jobs created by allowing this abundant natural resource to be exported. Eastern Ohio has the supply, the technological know-how, and a workforce that’s ready to make this happen."

Johnson added, “Allowing American workers to increase our share of the global market for natural gas is an important part of a true ‘all of the above’ approach to energy development that will make America more energy independent, lower the price of energy, and create much-needed jobs. With unemployment above 8% for the past 40 months, it’s important to develop these abundant natural resources to once again bring exceptionalism back to America.”

Rep. Ryan said, “Natural gas has become a key element in the economic turnaround in my district and throughout Ohio, Pennsylvania and West Virginia. We need to support the businesses that are creating quality jobs by allowing them to compete in the global market, and I hope that Secretary Chu will speed up the approval process in a responsible way to permit producers of LNG to export their products to consumers around the world."

Where's the Outrage for Evil Ticketmaster?

"Ticket scalpers" have a tough time.  Everybody seems to despise them: musicians, music and sports fans, promoters, sports teams, and concert venues.  "Scalpers" are accused of "cheating" people (see sign above), and musicians like LCD Soundsytem call them really, really bad names like "pieces of f***ing shit," "scalping scumf***s and "shitbags."  Wow!  You would think they were talking about Osama bin Laden, Hitler, or Jerry Sandusky, not a seller engaged in a voluntary, market transaction with a willing buyer, sometimes for a ticket selling below face value!

Well, how about some outrage for the really, really, truly evil bad guys and ticket-selling monsters - Ticketmaster. Have you checked their fees and paperless ticket restriction lately?  If not, here's what the evil, anti-competitive, anti-fan ticket monopolist is doing, using the Eric Church concert in October at the Joe Louis Arena as an example:


Let's summarize

1. If you purchase a $47.50 general admission "paperless ticket," you're hit with a whopping $11.30 ticket charge, which is 24% of the ticket price (see above)!

2. If you purchase a $37.50 reserved seat in the "upper bowl," you'll pay a 29% ticket fee, or $11.05 (see above). 

3. Tickets for the Eric Church concert are "paperless," and for this show they are NON-TRANSFERABLE, and the ORIGINAL TICKET PURCHASER MUST ATTEND THE EVENT.  In other words, you can NOT sell the ticket after it's purchased, even for a price below face value.  And if you get sick or can't attend the concert, too bad, there's NO way to transfer the ticket. You can't even give it away.  Moving towards "paperless ticketing" is Ticketmonster's strategy of trying to kill the secondary market, which then creates a new set of anti-consumer, anti-fan outcomes by taking away a fan's property rights to his or her ticket, and creating fan inconveniences, see next item.

4. If you attend the concert with your friends and you bought four tickets together, you MUST all enter the venue at the same time as a group with the person who purchased the ticket, who must present a photo I.D. and the credit card used to purchase the tickets.  

Is there anything that can be done to challenge the evil Ticketmonster?

Well, comedian Louis C.K. is going up against both Ticketmonster and ticket scalpers by selling tickets directly on his website for $45 to his upcoming national tour, here's from a long rambling message on his website:

"Tickets across the board, everywhere, are 45 dollars. That's what you'll actually pay. In every case, that will be less than anyone has actually paid to see me (after ticket charges) in about two years and in most cases it's about half of what you paid last year.
Making my shows affordable has always been my goal but two things have always worked against that. High ticket charges and ticket re-sellers marking up the prices. Some ticketing services charge more than 40% over the ticket price and, ironically, the lower I've made my ticket prices, the more scalpers have bought them up, so the more fans have paid for a lot of my tickets.

By selling the tickets exclusively on my site, I've cut the ticket charges way down and absorbed them into the ticket price. To buy a ticket, you join NOTHING. Just use your credit card and buy the damn thing.

Also, you'll see that if you try to sell the ticket anywhere for anything above the original price, we have the right to cancel your ticket (and refund your money). this is something I intend to enforce. There are some other rules you may find annoying but they are meant to prevent someone who has no intention of seeing the show from buying the ticket and just flipping it for twice the price from a thousand miles away."

MP: It's not clear yet how he'll prevent tickets from being sold above face value, but at least Louis C.K. has cut out the ticket monopolist by selling tickets directly to his fans, and we can expect to see more of that in the future.  Charging service fees of 20-30-40% to process a ticket order that is both paper-less and now almost cost-less using online technology seems to be clearly unsustainable. Hopefully, fans will start to re-direct their frustration over high ticket prices from secondary markets (which generate huge benefits for both ticket sellers and buyers) towards the evil monopolist - Ticketmonster!

Walmart's Everyday Low Prices to Go Even Lower in Canada on 10K Items, Saving Shoppers Millions

Bloomberg News -- "Target hasn't opened a single store in Canada, and already Wal-Mart wants Canadians to know it's the price leader north of the border. Wal-Mart Canada will lower prices on 10,000 products in July. The company called the sale, which it says will save customers $50 million next month, the biggest in Wal-Mart's 18-year history in Canada.

While Target's Canada debut is at least six months away, part of Wal-Mart's strategy is to get out front in the brand messaging wars.  Minneapolis-based Target plans to open more than 100 stores in Canada starting next year. Last year, Target paid $1.85 billion to acquire the leases of as many as 220 Zellers stores, a Canadian discounter, with plans to convert many of them into Targets."

MP: Some of the economic lessons here are: 1) consumer sovereignty, 2) intense "cutthroat" competition is good for consumers, 3) Walmart's everyday low prices provide obvious direct benefits and cost-savings to its own customers, but also provide indirect benefits and cost-savings to all of those customers who may never shop at Walmart and only shop at Target or other retailers.  Reason? Walmart's low prices provide a powerful form of price discipline on all of its competitors, who would be able to charge higher prices in the absence of Walmart.    

Bottom Line: Walmart is the consumer's BFF, even for those consumers who NEVER shop there.

Cartoon of the Day


More Signs of a Real Estate Recovery

More reports below on strong double-digit gains in home sales for May as high as 32% for Maine, and some increases in median home prices, including a 22% gain in Miami condo prices in May compared to last year.  

1. Utah: May sales up 11.8% from May 2011; 12th month in a row that home sales have grown year-over-year. Realtors also say this is the strongest January-to-May sales period since 2007.

2. MaineMay sales up 32% from May 2011; and median sales price up by 7.4%.

3. Connecticut: May sales up 12.3% from May 2011; median sales price up 2.4%.

4. New Hampshire: May sales up 27.7% from May 2011; median sales price down by 2.4%.

5. Rhode Island: May sales up by 15% from May 2011; median sales price down 7%.

6. Wisconsin: May sales up by 18.9% from May 2011, the 11th consecutive month of a double-digit increase from the same month a year earlier; median sales price up by 1.5%. Through May, sales for 2012 are up 20.2% from the same period last year.

7. Miami: May sales up by 14% from May 2011, median sales price for single family homes up by 6%, condo prices by 22%.

In another positive indicator for the real estate industry, the chart below shows the "S&P Homebuilders SPDR" (XHB), an ETF that replicates the homebuilding portion of the S&P Total Markets Index (blue line), compared to the S&P500 Index (red line) over the last six months.  While the overall stock market (S&P 500) has increased by about 5% since January, the ETF of homebuilders' stocks has increased by 20%.    


Foreign Workers Help Fill Jobs in ND Oil Patch


WILLISTON, N.D.--"With the nearby oil boom draining this city of many of its service workers, businesses here are relying on a cultural-exchange program for foreign college students to keep the local economy humming.

More than 500 foreign students—from Thailand, Jamaica and about a dozen other countries—are staffing nearly every hotel, car wash and fast-food place in town, tending to the troops of roughnecks from the oilfields.

 "Without them, I don't know what we'd do," said Ward Koeser, mayor of this city of 16,000, citing long lines, slow service and limited hours at stores and restaurants before the students arrived."

Williston and the surrounding area face a rare problem in today's economy: more jobs than workers. As of May, the county surrounding Williston had nearly 1,700 unfilled jobs and 240 people unemployed. The unemployment rate is 0.7%. Since 2006, when new drilling technology opened up the region's shale reserve to oil production, the northwest corner of North Dakota has added 30,000 jobs—a 136% increase. Those jobs were filled by many former service workers in Williston—along with mostly male workers who flocked to the oil jobs from across the country."

Thursday, June 28, 2012

Energy Milestone: Natural Gas and Coal Had the Same Share of Electricity Generation in April


The Energy Information Administration reported this week that for the first time since it began keeping monthly records, "natural gas and coal had the same share of total net generation of electricity at 32% during April 2012 (see chart above)."

This is one more reason that America's natural gas windfall represents "one of the most important developments for the economy in the last 60 years," as I reported earlier today.   In the process of creating thousands of jobs and saving natural gas customers billions of dollars, the shale revolution has also significantly reduced carbon emissions as electricity producers have switched from dirty coal to clean, cheap natural gas.  It's really no exaggeration to say that the United States really managed to "hit the energy jackpot" with shale gas. 

HT: Robert Kuehl

U.S. Housing Market: The Evidence Continues to Mount That We're Past the Bottom


The Economist -- "In unsurprising but good news, Case-Shiller reported new home price data this week that showed a definitive upward move in markets across the country. From March to April, Case-Shiller's 10- and 20-city indexes rose 0.7%, seasonally adjusted. All but three of the tracked markets saw month-on-month increases. Half of tracked cities notched year-on-year price increases in April.

Price rises have looked imminent for some time. Sales figures have been trending upward and inventory numbers are at remarkably low levels. Rents have also been increasing, making home purchases look ever more attractive. There is still an ample stock of distressed and bank-owned homes to work off, but America seems to have achieved bottoms for both sales and prices. Housing markets have adjusted.

This turning point could be a source of considerable strength for the American economy. Rising prices should have a direct wealth effect for owners and should sharply limit new defaults and foreclosures. As a result, mortgage lending should begin to look much more attractive. A return to something like normal lending conditions could turn fledgling increases in sales and construction into strong increases, boosting GDP and construction employment."
 
MP: The top chart above shows the monthly FHFA House Price Index (HPI) through April, based on the purchase prices of houses financed with Fannie Mae or Freddie Mac mortgages.  The April index was 3% above its year-ago level, and 3.3% above what is apparently the cyclical low point for the HPI in March of last year.  The 3% annual gain in the HPI was the largest yearly increase since November 2006, five and-one-half years ago (see bottom chart).

This FHFA index of national home prices is more comprehensive geographically than the major metro-area based Case-Shiller index, and includes both small cities and major cities like Houston (not one of the 20 metro areas in Case-Shiller), where median home prices in May reached a new record-high level.  The HPI is also available now for the month of April, whereas the most recent Case-Shiller index is a three-month average of February-April.

Bottom Line: The evidence continues to mount that we've passed the bottom of the U.S. housing market, as we continue to see strong sales gains for new and existing homes, a two-year high for pending home sales, and gradual increases in home prices.  Look for more improvements in the real estate market going forward through the rest of the year.

Natural Gas Windfall is One of The Most Important Economic Developments in the Last 60 Years

On an energy-equivalent basis, natural gas remains 87% cheaper than oil, equivalent to a price of $14 per barrel.

Martin Neil Baily, senior fellow in Economic Studies at the Brookings Institution, and Philip Verleger, president of PKVerleger and visiting fellow at the Peterson Institute for International Economics, emphasize in their recent CNN article that America "hit the energy jackpot" with oil and shale gas, making it "one of the most important developments for the U.S. economy in the last 60 years."  Here are some excerpts:

"Shale extraction... is pushing down energy prices and creating many new opportunities for jobs, investments and manufacturing.

And the new innovations are unique to the United Sates. Although other countries will exploit shale, none will come close to the low costs in the U.S. That's because the U.S. has a unique governmental structure in which many powers remain with the states, along with a very competitive market for the product, as opposed to the monopolies and oligopolies that control the market in almost every other country.

While it may sound like the latest energy fad, the shale boom is for real and a serious game changer because of its size and potential longevity. Based on equivalent amounts of energy, natural gas has been about half as expensive as oil for many years (MP: See chart above, gas has actually been closer to 80% less expensive since the use of fracking increased significantly in 2008-2009).

Cheap gas may not be enough to offset the drag of a slowing global economy this year, but it will boost long-term investment, help the beleaguered manufacturing sector and increase exports.

Building petrochemical plants could suddenly become attractive in the United States. Manufacturers will "reshore" production to take advantage of low natural gas and electricity prices. Energy costs will be lower for a long time, giving a competitive advantage to companies that invest in America, and also helping American consumers who get hit hard when energy prices spike.

After years of bad economic news, the natural gas windfall is very good news. Let's make the most of it."

Venture Capitalists: Doing More with Less

The destruction of farm jobs, and doing "more with less," since the 1700s has brought about economic prosperity.
In the Freeman, economist Steve Horwitz responds to the Doonesbury cartoon below and comes to the defense of maligned venture capitalists like Bain, who generate huge benefits for society by "doing more with less":  

"Innovation enabled us to create more food with less work (see chart above), freeing humans to create other valued products through other jobs. This destruction of jobs and reallocation of labor and capital are the true sources of prosperity. Bain Capital's attempts to allocate resources more effectively can lead to big-time profit for it and its investors—and increased prosperity for everyone else even as jobs are destroyed in the process. 

Government’s attempts to create jobs do not do more with less. On the contrary, politicians get votes by creating as many jobs as possible, and they have no incentive to care about the price tag or what if anything those jobs produce. In other words, politicians will tend to do less with more. That’s called waste

Profits guide firms like Bain to meet people’s needs. This can lead to a growth in employment for some companies and a drop for others. But ultimately it means that resources are better allocated, increasing prosperity for all. When more is done with less throughout a market economy, billions of people are made better off, which only shows that firms like Bain are not vultures preying on the dead, but bees bringing the pollen of life from plant to plant. They are about profits and people."

Click to enlarge.


$29,409 Per Student Cost of D.C. Public Schools Puts Them In Elite Group, But Without the Results

Judging by the expenditures per student of almost $30,000 (Andrew Coulson at Cato crunches the numbers), the "pricy" District of Columbia public schools are among the most elite of all of the D.C.-area schools, see the chart above.  The $29,409 per-student educational price tag for D.C. schools is just slightly below two of the area's most prestigious private schools - Georgetown Prep ($29,625), founded in 1789 as the nation's oldest Jesuit school, and Sidwell Friends School ($33,000), the "school of choice" for President Obama's daughters.  It's also almost twice as expensive as Bethesda-based St. John's College High School ($15,950) and almost three times as expensive as D.C.'s Archbishop Carroll ($10,500).

However, judging by the graduation rate of D.C.'s public high schools of only 58.6% for the Class of 2011 (compared to the national average of 75.5% for public schools), District taxpayers might wonder why they're getting such poor results from such an elite level of spending.  For every 100 students who graduated from D.C. high schools in 2011, there were 71 of their freshman classmates who either dropped out or didn't graduate on time.  At one of D.C.'s worst-performing high schools - Cardozo Senior High - fewer than 40% of its students graduated in 2011, which means that for every 100 students who graduated, there were 154 of their freshman classmates who did not graduate.  

It wouldn't be so troubling that the cost to educate students in D.C. school is comparable to the tuition of some of the most elite, D.C.-area private-schools, and 2-3 times the tuition of some of the area's private Catholic high schools, if the graduation rates at D.C. public schools weren't so miserably low.  But when public school spending is so high in the District of Columbia (more than total state spending in both North Dakota and South Dakota), and the results are so miserable, you would think there would be more political support for alternative approaches like the "D.C. Opportunity Scholarship Program," which President Obama and many Democrats oppose.  Obama tried to kill the program by de-funding it, but the program was rescued by Republicans John Boehner and Joe Lieberman. Unfortunately, the president and Democrats are "more interested in doing right by teachers unions than doing right by ghetto kids confined to failing schools," as Jason Riley pointed out in the WSJ

Bottom Line: Russ Roberts reminds us that the most costly goods and services are often the ones that politicians decide should be "free," like education, health care and housing.  The $29,409 per-pupil cost for "free" public education in D.C. is a perfect example, and the future trend seems clear: spending on public schools will continue to increase and the academic results will continue to decline.  

Wednesday, June 27, 2012

Cartoon of the Day


Real Estate Recovery Watch

1. "Pending home sales bounced back in May, matching the highest level in the past two years, and are well above year-ago levels, according to the National Association of Realtors.  Both monthly and annual gains were seen in every region.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 5.9 percent to 101.1 in May from 95.5 in April and is 13.3 percent above May 2011 when it was 89.2.  The data reflect contracts but not closings. The index also reached 101.1 in March, which is the highest level since April 2010 when buyers were rushing to beat the deadline for the home buyer tax credit."

Lawrence Yun, NAR chief economist, said longer term comparisons are more relevant.  “The housing market is clearly superior this year compared with the past four years.  The latest increase in home contract signings marks 13 consecutive months of year-over-year gains,” he said.  “Actual closings for existing-home sales have been notably higher since the beginning of the year and we’re on track to see a 9 to 10 percent improvement in total sales for 2012.”

2.  DQ News --"The median price paid for a home in the Phoenix area last month rose to a 41-month high, increasing on a year-over-year basis for the sixth month in a row. The region’s overall sales trended slightly higher as mid- to high-end activity jumped again, compensating for a sharp ongoing slide in sales of lower-cost homes, especially foreclosures. reported. 

In May, buyers paid a median $150,000 for all new and resale houses and condos sold in the Phoneix metro area. It was the highest median for any month since December 2008, when the median was $154,000. Last month’s median rose 5.6 percent from April and rose 25.0 percent from May 2011. The median's 25.0 percent year-over-year increase in May followed annual gains of 18.3 percent in April, 13.8 percent in March, and 7.5 percent in each of the prior three months."

Markets In Everything: Bone Marrow, Finally



MSNBC -- "Certain bone marrow donors could soon be compensated for their life-saving stem cells after federal officials declined to take the matter to the U.S. Supreme Court, allowing a lower court order to become law. At least one agency, MoreMarrowDonors.org, hopes to begin a pilot program offering up to $3,000 in scholarships, housing vouchers or charity donations -- but not cash -- in exchange for matching donations of marrow cells derived from blood. 

“This decision is a total game-changer,” said Jeff Rowes, a senior attorney with the Institute for Justice, which filed the lawsuit three years ago on behalf of cancer victims and others seeking bone marrow matches. “Any donor, any doctor, any patient across the country can use compensation in order to get bone marrow donors.” 

That may be the effect of the decision by U.S. Attorney General Eric Holder to forgo a high court review of a 9th U.S. Circuit Court of Appeals ruling that certain kinds of bone marrow donations are exempt from federal rules banning compensation. Under the ruling, donors who provide marrow cells through a process similar to blood donation, called peripheral blood stem cell apheresis, can be compensated because those cells are no longer regarded as organs or organ parts as defined in the National Organ Transplant Act.

About 10,000 people need bone marrow transplants each year, but only about half receive them. The Institute for Justice estimates that about 3,000 die waiting for matches."

See previous CD posts on legalizing bone marrow compensation here and here.  Here's a press release from the Institute for Justice. 

N. Dakota Leads the Country in Q1 Income Growth

From the BEA today

"State personal income growth accelerated to 0.8% in the first quarter of 2012, from 0.4% percent in the fourth quarter of 2011. Personal income rose in 47 of the 50 states, fell in Kansas and Mississippi, and was unchanged in Oklahoma. The percent change across states ranged from 2.3% in North Dakota to -0.3% in Mississippi."

MP: Once again, the energy-rich, economic miracle state of North Dakota led the country on a key economic measure, this time with the highest personal income growth in the January to March period of 2.3% (9.2% at an annual rate), almost three times the national average of 0.4%.  No. 1 North Dakota's income growth in Q1 was a full one-half percent above second place Nebraska, which had 1.8% income growth.   

Tuesday, June 26, 2012

Markets in Everything: Digital Hitchhiking App

There's an interesting new ridesharing app available through Apple called SideCar, which connects drivers and passengers, kind of like a modern form of hitchhiking in the digital age:

"SideCar is a community-based, real-time ridesharing marketplace. Our proprietary technology, deployed via a user-friendly mobile app, instantly connects people with extra space in their cars to those who need to get from one place to another. Spontaneous carpools. SideCar is an easy, safe, reliable, and completely donation-based way to get from here to there. Not to mention fun!

SideCar is neither a taxi nor limo. It’s a ride-matching app that connects people who need rides with community drivers who can give them rides on the fly. All payments are completely voluntary and are handled via a cashless, donation-based system between smartphones."

Note: It's only available right now in San Francisco, with plans for expansion to other parts of the country.

HT: Fred Dent