Professor Mark J. Perry's Blog for Economics and Finance
Saturday, July 07, 2012
Seattle, Pittsburgh, and Denver Real Estate Markets Sizzle in June, Double-Digits Gains in Sales, Prices
2. In the 13-county Pittsburgh-region, the number of residential homes placed under agreement increased 18.6% in June 2012 versus June 2011, while average home sale price increased 13% ($194,500 versus $172,177).
Update: Add Denver to the list of hot real estate markets, with a 20% increase in June home sales and a 12% increase in price.
Chart of the Day: Federal Drug Prisoners
Besides the fact that federal drug prisoners far outnumber any other category of criminal offenders, there is another important characteristic that distinguishes drug offenses from other federal crimes like arson, extortion, robbery, burglary, homicide, and embezzlement - almost all of those other crimes have identifiable victims who have been clearly victimized, e.g. robbed, assaulted, murdered, etc. In contrast, drug offenders were mostly involved in "crimes" that frequently had no identifiable victim, i.e. crimes without a victim, or "victimless crimes." Hopefully, future generations of more enlightened Americans and political leaders will look back on the War on Drugs as a shameful chapter of U.S. history and a blemish on America's long tradition of individual liberty and limited government.
U.S. and Bakken Oil Updates
The Coming Golden Era and Next U.S. Boom, If We Can Unleash the Animal Spirits of the Market
June U.S. Rail Traffic: Ongoing Economic Growth
Some highlights from yesterday's monthly report from the American Association of Railroads (AAR):
Intermodal: U.S. railroads originated 996,022 intermodal containers and trailers in June 2012, up 5.2% (49,168 units) over June 2011 and an average of 249,006 units per week. That’s the highest average for any June in history and the third highest average for any month in history (behind August 2006 and October 2006, see top chart above).
In the second quarter of 2012, intermodal loadings were up 4.0% (121,369 units) over the second quarter of 2011. For the first six months of 2012, intermodal originations were up 3.3% (193,541 containers and trailers) over the first six months of 2011.
Through June, year-to-date 2012 U.S. intermodal originations were slightly ahead of 2006, setting up the very real possibility that 2012 will be the highest-volume intermodal year ever for U.S. railroads. The recovery since 2009 has been remarkable. In the first six months of 2009, average weekly intermodal loadings were 185,075 containers and trailers. In the first six months of 2012, the average was up to 232,682 containers and trailers, a 25.7% increase. Assuming 240 intermodal units per train, the improvement in 2012 over 2009 is equal to nearly 200 additional full-size intermodal trains per week.
Carloads: U.S. rail carload traffic in June 2012 wasn’t as encouraging as intermodal traffic, but it was better than it’s been lately. U.S. freight railroads originated 1,140,271 carloads in June, an average of 285,068 carloads per month and down 1.3% from June 2011.
That’s the lowest percentage decline in five months, mainly because coal carloads weren’t as lousy as they have been. Coal carloads in June 2012 averaged 114,485 per week, the highest weekly average in four months and down just 6.2% from June 2011.
Excluding coal, U.S. rail carloads were up 2.2% (14,979 carloads) in June 2012 over June 2011. That’s their lowest year-over-year monthly increase in six months, though the weekly average in June 2012 (170,583) was the second highest (just behind April 2012) since October 2008 (see bottom chart above).
Excluding coal and grain, U.S. carloads in June 2012 averaged 151,363 per week in June 2012, up 4.2% (24,138 carloads) over June 2011 and their highest weekly average since August 2008.
U.S. carloads of petroleum and petroleum products continued their startling growth in June 2012, rising 51.0 percent (14,177 carloads) over June 2011.
Carloads of motor vehicles and parts continued to grow rapidly in June 2012 as well, with U.S. carloads up 24.5% (12,957 carloads) and U.S. plus Canadian carloads up 22.5% (16,545 carloads) compared with June 2011.
Seasonally adjusted total U.S. rail carloads were up 2.9% in June 2012 over May 2012. Seasonally adjusted U.S. rail intermodal traffic was up 3.8% in June 2012 over May
Bottom Line: The AAR points out that rail freight is a "derived demand" industry, meaning that the demand for rail delivery occurs as a result of demand elsewhere in the economy for the products that railroads haul (inputs, raw materials, parts, lumber, chemicals, autos, etc.). Therefore, weekly and monthly rail traffic activity is a useful gauge of broader economic activity, especially of the "tangible" economy.
Except for a decline in coal and grain deliveries this year, most other products delivered by rail have been increasing, and overall intermodal rail traffic was the highest ever for the month of June, and on track to set a new annual record in 2012. Rail car traffic excluding coal was the highest for the month of June since 2008, and rail car loadings have been at 4-years highs in each month this year. Overall, the June report from the AAR on U.S. rail activity suggests that the economy is continuing to make gradual improvements, and there is nothing in the report that would suggest that the economy is heading towards a recessionary cliff.
Friday, July 06, 2012
Louis C.K. Battles Ticket Scalpers Using Basic Economics: He's Increasing Supply by Adding Shows
Comedian Louis C.K. is battling ticket scalpers (see recent related CD post here) for his upcoming national tour using some basic principles of economics: he's increasing the supply of tickets by adding shows to meet fan demand. The market conditions that allow ticket
When enough tickets are supplied to satisfy fan demand, the secondary market for tickets above face value is limited. Louis C.K. apparently understands that he can combat the ticket scalpers by increasing the supply of tickets in markets where his originally scheduled shows sold out, and that's what he's doing. So far Louis C.K. has added shows in New York City (two shows added), Tampa (one show added), Fort Lauderdale (one show added), Seattle (one show added), St. Louis (one show added), Dallas (one show added) and Austin (one show added). In most cities, if his first show at 7:30 or 8 p.m. sold out, he's added a second show at 10 p.m.
Musicians, artists and other performers should take an economics lesson from Louis C.K. and realize they have been largely responsible for creating a secondary market for tickets to their performances and they have been supporting ticket scalpers by under-supplying tickets relative to fan demand. Increase the number of tickets to satisfy fan demand, and the secondary market for tickets above face value evaporates.
Coal, Gas Shares of Electricity Equal for 1st Time
From the EIA website today -- "Recently published electric power data show that, for the first time since EIA began collecting the data, generation from natural gas-fired plants is virtually equal to generation from coal-fired plants, with each fuel providing 32% of total generation (see chart above). In April 2012, preliminary data show net electric generation from natural gas was 95.9 million megawatthours, only slightly below generation from coal, at 96.0 million megawatthours."
See related CD post here.
"Markets" in Everything: Free Online Textbooks
The rising cost of textbooks—along with the rise of easy-to-use publishing tools online—has helped drive the popularity of open-source materials and professors’ taking a do-it-yourself approach to textbook publishing. The Chronicle of Higher Education features three professors who wrote their own textbooks and are distributing them free.
Markets in Everything: Hacker Hostels
Thursday, July 05, 2012
Economics 101 Tells Us That the War on Drugs is a Complete Failure: Prices Are Going Down, Not Up
Today's GPA-Inflated and Tuition-Inflated World
That's what was suggested in a recent CD post about grade inflation at the University of Minnesota, based on the Star Tribune article "At U, concern grows that 'A' stands for average." In the article, a Minnesota undergraduate student explained the rising GPA trend by saying "We live in a grade-inflated world." A University of Minnesota anthropology professor quoted in the article suspects that attitude among students can be traced to rising college tuition, i.e. today's "tuition-inflated world." The professor commented "They're paying for it, and they worked really hard, and they put in time, and therefore they think they should get a good grade."
I concluded in the post that: The connections among "grade inflation, "tuition inflation," "college textbook inflation," and exponentially rising student loan debt are important. Perhaps students find it easier to accept rising tuition, higher textbook prices, and $25,000 in average student loan debt if they at least graduate with mostly As and a GPA above 3.0? Even if they can't find a job, they can take pride in having "earned" an inflated GPA?
The chart above confirms the historical relationship between rising college tuition (based on the CPI for college tuition and fees) and the rising GPA at the University of Michigan, where grade inflation since the 1970s closely reflects the national trend (data here). With the caveat that correlation doesn't prove causation, there does appear to be a statistical relationship (association) between college tuition and average college GPAs, which have both risen together over time in a similar pattern.
Markets in Everything: Rent Control Millionaires
Thursday Economic Reports: Lookin' Pretty Good
2. (Reuters) - The number of U.S. businesses and consumers filing for bankruptcy fell 14 percent in the first half of 2012 and could end the year at the lowest level since before the 2008 financial crisis, according to data released today by Epiq Systems and the American Bankruptcy Institute.
3. The fixed rate for 30-year mortgages fell to another fresh low this week of 3.62%, according to Freddie Mac. The fixed rate for 15-year mortgages also dropped to a new low of 2.89%.
4. From the American Association of Railroads today: "Intermodal volume for the week totaled 253,497 trailers and containers, up 7 percent compared with the same week last year and the fifth highest-volume intermodal week ever for U.S. railroads."
5. "Planned layoffs fell to a 13-month low in June, as U.S.-based employers announced job cuts totaling 37,551 during the month. That is down 39% from the 61,887 announced job cuts in May, according to today's report on downsizing activity from Challenger, Gray & Christmas. The June total is 9.4% lower than the 41,432 planned job cuts announced during the same month a year ago. It is the lowest monthly total since May 2011, when employers announced plans to eliminate 37,135 workers from their payrolls."
6. "U.S. unemployment, as measured by Gallup without seasonal adjustment, was 8.0% in June, unchanged from May, but significantly better than the 8.7% from a year ago. Gallup's seasonally adjusted number, based on applying an estimate of the government's June adjustment, is 7.8%, an improvement from 8.3% in May, and down considerably from 8.5% in June 2011. Both the unadjusted and the adjusted numbers are at least tied for the lowest Gallup has recorded since it began collecting employment data in 2010."
7. Intrade odds of a U.S. recession this year? Less than one-in-six chance at 15.8%.
Markets in Everything: Android-based Healthcare Smartphone Packed with Medical Sensors
MedGadget -- "LifeWatch AG (Neuhausen am Rheinfall, Switzerland) has presented the LifeWatch V (see video above), a feature-packed healthcare smartphone for patients and health conscious consumers. At its core, the LifeWatch V is a pretty standard Android-based phone. However, what sets it apart is the presence of a plethora of medical sensors powering seven health tests, combined with wellness-related applications and cloud-based services. The health tests are operated by placing a finger on one of the sensors, allowing users to measure, track and analyze their medical measurements, take corrective action, plan meals, activities and more.
There is no information on pricing or availability yet, but LifeWatch intends to launch the healthcare solution smartphone world-wide in collaboration with local partners."
Cars.Com: Japan-Based Honda and Toyota Now Make 4 of Top 5 "American-Made Cars" in U.S.
|Rank 2012||Make/Model||U.S. Assembly Location||Rank 2011|
|1||Toyota Camry||Georgetown, Ky.;|
|2||Ford F-150||Dearborn, Mich.;|
|3||Honda Accord||Marysville, Ohio||2|
|4||Toyota Sienna||Princeton, Ind.||6|
|5||Honda Pilot||Lincoln, Ala.||-|
|6||Chevrolet Traverse||Lansing, Mich.||8|
|7||Toyota Tundra||San Antonio||9|
|8||Jeep Liberty||Toledo, Ohio||-|
|9||GMC Acadia||Lansing, Mich.||10|
|10||Buick Enclave||Lansing, Mich.||-|
Although the "American-Made Index" is interesting, it also helps highlight how meaningless the whole concept of "American-made" has become in a highly globalized industry like motor vehicles with global sales, global production, and global supply chains. Does it really matter any more that a Ford Focus has lower domestic content than a Toyota Camry? Most consumers shop on price and value and don't consider domestic content, although 23% of consumers surveyed by Cars.com last month still say that "they would only consider buying a car from the Detroit Three." Well, at least that means that 77% of American consumers are thinking clearly about this issue, and shopping sensibly on price, value, quality and service, regardless of the national origin of the automaker or the domestic content.
But the old traditions of driving only "American cars" and demonizing "foreign cars" die hard in places like Flint, Michigan, where you still find signs like these at UAW offices.
Wednesday, July 04, 2012
AMA: The Strongest Trade Union in the U.S.A.
As a follow-up to the post below on Milton Friedman's Mayo Clinic talk on the "economics of medical care," I present the two charts above.
The top chart shows the number of annual graduates from U.S. medical schools (AMA data here) per 100,000 U.S. population, from 1962 to 2011. Between about 1970 and 1984, there was a significant increase in medical school graduates that pushed the number of new physicians from 4 per 100,000 Americans in 1970 to almost 7 per 100,000 by 1984. Since 1984, the number of medical school graduates has been relatively flat (see red line in bottom chart), while the population has continued to grow, causing the number of new physicians per 100,000 population to decline to only 5.3 per 100,000 by 2008, the same ratio as back in 1974. Over the last few years the number of medical school graduates has increased slightly, and the ratio of graduates per 100,000 increased to 5.56 last year, the highest in a decade.
The bottom chart compares the actual number of medical school graduates (red line) to the projected number of graduates if the number of new physicians had keep pace with U.S. population increases, i.e. the ratio of graduates per 100,000 Americans had stayed at the 1984 level of 6.91. In that case, we would now be graduating close to 22,000 new doctors annually, and the cumulative increase in medical school graduates from a rate of 6.91 per 100,000 population over the last 27 years would mean that we would have 84,000 additional physicians today.
In most professions, as the population grows and the demand for those occupations increase, we would expect to see an increase in the number of people employed in those professions. Over the last 25 years, the U.S. population has both increased in size, and gotten significantly older on average due to increasing life expectancy, and both of those factors would put upward pressure on the demand for physicians. But in the case of medicine, the supply of students entering medical schools has been restricted relative to the growing population, leading to an insufficient supply of doctors, and higher-than-market wages. This restriction on the supply of doctors relative to a growing population is one example of the "power of organized medicine" that Milton Friedman talks about in his lecture at the Mayo Clinic.
Also, in his classic 1962 book Capitalism and Freedom, Dr. Friedman describes the American Medical Association (AMA) as the "strongest trade union in the United States" and documents the ways in which the AMA vigorously restricts competition. For example, the "Council on Medical Education and Hospitals" of the AMA approves both medical schools and hospitals. By restricting the number of approved medical schools and the number of applicants to those schools, the AMA effectively limits the supply of physicians, which increases their wages, and raises the overall cost of medical care.
Tuesday, July 03, 2012
Milton Friedman's Response to Obamacare? The "Economics of Medical Care" from 1978 at Mayo
Markets in Everything: Vacation Photographers
Tuesday Night Links
Recession? This volume of activity for new car sales in June and sales YTD is certainly not consistent with an economy teetering on the edge of a recession. Update: See chart below of the percentage change in car sales from the same month in the previous year.
3. June real estate reports are just starting to come in, and Nashville is reporting a 21% increase in June home sales compared to last year, and a year-to-date increase of 24.5% compared to the first six months last year. The average price for a Nashville condo sold in June increased almost 7% over last year, while the average home prices rose by 3.2%.
5. Barack Obama's re-election odds on Intrade have been rising for the last two weeks and have increased now to 56.3%, the highest level since May. Meanwhile, Romney's Intrade odds have been falling, and are now below 41% for the first time since May.
Michelle Obama Calls On States to Reduce Regulatory Burdens for Occupational Licensing
Monday, July 02, 2012
More Shockingly Good News from Shale Gas: CO2 Emissions Will Likely Fall This Year to 1991 Levels
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
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
"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
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
Sunday, July 01, 2012
Spontaneous Order, Sometimes It Just Happens
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
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."
May Las Vegas Home Sales Highest Since 2006
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
Ray Charles Sings America the Beautiful
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
|Hong Kong, China||12.1|
|United Arab Emirates||14.5|