Wednesday, September 30, 2009

$500 Million of Missing Tax Revenue from The Rich; ECON 101: If You Tax Something You Get Less of It

ASSOCIATED PRESS -- Early data from New York show the higher tax rates for the wealthy have yielded lower-than-expected state wealth. Gov. David Paterson, who had always warned targeting the rich could backfire, fears that's just what happened.

Paterson said last week that revenues from the income tax increases and other taxes enacted in April are running about 20% less than anticipated. So far this year, half of about $1 billion in expected revenue from New York's 100 richest taxpayers is missing. State officials say they don't know how much of the missing revenue is because any wealthy New Yorkers simply left.

But at least two high-profile defectors have sounded off on the tax changes: Buffalo Sabres owner Tom Golisano, the billionaire who ran for governor three times and who was paying $13,000 a day in New York income taxes, and radio talk-show host Rush Limbaugh. Golisano changed his official address to Florida, and Limbaugh, who also has a Florida home, announced earlier this year that he was relinquishing his home in Manhattan.

Donald Trump told Fox News earlier this year that several of his millionaire friends were talking about leaving the state over the latest taxes.

Thanks to Jeff Perry.

Canada's Improving Real Estate Market - Three Consecutive Monthly Increases in Home Prices

Canadian home prices in July were down 5.1% from a year earlier, according to the Teranet-National Bank National Composite House Price Index. Though it was the eighth consecutive 12-month decline, it was also the first time in 13 months that prices in every region covered by the index were up from the month before. For the composite index it was a third consecutive monthly rise (see charts above). The trend reversal is consistent with improving market conditions for the country as a whole in recent months - more homes have been selling and fewer have been coming on the market.

MP: The three consecutive monthly increases in Canada's main House Price Index follows 8 consecutive monthly decreases, and is the largest cumulative three-month increase in about two years (see bottom chart above).

Entrepreneurship At Its Finest: Why We Need Them

The reason that entrepreneurs are so important to the economy is because their very existence and success depends on one key factor: Effectively solving other people's problems. Need some new product to make your life better off, or something that already exists but you want it cheaper, better, faster, or more conveniently to make you better off? The entrepreneurs are at your service.

Here's a great example of entrepreneurship at its finest, featured recently on Club for Growth and Marginal Revolution- the Big Box Deliveries service in NYC. From its homepage:

On average, New York City stores and delivery services are 147% more expensive for Non-Perishable items and 107% more expensive for Perishable items than for similar items at Costco. Big Box Deliveries will "split the savings" with you. Each Non-Perishable item for sale has a “Costco” price and the “Average New York City” price for the exact same item but with Costco-sized bulk packing (see samples above).

For instance, Charmin costs $20.19 at Costco for 30 rolls. If a customer were to purchase 30 rolls in New York City, on average, the price would be $42.18. We split the savings. The customer pays $31.19 and saves $11. The Average New York City price is derived from real prices at Fresh Direct, Fairway, Gristedes, D’Agostino’s, Food Emporium, Whole Foods, Duane Reade™, CVS, Staples, Petco, and Where there is no direct comparison for items, we use the overall average difference of 147.42% to calculate your final price.

They deliver 7 days a week to the Upper East and West sides of Manhattan, only to apartment buildings that have a doorman (doorperson?).

Markets in Everything: Deeply-Discounted Surgery for Cash, Payable in Advance

The Surgery Center of Oklahoma offers deeply-discounted surgery, payable in advance in cash or cashier's check, see a sample of prices above (click to enlarge).

From the FAQ section:

To keep our prices as low as possible, cashier's checks or cash are the methods preferred. Credit cards and personal checks cannot be accepted. Human resource departments or divisions of self-insured companies can make other arrangements if necessary.

Payment in full is required at the time service is rendered. No payment arrangements can be made. These deeply-discounted prices are otherwise not available.

HT: Jim DeLong via Nick Schulz

A Dirty Pun Tweaks China’s Online Censors in the World's Largest Cyber-Community

BEIJING -- The number of China's Internet users increased by 40 million to 338 million in January-June 2009, exceeding the total U.S. population, according to official news agency Xinhua. About 95% of towns and cities are connected to broadband Internet, Xinhua said. China has a population of over 1.3 billion people compared with the U.S. population of 307 million. The number of broadband Internet users in China increased by 10 million in the first half of the year to 93.5 million.

NY TIMES-- Government computers scan Chinese cyberspace constantly, hunting for words and phrases that censors have dubbed inflammatory or seditious. When they find one, the offending blog or chat can be blocked within minutes.

The grass-mud horse is an example of something that, in China’s authoritarian system, passes as subversive behavior (see video above). Conceived as an impish protest against censorship, the foul-named little horse has not merely made government censors look ridiculous, although it has surely done that. It has also raised real questions about China’s ability to stanch the flow of information over the Internet — a project on which the Chinese government already has expended untold riches, and written countless software algorithms to weed deviant thought from the world’s largest cyber-community.

Markets in Everything: Fantasy Sports Insurance

You’ve seen it time and time again… you spend your valuable TIME and MONEY preparing for your fantasy season… the anticipation of winning it all, drafting a team thatwould make any fantasy owner jealous, to have it all washed away with a major injury to your key player(s). NFL, MLB, NBA and NHL Team Owners carry disability insurance for key players on their team – Now Smart Fantasy Team Owners Can Too!

Tuesday, September 29, 2009

People Voting With Their One-Way U-Haul Rentals

Fortunately, the American people and businesses can vote with their feet, and with their one-way truck rentals, and that is apparently what the U-Haul data in the chart above show they are doing—moving away from places like Detroit and Providence with high unemployment and business-unfriendly environments, to cities like Fairfax, Fargo, and Houston that rank high for business climate in a new Forbes study on the best states for business.

Read my full post here at
The Enterprise Blog.

Real Estate Recovery: Phoenix, Miami, Las Vegas

PHOENIX -- A total of 8,639 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in August, down 15.5% from July but up 20.2% from a year ago. Total home sales have increased on a year-over-year basis for eight consecutive months. Last month’s sales were at the highest level for an August since 2006.

MIAMI -- In August, 7,178 new and resale houses and condos closed escrow in the metro area encompassing Miami-Dade, Palm Beach and Broward counties. That was down a relatively sharp 9.6% from July but still up 27.4% from 5,635 in August 2008. August marked the sixth consecutive month in which the region's sales have risen on a year-over-year basis.

LAS VEGAS -- A total of 4,716 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County) last month (August), down a record 11.2% from July but up 16.5% from a year ago. August marked the 12th consecutive month in which sales have risen on a year-over-year basis.

Source: DQNews

14th Straight Month of Pending Sales Increases for the Minneapolis Area Housing Market

Minneapolis Area Association of Realtors -- Home prices continue to show signs of strengthening in August. From March 2009 through August 2009 the median sales price has grown from $154,125 to $175,000. During the same period last year prices were flat. Prices are stablizing due to strong buyer demand—especially in the lower price ranges—buoyed by low mortgage rates and the federal tax credit for first-time home buyers. For the 14th consecutive month, there were more pending sales than there were the prior year. August saw 4,897 signed purchase agreements, up 11% percent from August 2008. With the tax credit expiring in November, closed sales should stay robust for at least the next two months. Time will tell what the market looks like after that, but there will be less inventory.

MP: The chart above displays some of the key August data for the Twin Cities real estate market - home sales increased by 14.5% compared to August of last year, and the months supply of housing inventory decreased by three full months, from 9.9 months in August 2008 to 6.9 months in August of this year.

Single Most Important and Revolutionary Factor for Economic Development and Empowerment?

Over the last several years, what has been the single most important and revolutionary factor for the economic empowerment of the world’s poorest people?

Hint: It’s not foreign aid, the World Bank, or the International Monetary Fund.

Hint: It has compensated for inadequate infrastructure such as bad roads and slow postal services, it has facilitated the flow of information, it has allowed emerging market economies to operate more efficiently, and it has helped unleash entrepreneurship in some of the poorest countries in the world. And having it is “almost like having a card to get out of poverty in a couple of years.”

Find out what “it” is
here, here and here.

U.S. Home Prices Increase for the Third Month in a Row For the First Time Since Spring 2006

NEW YORK (Reuters) - U.S. single-family home prices in July rose from the previous month, surpassing forecasts and bolstering the case for housing market stability after a three-year plunge, Standard & Poor's said on Tuesday. The S&P/Case-Shiller composite index of 20 metropolitan areas rose 1.6% in July from June, more than triple the estimate of a 0.5% rise found in a Reuters poll. This index rose 1.4% the month before. The 10-city index gained 1.7% in July after a 1.4% rise the previous month (see top chart above, data here).

"These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer's Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," David Blitzer, chairman of the index committee at S&P, said in a statement.

MP: The 1.61% July increase in the Composite-20 Index was the largest monthly gain since a 1.62% increase in April of 2005, and the period of three consecutive monthly increases in May, June and July of this year is the first time in more than three years that the index has increased three months in a row (see bottom chart above).

Markets in Everything: Carbon Offset Airport Kiosks

Three new kiosks with touch screens let travelers passing through SFO airport punch in an itinerary and purchase the appropriate carbon offset—calculated on the spot. These Climate Passport kiosks, the first in a U.S. airport, debuted yesterday and are located after security checkpoints near the entrances to Terminal 3 and international terminals A and G.

The offsets will fund two local projects: Garcia River Forest's planting of redwood and Douglas fir trees in heavily-logged Mendocino County and Dogpatch Biofuels, a bio-diesel fueling station based in San Francisco.


See related article "Carbon Offsets: Eco-Extortion, Green Guilt, and the Selling of Indulgences."

Monday, September 28, 2009

Questions for Protectionists: Is The National Zoo with Foreign Animals Unpatriotic & Un-American?

Is China Guilty of "Panda Dumping"?
I now live several blocks from the Smithsonian National Zoo in Washington, D.C. and have visited there twice in the last week to see the exotic, foreign, imported pandas, hippo, zebras, the 8-month old baby gorilla, tigers, lions, etc.

Based on an earlier CD post, here are some questions for the trade protectionists, many of whom reside right here in the DC area, including my new neighbor President Obama:

1. Is there any material difference between American zoos like the Smithsonian National Zoo spending millions or billions of dollars annually to acquire "foreign" animals from South America, Africa and Asia for their exhibits, and American consumers spending billions of dollars annually to acquire foreign products from those same parts of the world, like tires from China?

2. If patronizing a foreign car company or a foreign tire company is considered to be an unpatriotic, un-American act, wouldn't visiting a zoo to patronize foreign, imported animals like the Chinese pandas be equally unpatriotic and un-American?

3. Protectionists might argue that you cannot buy an American elephant, so the only choice for the National Zoo is to purchase one from Africa or India. But isn't it also true that American consumers cannot buy what they might consider to be uniquely British, Japanese or German engineering features in an American car? Just like you cannot purchase an American elephant, you cannot purchase an American Jaguar, Lexus or BWM can you?

4. Isn't naming professional sports teams after foreign animals (Tigers, Lions) somewhat unpatriotic? If a team is named for an animal, wouldn't it really be better to name teams after American animals instead? If you support "Buy American," shouldn't you also support a "Name American" practice for professional sports teams?

5. One might argue that the National Zoo didn't spend any money purchasing the Chinese pandas (pictured above), but then wouldn't that be a case of "predatory panda pricing," since the Chinese government and Chinese people provided the pandas to the American people for "less than the cost of production." Should the American people complain to the WTO or the International Trade Commission that China is guilty of "panda dumping"? If we're willing to accept gifts from the Chinese people in the form of free pandas, why would we complain about them providing tires or other products at less than the cost of production, or complain about gifts from the Chinese people in the form of what is pejoratively called "predatory pricing" or "dumping"?

Libertarian Purity Test

Take Bryan Caplan's Libertarian Purity Test here.

HT: Mike Munger

There's Hope: Even Michigan Economy Rebounds!

DALLAS/September 28, 2009Comerica Bank’s Michigan Economic Activity Index improved five points in August to 78, the highest reading since December 2008. Compared to its recent May low, the Index is now up eight points, or 11%. Year-to-date, the Index averages 73, down 14 points from the 2008 average.

“A surge in Michigan auto sales related to the cash-for-clunkers incentives accounted for about half of the rise in our index in August,” said Dana Johnson, Chief Economist at Comerica Bank. “Although car sales will undoubtedly be much weaker in coming months, the decline in our index due to that component will be at least partially offset by rising light vehicle production. Our index may not rise in September, but it looks increasingly likely that it will trend higher over the balance of the year as a gradually accelerating national recovery boosts the auto sector and other components of the Michigan economy.”

Health Care PSA Smackdown

Do we need a "Public Health Insurance Option"?

YES. "Save the Insurance Company Executives PSA."
Use this link if the video above doesn't play.

NO. "Save the Celebrities PSA."

From the No Insurance Club.
Try this link if the video above doesn't play.

Chicago Fed Index Increases for 7th Straight Month

The three-month moving average, Chicago Fed National Activity Index-MA3 , improved for the seventh consecutive month (see charts above). At –1.09 in August (up from –1.61 in the previous month), the CFNAI-MA3 suggests that growth in national economic activity was below its historical trend.The production-related indicators made a smaller positive contribution of +0.29 to the index in August compared with +0.45 in July. Industrial production increased 0.8% in August, down slightly from 1.0 percent in the previous month; and manufacturing production increased 0.6 percent in August after rising 1.4 percent in July. July and August marked the first consecutive increases in industrial production since November and December 2007.

MP: The Chicago Fed National Activity Index (CFNAI-MA3) has increased in each of the last seven months (February to August), the first period of seven consecutive monthly increases since the December 2001 to June 2002 period following the 2001 recession, see bottom chart above.

Cuba's Farms: From State-Run to Private

GOOD NEWS: Faced with the smothering inefficiencies of a state-run economy and unable to feed his people without massive imports of food, Cuban leader Raúl Castro has put his faith in compatriots like Esther Fuentes and his little farm out in the sticks.

If Cuba is searching for its New New Man, then Fuentes might be him. The Cuban government, in its most dramatic reform since Castro took over for his ailing older brother Fidel three years ago, is offering private farmers such as Fuentes the use of fallow state lands to grow crops -- for a profit. Capitalism comes to the communist isle? Not quite, but close. Raúl Castro prefers to call it "a new socialist model." But Fuentes gets to pocket some extra cash.

"The harder you work, the better you do," said Fuentes, who immediately understood the concept. Castro's government says it has lent 1.7 million acres of unused state land in the past year to 82,000 Cubans in an effort to cut imports, which currently make up 60% of the country's food supply.

BAD NEWS: One of the challenges facing private farmers is the lack of credit and investment. They can work their new farms, but they often don't have enough fertilizer, seed or fuel. There's not enough electricity to run water pumps, Fuentes said, and no one has pesticides.

"This a big problem," said Alvarez, a University of Florida professor. "The government gives the farmers some land, which is good, but they don't give them any inputs. So they tell them, 'Take your old machete and go and fight the sun and weather and save us.' "

~Washington Post article today "Cuba Pins Hopes On New Farms Run for Profit"

Sunday, September 27, 2009

Markets In Everything: Drive-Through Flu Shots

LEESBURG, Va. - Doctors and health departments are trying to meet the demand for the seasonal flu vaccination. Nurses in Leesburg Sunday offered a unique way to get the seasonal shot and Virginians turned out in droves. On Sunday, Leesburg residents had the opportunity to get a drive thru flu shot. Mattie Sherwood is a fan, saying you can't beat feeling the pinch in the comfort of your own car.

One Reason European Health Care Works: America

A 2006 article by Henry G. Grabowski and Y. Richard Wang in the peer-reviewed journal Health Affairs makes plain, the lion’s share of new chemical entities (NCEs)—that is, genuinely new drugs—are invented in the United States. Between 1993 and 2003, the authors found, 437 NCEs were introduced around the world. America was responsible for 152 of them—far more than any other country—with Japan coming in second with 88 and Germany a distant third with 42 (see chart above).

Why is this important? One reason for America’s drug dominance (though far from the only one) is America’s unsocialized medicine. Here, with the exception of a few programs like Medicaid and the VA system, the government doesn’t regulate the price of drugs, so when a company invents something big—the latest miracle cancer drug, say—it strikes it rich, making its executives hunger for more. Take away the profit motive, as government-run medicine often does by forcing drug companies to sell at discounted prices, and innovation will dry up.

So socialist Europe, by using American drugs is profiting from good old-fashioned American free enterprise. the lesson is to be skeptical of reports speaking glowingly of socialized health-care systems [MP:
Example here of a report cited earlier in this article], because those systems wouldn’t work nearly as well as they do without unsocialized American medicine.

~From "
The Pharmaceutical Umbrella," by Benjamin A. Plotinsky in City Journal

HT: Art Little

An Inconvenient Question: Did You Fly to the NYC Premiere of Climate Change Movie "Age of Stupid"?

MANILA (9/23/2009) - The much-awaited documentary "Age of Stupid" premiered globally in over 50 countries (including Antarctica) this week, sparking renewed calls for climate change action. The film, directed by British filmmaker and climate change activist Franny Armstrong ("If you're not fighting climate change or improving the world, you're wasting your life"), is set in the bleak scenery of 2055 where an archivist (played by Oscar nominee Pete Postlethwaite) is looking at 2008 archive footage that illustrate the signs and impacts of climate change.

The film's main premise is that climate change is happening now, often with alarming and disastrous effects, but humans are not doing more to stop it. The film has served as another rallying point for the climate change campaigns of many international environmental groups like Greenpeace, which is actively promoting the film worldwide.

MP: In the video above, journalist/filmaker Phelim McAleer asks celebrity attendees and film director Franny Armstrong an inconvenient question while covering the premiere of "The Age of Stupid": Did you fly to New York? Ms. Armstrong apparently can't or won't answer the question, and the journalist is ejected.

HT: Art Little

Yes, Income Inequality *IS* Increasing Significantly

In the National Football League.

CA Real Estate Recovery: Home Sales Increase for 14th Straight Month, Median Prices for 6th Month

LOS ANGELES (Sept. 25) Home sales increased 9% in August in California compared with the same period a year ago, while the median price of an existing home declined 16.9%, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.) reported (see chart above). Closed escrow sales of existing, single-family detached homes in California totaled 526,970 in August at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR associations statewide. Statewide home resale activity increased 9% from the revised 483,400 sales pace recorded in August 2008.

The median price of an existing, single-family detached home in California during August 2009 was $292,960, a 16.9% decrease from the revised $352,730 median for August 2008, C.A.R. reported (see chart above). The August 2009 median price rose 2.6% compared with July’s $285,480 median price.

“The statewide median price rose for the sixth consecutive month in August,” said C.A.R. Vice President and Chief Economist Leslie-Appleton-Young. “Recent price gains are consistent with the low inventory levels of the past few months. Levels of distressed properties remain high, but have declined compared with earlier in the year, and are one reason why inventory levels are running below the state’s long-run average of 7.2 months.

C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in August 2009 was 4.3 months, compared with 7 months for the same period a year ago (see chart above). The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

MP: In a separate report,
DQNews reported that the August increase in California home sales was the 14th consecutive monthly sales increase on a year-over-year basis. Increasing home sales for 14 straight months, increasing median home prices for the last six months, and an unsold inventory index of almost 40% lower than a year ago - if those conditions do not reflect a true, solid real estate recovery in the California real estate market, how would a real recovery be any different?

Florida Real Estate Market Recovery: 12th Consecutive Monthly Increase in Home Sales

ORLANDO, Fla. (Sept. 24, 2009)Florida’s existing home sales rose in August – marking a full calendar year (12 months) that sales activity increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors. Existing home sales rose 28% last month with a total of 13,850 homes sold statewide compared to 10,813 homes sold in August 2008 (see chart above). The state association also reported a 45% increase in last month’s statewide sales of existing condos compared to the previous year’s sales figure. Florida’s median sales price for existing homes last month was $147,400; a year ago, it was $188,500 for a 22 percent decrease.

MP: Along with home sale increases, median home prices are also starting to gradually increase as Florida's real estate market recovers. During the first four months of 2009 (Jan.-Apr.), the median home price averaged $140,000, compared to an average price of $147,000 during the most recent four months (May-Aug.). With a full year of monthly increases in home sales, and with rising median home prices, can we now officially declare that the Florida real estate market is in full recovery mode?

Saturday, September 26, 2009

The Improving Economic Picture: From 25% to 95% Odds Since March for Positive Q3 Real GDP Growth

Back in early March, as the U.S. and global stock markets were bottoming out and the general economic outlook for the U.S. was pretty uncertain, the odds of third quarter U.S. real GDP growth being positive was only about 25%, according to futures trading on Intrade. As the economic picture has gradually and significantly improved over the last six months, the odds of positive economic growth in Q3 (which ends next Wednesday) have increased to 95% (see graph above, click to enlarge).

Michigan's Babysitting Gestapo

MIDDLEVILLE, MI - A West Michigan woman says the state is threatening her with fines and possibly jail time for babysitting her neighbors' children. Lisa Snyder of Middleville (pictured above) says her neighborhood school bus stop is right in front of her home. It arrives after her neighbors need to be at work, so she watches three of their children for 15-40 minutes until the bus comes.

The Department of Human Services received a complaint that Snyder was operating an illegal child care home. DHS contacted Snyder and told her to get licensed, stop watching her neighbors' kids, or face the consequences.

"It's ridiculous." says Snyder. "We are friends helping friends!" She added that she accepts no money for babysitting. Mindy Rose, who leaves her 5-year-old with Snyder, agrees. "She's a friend... I trust her."

HT: Jonathan Turley

MP: What happened to all of that talk about how "It Takes A Village" to raise a child?

Everything's For Sale. Sometimes for Just $20

There is almost nothing on earth that cannot be had for a price. The question is, what is that price? And the answer is twenty dollars.

I've always wanted to test myself, to establish the weight and worth of a twenty in the world. So last month I took two grand in twenties, rolled them up, and left for New York. I was going to spend three days greasing palms from gate to gate and see what it got me. This is about as much Zen as I can muster: Stuff your pockets full of twenties and doors will open by themselves.

From the article "
The $20 Theory of the Universe," published in Esquire in 2003.

Unemployed? Try Working for Cash

From the Marketplace story "Can't Find Work? Try Looking for Cash."

Michael: I'm getting $272 a week [in unemployment benefits]. Which is just, bare bones. It's so bad that at one time I was going to the food bank. And, you know when you're really hungry and when you're facing eviction, you've got to do something.

Marketplace: So he started looking for work on the side. He found it pretty quickly.

Michael: So right now I have Craigslist open. And what I've done is I've opened three different tabs: I've opened free stuff, all gigs and all jobs.

Marketplace: He's found all sorts of work this way: software testing, landscaping, bouncing and lots of focus groups. All have paid cash. He says some weeks he's earned three times as much as his benefits check. Like everyone on unemployment, he's meant to report any earnings to his unemployment insurance office. Then they adjust his benefits down. So how does Michael answer the question, have you earned any money this week?

Michael: I opt to say, you know, no. I opt to say no, I have not. Because this is my own hard work, this is my own ingenuity, this is my own genius, and I am still looking for work every day.

MP: We hear a lot about how the official unemployment rate doesn't count those who are "underemployed" and doesn't count discouraged workers, and therefore we are underestimating the stress and pain in the labor market. However, those unemployed workers receiving unemployment compensation who are actually working for cash would offset some of the underestimation of the official jobless numbers.

America's Ridiculously Large $14T Economy

Click to enlarge.

Which economy is larger: the NYC metro area or India? San Francisco metro area or Argentina? Detroit or Israel? St. Louis or New Zealand? Baton Rouge or Guatemala? Davenport (IA) or Bolivia? Flint (MI) or Brunei? Palm Coast (FL) or Belize?

In all cases, the economies of those American cities are approximately the same size as the economies of the entire countries listed above, both measured by GDP in 2008 (GDP
data here for U.S metro areas, GDP data here for countries). More than 100 U.S. cities are matched in the table above to countries that produced approximately the same amount of annual output in 2008.

We often lose sight of: a) how big the U.S. economy is, b) how productive American workers are, and c) how much we produce vs. other countries. After all, who can get their mind around $14 trillion, the size of the U.S. economy measured by GDP ($14,000,000,000,000)? Maybe this comparison of the GDP of U.S. metro areas to entire countries will help put the enormous size of the U.S. economy in some perspective.

Friday, September 25, 2009

Truck Tonnage Index Rose 2.1% in August, Follows 2.1% Increase in July, Reaches Six-Month High

ARLINGTON, VA The American Trucking Associations’ (ATA) advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.1% in August, matching July’s increase of the same magnitude. The latest gain raised the SA index to 104.1, which was the best reading since February 2009. Compared with August 2008, SA tonnage fell 7.5%, which was the best year-over-year showing since November 2008.

ATA Chief Economist Bob Costello said that the latest increase was another positive sign for the industry. “The gains in tonnage during July and August reflect a growing economy and less of an overhang in inventories,” Costello noted. He is hopeful that the overall trend in truck tonnage during the months ahead will be upward; however, he acknowledged that the pace of increase will likely moderate from the cumulative 4.3% gain over the last two months. “While I am optimistic that the worst is behind us, most economic indicators, including industrial output and household spending, suggest freight tonnage will exhibit moderate, and probably inconsistent, growth in the months ahead."

Markets in Everything: Left-Handed Underpants

LONDON (Reuters) - A British store is launching a range of underpants for left-handed men, an innovation it says will save them both time and embarrassment in front of the porcelain. The new range, by UK-based Hom, will have a horizontal opening instead of a vertical slit accessed from the right-hand side, breaking a tradition that has lasted for 75 years.

Consumer Confidence at Highest Level Since January 2008, Largest 6-Month Gain in 15 Years

NEW YORK (Reuters) - U.S. consumer sentiment rose in late September to the highest since January 2008 as expectations of an economic rebound gathered momentum, a survey showed on Friday (see chart above). The data added to indications the economy is pulling out of a lengthy recession more powerfully than many analysts had expected a few months ago, although doubts persist about how much staying power the rebound may have.

The Reuters/University of Michigan Surveys of Consumers said its final index of sentiment for September rose to 73.5 from 65.7 in August. This was above economists' median expectation for a reading of 70.3, according to a Reuters poll.

MP: The 16.2 point increase in Consumer Sentiment from 57.3 in March to 73.5 in September of this year is the largest six-month gain in consumer confidence in 15 years, going all the way back to January of 1994, and it's the third biggest 6-month gain since 1990 (see chart below).

The Gallup Consumer Confidence Index is also at the highest level since January 2008, see chart below.

The Worst Economy Since…. the 1980s?

Read my full post here at the Enterprise Blog, based on the chart above.

Thursday, September 24, 2009

Markets In Everything: The New Congruent Tie

APPLE VALLEY, MN. (WCCO)Eric Glennie, of Apple Valley, MN, came up with what he calls a "congruent tie," where the stripes of the knot go in the same direction as the rest of the tie (see picture above). For all the years that men have been wearing neckties, it seems no one has figured out how to get the stripes in the knot going the same direction as the rest of the tie...until now.

Eric Glennie, of Apple Valley, was tinkering around in his home after being laid off from his job in a trucking firm when he came up with the solution. The result is what he's calling the "congruent tie." "The stripes in the tie knot have always gone the wrong way," said Glennie. "I think it's over 100 years, so this is something that is totally unique, totally different. It could be a paradigm shift in menswear."

Watch video of a news report here about the congruent tie.

HT: Joyce Howe

Home Inventory Measure Falls to April 2007 Level

The best news in today's housing report from the National Association of Realtors on existing-home sales (data here) was that at the current sales rate (425,000 homes sold in August), it would take 8.5 months to sell off the current inventory of 3,622,000 homes, and this inventory measure is at the lowest level since April of 2007 (see chart above). A year ago August, the months supply of homes was 10.6, and had averaged more than 11 months in the four previous months, so there has been a significant improvement over the last year in the balance of homes available for sale relative to the demand.

Equity Activism Run Amok: Double Standards for Behavior and Race-Based Discipline in Tucson

The Tucson School board is calling for a two-tiered form of student discipline. One for Black and Hispanic students; one for everyone else.

With the goal of creating a "restorative school culture and climate" that conveys a "sense of belonging to all students," the board is insisting that its schools reduce its suspensions and expulsions of minority students to the point that the data reflect "no ethnic/racial disparities."

From the section of the 52-page plan titled "Restorative School Culture and Climate": "School data that show disparities in suspension/expulsion rates will be examined in detail for root causes. Special attention will be dedicated to data regarding African-American and Hispanic students."

The board approved creating an "Equity Team" that will oversee the plan to ensure "a commitment to social justice for all students." The happy-face edu-speak notwithstanding, what the Tucson Unified School District (TUSD) board of governors has approved this summer is a race-based system of discipline.

Offenses by students will be judged, and penalties meted out, depending on the student's hue. TUSD principals are being asked to set two standards of behavior for their students. Some behavior will be met with strict penalties; some will not. It all depends on the color of the student's skin. It is an invitation to chaos.

~Doug MacEachern writing in the
Arizona Republic

Jobless Claims Fall to Lowest Level in 34 Weeks

Unemployment claims were reported today by the Department of Labor, showing that the 4-week moving average fell 11,000 to 553,500, the lowest level since late January, 34 weeks ago (see graph above). Weekly claims (4-week average) have fallen in 10 of the last 13 weeks.

25 Awesome Homeless Guy Signs

These days, being homeless is more competitive than ever. Only the most clever and creative signs are going to get people to let go of their precious spare change. This makes for some pretty awesome homeless dude signage.

Perry's Law: "Competition breeds competence."

Men: The New Second Sex in Higher Education

The charts above are based on new data recently released by the Council of Graduate Schools in its study “Graduate Enrollment and Degrees: 1998 to 2008,” showing how women have been making solid and steady gains in graduate degrees (both master's and doctoral) over the last ten years, in all disciplines, including engineering and physical sciences.

Please see my full post on the American Enterprise Institutes's
Enterprise Blog.

Wednesday, September 23, 2009

Map of the Day: Where is McFarthest Spot in U.S.?

The map above is a visualization of the contiguous United States, colored by distance to the nearest McDonald’s, courtesy of Stephen Von Worley (via Felix Salmon):

For maximum McSparseness, we look westward, towards the deepest, darkest holes in our map: the barren deserts of central Nevada, the arid hills of southeastern Oregon, the rugged wilderness of Idaho’s Salmon River Mountains, and the conspicuous well of blackness on the high plains of northwestern South Dakota. There, in a patch of rolling grassland, loosely hemmed in by Bismarck, Dickinson, Pierre, and the greater Rapid City-Spearfish-Sturgis metropolitan area, we find our answer. Between the tiny Dakotan hamlets of Meadow and Glad Valley lies the McFarthest Spot: 107 miles distant from the nearest McDonald’s, as the crow flies, and 145 miles by car!

American Consumers Get Their Driving Mojo Back; Largest Monthly Travel Increase Since Jan. 2006

The chart above shows the percent change in U.S. traffic volume through July (from the same month in the previous year), in a report released today by the Federal Highway Adminstration (data and report here). After falling for 17 consecutive months starting in November 2007, traffic volume has increased in three of the last four months. The 2.3% July increase was the largest monthly gain since January 2006, and matches the 2.3% increase in October 2006.

The chart below shows traffic volume as a moving 12-month total, with a similar pattern to the percentage monthly increase above. After falling for 16 straight months going back to December 2007, the moving 12-month total has now increased in 3 out of the last 4 months to the highest level since last year.

MP: Another sign that the recession probably ended in June.

Part II: Betting on Progress and Technology

In recent years, natural gas producers in the United States have struggled, mostly in vain, to be taken more seriously in the energy world. Big oil companies like Exxon had concluded that natural gas reserves in the United States were not sufficiently abundant to warrant big investments in exploration and drilling. When small independent gas producers argued otherwise, they were often ridiculed.

But the natural gas folks now have numbers on their side due to new successes in getting gas out of shale rock. Geologists have always known that shale rock, often found in combination with coal and oil deposits, holds substantial amounts of natural gas. If a piece of shale rock is broken and lit with a match, it will actually burn for a few moments with a small flame.

The shale gas was previously considered unreachable, but advances in drilling techniques have changed that assessment. The result is a dramatic increase in estimated natural gas reserves. The Potential Gas Committee, loosely affiliated with the Colorado School of Mines, reported in June that natural gas reserves in the United States are actually 35% higher than believed just two years ago, and some geologists say even that estimate is too conservative.

"I used to say the nation is awash in natural gas," Hefner says. "Now I say we're drowning in it." (See price chart above, data here.)

Shale formations are deep underground — 6,000 feet or more — and the rock is relatively impermeable. Deep drilling is expensive, and in the past the amount of gas that could be reached was not considered sufficient to justify the cost. In recent years, however, gas producers expanded the use of "horizontal" drilling. After boring more than a mile below the Earth's surface to reach the shale layer, a drill operator will slowly "steer" the drill bit to one side, until it is heading sideways across the shale layer, thus achieving access to more of the shale than a traditional vertical well could provide (see chart above).

National Public Radio, part 1 of 3-part series on natural gas. Part 2 available here, here's an excerpt:

In the energy world, Big Oil has long been the key player — with one notable exception: The natural gas business in the United States is dominated by small, independent companies. More than 80% of U.S. natural gas supplies are produced by companies with a market capitalization of less than $500 million. On average, these companies have only a dozen employees.

But their business is booming. New production techniques in recent years have enabled companies to extract natural gas from shale rock formations deep underground. As a result, estimates of accessible natural gas reserves have been revised dramatically upward. Small gas producers can justifiably take the credit for the transformation of their industry.

MP: What a great tribute to America's entrepreneurial spirit, the important role of small businesses for the U.S. economy, and a clear demonstration of how advances in technology and the invisible hand of the private sector are our most effective "energy policy."

Quote of the Day: Betting on Progress, Technology

The “Peak Oil’ers” tell us that there are no new “whale” oil finds to be found; that the drilling to find crude oil is too expensive and that further exploration is a waste of time. The problem is that they are wrong. As we like to say, the world did not stop using Whale Oil to light its lamps in the late 19th century; the world stopped using Whale Oil because its cost had gotten too high creating the “technology” needed to find a new source of energy, fossil fuels. Now, the technology involving seismic geology, and the technologies involving multiple drilling points from one initial hole in the ground, et al has succeeded in finding new, massive oil pools… most of which is now offshore where the finding is good and getting better.

Twenty five years ago, oil was not drilled for in water deeper than 600 feet. The platforms were not stable; the pipe too weak; the technology simply not extant. Now, however, oil drilling firms are comfortable drilling in water 6000 feet deep, and the huge new oil finds reported two weeks ago by Anadarko Petroleum found off the western coast of the African nation of Sierra Leone was drilled for and found in water that deep. Two years ago, Anadarko found another huge pool of oil in deep water off of the Cote d’Ivoire and Ghana. BP recently found a “whale” in deep waters in the Gulf of Mexico, and Petrobras continues to drill for and find huge new pools of crude off shore from Brazil in ever deeper water.

We tell the “Peak Oil-ers” to sit down and shut up, for they are wrong. They are bettors in favor of antiprogress… in stasis… and we are far more willing to bet in favor of progress, and of technology and of the eventual replacement of fossil fuels with something else entirely. Betting on progress has been the better of the bets to be made through history; we’ll go with for a while longer anyway.

~Dennis Gartman in today's
The Gartman Letter (subscription required)

Tuesday, September 22, 2009

Emerging Markets Index Reaches New Yearly High

The MSCI Emerging Markets Index closed today at 922.31, reaching the highest level since September 2, 2008. Many of the emerging markets like Argentina, Brazil, India, Hong Kong and Taiwan are trading at the highest levels in more than a year.

Did You Know?

Watch the full video below (may take some time to load).


HT: Richard.

Volatility Index Falls to 1-Yr. Low, Bloomberg Financial Conditions Index Reaches New 2-Yr. High

The CBOE Volatility Index (^VIX) closed at 23.08 today, the lowest level in more than a year, since September 5, 2009 (see chart above).

The Bloomberg U.S. Financial Conditions Index reached a new record high for 2009, and closed at the highest level (-.50) since August 2007, more than two years ago (see chart below).

Real Lesson from Great Depression: Tax Damage

Arthur Laffer in today's Wall Street Journal ("Taxes, Depression, and Our Current Troubles") writes:

In 1930-31, during the Hoover administration and in the midst of an economic collapse, there was a very slight increase in tax rates on personal income at both the lowest and highest brackets. The corporate tax rate was also slightly increased to 12% from 11%. But beginning in 1932 the lowest personal income tax rate was raised to 4% from less than one-half of 1% while the highest rate was raised to 63% from 25% (see charts above). (That's not a misprint!) The corporate rate was raised to 13.75% from 12%. All sorts of Federal excise taxes too numerous to list were raised as well. The highest inheritance tax rate was also raised in 1932 to 45% from 20% and the gift tax was reinstituted with the highest rate set at 33.5%.

But the tax hikes didn't stop there. In 1934, during the Roosevelt administration, the highest estate tax rate was raised to 60% from 45% and raised again to 70% in 1935. The highest gift tax rate was raised to 45% in 1934 from 33.5% in 1933 and raised again to 52.5% in 1935. The highest corporate tax rate was raised to 15% in 1936 with a surtax on undistributed profits up to 27%. In 1936 the highest personal income tax rate was raised yet again to 79% from 63%—a stifling 216% increase in four years. Finally, in 1937 a 1% employer and a 1% employee tax was placed on all wages up to $3,000.

Because of the number of states and their diversity I'm going to aggregate all state and local taxes and express them as a percentage of GDP. This measure of state tax policy truly understates the state and local tax contribution to the tragedy we call the Great Depression, but I'm sure the reader will get the picture. In 1929, state and local taxes were 7.2% of GDP and then rose to 8.5%, 9.7% and 12.3% for the years 1930, '31 and '32 respectively.

The damage caused by high taxation during the Great Depression is the real lesson we should learn. A government simply cannot tax a country into prosperity. If there were one warning I'd give to all who will listen, it is that U.S. federal and state tax policies are on an economic crash trajectory today just as they were in the 1930s. Net legislated state-tax increases as a percentage of previous year tax receipts are at 3.1%, their highest level since 1991; the Bush tax cuts are set to expire in 2011; and additional taxes to pay for health-care and the proposed cap-and-trade scheme are on the horizon.