Posts Tagged ‘Economy’

Factoids: The state of the economy …

September 21, 2012

The economic analyses done by Mort Zuckerman at US News are always laden with cold facts.

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Read the article for the prose. Here are the factoids:

  • Annual wage increases have dropped to an average of 1.6 percent, the lowest in the past 30 years.
  • A Census Bureau analysis  indicates that median income in 2011 had fallen to $50,054, the fourth straight year of decline.
  • Layoff announcements have risen from a year ago and hiring plans have dropped dramatically.
  • 5 million people have now been out of work for 27 weeks or more. That’s roughly 40 percent of the unemployed.
  • The average period of unemployment is close to 40 weeks.
  • Fewer Americans are at work today than in April 2000, even though the population has grown by 30 million people since then.
  • Older people are not leaving the workforce at the same rate as in the past … employment in the age group of 55 and older is up 3.9 million, even as total employment is down by five million.
  • The so-called quit rate has sagged to the lowest rate in years.
  • Young workers now face double-digit unemployment and job prospects for young workers aren’t very good.
  • As a result, the birth rate has just hit a 25-year low of 1.87 births per woman. And
  • Of jobs that have been added, more than 40 percent of new private sector jobs are in low-paying categories such as leisure and hospitality, bars, and restaurants
  • Millions of people who had good private sector jobs are now dependent on the government for life support.
  • Roughly 15 percent of the population, a record, representing over 46 million Americans, are in the food stamp program, compared to the 7.9 percent participation from 1970 to 2000.
  • A record 11 million-plus Americans are now collecting federal disability checks. Half of them have come on board since President Barack Obama took office.

Sure doesn’t look like we’ve turned the corner yet.

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Were jobs added or lost in July?

August 6, 2012

Basic answer: it depends.

It depends on which BLS survey you look at.

The BLS’ “Establishment Survey” polls businesses and collects data on hiring and firing.

It says that 163,000 jobs were added in July … reversing a recent slide.

The BLS’ “Population Survey” polls people instead of businesses and collects data on whether they’re employed, unemployed, looking for work.

The Population Survey says that 195.000 jobs were lost in July … which is why the unemployment rate increased to 8.3%

Note:

  1. Both surveys are conducted by the BLS
  2. The Establishment Survey – which heavily guesstimates small biz hiring & firing —  is the headline jobs number.
  3. The Population Survey is the basis for the headline unemployment rate
  4. From the lips of the BLS: “Both the payroll and household surveys are needed for a complete picture of the labor market. The payroll survey provides a highly reliable gauge of monthly change in nonfarm payroll employment. The household survey provides a broader picture of employment including agriculture and the self-employed.

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Hey, Millennials: Lower your expectations … say, what?

July 30, 2012

Couple of articles caught my eye in the past couple of days that together have me scratching my head …

First, an HBR blast which argued that the best way to reduce stress is to lower your expectations.

Don’t expect much out of life, your friends & family or your co-workers.

If you don’t expect much, you won’t be disappointed and your stress level will be kept in check

Say, what?

Then came a Newsweek article about the economic  jam Millennials are in … with student loans, a bad job market, etc.

Started with an interesting point:

Median net worth of people under 35 fell 37 percent between 2005 and 2010; those over 65 took only a 13 percent hit.

The wealth gap today between younger and older Americans now stands as the widest on record.

The median net worth of households headed by someone 65 or older is $170,494, 42 percent higher than in 1984

The median net worth for younger-age households is a paltry $3,662, down 68 percent from a quarter century ago.

OK, reason for the Millennials to despair, for sure.

And, the proposed  prescriptions?

There’s a  growing notion among economists that the new generation must lower expectations.

For example, the  millennial generation shouldn’t set its sights on homeownership … “because it’s going to be out of reach for so many of them.”

They are understandably more amenable to  government-mandated income redistribution … since so few young people pay much in the way of taxes.

All I can say is: YIPES.

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What are you going to believe, the facts or our rhetoric?

July 9, 2012

Reported by Chris Moody of Yahoo News

When the Bureau of Labor Statistics announced the nation’s latest national employment last week, the Obama administration stressed that people should not “read too much” into the data.

Mitt Romney’s campaign pounced, and flagged the fact that the White House has repeated that same line nearly every month since November 2009.

See below for the roundup of articles from WhiteHouse.gov that Romney’s campaign posted on its site. In many of the posts, the authors for the administration do acknowledge that they repeat themselves:

June 2012: “Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.”

May 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.”

April 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.”

March 2012: “Therefore, it is important not to read too much into any one monthly report, and it is helpful to consider each report in the context of other data that are becoming available.” (LINK:)

February 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.”

January 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.”

December 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

November 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

October 2011: “The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. There is no better example than August’s jobs figure, which was initially reported at zero and in the latest revision increased to 104,000. This illustrates why the Administration always stresses it is important not to read too much into any one monthly report.”

September 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

August 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

July 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

June 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

May 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

April 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

March 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

February 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

January 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

December 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

November 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

October 2010: “Given the volatility in monthly employment and unemployment data, it is important not to read too much into any one monthly report.”

September 2010: “Given the volatility in the monthly employment and unemployment data, it is important not to read too much into any one monthly report.”

July 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.  It is essential that we continue our efforts to move in the right direction and replace job losses with robust job gains.”

August 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

June 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.”

May 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.”

April 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

March 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

January 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

November 2009: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

In other words, it’s important not to read too much into the Obama administration’s past 3-1/2 years of performance.

So much for accountability …

Thanks to SMH for feeeding the lead

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Some economic statistics that’ll ruin your day … and, maybe your week.

April 23, 2012

Mort Zuckerman — head of U.S. News, not the Mark Zuckerberg, the guy at Facebook — was an Obama supporter in 2008.

Suffice it to say that he’s disappointed with the President’s accomplishments re: the economy.

His article President Obama’s Economic Programs Have Failed is worth reading in its entirety.

Here are a couple of data points from it …

  • The pool of unemployed Americans is 15 million  — that’s roughly equal to the entire population of the states of Connecticut, Delaware, Arkansas, Iowa, and Oklahoma.
  • 25% of households include someone who is unemployed and looking for work.
  • Among the jobless, a staggering 42% of the unemployed are long-term unemployed, without jobs for six months or longer.
  • Since 2008, some 3 million people have dropped out of the job market. If they hadn’t, the unemployment rate would be about 10.8%.
  • So-called structural unemployment has risen from 5 percent before the crisis to close to 7% today …. if so, many lost jobs that cannot be restored by boosting demand.
  • Hiring today is at about 70% of the 2006 level … so, job seekers are only about one third as likely to find work as in 2006.
  • Layoff announcements have risen 18% from a year ago, and hiring plans have dropped 82%.
  • The U.S has lost 6 million blue-collar manufacturing jobs.
  • 70% of job openings have been in mostly low-wage sectors, including healthcare, leisure, hospitality, and retail.
  • Some 7.7 million workers are stuck in part-time jobs, with pay inadequate for entry into the middle class.
  • 67% of the meager employment growth rate has been in the 55 and older age cohort.
  • The jobless rate for workers ages 20 to 24 is over 13%; teenagers, 25%; Hispanic teenagers, 30.5%; and black teenagers, 37.9%.
  • People with a college education face unemployment rates of about 4.2; those with a certificate from a community college or at least some college coursework have a jobless rate of 7.5%.
  • People who did not finish high school have it worst at almost 13%.
  • Two thirds of our employment is concentrated in 6 million small and medium-size businesses.
  • The U.S. needs 1 million new businesses every year to keep us on the right track. Instead we have only about 400,000 firms starting up.
  • Real per capita disposable income — adjusted for inflation — is down to  $32,600 now versus $34,641 back in 2006.
  • The ratio of total household debt to after-tax earnings is 117% — down from last year’s peak peak of 131%, but is still above the pre-bubble rate of 70%.

Zuckerman concludes: We are still in an era of deleveraging, rising savings rates, home price deflation, and squeezed real income, all of which will continue to affect consumer spending.”

Have a nice day …

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According to investment guru Burton Malkiel …

March 29, 2012

In a recent WSJ op-ed,  Burt Malkiel stopped random walking and cut to the chase re: the near-term economic climate and  investment options. 

Malkiel says:

The economic data, as a whole, suggest the economy is growing at a rate nearer to 2% rather than its previous trend rate of 3%-4%.

  • The strong employment gains may well have been aided by our unusually warm winter.
  • Rising gasoline prices will put increased pressure on consumers. And a number of strong economic headwinds still exist.
  • The economies of the euro zone are getting worse, not better.
  • The housing sector has yet to make a convincing turn for the better.

Given the present economic outlook, let’s look at three asset classes ranked them from worst to best – bonds, equities, and real estate.

Bonds are the worst asset class for investors.

Usually thought of as the safest of investments, they are anything but safe today.

At a yield of 2.25%, the 10-year U.S. Treasury note is a sure loser.

Even if the overall inflation rate is only 2.25% over the next decade, an investor who holds a 10-year Treasury until maturity will realize a zero real (after-inflation) return.

Even if the inflation rate remains moderate, interest rates are likely to rise to more normal levels as the economy continues to recover.

Given the likely trends, U.S. Treasurys and high quality bonds are likely to be extremely poor investments and are very risky.

Equities on the other hand are still attractively priced.

Despite their substantial rise from the October 2011 lows.

A good way to estimate the likely long-run rate of return from common stocks is to add today’s dividend yield (around 2%) to the long-run growth of nominal corporate earnings (around 5%).

Equity returns should be about 7% — five percentage points more than the safest bonds.

This five-percentage point equity risk premium is close to the historical average.

In other words, while equities appear to be favorably priced relative to Treasury bonds, returns are unlikely to be at the double-digit level enjoyed from 1982 through 1999.

Real estate is a particularly attractive asset class

Real-estate prices have fallen sharply, if not to their absolute lows, then certainly very near to them.

Long-term mortgages are below 4% for those who can qualify.

Housing affordability (a measure based on house prices and mortgage rates) has never been more attractive.

Housing has been a dreadful investment since the housing bubble burst in 2007.

I believe it will be one of the best investments over the next decade.

In today’s environment, the minimization of investment fees is more important than ever.

A 1% investment management fee may appear to be very low when measured against assets.

But when measured against a 7% equity return, that fee represents more than 14% of the return.

Against a 2% dividend yield, the fee absorbs one half of the dividend income.

The only way to ensure that you can enjoy top quartile investment returns is to choose investment funds that have bottom quartile expense ratios.

During 2011, over 80% of actively-managed equity funds were outperformed by the broad-based S&P 1500 Stock Index.

Investors can’t control returns generated by world financial markets.

But, they can control is fees paid to investment managers.

And, the quintessential low-expense instruments are broad-based, indexed mutual funds and ETFs.

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Personal note: My very first class at Princeton was Econ 101 taught by Burton Malkiel. He was one of the “inspirers” for my majoring in economics. 

As a senior, he was one of my thesis graders … gave me an A, then wrote a Journal of Finance article debunking my findings.  Ouch.

Still think he’s a great economist and a great guy.

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Bad economy? … Jack up your heels.

December 6, 2011

TakeAway: IBM research shows a relationship between the height of women’s heals and the economy … the weaker the economy, the higher the heels..

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Excerpt from AdAge: “At Last a Good Economic Indicator: Heel Heights Poised for Fall”

Historically in economic downturns heels have tended to go up and stay up, according, a consumer-products expert with IBM.

Why? Consumers look to compensate for dismal times with more flamboyant fashions.

Certainly that’s been true during the recent downturn.

Flats and relatively subdued heels of the 1920s gave way to the high heels of the 1930s recession.

Platform heels also soared during the recession fueled by the 1973 oil crisis.

Ominously, the average height of heels mentioned in social media soared from 3 inches in the first half of 2008 to 6 inches in the second half, just as the U.S. financial bubble burst.

Heel buzz most recently peaked in the first half of 2009 at 7 inches, bounced around at 4 to 5 inches through early 2010 and plunged to 2 inches in the most recent IBM analysis from early this year.

IBM’s cross analysis of heel-height buzz and macroeconomic data suggest a strong inverse correlation between heel-height buzz and economic growth.

Edit by ARK

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Hit the potty, kid … diapers cost money!

October 7, 2011

Punch line: In tough economic times you gotta cut back, right?

Some parents are simply lengthening the time between their kids’ diaper changes.

Gross.

And, it’s penny wise – pound foolish … just raises the home’s decibel level and the ointment bill.

Excerpted from WSJ : Cut Back Diapers

As the economy continues to sputter, recent data show diaper sales are slowing and sales of diaper-rash ointment are rising.

Diapering a child six times a day costs about $1,500 a year, so it isn’t hard to see how it could become a burden on families dealing with chronic unemployment or struggling to cover rising costs.

Meantime, sales of diaper-rash ointment have increased 8% over the past year and pediatricians say the higher sales likely reflect either less frequent changes or a shift to lower quality diapers.

A pediatrician at Northwestern Memorial Physicians Group in Chicago, says she has seen a 5% to 10% spike in diaper-rash cases this year.

“We’re definitely seeing major effects of the economy: Diapers are very expensive, and the longer you sit in a dirty diaper, the more likely the chances of an infection.”

P&G says the new “wetness indicator” on Pampers Swaddlers has saved his family unnecessary diaper changes because “you don’t have to take the diaper off. You can just see the indicator, and you know if the baby is wet.”

P&G says its research shows parents are also potty training children earlier to save cash as economic uncertainty deepens.

Wonder if the wetness indicator was inspired by the pop-up that tells you when the T-Day turkey is ready?

Thanks to DM for feeding the lead.

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