Luxury 50 Yardline Suite Superbowl Tickets: $150k
"Buy it Now" price on Ebay: $150,000
See more Superbowl 2009 listings here on Ebay.
Professor Mark J. Perry's Blog for Economics and Finance
Out of $355 billion newly appropriated, the Congressional Budget Office estimates that only $26 billion will be spent this fiscal year and only $110 billion by the end of 2010. Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.
Members of Congress are less like whores than they are like pimps for persons unwillingly conscripted to perform unpleasant services.
The central defect of government bailouts and stimulus packages is that the money is allocated through a political process. It goes to recipients who have the most political influence. Private entrepreneurs and even big business, by contrast, employ investment to earn a profit. The record shows that the latter yields greater economic efficiency, and hence creates real jobs.
MP: As the chart above shows, another fact to consider is that average 2007 household farm income ($86,223) was 27.5% higher than U.S. average household income ($67,609), according to the USDA.
Cato Institute's Dan Mitchell explains why Obama's so-called stimulus is good for the government, but bad for the economy:
From The Economist, "The Big Mac index (see chart above) is based on the idea of purchasing-power parity (PPP), which says currencies should trade at the rate that makes the price of goods the same in each country."
Obama is already asking for an unprecedented increase in the size of the national debt. Before we go back down that road, maybe we should stop and ask: "What crisis?''
Q: Wouldn't it be a lot easier for Target to just lower its prices and/or increase wages for Target employees by $3 million weekly? Wouldn't that be a more direct, and just as effective, way to serve the communities where Target stores are located?
CENSUS BUREAU -- Tracing the history of heating fuels from 1940 to 2000 shows that 3-in-4 households used coal or wood in 1940, whereas only 1.8% of homes used these fuels in 2000. Homes using coal or coke for heating fuel dropped rapidly in each decade between 1940 (55%) and 1970 (2.9%); and the rate continued to drop until 0.1% of homes used these fuels in 2000. Wood, used as a major heating fuel in 1940 (23%), virtually disappeared by 1970 (only 1.3%). Since that time, it has shown a modest comeback in 1990 (3.9%), but dropped in 2000 (1.7%). It was the dominant fuel in the Pacific Northwest and South in 1940.
Including FedEx, Microsoft, CNN, Wikipedia, HP, etc. Pre-existing companies can also make incredible gains in years where the economy is down, like Google, PayPal and Salesforce.com Inc.
WASHINGTON POST -- Less than half the money dedicated to highways, school construction and other infrastructure projects in a massive economic stimulus package unveiled by House Democrats is likely to be spent within the next two years, according to congressional budget analysts, meaning most of the spending would come too late to lift the nation out of recession.
GM is not counting on market success for its comeback. It has neither the cash reserves nor the brilliant product line needed for that in a down economy, when sales are expected to be 40% lower than two years ago (the lowest volume since the 1973 Arab oil embargo).
Some selected excerpts from the Time Magazine Cover Story "Why We're So Gloomy":
Well, why are Americans so gloomy, fearful and even panicked about the current economic slump?
In one of history's most painful paradoxes, U.S. consumers seem suddenly disillusioned with the American Dream of rising prosperity even as capitalism and democracy have consigned the Soviet Union to history's trash heap. Hard times are forcing some people to turn their back on the American Dream.
"Whining" hardly captures the extent of the gloom Americans feel as the current downturn enters its 14th month. The slump is the longest, if not the deepest, since the Great Depression. Traumatized by layoffs that have cost more than 1.2 million jobs during the slump, U.S. consumers have fallen into their deepest funk in years.
While some economists have described the current slump as a near depression, that phrase overstates the case if it is taken as a comparison with the period 1929-33, when the U.S. economy contracted by nearly a third. The D word becomes more valid, especially with a small d, when it is used to compare the growth rate of the 1930s, which averaged 0.5% a year, with the expected sluggishness of the next decade, which some economists predict will see an average growth rate of 2%.
"I'm worried if my kids can earn a decent living and buy a house," says Tony Lentini, vice president of public affairs for Mitchell Energy in Houston. "I wonder if this will be the first generation that didn't do better than their parents. There's a genuine feeling that the country has gotten way off track, and neither political party has any answers. Americans don't see any solutions."
The deeper tremors emanate from the kind of change that occurs only once every few decades. America is going through a historic transition from a heedless borrow-and-spend society to one that stresses savings and investment. When this recession is over, America will not simply go back to business as usual.
The underlying change in the way American consumers and business leaders think about saving and spending will make the recovery one of the slowest in history and the next decade one of lowered expectations. Many economists agree that the U.S. will face at least several years of very modest growth as consumers and companies work off the vast debt they assumed in the last decade.
The conditions that led to today's transition economy go back several decades. Americans have suffered a long-term stagnation of their earnings. The median income of U.S. families has virtually stood still since 1973, showing an annual gain of just 0.3% a year.
The recent debt binge took place on a colossal scale in every sector of the economy. Runaway federal deficits have more than tripled the national debt. Meanwhile, consumers increased their IOUs from $1.4 trillion to $3.7 trillion last year. And U.S. industry raised its debt from $1.4 trillion to $3.5 trillion over the same period. The reckless borrowing made a reckoning inevitable.
So far, though, no reprieve from layoffs is anywhere in sight. Economists say U.S. companies will shed more than 1 million jobs in fields ranging from banking to aerospace, a pace even faster than last year's. "It's become almost like a poker game to see who can cut the most," says employment analyst Lacey. "There's a kind of corporate frenzy."
GM's plans to close 25 plants and cut 74,000 jobs, or 19% of its work force, scarcely addresses such problems as why it takes the company up to a year longer than the Japanese to redesign its cars.
MP: This was from the January 13, 1992 edition of Time Magazine, and the opening quote was from President George H.W. Bush, and the article was about the relatively mild 1990-1991 recession. Note: I altered some of the text above so that the specific time period was not obvious. Notice the distinct similarities to the reporting about today's economy.
Update: I found a longer dataset for jobless claims and was able to update the post below.
ASSOCIATED PRESS -- The Labor Department reported today that initial jobless benefit claims rose to a seasonally adjusted 589,000 in the week ending Jan. 17, from an upwardly revised figure of 527,000 the previous week. The latest tally was well above Wall Street economists' expectations of 540,000 new claims. The total matches a 26-year high reached four weeks ago. The last time claims were higher was in November 1982, when the economy was emerging from a steep recession, though the work force has grown by about half since then.
MP: The chart above from 1987 to 2008 shows why comparisons of unemployment claims today to past years are meaningless, without adjusting for the change in labor force. In the last 22 years, the U.S. labor force (blue line) has increased by 30%, from about 119 million in 1987 to more than 154 million today.The chart below shows initial jobless claims as a percent of the labor force, to adjust for the increase over time in the population and labor force. December's 0.355% level (549,000 average weekly claims / 154,447,000 labor force) is above the 0.333% peak at the end of the 2001 recession, but still way below the 0.3915% peak of the 1990-1991 recession. (Note: The January labor force number has not been released, but the average jobless claims so far in January (522,500 on a 4-week moving average basis) are actually lower than December's 549,000 number, so the January figure for jobless claims as a percent of labor force could be lower than December.)
ASSOCIATED PRESS (12/30/2008) — General Motors said it will offer financing as low as 0% for several 2008 and 2009 models as the automaker makes a big year-end push to improve sales.
The chart above shows the monthly employment levels since 1969 in: a) the construction and manufacturing sectors combined, and b) government. Back in 1969, there were almost 2 manufacturing and construction jobs for every government employee. Since then, government employment almost doubled from 12 million in 1969 to almost 24 million today, as manufacturing and construction jobs have remained flat and have recently fallen, to the point that there are now more workers employed by government than are employed in the manufacturing and construction sectors. A version of this graph was posted here and here (thanks to Tim Wise).
As the chart shows, there has been a general downward trend in government employees as a percent of total payrolls since the mid-1970s, from more than 19% in 1975 to below 16% by 1998, with a slight reversal of the trend since 2000.
As much as we hear about the growth in government, it seems like the jobs data tell a different story. Comment welcome.
One explanation for the top chart is that there have been so many productivity gains in manufacturing that we can produce increasingly higher levels of output over time with fewer and fewer manufacturing workers?
In 2001, the ratio of spending on residential phone services to spending on cellular phone services was greater than 3 to 1 (see chart above). In 2007, cellular phone expenditures accounted for 55% of total telephone expenditures compared to 43% for residential phone expenditures.
I thought it would make sense to get some clearer historical perspective, and the economists at the Bureau of Labor Statistics (BLS) were nice enough to help me do so. In the last week, they helped me put together a broad measure of the job market — one including both official unemployment and more subtle kinds — stretching back to 1970. Since the job market covers the entire economy and affects families in tangible ways, it seems to be the single best yardstick.
Over the past decade the global average temperature has fallen to its lowest levels in 30 years:
When Barack Obama takes office today, his first order of business will be a stimulus package estimated to be close to $1 trillion, including $300 million in tax cuts and the largest new government spending program for infrastructure since Franklin Delano Roosevelt. Sages nod that replicating aspects of FDR's New Deal will help pull the country out of a recession. But the experience under FDR largely provides a cautionary tale.
WASHINGTON POST -- You've heard of medical patients traveling abroad to save on everything from hip replacements to nose jobs. But how about heading to Wichita or Oklahoma City? More Americans are discovering medical tourism right here in the United States.
Behind the housing boom and bust was one of those alluring but undefined phrases that are so popular in politics-- "affordable housing." In looking back over my own life, I find it hard to think of a time when I didn't live in affordable housing. While the specifics will differ from person to person, my general pattern was not unusual. Most people pay for what they can afford at the time.
Probabilities above are for the December 2009 U.S. jobless rate, from futures contracts traded on Intrade: The Prediction Market. Based on these contracts, there is only a 1 out of 8 chance of an unemployment rate above 9.50% in 2009, suggesting that there's probably almost no chance that in 2009 we would be anywhere even close to the 10.8% jobless rate of 1982, and zero chance of reaching the unemployment rates of the 1930s and the Great Depression.
Most doctors want to serve patients. But there is a conflict: the patient is not the one who pays the bills. Instead, the customer that health care providers must learn to serve is the private insurance company or the government program. If doctors want to get paid in today’s environment, they have to play by rigid third-party rules imposed by employers and government, not patients’ choices.
From the Minneapolis Fed:
FRANKFURT (AFP) – German sex-shop owners and erotic film makers, badly hit by the economic crisis, are pushing for state aid that has also been requested by U.S. peers. "Economic aid would be judicious," said erotic trade federation official Uwe Kaltenberg.
The upcoming inauguration has been getting a lot of attention, including many reviews of past inaugural speeches. Therefore, I thought it would be appropriate to post economist Milton Friedman's rebuttal to President Kennedy's famous 1961 inaugural address:
BBC NEWS -- On Tuesday, a 50 billion Zimbabwean dollar note was issued (see above), less than a month after a Z$500m bill was released. Prices can double every day, and food and fuel - for those without US dollars - are in short supply. Now Zimbabwe is introducing a new Z$100 trillion note, currently worth about US$30. Other notes in trillion-dollar denominations of 10, 20 and 50 are also being released to help Zimbabweans cope with hyperinflation.
An increasing number of recession-pinched Los Angeles homeowners are turning to Hollywood for help, offering their houses as sets for feature films, commercials and even adult movies.
Ten pictures here. Pictured above is the build-up of imported cars at the port of Newark, New Jersey.
Consider the following comparisons of key economic variables today to the peaks for those variable in the early 1980s (see graph above):
The brutally cold weather (so cold that I saw a lawyer yesterday who actually had his hands in his own pockets) and all of the complaints about low temperatures got me to thinking about this.... Couldn't the government intervene in the market for temperature-reading equipment to counteract the unfair "excessively low" temperatures, just like it does in the unskilled labor market for unfair "excessively low" wages???