Saturday, November 5, 2011

Early map of the way the Electoral College vote may go...Like it or not, this is how we elect a President...

USA Today has nice interactive graphic displaying some key variables that are in play for the next Presidential election.  I know it is early in the process, but I wanted to remind you of the impact the Electoral College has in selecting the President. 

The chart below shows the safe states for each partys candidates and the ones, that while not in their pockets, trend toward one party over the other.  The ones shaded gray are "swing-states". They are toss ups.  Like it or not, these states, especially the big one Florida, are likely to determine the winner.  Candidates will spend the majority of their time and money in these states.

The positive thing to come out of this is if you live in a safe state for the candidate---you won't be subjected to constant and inane political advertising on TV. 

Friday, November 4, 2011

GDP vs EMPLOYMENT...This is THE graph people FOR and AGAINST the OWS protesters need to see and think about...

In AP Macroeconomics we teach students there is a direct relationship between changes in Real GDP and Employment (or an inverse relationship between Real GDP and UN-employment). 

In the graph below this relationship holds nicely, whether Real GDP (Blue Line) is increasing or decreasing. Employment (RED Line) follows, albeit to different degrees but the relationship is relatively tight.  It makes sense: If in real terms, more goods and/or services are produced, more people will be hired. If fewer goods and/or services are produced, fewer people are needed.
Source: Carpe Diem

However, in the first/second quarter of 2009 this relationship breaks down. While Real GDP bottoms out, employment continues a free fall.  As Real GDP recovers and increases, employment STILL falls before leveling out.  We have a large GDP to employment deficit. 

Starting in the first quarter of 2010 notice the change in the slope of the Real GDP line relative to the slope of the employment line. The former becomes steeper and the latter relatively less steep.  Very different from previous years.  Real GDP is now at its pre-recession level BUT employment is at approx. 6.6 million FEWER workers. What a difference two years makes!

If, on a macro-level, businesses are producing and selling the same dollar amount of goods and/or services as they did before the recession and doing it with many fewer workers, it is relatively easy to see why corporate profits are at record levels. 

Can we chalk this up to "corporate greed"? Were these 6 million workers not really needed in the first place? Has technology and/or efficiencies/improved processes rendered many workers unnecessary? Are businesses working the remaining workers to death to wring as much profit out of them as possible? 

Corporate greed is not a new thing.  If this was the case, why did it not happen to this extent before?  Did corporations just recently figure out how to do more with less?  Below I extended the timeline of the above graph back to 1950.  The last time we had a significant separation between these Real GDP and Employment was back in the 1950's.  Why did the gap close for so many years/decades then reappear?  Are the two periods comparable in any way? Is there no connection?  Am I completely off the mark and comparing apples and oranges?   I honestly don't know and would love to hear any suggestions....

Tuesday, November 1, 2011

How many $100 bills does it take to finance the Federal Budget this year? See it neatly stacked in this graphic here...

This graphic represents the spending side of the Federal Budget in 2011.  What you see here are stacked pallets of $100 bills. Not $1.00 bills but $100 bills...The stack on the left represents the amount of money we actually have from tax revunes. The stack on the right represents the amount we have to borrow THIS year to fully fund the budget.  Go HERE to see more of this particular graphic..

It is a MYTH: Sugar and Candy do NOT make kids hyper...This one can be filed away with the razor blade in the fruit myth..

Sugar, and candy, do not make kids hyper  (Click HERE for the razor blade story)
Since it’s now the day after Halloween, I thought I’d protect your children from this myth. It’s also one of my favorites.

Let’s cut to the chase: sugar doesn’t make kids hyper. There have been at least twelve trials of various diets investigating different levels of sugar in children’s diets. That’s more studies than are often done on drugs. None of them detected any differences in behavior between children who had eaten sugar and those who hadn’t. These studies included sugar from candy, chocolate, and natural sources. Some of them were short-term, and some of them were long term. Some of them focused on children with ADHD. Some of them even included only children who were considered “sensitive” to sugar. In all of them, children did not behave differently after eating something full of sugar or something sugar-free.

Personally, I think there are so many studies on this issue because after each was completed, the results were met with such skepticism that researchers felt the need to do another. This myth, perhaps more than any other, is met with disbelief when we discuss it, especially among parents.

In my favorite of these studies, children were divided into two groups. All of them were given a sugar-free beverage to drink. But half the parents were told that their child had just had a drink with sugar. Then, all of the parents were told to grade their children’s behavior. Not surprisingly, the parents of children who thought their children had drunk a ton of sugar rated their children as significantly more hyperactive. This myth is entirely in parents’ heads. We see it because we believe it.

Even when science shows time and again that it’s not so, we continue to persist in believing that sugar causes our kids to be hyperactive. That’s likely because there’s an association. Times when kids get a lot of sugar are often times when they are predisposed to be a little excited. Halloween. Birthday parties. Holidays. We may even be causing the problem ourselves. Some parents are so restrictive about sugar and candy that when their kids finally get it they’re quite excited. Even hyper.

This does not mean that there aren’t a ton of great reasons why our kid should not ingest large quantities of sugar. As almost any parent knows, sugar has been linked to cavities and the obesity epidemic. Just don’t blame it for your child’s bad behavior.
  1. Hoover DW, Milich R. Effects of sugar ingestion expectancies on mother-child interactions. J Abnorm Child Psychol 1994;22:501-15.
  2. Kinsbourne M. Sugar and the hyperactive child. N Engl J Med 1994;330:355-6.
  3. Krummel DA, Seligson FH, Guthrie HA. Hyperactivity: is candy causal? Crit Rev Food Sci Nutr 1996;36:31-47.
  4. Wolraich ML, Lindgren SD, Stumbo PJ, Stegink LD, Appelbaum MI, Kiritsy MC. Effects of diets high in sucrose or aspartame on the behavior and cognitive performance of children. N Engl J Med 1994;330:301-7.
Adapted from Don’t Swallow Your Gum by Dr. Aaron E. Carroll and Dr. Rachel C. Vreeman. Copyright © 2009 by the authors and reprinted by permission of St. Martin’s Griffin.

Nice interactive showing you where you rank in terms of the global population...Kinda Cool!

Click HERE to go to the BBC website and enter your own date of birth to see where you fit in the population of the world. Mine is below...
Source: BBC

Monday, October 31, 2011

Real life effects of Xenophobia (the fear of foreigners) and how ill advised it is to use it as the basis for economic policy...

So much for the thought that "Americans" will fill the jobs that migrant/illegal/ the undocumented so willingly do year after year. 

Here real life examples of  the "unseen" effect of policies that are misguided and are enacted to please certain constituencies that should have been plainly "seen".  This is bad economic and social policy.

The following links and blurbs are from Carpe Diem...

1. NPR -- "Alabama farmers are facing a labor crisis because of the state's new immigration law as both legal and undocumented migrant workers have fled the state since the strict new rules went into effect last month.

In Baldwin County on the Gulf Coast, strawberry planting season is just a few weeks away. Farmers are wondering if they'll have the crews to get the plants in the ground.

Alabama Agriculture Commissioner John McMillan says there's no doubt the immigration law has left farmers in a lurch. He says they're concerned about where the labor is going to come from since legal immigrants are leaving along with the illegal ones."

2. SEATTLE TIMES - "One after another, at a recent emergency meeting called by the Governor's Office, Washington fruit growers talked about how hard it's been to find workers as the harvest hits its sweet spot. Apples alone are a $1.5 billion-a-year business in the state.

And two weeks ago Gov. Chris Gregoire amped up what now has become an almost annual harvest-time refrain by growers when she declared the state's farm-labor shortage a crisis.

Growers mostly blame rising tensions around illegal immigration that have spooked migrant farmworkers, the majority of whom are here illegally, while worker advocates say there'd be no shortage if growers were willing to pay workers more."

3. ATLANTA JOURNAL CONSTITUTION -- "State officials have set their sights on another potential pool of workers to help bridge Georgia’s severe farm labor gap: prisoners."

Sunday, October 30, 2011

Nice graphic showing the situation with Social Security...A concern for the young and old...

Go HERE for the source of this graphic in the Washington Post (Via: Jared Bernstein blog).

A concern should be the cross-over point between surplus and shortfall.  There are lots of divergent viewpoints as to whether this constitutes a crisis or not.

Revenues will still come into the fund from current workers payroll taxes (6.20% from workers and 6.20% from employers).  Until now that has been sufficient to pay current benefits.

However, as we pass into shortfall, workers will still pay into the fund from payroll taxes, BUT the Social Security Trust fund will have to redeem bonds (according to the graphic) to pay for the difference.  Where does the money come from to do that?

I am just trying to follow the money trail.  Is it from taxes? Borrowing ("private and/or public)?  Printing? A continued shell game with the Treasury?

A vigorous economic recovery, seemingly remote at this point, would lesson the problem in the short run as a surge in tax revenue from the payroll tax would continue to fund current and future obligations.  While that would be terrific, it would give politicians breathing room to postpone necessary reforms that must take place in order to make the program solvent for the next generation of recipients. 

Nice graphic showing Americans are driving fewer miles... In general this is good, but maybe it is for the wrong reasons..

Number of the Week: Cutting Back On Driving

4.6 Billion: How many fewer miles traveled by drivers on U.S. roads in August than a year earlier:
Source: WSJ

These two graphs/charts don't synch up exactly, but you can see the direct relationship between the demand for gasoline and the miles driven over time.  The independent variable of course is the price of gasoline.

It is generally accepted that consumer demand for gasoline is relatively inelastic. This means that the percentage change in demand for a good is LESS than the percentage change in price.  In other words, consumers do not dramatically change their quantity demanded for a good when the price of the good changes.

In the case of gasoline, this is especially true when the price increases.  There is no immediate subsitute for gasoline in the short run---gotta have what you gotta have to satisfy how you have organized your life, job or business around, well, getting around.

This article and graphs suggest that the demand for gasoline has become MORE elastic in the last few years.  In other words, relative to previous gas price hikes, the percentage change in quantity demand for gasoline now is greater relative to the percentage change in quantity demanded for gasoline in a previous time period.  People are quicker to change behavior or have developed coping mechanisms the serve as subsitutes for consuming more gasoline:

""When gasoline prices started shooting higher earlier this year, U.S. drivers throttled back much more quickly than they used to in response to price increases. One reason why might be that the 2008 energy price shock is a recent enough memory that it’s easy for people to conserve. They still have the phone numbers of their old carpool buddies handy, and they know where the bus stop is. What’s more, with so many scarred by the recession and scared by the jobless rate, people seem quicker to cut back in response to price increases not just at the gas pump, but of any kind.""

It is certainly desirable for the country as a whole to consume less gasoline (hence oil) and drive fewer miles. However, the best way to achieve that is not through recession and economic hard times.  Improved transportation infrastucture, fuel effeciencies, and better consumer decision making would be far more preferrable.

Nice podcast from NPR on the pitfalls of measuring GDP. Good stuff!

Measuring Gross Domestic Product (GDP) is a daunting task, especially in an economy like the US which so large and has many moving parts. 

This is a short primer on some of the shortcomings of measuring GDP and how it is not an accurate measure of "social welfare".  Like all statistics on the economy, you have to drill down deeper into the data to really get a sense of what is happening in the economy.  (Listen or read the transcript below)

Why GDP Is Like GPA

October 28, 2011 - MICHELE NORRIS, host: By one measure, the U.S. economy has completely recovered from the last recession. GDP, the nation's gross domestic product, is the sum total of everything the U.S. produces, and it's now back to where it was before the financial crisis. Of course, the country has more people now and millions of them are unemployed.

And as NPR's Robert Smith reports, GDP is not a perfect number.

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