Friday, June 7, 2013

Quick Snapshot of today's employment report. 175,000 net new jobs created. But are they "good jobs"? See the evidence here...

In May the BLS reports the number of new jobs created (net) was 175,000 (first yellow highlight).

Of those 175,000 jobs the big gainers were in the categories of Retail Trade (+27,700), Temporary Help Services (+25,500) and Leisure and Hospitality (+43,000).

These three sectors accounted for 96,200 of the jobs created, or 55% of the total.

Not sure what the breakout is, but I would say a good portion of these jobs are part-time, lower wage positions. No data to back that up having worked in those sectors in my lifetime, I think from experience I am safe in than conclusion.

It is great that we are creating these jobs.  But are we creating a healthy, vibrant economy.

I don't think when over 50% of the new jobs are in these categories we are.  What do you think?

Thursday, June 6, 2013

New revision to the number of jobs needed to maintain a steady unemployment rate. The change is dramatic and of consequence!

When the monthly employment report is published by the Bureau of Labor Statistics (BLS) it reports the number of new jobs created and lost during the month and the change in the unemployment rate.  In a seemingly odd quirk, when there is a net gain in jobs created sometimes the unemployment rate goes down (as it seems it should) OR up (as it seems it SHOULDN'T).  How does that happen?

Variables such as a change in population due to birth rates or aging, new entrants such as high school or college graduates, immigration, can affect the number of people classified as part of the labor force.

In a recovering economy the only way to bring down the unemployment rate is to have net job creation that is greater than the number of new entrants/re-entrants into the labor force PLUS some that are already in the labor force but are currently classified as officially unemployed.

 Net job creation can be positive but unless it at least EQUALS the change in labor force then the unemployment rate will stay the same.  If less, then the unemployment rate will increase (ceteris paribus).

Previously in the media and in the economic blogosphere, economist have suggested that we need anywhere between 150,00 to 225,000 net new jobs just to keep up with the increase in the labor force.

A new study from the Federal Reserve suggests this number is MUCH lower, about 80,000 per month!

Here is a short excerpt.  The paper is very short and has some interesting graphs. I encourage you to read it to keep up on this important trend in the labor markets!

Estimating the trend in employment growth
For the unemployment rate to decline, the U.S. economy needs to generate above-trend
job growth. We currently estimate trend employment growth to be around 80,000 jobs
per month,
and we expect it to decline over the remainder of the decade, due largely
to changing labor force demographics and slower population growth.

Tuesday, June 4, 2013

Did Disney raise its admission prices just to keep up with inflation? (Also a link to historical prices to the "Happiest Place on Earth")

This is an extension of a Disney post on the recent price increase. Here is that one.

Below is a single day ticket for entry into Disney World from 2003 (for a list of historical admission prices to Disney, go HERE). Note is says entry into Epcot for $52.00 but that was the price to get into any of the parks.

For the first time Disney has priced Magic Kingdom at a different price than the other parks.  Magic Kingdom now costs $95 for a one day ticket. It costs $90 for a one day ticket to the other theme parks.

I have read in several places that Disney has increased the price of admission well beyond the rate of inflation for the year. True enough. But what about longer term?  Maybe they are just making up for lost ground with not being able to raise prices enough in the past?

According to this BLS inflation calculator, $52 in 2003 in today's dollars would be  $65.72. Yikes! The ticket price today  is well beyond the 10 year rate of inflation. $95 - $65.72 = $29.28 divided by $65.72 = 45%.

I think they are doing fine on the keeping up with inflation front.

Source: HERE

Nice interactive showing various occupations and median income earned in those occupations...Know before you go (for it)...

Kinda cool.  It shows various occupations, the number of people in those occupations and the "median" income earned in those occupations.

Click image to open interactive version (via Rasmussen College).

Disney has just (this week) increased the admission price to its theme parks. Here is the rest of the story not reported by the media (yet).

For Disney Fans this is important.  Admission prices to DisneyLand and DisneyWorld have just increased AND they have disaggregated a ONE-DAY ticket to Magic Kingdom from the rest of the parks.  Previously admission prices to ALL of the theme parks were the same.  If you buy a multi-day ticket it includes Magic Kingdom as one of the parks you can visit.

Below I pasted the new price list from the Disney website. The new prices are in BLACK and the previous prices are in RED (I inserted those).  I also put a circle around the Magic Kingdom ticket to highlight that it IS different from the rest of the parks now.

I also calculated the percentage change in price for Adult tickets (age 10 and over) and a child's ticket (3-9). You will see those numbers to the left.

Source: Disney Website

I have read (and just saw on the news) only about the 6.7%  change in price for the single ticket price for Magic Kingdom.  The price single ticket price for the other parks increased too, but only by $1.00 (+1.12%).  That is positive, right?

What I have NOT seen is an analysis of the how the Multi-Day ticket prices are impacted.  After all, who REALLY only goes to DisneyWorld for just one day!!

Look at those change in prices and percentage changes as you buy additional days.

I think Disney believes the 3 and 4 day purchaser of tickets are not going to significantly reduce their quantity demanded for days at the theme parks.  Demand for those tickets isrelatively Inelastic.

They are probably right. If you can afford to visit the parks for that many days then an 8%+ price increase is not going to discourage consumption by more than that percentage change in price.

FYI: Here is the photo of admission prices in January 2013 when I last visited Disney Orlando.  This is where I got the price data in RED above.

Wall Street is saving the housing market and the economy!! Reminds me of the arsonist who sets the fire then puts it out. I GUESS we are thankful. Read here why...

If you are interested in "going deep" with your knowledge of various underlying fundamentals contributing to our economic recovery, here is an article that explains the role BIG Wall Street investment firms are playing in housing markets that were the MOST adversely affected during the Great Recession.

"...The last time the housing market was this hot in Phoenix and Las Vegas, the buyers pushing up prices were mostly small time. Nowadays, they are big time — Wall Street big.
Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Some are already wondering if prices will slump anew if the big money stops flowing....
Blackstone, which helped define a period of Wall Street hyperwealth, has bought some 26,000 homes in nine states. Colony Capital, a Los Angeles-based investment firm, is spending $250 million each month and already owns 10,000 properties. With little fanfare, these and other financial companies have become significant landlords on Main Street. Most of the firms are renting out the homes, with the possibility of unloading them at a profit when prices rise far enough.
This is a good thing, for the most part. But it is difficult to not be a little cynical, at least for me.

Interesting twist. The institutions (not necessarily the SAME ones) responsible for the run up in housing prices and subsequent bust are now aiding in the recovery of the housing market in the hardest hit areas.

Reminds me of the arsonist who sets a fire then comes in and saves the day by putting it out and rescues people.   They might consider themselves a hero but  they are still an arsonist at heart.
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