Saturday, May 3, 2014

My Informal Lime Report Update: A price increase!! According to reports, this should NOT be happening...

I have been chronicling the price of Limes at my neighborhood Kroger (Northern Burbs of Columbus OH) for the past month or so. 

Today (May 3rd) they are $1.59 each.  Just last week they were $1.49.  This article HERE suggests that the price is about to pop and decrease in time for Cinco de Mayo.  Apparently the supply chain has been replenished enough for supply to align more closely with demand.
""This week's sharp move lower comes amid increased supply from Mexico, where the majority of fruit consumed in the U.S. originates, experts said. Falling demand has also contributed to the recent easing.""
This may be a nice illustration of prices being flexible upward but "sticky"on the way down.  Retailers may be capturing some lost profit as they lagged in raising prices in fear of alienating customers.

The supply certainly was adequate at this store on a Saturday afternoon.   :)

Displaying photo.JPG

Nice graph showing Median Age of workers and an aging population. Is there something to see here?

Via Twitter and Micheal McDonough.

"Median" age means half of workers are older than 42.40 years of age and half are under (read that on the RIGHT SCALE).

The percent of the population that is over 65 is 14.2% (LEFT SCALE).

Both these numbers are all time highs, as you can see.

During the late 50's and part of the 60's we had a high in median age just a year or so below the current one but the percent of the population over 65 was significantly less (assumption--the graph does not show it).

So, we have an increasingly aging workforce taking care (in terms of entitlements) of an increasingly aging population.

Not sure my back can take it and my feet really hurt.  Hope we start trending young again sometime soon.
Embedded image permalink
Source: Twitter via Michael McDonough

Nice graphic on revised employment reports from the St Louis Fed

This graphic comes from the St Louis branch of the US Federal Reserve Bank.

It is a nice illustration of (1) why we should pay only mild attention to INITIAL employment reports and (2) the importance of looking for longer terms trends in economic data reporting.

However, both might be of scant use because the employment report is a "lagging indicator".  It reports on what has already happened and may or may not be useful in assessing the current state of the economy.  But we have to dance with the partner we came with.

As the Bureau of Labor Statistics gathers more data about a particular time period they can revisit and update the number of jobs created

According to the numbers below, there was a +23% difference in the average number of new jobs reported initially and what an updated revised average number 3 or so months later.  That seems significant to me.

Does that mean you can just go ahead and add 23% more jobs to the next jobs report to extrapolate that out to a longer term trend? Nope. Only a good politician or a bad statistician would do that...

The revision could be biasd upward OR downward:
The pattern of the revisions shown in the chart is consistent with the evidence showing that revisions tend to be procyclical. That is, during an expansion, revisions to payroll employment tend to be positive; and, during periods of slow economic growth and recessions, the revisions tend to be negative.--St Louis Fed
Employment Revisions

Friday, May 2, 2014

Electric Car buying and subsidies. Who REALLY benefits?

Electric Cars are considered a net positive for a lot of reasons.  I know this can be a point of contention, but that is not what this posting is about.

The article link below is about a proposal to increase the Tax Credit for people who elected to purchase an Electric car.  The thinking is this will in effect make buying one less expensive and, at the margin, people would purchase more of them.

The suggestion is the market fails to supply enough of this type of car at a low enough price.

A subsidy, in this case at tax credit for buyers, is one way to correct for the "externality".

Electric cars tax credit should rise to $10,000, says Congressman:  
Electric cars: New legislation would increase the tax credit for the purchase of electric vehicles from $7,500 up to $10,000 as a way to make it easier for people to buy electric cars.
Here are my series of slides that illustrate how this might work AND how it is not as simple or effective as it is intended to be.  Things never are in Economics!

What do you think?  Constructive comments or corrections are welcome.  Feel fee to steal.

Wednesday, April 30, 2014

Latest GDP report out. I see heating bills and transfer payments. What do you see?

The latest Gross Domestic Product report for the 1st Quarter of 2014 just came out.  Not a good one at all---GDP grew at a .1% pace (yes, POINT 1 percent!).  Stagnant for the most part.

However, I have seen commentary in a few places that suggest a bright spot is "Personal Consumption Expenditures" or "PCE" for short---spending by regular folk like you and me.  It is up 3%.

The US Bureau of Economic Analysis (BEA) has a nice interactive graph that more information can be obtained than is generally reported in the media.  See it HERE.

I wanted to see how the components within PCE's performed relative to each other.

This first graph show "Goods", broken down into Durable and Non-Durable categories, and Services.  You can see the GOLD line representing the broad category Services did very well compared to material good expenditures. YAY Services!!

Ok, this is good information. But if expenditures on Services as a category carried the economy, what exactly are those services that we collectively splurged on?  Glad you asked.

The graph below breaks down the category of Services into further broad categories BUT at least it is winnowed down a bit.

The BLUE line represents Services as a whole (just like the GOLD one did above).

The light-greenish line below the BLUE line represents "Health Care" spending as a category. You can see spending on health care related expenses was the majority of spending that occurred in the first 3 month of this year.

It was followed by expenditures on "Housing and Utilities".

Those two categories of expenditures carried the economy in the 1st Quarter.

Considering about 50% of health care dollars are "government transfer payments" and many/most of the dollars spent on Housing and Utilities were spent on heating bills that spiked in January and February, it seems like we pretty much did not do anything else.

Not a broad based recovery by any means.  At least not this early in the new year.

Is the US REALLY falling behind China in terms of measuring GDP? "Objects in mirror appear larger than they really are" is not just for rear view mirrors...

There is a new International Monetary Fund (IMF)  report out regarding China's imminent surpassing of the US as the worlds largest economy, as measured by Gross Domestic Product (GDP).

It centers around measuring GDP on a "nominal" basis (current exchange rates) or by a concepts called "Purchasing Power Parity" (normalizing exchange rates).

I think most people who see the headline will not understand the important distinctions between these two ways to measure the dollar value of a nations output.

The graphic below and the article that accompanies it (from the Wall Street Journal) is one of the better ones I have seen that explains the positives and negatives of each measurement.

As with ANY statistic, caution is advised!

China’s Economy Surpassing U.S.? Well, Yes and No

Source: Wall Street Journal
There are a number of reports around Wednesday (here and here) that China’s economy, by one measure at least, is likely to surpass the U.S. in size sometime this year.
The headlines will surprise many people, used to hearing China’s economy will overtake the U.S. sometime in the 2020s, or even later.
On Wednesday, the International Comparison Program, a statistical project coordinated by the World Bank, announced new data on the size of economies by purchasing power parity that suggests China’s economy is bigger than previously thought.
But the latest news is anything but surprising.

Monday, April 28, 2014

Nice graphic on the number of jobs lost during the recession then gained back, by wage range. Surprised?

This graphic on the losses and then gains in jobs in different wage bands is from The National Employment Law Project. (A liberal group). It has some other interesting graphics and explanations as well. Worth a read.

If you take the number of jobs gained since the end of the recession and divide that by the number lost during the recession you will get a "New job per Job Lost Ratio" for each of the wage categories.

For High wage industries the ratio is: .73 (every job lost we have gained .73 jobs back. 27 percentage points below parity)

For Mid-wage industries the ratio is: .70 (every job lost we have gained .70  jobs back. 30 percentage points below parity)

For Low-wage industries the ratio is: 1.94 (every job lost we have gained 1.94 jobs back.  94 percentage points ABOVE parity)

Not all income inequality is the same: The College Town Edition.

A nice example that illustrates the maxim "There are lies, damn, lies, and Statistics".

Five Thirty Eight (Ben Casselman) has a nice posting on how income inequality measurements can present a picture that is not a true reflection of the actual situation.

College Towns with a high number of college students are a prime example.

This graphic shows how misleading the measure of income inequality in some of the biggest college towns in the US can be.

The key columns to look at are "Students Included" and "Students Excluded" from the measurement. As you can see when students, who may be income poor but not cash or resource poor, are excluded from the measurement the areas "Median Household Income" rises significantly.

I encourage you to read the whole article.
casselman-College-Inequality-table (1)
Source: Five Thirty Eight (Ben Casselman)

How much stuff can you make from one bale of Cotton?

Saw this on Twitter from an organization called "American Farmers".  Thought it interesting. I like graphics that quantify and put into context the inputs that go into making finished good outputs.

Go HERE for the official size/weight dimensions for a standard bale of cotton.

Embedded image permalink

Trade restrictions: The Quota Edition. Get primed with this primer!!

I put together a presentation on how a QUOTA (as opposed to a Tariff) put on Imports affects the market for a good.

This is meant as an introduction to the concept of a quota. It can get more complicated.  But I think I have been comprehensive enough to get you started for a basic economics class.

View My Stats