Wednesday, March 30, 2011

Income Mobility

1. For American households that were in the lowest earnings quintile (bottom 20 percent) in 2001, only 56% of those households remained in that quintile in 2007, and 44 percent had moved to a higher quintile by 2007. Five percent of low-income households in 2001 had moved to one of the top two quintiles in just six years.

2. For those households that were in the highest earnings quintile (top 20 percent) in 2001, 34 percent had moved to a lower quintile by 2007, and 5 percent of those households had moved all the way to the bottom quintile.

3. For those households in the middle earnings quintile (middle 20 percent) in 2001, about one-third moved to a higher quintile by 2007, more than one-fourth moved to a lower quintile, and only 42 percent remained in the same quintile.

4. More than half of the households in the second, third, and fourth quintiles in 2001 moved to a different earnings quintiles by 2007 (see bottom row in chart).


Housing Double Dip?

Home prices fell in 13 of 20 cities in January, paced by a 3.4 percent decline in Minneapolis, a 2.4 percent drop in Seattle, and a decline of 1.9 percent in San Francisco. On a year-over-year basis, Phoenix saw the biggest drop, down 9.1 percent, followed by a decline of 8.1 percent in Detroit, and prices fell 7.8 percent in Portland. source

Tuesday, March 29, 2011

Manufacturing Profits and Profit Margin

Profits for U.S. manufacturing firms reached $135.3 billion in QIV last year, the highest amount of profits ever recorded in a single quarter for America's manufacturers, and surpassing the previous record of $127 billion in QII 2007 before the recession started (see top chart above). The after-tax profit margin for U.S. manufacturers also reached an all-time time of 9.1%, at least for the data the Census Bureau has available going back to 1999 (see bottom chart above).


Personal Consumption Expenditures


Monday, March 28, 2011

Job Loss by Recession

The employment graph shows the percentage of payroll jobs lost during post WWII recessions - aligned at maximum job losses.This shows the severe job losses during the recent recession - there are currently 7.5 million fewer jobs in the U.S. than when the recession started.

Friday, March 25, 2011

Q4 GDP Growth Revised from 2.8% to 3.1%

The Commerce Department reported that, in the third and final estimate for the fourth quarter of 2010, the U.S. economy grew at a seasonally adjusted annual rate of 3.1 percent, up from the prior estimate of 2.8 percent.The upward revision was due mostly to higher business investment and a smaller inventory build.

GDP Growth Rates

On an annual basis, real GDP grew by 2.9% in 2010, the highest annual gain since a 3.05% increase in 2005, according to today's BEA report. In dollars, real GDP in 2010 was $13.248 trillion, which set a new annual record for U.S. output, surpassing the $13.228 trillion levels in 2007 and 2008.


Corporate Profits


Real Gross Domestic Income Still Below Pre-Recession Peak

According to the Bureau of Economic Analysis (BEA), real GDP is now slightly above the pre-recession peak. Real GDP (in 2005 dollars) was at $13,380.7 billion in Q4, just 0.13% above the $13,363.5 billion in Q4 2007.However real Gross Domestic Income (GDI) is still 0.25% below the pre-recession peak.

Q4 Real GDP Growth revised up to 3.1%

Spending is the Problem


Thursday, March 24, 2011

The Rich--A Changing Group

Robert Frank writes:
Researchers and journalists (myself included) often refer to the rich as a
fixed group. There are the “the rich” who keep getting richer, with ever-rising
shares of the nation’s income and wealth. And then there are “the rest,” who
aren’t getting much of either.

At a time when the American Dream is supposedly dead for most Americans,
while Wall Streeters seen as permanently ensconced in government-backed
luxury, the chances of moving up or down would appear slim.

But the rich and poor may be far more fluid than the conventional
wisdom would have us believe. What is most surprising is the churn at the top of
the income ladder.

A Census Bureau study shows that from 2004 to 2007, about a
third of the households in the highest income quintile (the top 20%) moved down to another income group. In the same period, a third of those in the lowest income group moved to a higher group.

This isn’t to say Horatio Alger is the norm, and America ranks below
many other developed countries when it comes to intergenerational mobility, or
the chances of rising higher than your folks did. And wealth mobility, which
measures accumulated assets over a lifetime, is more persistent than income
mobility. The period of 2004 to 2007 also is selective, since the country was
prospering from the real-estate bubble...

“One of the most enduring economic myths in our society is that the
rich keep getting richer, while the poor keep getting poorer,” he writes. “It isn’t true.”


Tuesday, March 22, 2011

FoxNews or a Politician?

Paul v Obama Budget Proposals

While Obama intends to continue spending at a historically high level, Paul would reduce spending as a share of the economy. Paul takes the scalpel to all areas of federal spending, including discretionary, defense, and mandatory. However, it is not a radical plan. In fact, it’s a practical, common sense budget that recognizes that the federal government’s growth has become unsustainable, and thus a threat to our economic well-being and future living standards.

Monday, March 21, 2011

Wednesday, March 16, 2011

Jimmy the 2nd

I think it all adds up to a pretty bearish scenario because of all the inflation implications of what we’re seeing right now. You already had massive deficits and money printing in the developed world. On top of that you had enormous demand-side pressure from China relative to commodities. And now you’ve got the prospect of massive geopolitical disturbance in the great oil-producing centers of the world. I mean, that has to be a pretty inflationary scenario. The best case is that we’re about to re-run the 1970s, only with Barack Obama instead of Jimmy Carter in the White House.

Niall Ferguson

Greenspan v Bernanke

Monday, March 14, 2011


"The natural disaster of a tsunami could actually provide a temporary boost to the global economy."

Larry Summers, former director of President Obama's economic council and a former head of the World Bank

Bank Failures

Thursday, March 10, 2011

Subway Passes McDonald's

It's official: the Subway sandwich chain has surpassed McDonald's Corp. as the world's largest restaurant chain, in terms of units.

At the end of last year, Subway had 33,749 restaurants worldwide, compared to McDonald's 32,737...

Subway, which surpassed the number of McDonald's in the U.S. about nine years ago, expects China to eventually become one of its largest markets. The sandwich shop only has 199 restaurants in China now, but expects to have more than 500 by 2015.


Thursday, March 3, 2011

Greenspan: March 2001

Both the Bush Administration and the Congressional Budget Office project growing on-budget surpluses under current policy over the next decade. ...

The most recent projections from OMB and CBO indicate that, if current policies remain in place, the total unified surplus will reach about $800 billion in fiscal year 2010, including an on-budget surplus of almost $500 billion.

Moreover, the admittedly quite uncertain long-term budget exercises released by the CBO last October maintain an implicit on-budget surplus under baseline assumptions well past 2030 despite the budgetary pressures from the aging of the baby-boom generation, especially on the major health programs.

These most recent projections, granted their tentativeness, nonetheless make clear that the highly desirable goal of paying off the federal debt is in reach and, indeed, would occur well before the end of the decade under baseline assumptions.


When Cuts Don't Cut the Budget

Housing Double Dip?