• gaspumps

    Energy Expenditures

    With the recent sharp decline in energy prices, the percentage of household spending devoted to energy in Q4/14 was 4.9%, its lowest level since Q1/09. The last time it was below 5% for an entire year was 2003. The lowest quarterly percentage this century was 3.97% in Q1/02, while the highest was … [Read More...]

  • dollarstacks

    Burgeoning Buck

    While the strength of the US dollar was for a long time the result of central bank policy in the US, the dollar is now, to at least some extent, a determinant of Fed policy. Because the surging dollar is dampening inflation, hurting exports, lowering corporate profits, and will probably harm … [Read More...]

  • povertywithkid

    Parental Poverty

    The Friday File: The cost of raising a child from birth to college is $245,340, or $13,630/year for families with annual incomes of $82,790. Of course this excludes college costs and forgone income while being a stay-at-home parent. Conservatively those two items sum to over $150,000, bringing the … [Read More...]

  • ProductivityProblem

    Productivity Problem

    While 3.2 million new jobs were created in 2014 making it a great year for job creation, GDP grew by a very pedestrian 2.4%. This suggests that labor productivity is either growing very slowly, or worse, may be declining. Either way, it means when labor force slack disappears inflation pressures may … [Read More...]

  • balanced-budget

    Budget Balance

    In calendar year 2014, the budget deficit was $488 billion, $72 billion less than in 2013 and the smallest deficit since 2007. Since the start of 2010, revenues have risen from $2 trillion to $3 trillion, while spending has been flat at $3.5 trillion. If revenues continue rising by $200 … [Read More...]

Apr
17

Inflationary Income

sherzer

The Friday File: The Washington Nationals recently signed hurler Matt Sherzer to a mind-blowing seven-year $210 million contract, payable over 14 years. Sherzer will receive $15 million/year. Beyond Sherzer’s performance, this is a bet on expected long-term inflation. If inflation averages 2% over … [Read more...]

Apr
16

Humdrum Housing

humdrum housing

After a dismal February, housing bounced back slightly in March, but is still quite weak. While starts jumped a weather-related 115% in the Northeast and 31% in the in the Midwest, they inexplicably fell 4% in the South and 19% in the West, by far the two biggest regions. March starts are down 3% … [Read more...]

Apr
15

Teutonic Trouble

german economy

While China has the largest trade surplus at $380 billion, Germany, with a trade surplus of $250 billion, may soon take that title. China’s surplus is about 2% of its GDP, but Germany’s is almost 7% and rising. It’s high primarily because Germany benefits from the weak euro and because its … [Read more...]

Apr
14

Taxing Totals

income taxes

In 2014, the bottom fifth of Americans (incomes up to $24,200/year) earned 4.5% of income and paid -2.2% of income taxes (because of credits like EITC). The next quintile earned 9.3% of income and paid -1% of income taxes. The middle quintile earned 14.8% and paid 5.9%, while the fourth quintile … [Read more...]

Apr
13

Cracking Crime

medicare fraud

A dollar of government spending can create more than a dollar of tax revenue! About $60 billion/year of Medicare spending goes for “improper payments.” With a return of over $10 for each dollar spent, Congress should increase the Medicare fraud-busting budget. Similarly, with a return of about $5 … [Read more...]

Apr
10

Doctor Drupe

apple1

Doctor Drupe The Friday File: Contrary to popular wisdom and after controlling for socioeconomic status, persons that eat an apple a day are just as likely to see the doctor or have an overnight hospital stay as those that do not. Despite this heavy blow to the fruit-farmer-industrial complex, the … [Read more...]

Apr
09

Rarefied Reserve

globe

While the Fed struggles as to the timing of its first rate rise since 2004, this puts it in rarified company. Last quarter, Australia, Brazil, Canada, China, Denmark, India, Indonesia, Japan, South Korea, Thailand, the ECB, Hungary, Israel, Poland, Russia, Sweden, Switzerland and Turkey all lowered … [Read more...]

Apr
08

Migration Mix

suburbs

The population of US counties that include large metropolitan cities grew just 0.7% between 7/13 and 7/14, down 0.9% Y-o-Y. Suburbs of the large metro areas grew by 1.2%, up from 1.1% Y-o-Y. The exurbs, (the suburbs of the suburbs) grew 0.87% last year, faster than big cities and up from 0.56% … [Read more...]

Apr
07

Boomer Buying

vacation home

Sales of vacation homes are skyrocketing. Last year a record 1.13 million vacation properties sold, an amazing 21% of all sales and up 57.4% from 2013! Part of this is due to Boomers buying second homes to eventually retire to, while part is being fed by strong gains in financial markets. Meanwhile, … [Read more...]

Apr
06

Flexible Fed

fed

The Fed wants to raise short-term rates, and the three most important labor market variables they’re looking at are payroll growth, the unemployment rate and the change in average hourly earnings. Last Friday’s employment report offered no good news. Payroll growth at 126,000 was half the level … [Read more...]