• 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
24

Flat Fiz

soda pop

The Friday File: In 2014, flavored, unflavored, carbonated and non-carbonated non-alcoholic beverage sales in the US fell by 1% to 12.76 billion gallons, or 40 gallons/person, the 10th consecutive year of declining volume. The top seller, Coke with a 17.3% market share, followed by Pepsi at 8.7%, … [Read more...]

Apr
23

Incentivizing Iran

nuclear power plant

The key is less the rollback of the Iranian nuclear program, but more the ability to monitor it in real time. Absent that, it will be impossible to determine if the Iranians are being honest and for us to impose penalties if they cheat. Moreover, a mechanism must be in place to deal with … [Read more...]

Apr
22

World Worry

checklist

For those who enjoy worrying about global economic health, here is a handy checklist. Macroeconomic risks have declined, but easy credit and low interest rates have caused pension funds and insurance companies to chase yield and in the process make dumb investments, increasing financial risk. … [Read more...]

Apr
21

Working Welfare

TANF

Perhaps surprisingly, 56% of federal and state welfare program spending (EITC, Medicaid, TANF and food stamps) went to households headed by a working adult. 52% of fast-food workers receive government assistance, 48% of home care workers, 46% of child-care workers and amazingly, 25% of part-time … [Read more...]

Apr
20

Dreadful Drought

drought

The California drought can be overcome with a grand compromise. Shift some water from agriculture to residential use. Purify wastewater into drinking water, recycle graywater to be reused as irrigation, and improve stormwater retention. Simultaneously, raise the price of water, yet keep the cost of … [Read more...]

Apr
17

Inflationary Income

sherzer

The Friday File: The Washington Nationals recently signed hurler Max 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...]