In DC there are 8,600 cabs for 600K people; plenty of cabs and a hacker license is cheap. In Chicago there are restrictions; only 6,951 cabs for a population of 3 million, and a license costs $200,000. In Boston, there are just 1,825 cabs and a license costs $385,000. And, in NYC there are only 13,237 cabs for 8 million people; the costs of a license, $750,000! Don’t tell me regulations don’t matter.
Category Archives: 70 Words
Shop or Drop?
Consumers are spending but for how much longer? Over the past year disposable income is down, savings has fallen from 5.3% to 3.5%, household net worth has fallen by $2.4 trillion as house prices keep falling and credit card debt is up. Luxury spending is strong but chain-store sales were down in Oct and Nov as were purchases by the middle class. I don’t think households can keep spending at the elevated levels of late.
Where are My Wages?
Over the six quarters ’09Q2 through ’10Q4 corporate profits captured 88% ($464 billion) of the growth in real national income ($528 billion) while wages and salaries accounted for slightly more than 1% of the growth ($7 billion). Through ’11Q1 corporate profits were 92% of growth and wages and salaries actually fell by $22 billion! The next best corporate recovery was 01Q4 through 03Q2 when corporate profits accounted for 53%, and wages and salaries, just 15%.
Packing it in!
The Friday File: Where to invest? The S&P has been marking time for over a decade, Europe is in recession, Treasuries can only go down as yields rise, and gold looks pricey at $1,700. The answer, buy stock in the Green Bay Packers! It pays no dividends, offers no voting rights, and is instantly worth less (zero to be precise) than you paid for it. It really reminds me of the stock I own! Yet never once did I brag about owning shares in Enron!
Swiped Away
Due to Dodd-Frank, the Fed capped fees merchants pay credit card companies (CCCs) on debit cards (DCs) to about 21 cents from about 44 cents. When the fee was 44 cents, CCCs often reduced DC fees on small transactions; less than $5 or $10. Because the fee was lowered, CCCs now want the full 21 cents even on small sales and stores are raising prices to compensate. Did you anticipate this?
Udder Nonsense
Eager to take advantage of fat margins dairy farmers around the world ramped up production in response to high prices. But, those same record prices weakened consumer demand for milk (down 4%), cheese (1.5%) and butter (2.5%). Now, the increased supply and decreased demand have resulted in 17% lower prices for milk! How many dairy farmers survive depends on how fast banks cut off credit to unprofitable farms.
GDP for Higher
During Q3 ‘11 U.S. GDP finally exceeded the real pre-recession peak of total economic output recorded in Q4 ‘07. It took 15 quarters to offset the 5.1% decline in output during the Great Recession, 3 times the average number of quarters needed to reach the prior peak in other post-WWII recessions. The bigger problem, the number of employed persons is still 6.5 million below what it was before the GR.
Tunnels Going to Pot
Authorities recently found 32 tons of pot after stumbling on a well built cross-border tunnel linking San Diego and Tijuana. The agents who made the discovery were surprised. I wonder why; they have found over 70 such tunnels since 10/08, more than in the previous 6 years! Why, the proliferation? Because of increased and improved border crossing and land enforcement by ICE agents. Digging to avoid detection is a natural economic response.
Unemployed and Well Slept
The Friday File: What do the involuntary unemployed do with their free time? Researchers find that about 40% of their “free” time is spent working in the home which includes cooking, doing laundry, shopping, home improvement projects, caring for elder parents etc… 30% of the time goes to sleeping longer and TV. Another 30% is spent on other leisure activities like reading and going to movies. As for searching for a new job, that takes up about 1% of the extra hours!
“Doc-Fix” is Broken
Unless Congress acts by 1/27/12, doctors treating Medicare patients will suffer a 27% fee cut. Last year, and every year since ’03, Congress passes a temporary “Doc Fix.” Problem is, every year, the size of the “Fix” gets bigger. The need for this annual display of fiscal dysfunction stems from a formula (the Sustainable Growth Rate) passed well over a decade ago designed to control Medicare spending that totally failed, but has never been repealed.