Posts Tagged ‘graphsandlaughs and economics’
Shrinking Middle
Middle class is defined as adults with household incomes between two-thirds and twice the national median, or between $40,000 and $120,000 today. In 1971, 61% of adults were middle class, 14% were upper class and 25% were lower class. Today, just 51% are middle class, 20% are now upper class, and 29% lower class. Even…
Read MoreBogus Benevolence
The Friday File: Organizations often promise that 10%, 20%, or even all profits go to charity, while other firms promise that a percentage of revenues go to charity. Of course charitable giving is always good, but as a curmudgeonly economist, I much prefer the latter approach because it gives firms no incentive to boost salaries…
Read MoreFederal Reserve Flexibility
The just-released minutes of the Federal Reserve’s July meeting are a Rorschach test. For those reluctant to taper, there’s a nod to the still struggling labor market and the very low inflation rate. Conversely, others felt that the recent rise in interest rates would exert little restraint and that easier lending standards would help juice…
Read MoreHot Lots
In a move to streamline operations and cash in on the home building renaissance, Weyerhauser is selling its home-building unit. The prize, 27,000 lots including 18,000 in market-constrained litigation happy California, mostly in L.A. and San Diego. Assuming no goodwill, if the home-building unit sells for $3 billion, that’s just $110,000/lot. At $4 billion it’s…
Read MoreFired, Not Hired
Healthy labor markets consist of many things including low rates of involuntary termination and high rates of hiring. Usually they’re highly correlated. Not now. First time unemployment insurance claims at 332,000/week are at levels last seen in 11/07 before the Great Recession. Yet total hires at 4.2 million in June are now where they were…
Read MoreMileage Miscalculation
Automobile regulation that improves fuel efficiency raises the price of new cars. That in turn raises the price of used cars, as some buyers avoid higher new car costs by buying used ones. This unsurprisingly reduces the number of used cars that get scrapped. And since used cars have worse gas mileage than new ones,…
Read MoreDeclining Deficit
As of 7/31/13, the FY2013 federal budget deficit was $607 billion, down from $973 billion on 7/31/12, and the full year FY13 deficit is projected to be $759 billion, down from $1.089 trillion last year. Revenues to date are up $278 billion, while outlays are down $88 billion. The deficit as a percent of GDP…
Read MoreHot Rod
The Friday File: Last month a virtually pristine 1954 Mercedes-Benz W196R racing car sold for $29.6 million, shattering the previous record of $16.39 million for the most expensive car ever sold. The car was driven by the late Argentine racing great Juan Manuel Fangio, who won 45% of the races he entered and five world…
Read MoreTerrible Tactics
The GOP threat to close the government on 10/1 if the 2014 budget contains any funding for Obamacare is laughable. Obama will veto any bill that defunds his signature achievement and a veto override is impossible as it requires a two-thirds majority in both chambers. Moreover, dare I remind anyone, the most recent attempt to…
Read MoreBanking on Leverage
A proposal to increase capital ratios for the biggest financial firms to 6% for bank subsidiaries and 5% for bank holding companies while good, presents a huge loophole. A $150 billion bank would need $7.5 billion in capital. But if it puts $50 billion in a BHC, the subsidiary would have to hold $6 billion…
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