Personal Economics 101

If you’ve traveled to New York or San Francisco recently, you’ve likely noticed the price of your Starbucks order change from terminal to terminal. The difference is due to price level variation throughout the United States. The Bureau of Economic Analysis (BEA) recently released data detailing the disparities in spending power across metropolitan and nonmetropolitan areas of each state for calendar year 2021. Using the data, we can compare how much $100 buys across the country. The differences can be large and they have significant implications for the relative impact of economic and tax policies across the United States. $100 tends to buy the least in large cities in the Northeast, California, and the Pacific Northwest. On the other hand, $100 goes the furthest in rural areas in the Southeast and Midwest. Prices can vary significantly within states too—$100 in California tends to buy $89.45 worth of goods on average, but in the Los Angeles area, $100 can purchase about $87.86 worth...

from Gary D. Halbert's "Between the Lines " President Joe Biden officially kicked off his 2024 re-election campaign in August, and he has been crisscrossing the country with campaign stops since then. His main re-election pitch is that the US economy is surging as a result of his economic policies. On that subject, the president repeatedly touts that the US economy has added almost  13.5 million new jobs  since he took office in January 2021. If true, that would be more jobs than created by any previous president over four years. The question is:  Is it true?  The answer is a little complicated but I’ll sort it out for you below. The fact is, nearly 13.5 million jobs have been gained since Mr. Biden took office. But what is critical to realize is that the vast majority of those new jobs were simply  businesses which shut down during Covid and are now reopening  – and calling back their laid-off workers. The issue when it comes to President Biden claiming he...

Note: As of 9 AM, GM is up .58 or 1.72% to $34.24, while Ford is up .10 or .7% to $12.72.  Sometimes I side with the unions, but mostly I don't. In this case, the UAW has asked for too much, in my opinion. Democrats talk about greedy companies all the time, but ignore greedy workers.  Full-time assembly plant workers at Ford and GM earn $32.32 an hour, while part-timers currently make about $17 an hour. Full-time employees at Stellantis earn $31.77 an hour, and part-time workers earn close to $16 an hour. The $32 an hour translates to approximately $67,000 annually, based on a 40-hour work week. According to the U.S. BLS, the median wage in 2022 was $54,132. So the plant workers are already making above-average pay, some 25% more. They want that $32 an hour to go up some 40 percent over four years, or to about $45 an hour. This equates to $94,000 a year, based on a 40-hour work week. The strike will initially target one plant at each of the Big Three automakers and will not in...

By Kelly Evans, CNBC The yield curve is useless! They exclaim. The recession should have been here by now! No, no. The recession is not late yet. And if it doesn’t show up for another three or even six or nine months, that wouldn’t be all that unusual by historical standards. Looking back over the past seven decades, yield curve inversions have occurred anywhere from seven to twenty-five months before recessions began. That’s according to research from MKM’s Michael Darda. The average is fourteen months, and we are currently in month thirteen since the one-year Treasury began yielding more than the 10-year, which is the preferred metric for many professionals to watch. So if the recession doesn’t begin in the next month or two, then the lag is longer than average. But still not unprecedented! And given the dual supports of massive fiscal spending and the Fed balance sheet swallowing up much of the paper losses in the financial system right now, it’s little wonder we’re seeing a de...

From the Committee to Unleash Prosperity The percentage of teenagers who are working in America is abysmally low. In the 1950s, almost half of teenagers were working. That work rate slid slightly in the 40 percent to 45 percent range when baby boomers and Gen Xers were teens in the 1970s, and 1980s. That labor force participation rate crashed with the spoiled generation – i.e., millennials – whose work rate as teenagers fell to as low as 28%. In other words, only a little more than half as many millennials worked as teens as previous generations. (Now in their late 20s and 30s, they are insisting on the right to “work” at home, or in offices with transgender bathrooms.) More recently, there has been a slight tick-up in teen work rates to one in three among Gen Z teens – but even this is a pitifully low rate. Why does this matter? Because almost every study on wages and career success shows that the earlier an individual starts to work and learn job skills, the higher their earnings and...

 Up from 6.09% on Feb. 3, 2023.

Interactive Chart here . 

The survey of business establishments has shown steady growth in employment and the smaller survey of households has shown virtually no job growth since March. This pattern held again for the November jobs report released Friday. Employment was up in the establishment survey by 263k, but the household survey dropped 138k. The divergence since March now stands at an enormous 2.7 million jobs.One reason is double counting in the establishment survey, with over 900k of the jobs added in the last year being workers with second jobs, not additional people employed. To be sure, it is still a hot employment market for workers with some 10 million job openings. Count us as skeptical that this rosy jobs market will continue much longer. The economy is hemorrhaging full-time jobs – we’ve lost over 2,600 full-time jobs every day since May.

Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over

  As Milton Friedman said: Inflation is a monetary issue. Think the money supply had anything to do with that? And what caused this? Spending by Congress and Quantitative Easing by the Fed.

Just when you thought it couldn't get any worse. Democrats are now pushing two very bad ideas: 1) Do away with the "gig" economy, as California has done with its draconian restrictions on independent contractors; and 2) nationalize the oil and gas industry.  The attack on American's right to work From National Review  (subscriber only):  The Department of Labor wants to effectively outlaw gig work. The Golden State has been there, done that, and the results aren’t pretty. The Biden administration has effectively declared war on gig work, with its Department of Labor proposing a new federal regulation inspired by California’s controversial AB 5 law that would limit people’s ability to be classified as independent contractors and work as they choose. This proposal, if successful, would cruelly upset millions of lives. At least 57 million Americans are currently involved in gig work, a number expected to grow to more than 86 million within the next five years. More on  ...

By Jack Crowe National Review Inflation surged 8.5 percent in July compared to the same month last year, down slightly from the four-decade high reached in June, the Labor Department announced Wednesday. The Consumer Price Index, a key measure of the cost of goods and services, dropped slightly due to a decline in record-high fuel prices which drove the previous month’s historic inflation spike. The increase also beat expectations as economists surveyed by Dow Jones expected headline CPI to increase 8.7 percent year-over-year in July. Excluding volatile food and fuel prices, core inflation rose 5.9 percent annually and 0.3 percent monthly. The average national fuel price stood at $4.010 per gallon as of Wednesday, down from a record-high $5.016 in mid-June. Despite the slight relief offered by declining fuel prices, the Federal Reserve is still expected to further raise interest rates to bring inflation closer to its target of 2 percent. Voters across the country consistently rank infl...

From the Tax Foundation. Full analysis here .  Reconciling the reconciliation bill: The Inflation Reduction Act, successor to the House-passed Build Back Better Act of late 2021, has been touted by President Biden to, among other things, help reduce the country’s crippling inflation. Among the major tax changes are a 15 percent corporate minimum tax, drug price controls, IRS tax enforcement, and a tax hike on carried interest to pay for increased spending on energy and health insurance subsidies as well as deficit reduction. See a more comprehensive list here . According to our model, the bill would raise about $304 billion in net revenue from 2022 to 2031, but would do so in an economically inefficient manner, reducing long-run economic output by about 0.1 percent, eliminating about 30,000 full-time equivalent U.S. jobs, and reducing average after-tax incomes for taxpayers across every income group in the long run. What about inflation? On balance, the long-run impact on inflation...

S ome people think America's main fiscal problem is the gap between the two lines. In other words, they worry about deficits and debt. But the real problem is government spending. And that's true whether the spending burden is financed by taxes, borrowing, or printing money. Full story here .

Technically, because GDP was negative for two quarters, it's a recession. However, there are caveats to current economic conditions, which mean if it is a recession, it's very mild. And there's still that pesky 2yr/5yr bond rate inversion (2.9/2.72). It's inflation that is the beast, which will undo everything.   T he GDP Price Index came in at an 8.7% increase, well above expectations of an 8.0% gain and compared to the unrevised 8.2% rise seen in Q1. By Kelly Evans The Exchange , CNBC Why was real GDP negative in the first half of this year? Because inflation ate up all the gains. The bombshell report this morning showed that real GDP shrank again in the second quarter, by 0.9% annualized, after a 1.6% drop in Q1. But wait, how can real GDP be shrinking while the labor market at the same time added 2.7 million jobs, and the unemployment rate fell from 4% to 3.6%? Because inflation ate up all the real economic gains. Nominal GDP--actual dollars before any adjustment fo...

Federal bond yields, when inverted, normally signify an upcoming recession. That's something we've been anticipating for some time, so whether it's a predictor or confirmation, is anyone's guess. It's not the first time yields have inverted in the last year or so.  It's just something all investors should be aware of, and plan for accordingly. I think the overall market has priced in these facts already, with the DJIA down about 15%, the SP500 down 18%, the NASDAQ100 down 25%, and the Russell down 27%.  These declines are up from yearly lows, with rebounds of 5% to 10% in the last month or so. This chart shows the short term bonds have larger yields than the longer term 10-year and 30-year bonds. It should be the other way around. 

The Republicans on the congressional Joint Economic Committee have calculated that from January 2021 through the end of this year, inflation will have cost the typical American family nearly $8,400. If these trends continue, this means that inflation will have erased all of the $6,400 median household income gains that were made under Trump. Here are the highlights: Prices increased 13.3 percent from January 2021 to June 2022, costing the average American household $718 last month alone Even if prices stop increasing altogether, the inflation that has already occurred will cost the average American household $8,616 over the next 12 months. In the United States overall, the monthly inflation cost in June 2022 was highest within transportation ($343), followed by energy ($214), food ($85), and shelter ($81). Families in Colorado are facing the highest transportation inflation ($487) and shelter inflation costs ($149); families in California are facing the highest food inflation costs (...

On a national scale, housing affordability weakened in May as monthly mortgage payments jumped to 5.31% versus the same time last year at 3.01%. The housing affordability index illustrates a decline, although the real estate market remains robust. Although there’s been some flattening due to higher rates and fears of a recession, these headwinds could bring the supply and demand back in alignment following months of frenzied home-buying post-pandemic and a seller's market riddled with bidding wars.

Inflation at the wholesale level climbed 11.3% in June compared with a year earlier, the latest painful reminder that inflation is running hot through the American economy. The Labor Department reported Thursday that the U.S. producer price index, or PPI — which measures inflation before it hits consumers — rose at the fastest pace since hitting a record 11.6% in March. Last month’s jump in wholesale inflation was led by energy prices, which soared 54% from a year earlier. But even excluding food and energy prices, which can swing wildly from month to month, producer prices in June jumped 8.2% from June 2021. On a month-to-month basis, wholesale inflation rose a substantial 1.1% from May to June. Thursday's PPI report came a day after the Labor Department reported that surging prices for gas, food and rent catapulted consumer inflation to a new four-decade peak in June, further pressuring households and likely sealing the case for another large interest rate hike by the Federal Res...

More than half of all Americans weren’t even alive the last time prices rose at this pace of 9.1%. Yet Democrats say dam the torpedoes and full speed ahead with another $1 trillion tax and spend bill. Stimulus is a large part of what caused this runaway inflation to begin with. I wonder why they don't get it.  Biden remarked that the data was backward looking, that June's numbers didn't reflect the drop in oil prices in July. Nothing to worry about. These aren't the droids you're looking for. OMG. All data is backward looking; otherwise, its a projection or prediction, or just a wild ass guess. Even the Carter administration didn't have this level of incompetence.  This is a scary bunch ruling Washington these days. November can’t get here soon enough .