Saturday, February 8, 2014

Nice resource on trade balance in the US. Or I should say trade imbalance.

If you are teaching or learning about trade here is a nice concise resource for the year 2013.

It shows the dollar values of exports and imports from and to the US.  It also shows the general categories of goods that the US trades in with the rest of the world.

I highlighted Exports in yellow, Imports in red and the overall trade numbers in green.

The US had a merchandise (this DOES not include trade in services) trade deficit $650.857 Billion with the rest of the world. In other words, we bought $650.857 Billion dollars more in "stuff" than we sold to the rest of the world.

We love foreign made stuff!  Is this a good thing, bad thing, or just a thing?

We all know "education pays" in terms of income but it also pays in employment consistency. Interesting graphs here that make this important point.

It is clear that "education pays" in terms of absolute income people earn over their lifetime---the more you learn the more you earn.

But another benefit of more education is the likely-hood of having gainful employment on a continual basis.  If you lose your job you are more likely to find another one in a relatively short period of time.

This graph from the Census Bureaus American Community Survey illustrates this nicely.

I inserted a RED line at the age of 60 to show the difference between years of work experience a person would have at the various levels of education.

You can see clearly someone with less than a high school diploma fares the worst by far with only about 27 years of work experience on average. Those with a college degree (or more) and those with some college trend together with 40 years of experience.  High school graduates lag by less than 5 years.

Stay in school, kids...

For more support here is a graph from the same American Community Survey that shows median monthly income by education level and years of experience.  I put a RED line at the end of the data lines at 35+ years of experience. Dramatic, is it not?

I repeat. Stay in school, kids!

Friday, February 7, 2014

Inflation is not a boring topic. It is a thief in the night and the root cause of rebellion around the world. Can't get more exciting than that! See here why...

When I introduce the concept of  inflation in class I teach it from two angles. 

I tell students it is like a thief in the night.  It does not actually take money away from you but it makes the money in your pocket worth less (not to be confused with worthless) than it was worth yesterday.

Example:  A bottle of water costs $1.00 today.  I exchange one dollar for the water. Assume tomorrow the water is $2.00.  We certainly can say that the price has increased by a dollar, but I think it is more powerful and meaningful to say yesterdays dollar is worth half of what it was 24 hours earlier. I now have to give up two one dollar bills to get the bottle of water OR I can only buy half a bottle!

Another point I like to make is inflation creates social instability, especially for people in poorer, developing countries where a higher proportion of cash money is spent on "needs"---food, water, shelter, etc.

In many places where social instability or outright rebellion is happening if you rewind the events to the root cause it often started with rising prices on basic staples in the marketplace.

You can get students and other young people to protest in the streets for "democracy, freedom, etc" BUT you can get moms, dads and grandparents to join them if prices rise unexpectedly.  Movies are made about fights for freedom from oppression. Not so much about the real cause--loss of purchasing power due to inflation.

Do the research.  I think you will find this is true.  Look for it going forward.

Oh, wait, you don't have to!  Just read about this VERY THING here in the WSJ:
Inflation may lead to social unrest in developing countries because rising prices are especially painful for households that rely heavily on cash as a store of wealth, according to recent research from the Federal Reserve Bank of St. Louis. 
Yi Wen, an assistant vice president in the St. Louis Fed’s research division, wrote in a new working paper that in developing nations, “liquid money [cash and checking accounts] is the major form of household financial wealth and a vital tool of self-insurance [precautionary saving] to buffer idiosyncratic shocks because of the lack of the well-developed financial system.” 
Mr. Wen also noted “historical evidence” that “moderate inflation [around 10% to 20% a year] may be significant enough to cause widespread social and political unrest in developing countries.

My salute to "Multiple Job Holders" in the US. Their numbers have increased significantly over the last year. This can't be good, can it??

The monthly jobs report has a lot of interesting data on employment/unemployment that is seldom reported on in the general media.

Here is one I find interesting: "Multiple Jobholders".

Highlighted in YELLOW are people whose primary and secondary jobs are BOTH part time.  There are 1.892million of them in January 2014.  That is a 6% increase over January of 2013.

Highlighted in RED are people whose primary and secondary jobs are BOTH full-time! There are 236,000 of them.  That is a 12% increase over January of 2013.

This means over the past 12 months there are 131,000 more people who gained at least one additional job (or both of them).  That is equivalent to the number of jobs created in the month of March of 2013.

Payin' the bills....

Your first look at January's Jobs Report. 113,000 new jobs created. Way below estimates from Left AND Right economists. Tepid at best.

Businesses created a total of 113,000 new jobs in January.  This is way below the general consensus of economists on the Left AND Right that about 185,000 were expected.

Highlighted in YELLOW are the areas where the jobs created in January 2014 were above the past two months level and higher than one year ago (Jan 2013).

Highlighted in RED are the areas where the the jobs created are below the past two month level and lower than one year ago.]

Highlighted in GREEN are the total for the overall "Goods Producing" sector which is higher than in prior periods, and "Private Service Producing" sector which is much lower than in prior periods.

"Government" at the bottom is down significantly.  This category includes Federal, State and Local employment.  The BLS reports that 9,000 of the job losses come from the US Postal service alone.

Source: BLS

Thursday, February 6, 2014

US Gross State Product vs a Nations Gross Domestic Product.

A neat map that matches a US States Gross State Product (GSP) with the Gross Domestic Product (GDP) of country that with a similar dollar value of the production of goods and services.

For instance, the dollar value of output produced by Texas alone is roughly the same as the dollar value of output produced by ALL of Canada.

A nice perspective on the just how the US is STILL a powerhouse in producing "stuff".

If educated people marry other educated people and it makes income inequality worse is it a problem that needs a solution? Nice graph here that illustrates one piece of the income inequality puzzle

When the government collects and reports data on "Household Income" it includes the income of all the people living in a particular household.  Two people living separately will be counted as two household units and their income counted separately.

However, if they marry (or co-habitat) then they will have one combined household income. Half the households, double the income on a per household basis (no more total income, however).

As households are formed over time their characteristics based on several factors will affect total household income.

Education is one such variable that has been identified as one of the primary drivers of income inequality. Not the only one but significant enough to note

New data provided by the Census Bureau and interpreted by the Pew Research Center (graph below) shows that the rate of household formation by marriage has decreased overall since 2008 by an average of 11.4%.  However, the decrease is not evenly spread over educational attainment levels.

As you can see, those with a college degree get married at a higher rate than people with lower levels of educational attainment, and even though they have decreased they have decreased at a slower rate than the other categories (7.8% is significantly below the average).

Additionally, those with a degree have seen an uptick from 2011 to 2012 (brown bars to the extreme right) in family formation by marriage.

If income gains are going to those with more education and educated people are pairing up at a higher rate than other groups, then income inequality as measured by "Household Income" can only get wider.

I don't know how to fix this.  I just thought it was interesting and I don't think it is something that is talked enough about at a policy making level.

Should it???

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