By Morgan Housel
April 5, 2012

In no particular order, here are 50 things about our economy that blow my mind:

50. The S&P 500 is down 3% from 2000. But a version of the index that holds all 500 companies in equal amounts (rather than skewed by market cap) is up nearly 90%.

49. According to economist Tyler Cowen, “Thirty years ago, college graduates made 40 percent more than high school graduates, but now the gap is about 83 percent.”

48. Of all non-farm jobs created since June 2009, 88% have gone to men. “The share of men saying the economy was improving jumped to 41 percent in March, compared with 26 percent of women,” reports Bloomberg.

47. A record $6 billion will be spent on the 2012 elections, according to the Center for Responsive Politics. Adjusted for inflation, that’s 60% more than the 2000 elections.

46. In 2010, nearly half of Americans lived in a household that received direct government benefits. That’s up from 37.7% in 1998.

45. Adjusted for inflation, federal tax revenue was the same in 2009 as it was 1997, even though the U.S. population grew by 37 million during that period.

44. In November 2009, the nationwide unemployment was around 10%. But dig into demographics, and the rates are incredibly skewed. The unemployment rate for young, uneducated African-American males was 48.5%. For Caucasian females over age 45 with a college degree, it was 3.7%.

43. About the same number of people was awarded bachelor’s degrees in 2010 as filed for personal bankruptcy (1.6 million).

42. According to The Wall Street Journal, “U.S. refineries are producing more gasoline and diesel than ever. And Americans’ gasoline consumption is at an 11-year-low.”

41. Americans spend an average of 1.8% of their income on alcohol and tobacco. In the U.K., it’s 4.8%.

40. In 2009, 5% of Americans accounted for 50% of all health care costs.

Read the rest here.

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Todd Sullivan from ValuePlays

Total N. American rail traffic came in at 686k last week. This is a pretty impressive surge, far better than what I expected. Even better is that the main reason was metal and stone products (think construction) and auto’s set yet another multi-year high. As I read the data coming out and observe the key indicators we follow I am becoming more convinced, those who “sell in April/May and go away” are going to regret that decision.

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New York, April 05, 2012 — The US energy sector is undergoing a permanent change as natural gas prices will remain low for the foreseeable future, with significant implications over the next decade for the power, pipeline, coal and rail industries, says a new report by Moody’s Investors Service.

“Moody’s believes that low natural gas prices — currently at a 10-year trough — will continue well beyond 2013. This is creating a fundamental shift in North America’s energy infrastructure, as low prices continue to erode margins for unregulated power companies such as Exelon, First Energy and PPL,” said Jim Hempstead, a Moody’s Senior Vice President and author of the report.

“Coal will find it increasingly difficult to compete with gas as a power source over the next decade and we expect miners to continue their shift toward non-domestic revenue opportunities,” added Hempstead.

Moody’s says that coal-fired power plant retirements will cut the power sector’s demand for coal by up to 10% between 2012 and 2020, and as coal consumption drops by roughly 100 million tons the industry will become increasingly focused on exports. The report highlights Peabody Energy, Arch, Consol and Cloud Peak Energy resources as industry players that are already securing additional port capacity to reach export markets.

The drop in domestic coal demand, one of the US railroad industry’s most profitable segments, will lead to long-term changes in that sector too, says Moody’s. Higher exports from western coal producers will increase volumes for Union Pacific and Burlington Northern Santa Fe. Illinois Basin and met coal production in the east will increasingly benefit CSX and Norfolk Southern.

The report also notes that new natural gas pipelines serving the shale production regions will create new competitive risks for the existing interstate pipeline network. Companies with assets near the production basins, such as NiSource and Dominion Resources, will benefit, but disappearing arbitrage opportunities will hurt the marketing arms of such utilities as AGL Resources and Vectren.

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NEW YORK (AP) — Retailers from discounter Target to department-store chain Macy’s reported better-than-expected sales in March in the latest sign that Americans are feeling better about the economy.

A combination of warm weather and high demand for spring fashions boosted revenue for the month, but analysts say there’s much more than higher temperatures at play: Americans who cut back on spending in the slow economic recovery are encouraged by the improving job market.

“There’s a growing belief we reached bottom a while ago,” said Joel Bines, managing director of the retail practice of AlixPartners “Rather than confidence that things have turned the corner, it’s confidence that things are unlikely to get worse from here.”

Even though only a handful of retailers report monthly figures, industry watchers say March figures are a reason to be optimistic. That’s because the numbers offer a snapshot of consumer spending, which accounts for more than 70 percent of all economic activity.

Overall, revenue at stores open at least one year — an indicator of a retailer’s health because it excludes results from stores that opened and closed during the year — rose 4.1 percent, according to a preliminary tally of 22 retailers by the International Council of Shopping Centers. That figure is within the range of the group’s March estimates, but several retailers from luxury chain Saks Inc. to food and fragrance retailer Limited Brands Inc., had monthly gains that beat their own expectations.

The strong sales reports were boosted by unseasonably mild weather and a flurry of positive economic news. The housing market had its best winter in five years. Consumer confidence was relatively flat in March, but near February’s 12-month high. And on Friday a government report on March job growth is expected to show the fourth straight month of strong hiring.

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ATHENS (Reuters) – Greek bank shareholders are under pressure from Athens to contribute billions of euros to recapitalize the lenders so that the government can avoid taking them over.

Investors will find out by April 20 the details of the financial support package on offer from the Greek government, technocrat Prime Minister Lucas Papademos said on Thursday. Athens desperately wants to keep the banks in private hands.

The terms are likely to determine whether shareholders decide to take part. If they balk at the offer, the heavily indebted Greek state could end up owning the banks.

In a worst-case scenario, 50 billion euros ($65.6 billion) or a quarter of Greece’s gross domestic product (GDP), may be required to shore up the banking system. The money is needed because loan losses and a bond swap that saved Greece from bankruptcy hit its lenders – big buyers of Greek debt – particularly hard.

The government wants at least 10 percent of the capital to come from banks’ shareholders through rights issues, a senior banker close to the talks told Reuters.

“Main shareholders will need to make decisions, come up with 10 percent to keep the keys,” the banker said. “The total bill could reach 50 billion euros, including recapitalization and resolution which is more costly.”

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“U.K. (UKX) stocks fell, with the FTSE 100 Index heading for its lowest close since January, as the country’s manufacturing output unexpectedly contracted and concern about the euro-area debt crisis resurfaced.

Halfords Group Plc (HFD) sank 3.2 percent after saying that its underlying costs will rise.Barclays Plc (BARC) and Lloyds Banking Group Plc (LLOY) led declines among lenders.

The FTSE 100 slid 17.75 points, or 0.3 percent, to 5,686.02 at 12:59 p.m. in London. The benchmark measure fell 2.3 percent yesterday after the Federal Reserve damped expectations of more monetary stimulus and demand declined at an auction of Spanish debt. The FTSE All-Share Index lost 0.3 percent today, while Ireland’s ISEQ slipped 0.2 percent.

“The euro crisis is still the greatest concern,” said Thomas Tilse, head of global portfolio strategy at Allianz Global Investors in Frankfurt. “The question, and what will be the answer to all this, is: will we be able to buy enough time to consolidate the budgets across Europe? Everything we have seen is all about buying time.” He spoke in a Bloomberg Television interview with Owen Thomas.

U.K. factory output fell 1 percent in February from January, the Office for National Statistics said today in London. The median forecast of 24 economists in a Bloomberg News survey had called for an increase of 0.1 percent.”

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Factory orders in Germany came in less than expected….

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With the U.S. economy yielding firmer data, some researchers are beginning to argue that recoveries from financial crises might not be as different from the aftermath of conventional recessions as our analysis suggests. Their case is unconvincing.

The point that all recoveries are the same — whether preceded by a financial crisis or not — is argued in a recent Federal Reserve working paper by Greg Howard, Robert Martin and Beth Anne Wilson. It was also discussed in a recent article in the Wall Street Journal.

It is mystifying that they can make this claim almost five years after the subprime mortgage crisis erupted in the summer of 2007 and against a backdrop of an 8.3 percent unemployment rate (compared with 4.4 percent at the outset of the financial crisis). Our research makes the point that the aftermaths of severe financial crises are characterized by long, deep recessions in which crucial indicators such as unemployment and housing prices take far longer to hit bottom than they would after a normal recession. And the bottom is much deeper. Studies by the International Monetary Fund concluded much the same.

Read the rest here.

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By Kathleen Madigan

The Dow Jones Economic Sentiment Indicator rose for the third month in a row, as job gains are providing momentum to the U.S. economy.

The ESI advanced to 48.1 in March, from 47.4 in February. The ESI is now at its highest reading since December 2007, although the rate of progress last month was slower than in previous months.

“The indicator suggests that employment growth remained robust during the month and that the recovery is in hand, although not yet with the ebullience of past rebounds out of recession,” said Dow Jones Newswires “Money Talks” columnist Alen Mattich.

Positive coverage continues to be driven by better news on the labor markets. Better job growth will provide the money and confidence consumers need to keep lifting their spending, a key driver of U.S. economic activity. Coverage of the Federal Reserve was also positive for the outlook.

Negative news was dominated by the sting of higher gasoline prices. Worries about the health of the U.S. banking system were also a negative for future growth.

The economic sentiment indicator is designed to project the health of the U.S. economy by analyzing coverage of 15 major American newspapers, using a proprietary algorithm to look for positive and negative sentiment about the economy in every article.

The ESI is reported on a scale of 0 to 100; higher numbers represent increasingly positive sentiment. Dow Jones selected the 15 newspapers used to compile the indicator because they include extensive original reporting on economic issues. They are also geographically diverse and represent eight of the 10 largest metropolitan areas in the U.S.

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Krugman: “the simple analytics say that we should soak the rich, hard.”

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Good news for the moment…

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Source 

“If you go by the official data, U.S. workers have benefited from international trade in the past few years. The reported deficit in the trade of goods fell 25 percent from 2007 to 2011, adjusted for price changes. A shrinking trade gap is good for workers because it means more Americans are being kept busy producing things for domestic and foreign consumption.

But what if those trade numbers are wrong? After all, the U.S. lost 2 million manufacturing jobs from 2007 to 2011. A new research report from the Democratic-leaning Progressive Policy Institute says the trade deficit isworse than officially stated. It says the government is understating how much of what Americans consume is actually produced abroad, particularly in such low-cost nations as China. Report authors Michael Mandel and Diana Carew calculate that rising imports account for the loss of about 1.3 million American jobs from 2007 to 2011, or about one-third of all the job losses in the private sector outside construction over that period.

Mandel and Carew say the Department of Commerce’s Bureau of Economic Analysis underestimates the value of imports from low-wage nations because of an “import price bias.” They say when a U.S. company switches to a cheaper supplier—such as a Chinese company—and its import bill falls, the government mistakenly assumes the American company is buying fewer items, rather than getting a lower price per item. So it understates imports.

I have asked the Bureau of Economic Analysis about this issue in the past, and it has responded that, while the phenomenon is real, it is not as big as Mandel makes it out to be. Mandel, a former chief economist atBusinessweek, and Carew present case studies from apparel, furniture, autos, communications equipment, and computers to bolster their case. I asked the government for comment on the latest report today and will update this article if I hear anything.”

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A surprising correlation between auto sales and employment may help you position into Friday’s number.

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“Luxury retailers are smiling. So are the owners of high-end restaurants, sellers of upscale cars, vacation planners, financial advisors, and personal coaches. For them and their customers and clients the recession is over. The recovery is now full speed.

But the rest of America isn’t enjoying an recovery. It’s still sick. Many Americans remain in critical condition.

The Commerce Department reported Thursday that the economy grew at a 3 percent annual rate last quarter (far better than the measly 1.8 percent third quarter growth). Personal income also jumped. Americans raked in over $13 trillion, $3.3 billion more than previously thought.

Yet it’s almost a certainly that all the gains went to the top 10 percent, and the lion’s share to the top 1 percent. Over a third of the gains went to 15,600 super-rich households in the top one-tenth of one percent.

We don’t know this for sure because all the data aren’t in for 2011. But this is what happened in 2010, the most recent year for which we have reliable data, and there’s no reason to believe the trajectory changed in 2011 or that it will change this year.

In fact, recoveries are becoming more and more lopsided.

The top 1 percent got 45 percent of Clinton-era economic growth, and 65 percent of the economic growth during the Bush era.

According to an analysis of tax returns by Emmanuel Saez and Thomas Pikkety, the top 1 percent pocketed 93 percent of the gains in 2010. 37 percent of the gains went to the top one-tenth of one percent. No one below the richest 10 percent saw any gain at all.

In fact, most of the bottom 90 percent have lost ground. Their average adjusted gross income was $29,840 in 2010. That’s down $127 from 2009, and down $4,843 from 2000 (all adjusted for inflation).

Meanwhile, employer-provided benefits continue to decline among the bottom 90 percent, according to the Commerce Department. The share of people with health insurance from their employers dropped from 59.8 percent in 2007 to 55.3 percent in 2010. And the share of private-sector workers with retirement plans dropped from 42 percent in 2007 to 39.5 percent in 2010.

If you’re among the richest 10 percent, a big chunk of your savings are in the stock market where you’ve had nice gains over the last two years. The value of financial assets held by Americans surged by $1.46 trillion in the fourth quarter of 2011.

But if you’re in the bottom 90 percent, you own few if any shares of stock. Your biggest asset is your home. Home prices are down over a third from their 2006 peak, and they’re still dropping. The median house price in February was 6.2 percent lower than a year ago.

Official Washington doesn’t want to talk about this lopsided recovery. The Obama administration is touting the recovery, period, without mentioning how narrow it is.

Republicans would rather not talk about widening inequality to begin with. The reverse-Robin Hood budget plan just announced by Paul Ryan and House Republicans (and endorsed by Mitt Romney) would make the lopsidedness far worse – dramatically cutting taxes on the rich and slashing public services everyone else depends on…”

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You are still free to discover the truth. Perhaps one day that will not be.

Cheers on your pleb robotic weeknd activities…..

[youtube://http://www.youtube.com/watch?v=g_lYGyIaK80 450 300]

Director Robert Kane Pappas’ “Orwell Rolls Over In His Grave” is the consummate critical examination of the Fourth Estate, once the bastion of American democracy. Asking whether America has entered an Orwellian world of doublespeak where outright lies can pass for the truth, Pappas explores what the media doesn’t like to talk about: itself.

Meticulously tracing the process by which media has distorted and often dismissed actual news events, Pappas presents a riveting and eloquent mix of media professionals and leading intellectual voices on the media.

Among the cast of characters in “Orwell Rolls Over In His Grave” are Charles Lewis, director of the Center for Public Integrity, Vincent Bugliosi, former L.A. prosecutor and legal scholar, film director and author Michael Moore, Rep. Bernie Sanders, Danny Schecter, author and former producer for ABC and CNN, and Tony Benn, former member of the British Parliament.

“Orwell Rolls Over In His Grave” expresses ideas that will never be heard in mainstream media. From Globalvision’s Danny Schecter: “We falsely think of our country as a democracy when it has evolved into a `mediacracy’, where a media that is supposed to check political abuse is part of the political abuse.” New York University media professor Mark Crispin Miller says, “These commercial entities now vie with the government for control over our lives. They are not a healthy counterweight to government.”

Joseph Goebbels, former head of Nazi propaganda, said that what you want in a media system- he meant the Nazi media system – is to present the ostensible diversity that conceals an actual uniformity. From the very size of the media monopolies and how they got that way to who decides what gets on the air and what doesn’t, “Orwell Rolls Over In His Grave” moves through a troubling list of questions and news stories that go unanswered and unreported in the mainstream media.

Are Americans being given the information a democracy needs to survive or have they been electronically lobotomized? Has the frenzy for media consolidation led to a dangerous irony where, in an era of more news sources, the majority of the population has actually become less informed? Orwell Rolls Over In His Grave reminds us that 1984 is no longer a date in the future.

[youtube://http://www.youtube.com/watch?v=UmNV8_VBGX0&feature=related 450 300]

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Michel Comte

Canada’s center-right government called for the retirement age to be raised and for major public service cuts Thursday, in an austerity budget that aims to balance the books by 2016.

Tackling unpopular measures that many industrialized countries are being forced to consider as their populations age, the Canadian government said its budget would help the country move a step ahead.

“Other Western countries face the risk of long-term economic decline. We have a rare opportunity to position our country for sustainable, long-term growth,” Finance Minister Jim Flaherty said in the House of Commons.

“Looking ahead, Canadians have every reason to be confident,” he said presenting what was dubbed a budget for “the next generation.”

Under the plan, Canada will cut its deficit this year through “moderate” spending cuts, as the economy grows by 2.1 percent, Flaherty announced.

Read the rest here.

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Matthew O’Brien

The recovery is real, even if it’s not spectacular, and Gross Domestic Income explains why.

Something odd has happened the past few months. The job numbers tell us the recovery is accelerating. The GDP numbers say it’s not. This discrepancy has confounded expectations because there’s usually a fairly stable relationship between the GDP and employment — economists call it Okun’s Law. The growth-and-jobs gap has since launched a thousand blog posts.

But it turns out there might not be a gap, after all. Today we received news that GDI grew at a gangbusters rate in the fourth quarter of 2011. Bye-bye, growth-and-jobs gap.

What the heck is GDI?

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“The threat of a double-dip recession is a thing of the past, and even the ailing housing sector is starting to turn around support the overall economy, says Jamie Dimon, CEO of JPMorgan Chase.

The economy is poised to continue growing, and banks are planning for more growth, and not for a return to recession.

“No one can forecast the economy with certainty,” Dimon tells CNBC, “but most of us in business [have] got growth plans that have nothing to do with the actual state of the economy.”

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Source

“Morgan Stanley’s economics team led by Joachim Fels just raised its estimate for 2012 global GDP growth to 3.7 percent from 3.5 percent.

The primary reason for this was a huge upward revision in their China GDP estimate.

From their note to clients:

In China, where our previous above-consensus forecast of 8.4% 2012 GDP growth had become (published) consensus in recent months, we raise our forecast to 9.0%, one of the highest in the Street. As Helen Qiao and her China team explain in more detail in a companion note, this is essentially a call on additional macro stimulus being implemented in the very near term in response to somewhat disappointing results during the first few months of the year. In addition to further RRR cuts, OMO and window guidance intensification, we expect the government to support loan demand by lowering the benchmark interest rate by 25bp at least once, resuming infrastructure investment projects, as well as promoting first-time home purchase and developers’ ‘regular commodity housing’ construction to smooth the cycle.

Fels says that Morgan Stanley also upped its growth estimate for Japan.

In Japan, the upward revision from 1.1% to 1.8% largely reflects a better-than- expected ramp into the year and stronger capex assumptions.

But things aren’t completely rosy.  Fels warns that risks are heavily skewed to the down side.

Risks remain skewed to the downside… with old (potential political gridlock leading to fiscal tightening next year in the US, or a euro crisis) and new (oil price) hazards each being serious enough to potentially derail the recovery: the distance between our bear case and our base case for global growth is 1pp, twice the distance between base and bull.”

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“Recent economic data suggest the U.S. economy will power ahead of Europe in the first half of 2012, with consumers growing increasingly confident and boosting activity in the former while more reforms are needed in the latter to boost growth, the Organization for Economic Cooperation and Development (OECD) said in a report on Thursday.

Martin Barraud | OJO Images | Getty Images

“In the United States, growth prospects continue to firm,” the organization said. “The rebound in equity prices, stronger consumer confidence, and growth in nonfarm payroll employment have lifted projected activity.”

The improved outlook was also reflected in better consumer confidence, increased motor vehicle sales, industrial production and credit growth, it said.

The OECD warned, however, that high oil prices, as well as the housing market, which remains fragile, pose a threat to the recovery in the United States.

The improved outlook for the U.S. contrasts with a weak outlook for Europe.

“The situation for the three largest euro area countries in aggregate is expected to remain fragile, with negative growth projected for the first quarter of 2012 and a moderate rebound in the second quarter,” according to the OECD….”

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