The current unemployment rate, 7.2% as of December '08, should be expected to rise significantly when the January data arrives next Friday. The 4th Quarter GDP came out and the nation's output fell 3.8%, the worst growth rate since 1982. Expect it to get much worse before it gets better.
January 30, 2009
Unemployment, GDP Data
The current unemployment rate, 7.2% as of December '08, should be expected to rise significantly when the January data arrives next Friday. The 4th Quarter GDP came out and the nation's output fell 3.8%, the worst growth rate since 1982. Expect it to get much worse before it gets better.
Where The Layoffs Are
Click on the chart above for an interactive Look at recent job cuts by industry and company. As you can see, the finance industry has been hit especially hard.
January 23, 2009
SIGNS OF THE TIMES
For more pictures of unsold cars around the world, click here.
Knoxville, Tennessee (above)
HOT: Family Dollar Stores, Up by +60% over the last 12 monthsNOT: Target Corporation, Down by -30% over the last 12 months
January 12, 2009
THE UNEMPLOYMENT RATE: HOW DOES THIS RECESSION COMPARE?
This is an interesting chart of unemployment rates over the last 60 years (Click to enlarge). The shaded areas are recessions. In 1974 the UE rate reached 9%, and in 1982 reached 11%. So our current 7.2% UE rate has yet to come close to these levels. Or maybe the worst is yet to come?
December 24, 2008
December 18, 2008
December 12, 2008
December 5, 2008
December 3, 2008
The "Undercover Economist" on Free Lunches
Tim Harford, author of the Undercover Economist, writes here how free lunches always leave a bad taste. This article brings to mind how the Wal-Mart worker who died after being stampeded by shoppers hungry for a shopping deal.
Harford writes: "The more attractive the gift, the more damage people will do to themselves, and each other, trying to get hold of it. If that idea seems counterintuitive, it is nevertheless true, as the managers of Ikea, the furniture giant, can testify. They opened a new London store recently, offering opening night discounts of nearly 90 per cent on a limited number of leather sofas. The store closed 40 minutes later after 6,000 people tried to force their way through the doors; several had to be taken to hospital.
The press immediately blamed either the boorish stupidity of the British public or the hypnotic influence of the wily Swedes. But the ill-tempered scenes are not unique to Britain: at the grand opening of Jeddah’s Ikea last summer, two people died in the crowds queuing to get hold of $150 vouchers. Nor are these incidents the result of some quasi-religious shopping frenzy. The curse of the free lunch is at work…"
Read more here.
Harford writes: "The more attractive the gift, the more damage people will do to themselves, and each other, trying to get hold of it. If that idea seems counterintuitive, it is nevertheless true, as the managers of Ikea, the furniture giant, can testify. They opened a new London store recently, offering opening night discounts of nearly 90 per cent on a limited number of leather sofas. The store closed 40 minutes later after 6,000 people tried to force their way through the doors; several had to be taken to hospital.
The press immediately blamed either the boorish stupidity of the British public or the hypnotic influence of the wily Swedes. But the ill-tempered scenes are not unique to Britain: at the grand opening of Jeddah’s Ikea last summer, two people died in the crowds queuing to get hold of $150 vouchers. Nor are these incidents the result of some quasi-religious shopping frenzy. The curse of the free lunch is at work…"
Read more here.
December 2, 2008
It's Official: Recession Is Here: Began in December '07
The Recession that we all knew was happening is now officially here. Many, including Minnesota State Economist Tom Stinson, think this one will be much worse that the two previous ones listed above in '90 - '91 and '01. Predictions are quite grim for the Q4 US GDP.
November 20, 2008
November 17, 2008
World Series of Poker: The Second Place Winner Won Twice As Much Cash
The World Series of Poker ended this week at the Rio Hotel and Casino in Las Vegas, and Denmark's Peter Eastgate (pictured above) became the youngest-ever winner of the world title. He is very much the new breed of player: 22 years old, Danish, mathematically brilliant, who gave up a fledgling career in accounting to "turn pro."
As the winner of the main event Peter won about $9.2 million, but would he actually end up with all that money?
Denmark's tax rate is 45% on the first 4 million Danish Kroners (about $680,000) and 75% on income above that. Mr. Eastgate will owe about $6.7 million in Danish taxes, and will get to keep only $2.5 million of his winnings—just 27.23% of his prize. In other words, he faces an effective tax rate of 72.77%. Ouch.
Ivan Demidov of Moscow finished second and won $5.8 million. Russia has a 13% flat tax rate, so Mr. Demidov will owe about $755,247 to the State Taxation Service of Russia. After taxes, Ivan will still have more than $5 million, more than twice as much as the first place Danish winner.
Read more here.
H/T: Carpe Diem
November 15, 2008
In A Slowing Economy, SPAM Thrives
It may be "Crazy Tasty," as the can says, but the increasing demand for SPAM is not crazy to economists. SPAM is an inferior good, where as income falls, demand rises for an inferior good. In the following article from the NY Times, demand is also rising for other inferior goods, such as rice, beans, among others. Here is more from the NYT:"The economy is in tatters and, for millions of people, the future is uncertain. But for some employees at the Hormel Foods Corporation in Austin, MN, times have never been better. They are working at a furious pace and piling up all the overtime they want.
The workers make Spam, perhaps the emblematic hard-times food in the American pantry....
Even as consumers are cutting back on all sorts of goods, Spam is among a select group of thrifty grocery items that are selling steadily.
Pancake mixes and instant potatoes are booming. So are vitamins, fruit and vegetable preservatives and beer, according to data from October compiled by Information Resources, a market research firm.
“We’ve seen a double-digit increase in the sale of rice and beans,” said Teena Massingill, spokeswoman for the Safeway grocery chain, in an e-mail message. “They’re real belly fillers.”
November 12, 2008
The Worst Economy Since When?
Above you can see the US Unemployment Rate since the 1930's. So comparisons to the 1930's seem quite overblown. It is likely that the unemployment rate will continue to rise, but more likely to levels seen in 1992, when the rate was 7.8%, or in the early 1980's when the rate hit 10.8%. So perspective is needed when analyzing the current situation.
November 11, 2008
Markets At Work: Presidental Inaugration Tickets Going For $40,000.
Markets at work, Presidential style. It looks like some tickets to the Presidential Inauguration may sell for as much as $40,000 (tickets are handed out for free by Congressional offices and other connected politicians, donors, etc.) What recession? Anyway, some Senators are trying to ban the resale of these tickets on sites like E-bay, Craigslist, etc. I highly doubt this will stop those who place a high value on tickets from getting them. Whenever you have many people after scarce goods, the price will rise. Read more here.
October 31, 2008
Happy Halloween
The first cartoon reflects the Stock Market in October, that was definitely scary. The worst month since 1987.
October 29, 2008
Now That's Some Serious Inflation
Check out these pictures from Zimbabwe:
Headed to the grocery store.
The 1.243 Billion dinner bill (I hope that tasted good)
Paying the tab.
See more pics here.
Headed to the grocery store.
The 1.243 Billion dinner bill (I hope that tasted good)
Paying the tab.
See more pics here.
October 27, 2008
The World's Most Expensive Cars
Read here from Forbes to see the World's most expensive cars. It will be interesting to see how these sell with the economic slowdown. Photo: The Saleen S7 ($395,000)
October 23, 2008
Poor Warren: Buffett is Down $9.6 Billion This Year, Only Has $52.1 Billion Left
Here's an interesting article in todays Wall Street Journal regarding how much today's chief executives have lost in the stock market this year. Here's a sampling: (Photo: Warren Buffet)
- Warren Buffett (Berhshire Hathaway): Down $9.6 Billion (Value of remaining equity: $52.1 Billion)
- Larry Ellison (Oracle): Down $6.6 Billion (Value of remaining equity: $19.8 Billion)
- Steve Ballmer (Microsoft): Down $4.8 Billion (Value of remaining equity: $9.8 Billion)
- Jeff Bezoz (Amazon.com): Down $4.2 Billion (Value of remaining equity:$5 Billion)
October 21, 2008
Centrally Planned vs. Free Market Economies
Here you can see the difference between North and South Korea at night. According to the CIA Factbook, South Korea's GDP is $25,000, where North Korea's is $1,700. Here, Professor Mark Perry from the University of Michigan writes how Socialism has failed and why capitalism works.
October 14, 2008
October 13, 2008
October 12, 2008
THE WORST WEEK EVER!
If you are in the stock market, like 60% of Americans, it was a really, really bad week. Read more from the Wall Street Journal here.
October 7, 2008
Another Great Depression? Noble Prize Winning Economist Becker Says No
Is this a final "Crisis of Global Capitalism" -- to borrow the title of a book by George Soros written shortly after the Asian financial crisis of 1997-98? The crisis that kills capitalism has been said to happen during every major recession and financial crisis ever since Karl Marx prophesized the collapse of capitalism in the middle of the 19th century. Although I admit to having greatly underestimated the severity of the current crisis, I am confident that sizable world economic growth will resume before very long under a mainly capitalist world economy.
Consider, for example, that in the decade after various predictions of the collapse of global capitalism following the Asian crisis, both world GDP and world trade experienced unprecedented growth thanks to the power of market competition on a global scale. The South Korean economy, for example, was pummeled during that crisis, but has had significant economic growth since. World economic growth will recover once we are over the present severe financial difficulties.
Read more from Noble Prize winning Economist Gary Becker here from Tuesday's Wall Street Journal.
New Definitions of Stock Market Terms
A fun email circulating trading desks, worthwhile as an informal measure of sentiment:
CEO --Chief Embezzlement Officer.CFO-- Corporate Fraud Officer.
BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, and the wife gets no jewelry.
VALUE INVESTING -- The art of buying low and selling lower.
P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.
BROKER -- What my broker has made me.
STANDARD & POOR -- Your life in a nutshell.
STOCK ANALYST -- Idiot who just downgraded your stock.
STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER -- A guy whose phone has been disconnected.
MARKET CORRECTION -- The day after you buy stocks.
CASH FLOW -- The movement your money makes as it disappears down the toilet.
YAHOO -- What you yell after selling it to some poor sucker for $240 per share.
INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.
PROFIT -- An archaic word no longer in use.
HT: Big Picture
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