Free Markets, Free People

Dale Franks

Dale Franks’ QandO posts

Observations: The QandO Podcast for 30 Sep 12

This week, Bruce, Michael, and Dale talk about the election.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

Economic Statistics for 28 Sep 12

The following US economic statistics were announced today:

Personal income in August advanced 0.1%, while consumer spending increased 0.5%. Headline inflation rose 0.4%, while the core rate showed a 0.1% increase. On a year –over-year basis, incomes rose 3.5%, but spending rose 3.6%. The price index rose 1.5% overall, and the core rate rose 1.6%.

The Reuter’s/University of Michigan’s consumer sentiment index fell to 78.3 from this month’s earlier reading of 79.2.

The Chicago PMI posted at 49.7 in September, down 3.3 points from the prior month. This report is often a preview of the national PMI, due out Monday. New orders fell a steep 7.4 points, and backlog orders also fell. The steep, sudden decline in Chicago business conditions took analysts by surprise.

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Dale Franks
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Economic Statistics for 27 Sep 12

The following US economic statistics were announced today:

Durable goods orders collapsed in August, posting a –13.2% decline overall, and a –1.6% decline ex-transportation. It is the worst monthly drop in 3 1/2 years. Aircraft orders fell –101.8%.

GDP growth for the second quarter for the final revision was unexpectedly revised down to 1.3% annualized. The GDP price index rose 1.6%

The Bureau of Economic Analysis says that corporate profits in the 2nd quarter decreased to $1.665 trillion annualized, compared to $1.671 trillion in the first quarter.

Initial jobless claims for last week were down a sharp 26,000 to 359,000, while the 4-week average dropped 4,500 to 374,000. Continuing claims  fell 4,000 to 3.271 million.

The Kansas City Fed manufacturing index in August posted at 2 for September, down from 8 last month.

The Bloomberg Consumer Comfort Index rose to –39.6 from –40.8 last week.

The pending home sales index fell –2.6% in August to 99.2, erasing last month’s 2.4% increase.

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Dale Franks
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Economic Statistics for 25 Sep 12

The following US economic statistics were announced today:

The State Street Investor Confidence Index fell 4 points to 86.9 as appetite for risk declined among institutional investors.

In retail sales, Redbook reports a 2% year-on-year sales increase. ICSC-Goldman reports an increase of 0.6% over last week, and 2.9% over last year. Both are trending slightly lower than last month.

The FHFA purchase only house price index extended a run of gains with a less than expected 0.2% rise for July, which is 3.7% over last year.

The Conference Board’s consumer confidence index jumped nearly 10 points in September to 70.3.

The S&P/Case-Shiller 20-city seasonally adjusted home price index reported a 0.4% rise in July. On a year over year basis, the index was up 1.2%.

The Richmond Fed manufacturing index for September rose to 4, the first positive reading since May.

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Dale Franks
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Observations: The QandO Podcast for 23 Sep 12

This week, Bruce, Michael, and Dale talk about the election.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

Economic Statistics for 20 Sep 12

The following US economic statistics were announced today:

The general business conditions index of the Philadelphia Fed’s Business Outlook Survey improved to –1.9 for its September reading versus minus –7.1 in August. The improvement comes mainly from a big jump in new orders.

Initial jobless claims for last week were down 3,000 to 382,000, though this "drop" is mainly an artifact of last week’s number being revised upwards by 3,000. The 4-week average rose 2,000 to 377,750. Continuing claims fell 32,000 to 3.272 million.

The Markit PMI manufacturing flash index for September fell very slightly, down –0.4 points to 51.5, as factory activity continues to grow modestly.

The Bloomberg Consumer Comfort Index rose to –40.8 from last week’s –42.2, continuing a long, slow, less negative trend.

The Conference Board’s index of leading indicators in July fell –0.1%, following last month’s rise of 0.4%, but still the third decline in the past five months.

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Dale Franks
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Economic Statistics for 18 Sep 12

The following US economic statistics were announced today:

Housing starts rose a worse-than-expected 2.3% in August to a 0.75 million annual rate, following July’s revised -2.8% drop. The August starts pace is up 29.1% on a year-ago basis.

The MBA reports mortgage applications fell -0.2% in the most recent week, with purchases down -4.0% and refinancings up 1.0%.

Existing home sales rose strongly in August, up 7.8% to an annual unit rate of 4.82 million. This is the second strong increase in a row, and is the highest since May 2010.

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Dale Franks
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Economic Statistics for 18 Sep 12

The following US economic statistics were announced today:

The U.S. current account deficit improved sharply to -$117.4 billion in the second quarter from a revised -$133.6 billion in the first quarter.

Net foreign demand for long-term U.S. securities rose from $9.3 billion in June to $676.0 billion in July.

The NAHB housing market index in September rose another 3 points to 40, for the fifth straight rise to the best level since early 2007.

Retail Sales: Redbook reports year-over-year retail sales growth of 2.4%, weaker than last week, but still moderately strong. ICSC-Goldman reports a -2.5% sales decrease from last week, and only a 2.1% increase over last year.

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Dale Franks
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About all those polls… (Updated)

If you listen to the podcast, you may have noticed that, over the past couple of weeks, we’ve talked a lot about polling, and why Obama is doing so well. We’re not the only ones. A lot of people are wondering why Obama is polling well when the things are so bad. One of the criticisms I’m seeing about a lot of the polls is that they skew so heavily democratic. Except for Rasmussen, almost all of the polls coming out seem to have larger numbers of Democrats than one would expect. They have been as high as a D+11% advantage in the population.

This is seen by some as proof that the pollsters are skewing the respondent population towards Democrats. I’m not impressed by the argument, because most pollsters don’t actually try and set up a likely voter model for the poll. Instead, the poll is a sample of usually between 1,000 and 1,500 randomly selected voters. The Democratic advantage in this poll, therefore, is not an artifact of the selection method, but is actually the result of what the respondents identify themselves as. If you call 1,000 people, and 380 of them say they’re Democrats, then that’s the sample.

The poll, then, reports what the respondents say. It’s not the result of selecting a particular number of Democrats or Republicans. That’s a vitally important distinction, because voter identification changes over time. The poll reports what voters say their party affiliation is, but a voter may say he’s a Democrat this week, and a Republican or Independent two weeks from now.

So, the key here, it seems to me, is to look at a set of polls from a particular pollster and see if the party affiliation varies widely from poll to poll. If it does, then there’s probably a problem with their methodology. You might see a shift in party affiliation over time, but the change between consecutive individual polls should probably be fairly small. But in general, if a pollster uses the same methodology for every poll, and is not explicitly looking to create a voter response model, then the results are probably fairly accurate, and show small movements–if they occur–to party identification from poll to poll.

What I’m hearing from a lot of conservatives this week is the idea that the polls are horribly skewed, as if there’s some industry-wide conspiracy to make Obama look good. That doesn’t seem very likely, especially since nearly every pollster uses a bipartisan polling team, i.e. one Democrat and one Republican. So, what I’m hearing from conservatives sounds like the response Democrats made in the 2004 election, when John Kerry was polling badly. Then, as now, there was this feeling that the polls were horribly wrong, and their candidate wasn’t actually losing. But the losing candidate was, in fact, losing.

So if the polls are off, then it must be the result of either a gross, industry-wide incompetence that is causing them all to use a faulty methodology, or a gross, industry-wide conspiracy–between both Republican and Democrat pollsters–to push a pro-Obama narrative. The alternative is that the polls aren’t off, and within a 3% or so margin of error, are reporting accurately what the electorate is saying. The latter seems to me to be far more likely.

Now, as to why so many voters are identifying as Democrats, I don’t have a clue. But consider this: pretty much everyone knows Bill Clinton is smarmy liar, and if he could run for a 3rd term…he’d win.

Also, consider that everyone remembers the Bill Clinton presidency as a time of economic growth and balanced budgets. They remember the end of Bush’s two terms as a time of complete economic collapse. The underlying reasons don’t matter, because most voters neither understand nor care. It may be that voters simply trust Obama more on the economy than they do Romney, because they fear a return to economic collapse. Maybe they think Obama has done as well as could be done. But simply dismissing that with a "the polls can’t be right" explanation is just whistling past the graveyard.

UPDATE: More here, including this graphic.

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Now, let’s split this out and look at correlation:

polls

That’s a pretty weak correlation. Look at the blue diamonds for the Obama lead. What is that, a bell curve? Seriously?

No, unless the poll makes a specific effort to model a voter turnout, and specifically samples for a given percentage of R-D-I, then the poll is just telling you what the respondents are telling the pollsters. They may tell them something different next week or next month, but the R-D-I sample is simply a result of respondent self-identification.

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Dale Franks
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