Questions and Observations

Free Markets, Free People

Economic Statistics for 16 Jan 15

Net foreign demand for long-term US securities rose $33.5 billion in November, versus $-1.4 billion in October.

The December Consumer Price Index fell -0.4%, mainly on declines in energy prices, with prices less food and energy unchanged. On a year-over-year basis, the CPI is up 0.7% overall, and 1.6% at the core.

The Fed reports that December industrial production fell by -0.1%, while capacity utilization in the nation’s factories fell from 80.1% to 79.7%.

The University of Michigan’s consumer sentiment index rose 4.6 points to 98.2, the highest level since January 2004.


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Economic Statistics for 15 Jan 15

Initial weekly jobless claims rose 19,000 to 316,000. The 4-week average rose 6,750 to 298,000. Continuing claims fell 51,000 to 2.424 million.

Producer Prices for Final Demand fell -0.3% in December. Prices less food and energy rose 0.3%, while prices less food, energy, and trade services rose 0.1%. Prices for goods declined -1.2% while prices for services rose 0.2%. On a year-over-year basis, PPI-FD is up 1.1% overall, while prices less food and energy rose 2.1%, and prices less food, energy, and trade services rose 1.4%. Prices for goods fell 1.2% from last year, while prices for services rose 2.2%.

The Empire State manufacturing index rose from December’s contractionary reading of -3.58 to an expansionary 9.95 in January.

The Bloomberg Consumer Comfort Index rose 1.8 points to 45.4 in the latest week, the highest reading since mid-2007.

The general business conditions index of the Philadelphia Fed’s Business Outlook Survey fell sharply in January, from 24.5 to 6.3.

The Fed’s balance sheet rose $16.6 billion last week, with total assets of 4.516 trillion. Reserve bank credit rose $3.2 billion.

The Fed reports that M2 money supply rose by $39.9 billion in the latest week.


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Military: Obama and political parties not very popular with soldiers

The Military Times has a long article out today in which come to the startling conclusion that a deeply conservative institution like the military may find a Commander-in-Chief like Obama to be very unpopular among most of its members.

That should really come as no surprise. And the reasons are pretty well known.

However, I found this to be more revealing than what I assumed was a given.

The loss of faith in lawmakers comes at a time when troops are less likely to identify with either major political party.

In the last nine years of the Military Times Poll, the percentage of respondents who consider themselves Republican has slowly dropped, from nearly half of those surveyed in the late 2000s to just 32 percent this year. Increasingly, readers are more likely to describe themselves as libertarian (9 percent) or independent (28 percent).

Likewise, readers who described themselves as “very conservative” have remained steady over the years, but “conservative” respondents have dwindled as well — down to 29 percent from a high of 41 percent in 2011.

Democrats and liberal readers make up about 8 percent of the poll respondents.

The fact is they’re less and less enthralled with the political class and political parties in general, not just the President (although I think a special sort of unpopularity that transcends party is his). And for the most part they reflect a growing trend in America. It’s ironic that one of Obama’s goals was to make government popular and cool again when he took office. Instead, what is happening in the military is a good snapshot of what is also going on within the country.  People have lost faith in government and see it as a problem for the most part, not a solution.

Obviously Democrats and liberals are underrepresented in the Military Times poll and that again is no surprise. It is, however, a good indicator of why the Democrats and liberals don’t “get” the military. They, for the most part, don’t serve or know many that do. It is one among many reasons why Obama suffers his unpopularity.

But the shift from “Republican” to libertarian or independent should have the GOP worried. This is mirrored among many on the right who call themselves conservative but are just as likely not to claim to be a Republican. While the GOP may not like that and are certainly resisting it, the “mushy middle” is losing out and the conservatives are demanding change if Republicans want their vote (they are just as likely, btw, not to want to see a Bush or Romney on the next ticket either).

Certainly the military is a special institution in and of itself. Much of the dissatisfaction with political leaders has to do with sequestration cuts, which apparently only the military had to suffer. That on top of the unilateral 10% cut imposed on the military by Obama while in the middle of two wars helps explain some of the President’s unpopularity. Social engineering of a force whose whole sole purpose is to fight wars and protect the country is another.

But there’s plenty to worry about for the political parties contained in that poll as well.

~McQ

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Economic Statistics for 14 Jan 15

The MBA reports that falling rates led to an explosion of mortgage applications, up 49.1% last week, with purchases up 24.0% and refis 66.0%.

Retail sales fell a disappointing -0.9% in December. Sales less autos fell -1.0%, while sales less autos and gas fell -0.3%.

Declining oil prices sent export prices down -1.2% in December, while import prices plunged -3.2%. On a year-over-year basis, Export prices are down -2.5% while import prices are down -5.5%.

The Atlanta Fed’s Business Inflation Expectations survey shows inflation expectations of 1.7% in January, down from December’s 1.9%.

Business inventories rose 0.2% in November, while a -0.2% drop in sales left the stock-to-sales ratio at a moderate 1.31.

The Fed’s latest Beige Book says that economic activity continues to expand at a “modest” or “moderate” rate.


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Economic Statistics for 13 Jan 15

Redbook reports that retail sales continue to slow, rising 3.8% on a year-ago basis, from last week’s 4.3%.

The NFIB Small Business Optimism Index rose from 98.1 to 100.4 in December, the highest level since October 2006.

The Labor Department’s JOLTS report shows 4.972 million job openings on the last business day of November.

The U.S. Treasury monthly budget report for December shows a $1.9 billion surplus for the month, as receipts rose 11%.


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Elitism driving “free” college proposal by Obama?

The short answer is “yes”. Megan McArdle makes the point :

Higher education is becoming the ginseng of the policy world: a sort of all-purpose snake oil for solving any problem you’d care to name, as long as we consume enough of it. Education is a very good thing, but it is not the only good thing. An indiscriminate focus on pushing more people into the system is no cure for society’s ills–and indeed, often functions as a substitute for helping the people who are struggling in the current system.

In fact (beside the fact we can’t afford “ObamaCare for colleges”):

What if people in the policy elite stopped assuming that the ideal was to make everyone more like them, and started thinking about making society more hospitable to those who aren’t? My grandfather graduated into a world where a man with a high-school diploma could reasonably hope to own his own business, or become someone else’s highly valued employee, a successful pillar of a supportive community. His grandchildren graduated into a world where a college diploma was almost the bare necessity to get any kind of a decent job. Why aren’t we at least asking ourselves if there’s something we can do to create more opportunity for people without diplomas, instead of asking how many more years we can keep everyone in school? Why do all of our proposed solutions essentially ratify the structure that excludes so many people, instead of questioning it?

Indeed. For too long our policies have been driven by an elite. And for the most part, the elite have made an awful mess of things. Now they want to take on “community colleges”.

Anyone? How long before they start looking at 4 year colleges?

McArdle suggests the following probable effects of any program like Obama has proposed:

1. Offer a subsidy to middle-class kids who don’t really need the money?

2. Encourage middle-class families to transfer their kids to community college for the first two years of school, and thus help to moderate college costs?

3. Encourage financially constrained students who might not have gone to college to enter the system en route to a degree?

4. Encourage marginal students with a low chance of completing a career-enhancing degree to attend school, mostly wasting government money and their own time?

As she points out 2 and 3 are actually not bad policy goals in and of themselves.  However, the much more likely effect will be 1 and 4.  Another government sponsored and taxpayer funded boondoggle that will essentially give community colleges a subsidy (it’ll be all about headcount – no one will really care if the student’s succeed) and create bureaucratic jobs while doing little or nothing in terms of “education advancement”.

Oh, yeah, did I mention we can’t afford it?

I thought I did.

~McQ

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Clint Eastwood nailed it when he portrayed Obama as an empty chair

I’ve said for 6+ years that the man in the White House was not a leader.  He’s never been a leader.  And this weekend he again demonstrated to the world that leadership is not something of which he has even an inkling of understanding.  This weekend, at a gathering of 3 million in the French capital, 40 leaders of various countries stood with those people and symbolically said “no” to terrorism, intimidation and murder and “yes” to free speech.  They demonstrated leadership.   They demonstrated political courage.  They did what leaders do.

And where was our President?  Or Vice President?  At home with nothing on their schedules … that’s where.  Showing up in Europe and doing what leadership demands was apparently something they couldn’t figure out.

Leadership takes, no, requires courage.  This weekend we saw a display of diplomatic and political cowardice (and I don’t buy the “threat was too great” – apparently it was acceptable to the Israeli PM).

Oh, we’ll see them scramble now to try to turn this around and to their advantage, but it is clear to those of us who’ve actually been leaders that we lack one in the White House.  It’s a pitiful but representative example of why this man should never have been elected to the Illinois Senate much less to the presidency of the United States.

He voted “present” as a state senator and this weekend he voted “present” as the President of the United States.

Shameful.

~McQ

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Economic Statistics for 9 Jan 15

The economy added 252,000 net new jobs in December, while the unemployment rate dipped to 5.6%. Average hourly earnings fell -0.2% while the average workweek was unchanged at 34.6 hours. The fall in the unemployment rate can mainly be attributed to the fact that 273,000 people left the labor force, brining the labor force participation rate down to 62.7%. That’s the second time in the last four months the participation rate has been that low, a level not previously seen since February, 1978.

Wholesale inventories rose 0.8% in November, while a -0.3% decline in sales pushed the stock-to-sales ratio up to a porky 1.21.


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