Relevant and even prescient commentary on news, politics and the economy.

Congratulations to Kim Kardashian

From the World Economic Forum:

Kim Kardashian is an unlikely champion of statistics, but a tweet from the reality TV star in January 2017 contained a startling figure that has been named International Statistic of the Year.

She shared a table showing a range of violent or unexpected ways people meet their deaths annually in the United States. Kardashian’s aim was to highlight how many more Americans are killed by fellow citizens with guns, than by terrorists.

Another View of the Data

While I applaud the cautious optimism of Spencer and Tom, I’m more inclined to quote Joseph Brusuelas:

[T]he January payrolls added a dollop of Zen like logic to a recovery that is shaping up like no other. An additional 111,000 workers entered the labor force, yet the unemployment rate fell to 9.7% while private sector employment continued to contract. Hours worked, demand for temporary workers and the hiring in the service sector all improved. However, without the benchmark revisions, the unemployment rate would have increased to 10.6% which better captures the condition of an economy that has seen 8.4 million workers displaced during the recession.

The bump in manufacturing was more than balanced by the drop in the Service Sector, as more and more flower shops cut staff in the face of slack demand and unavailable credit.

If the bank bailout was to bailout the banks—defibrillating them to kick-start the economy’s heart, as it were—then it appears to be time to admit that that program was too small. Or to stop the other programs that are making it more advantageous for banks to hold funds than lend them. Any way you look at it, the optimistic view that declining unemployment has started doesn’t appear to be the way to bet.

Green Shoots Data Defined

As a rule, the Shiller Index uses the CPI as reported for All Urban Consumers (CPIAUCNS on Fred(r)).

But the Index is only updated Quarterly, so monthly data is estimated. Which produces a very interesting difference over August, not to mention September expectations:

The annualised inflation rate between June and August is 0.39%, which just shows that the trend is volatile. But if there really is another round or two of 2.5% annual inflation, the projected 3% growth for Q3 is either going to look a lot more anemic than we think, or there is going to be a major producvtivity increase.

The odds of being paid the Marginal Product of Labor just dropped a bit more.

Stock Market Valuation

By Spencer,

At month end the S&P 500 PE on trailing operating earnings was around 24. In my model that is expensive, but not massively so.

Except in the irrational exuberance market of the 1990s, a PE of over 20 has never been sustained and always signaled a major bear market.

Trailing earnings does include the fourth quarter when EPS was minus $0.09 and as the low 2008 earnings roll out of the comparisons the PE could fall while the market rises as it did in 1993. But 1993 appears to be an exception to the rule that the market generally moves in the same direction as its’ PE. The correlation between the change in the market and the change in earnings is essentially zero, and one of the most dangerous times in the market is when EPS growth first turns positive.

The Real Difference with 2004

While there was a lot of blather about “values voters” swinging the 2004 Presidential election to the man who had none, the real story has always been that the HENRYs went for W’s policies.

That changed in 2008:

Guess who won Joe the Plumber’s vote…real people who make about $42,000 a year, the median income for plumbers and pipefitters. Barack Obama carried hard-working Americans of that income stripe by 10 points, according to exit polls.

And the only voters who were told directly that their taxes would go up under a new Democratic president? Obama took the rich as well, winning by six points that small sliver of the electorate that makes more than $200,000 [per] year.

The HENRYs can do basic probability calculations, it seems. “Saving” 5% on your taxes while losing 15% on your non-deductible investments is not a great long-term strategy, no matter what Greg Mankiw may have decided to hear from his self-selected group.

Four years is too long, Brad

Ms. mochi-tsuki discovers that the Washington Post has no copyeditors and cannot do math.

If this were another blog, I would be typing “Why, oh why, can’t we have a better press corps” here. Instead, let’s just leave it at: if you can’t extract data from the census correctly, what are you doing publishing a newspaper read by government officials?

And I thought I was a night person.


The evil* Aaron Shiff of [edited to clarify that he is not—to my knowledge, at least—the Aaron in Coventry] discovered Google Web History.

Being a natural follower, I checked my own breakdown. It appears I do a lot of Google searching during the two hours the children are Not Getting Ready for Bed:

I have doubts about their methods (the top Clicks lists, in particular, do not match with what I’ve been doing in the past two years but seem rather to map my searches to Google’s search database), but it’s worth checking out, and will probably produce a thesis or three in the near future.

*Sarcastic Designation of Mr. Schiff,** who posted this distraction, for this web posting only. I am not Lou Holtz.***

**No designation of aaron-in-coventry to be intended or implied, sarcastic or otherwise.

***Lou Holtz reference explained here.***

***If he isn’t suspended without pay, will Gary Becker give back his Nobel Prize?

More on Presidential Administrations

Via Kathryn (who previously pointed us to a similar exercise for the U.S. election), Theo Gray expands on the work of Tommy McCall (as published in the NYT under the title “Bulls, Bears, Donkeys, and Elephants,” which was glibly dismissed by Greg Mankiw*).

While his conclusion will be heartening to Brad DeLong:

And one more thing, notice the little gray figure labeled “Current value under Both”. That’s the figure if you had just left your money in the market the whole time regardless of party affiliation. Notice that it’s much bigger than either the Republican or the Democratic figure. Not a bit bigger, much bigger, so much bigger that if you check the box to graph the “both” curve (basically the index value itself) we have to let it go right off the scale in order to make the other two lines visible at all.

Play with the policy delay slider and you can see the Democratic and the Republican curves fighting it out in the noise at the bottom of the graph while the steady-as-she-goes full-time investment curve towers over them laughing at their silly antics. It doesn’t matter who is in charge, the market is saying, in the long run it’s going to be OK.

the whole thing is worth reading, especially as Mr. Gray has sent the model up so that you can “playing with it” yourself.**

*We might justly ask Mr. Mankiw to then justify several of his Very Public Statements about the value to the market provided by the Current Administration when he worked for them. But that is for another time.

**I hope to do the playing maybe this weekend, by which time I might expand the details of this post. Meanwhile, I note that The Skinny Brown Man has made an interesting start by putting it into a much larger context.