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  • Chart of Largest Petroleum Consuming Countries from 1980 to 2010

    chart of petroleum consumption by country 1980-2010
    Chart of petroleum consumption by country 1980-2010 by the Curious Cat Investing and Economics Blog. The chart may be used with attribution.

    The USA remains, by a huge margin, the largest consumer of petroleum products (motor gasoline, jet fuel, liquefied petroleum gases, residential fuel oil…) using 22% of the total (with about 4.5% of the population). From 1980 to 2010 the global consumption increased 38% to 87 million barrels a day.

    From 1980 to 2010 USA consumption increased 12% (so less than global consumption). Meanwhile, Germany, Japan and France decreased petroleum use by 19%, 17% and 10% respectively. Many countries have very low use in 1980 and have grown their economies dramatically over this period and increased petroleum use dramatically also: India up 433%, China up 411%, South Korea up 360%.

    Africa, in total, used 3.3 million barrels a day in 2010, up 120% from 1980. Africa used 73% of what Japan used in 2010 and 17% of what the USA used and 50% more than Canada. The data shows no sign of declining petroleum consumption on a global basis. The USA uses as much as China, India, Brazil and Africa combined. I believe, in 2015 those countries (by which I mean all the countries in Africa too, not that Africa is a country, which of course it is not) will use more than the USA (and likely show significant growth from 2010 levels).

    Data is from the US Energy Information Agency.

    Related: Oil Production by Country 1999-2009 – Top Countries For Renewable Energy Capacity – Chart of Nuclear Power Production by Country from 1985-2009 – Increasing USA Foreign Oil Dependence In The Last 40 years

  • Jobs News in the USA is not Good, Unemployment Remains at 9.1%

    This was a bad month for jobs in the USA. Not only did the U.S. Bureau of Labor Statistics report that the number of jobs remained at the same level as last month (125,000 additional jobs are needed for population growth, on average and we have huge losses from the credit crisis recession that have to be gained back) the last 2 months were revised down. The change in total nonfarm payroll employment for June was revised from
    a gain of 46,000 to a gain of 20,000, and the July was revised down from gaining 117,000 job to gaining
    85,000. That results in a total loss for this report of 58,000.

    Still much better than the huge losses of several years ago but, along with the last few months, not a good sign for short term job growth. And the failure to address decades of favors given by politicians to too big to fail banks may actually create serious problems much sooner than most people feared. Pretty much everyone knew that the failure to address the main cause of the credit crisis was setting us up for again having the economy suffer huge blows due to the behavior of too big to fail institutions but I, and I think most people, thought it would be at least 5 years away and maybe even 10 before we had to seriously pay for the failures of our politicians to address this problem they (and their predecessors created).

    It really seems like politicians don’t understand that their predecessors (decades ago) could afford to payoff large political donors and avoid dealing with problems and the enormous amount of wealth the economy was generating would let us prosper (even with lousy leadership), but that is no longer the case. The USA has used up huge economic advantages and that easy time is not coming back. Sadly the main hope for the USA is that other countries leaders create enough waste that the USA can remain competitive with all the waste our create (extremely lousy health care system, for example). It seems the American public doesn’t understand either, if anything we are electing even less intelligent and capable leaders today (over the last 10 years).

    The USA has 14 million unemployed. Among the major worker groups, the unemployment rates for adult men was 8.9%, adult women 8.0% and teenagers 25.4%, whites. Of those 14 million the number of long-term unemployed (those jobless for 27 weeks and over) was about unchanged at 6 million in August.

    The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.4 million to 8.8 million in August. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

    The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour over the month to 34.2 hours. The manufacturing workweek was 40.3 hours for the third consecutive month; factory overtime increased by 0.1 hour over the month to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down to 33.5 hours in August, after holding at 33.6 hours for the prior 6 months.

    As bad as this news is, it could be much worse. The economy is actually growing (very slowly), probably. Many companies are actually still very profitable (I am not counting companies that have fake profits with congress approved ability to report fake values for their assets – Congress granted their too big too fail donors, this, and many other favors while most others are left out in the cold). The wealth in the USA, even after we have been consuming our capital to live beyond what we earn each year (for decades) is still extremely high. This allows us to live well and invest even with many bad practices in place. We continue to have many excellent companies doing great work and providing great jobs. Even with all the problems in the USA there are few countries that are in as enviable an economic position. The biggest problem I see is we have been squandering those advantages far too easily and quickly for far too long. That leaves us much more economically venerable than we need to be.

    Related: Paying Back Direct Cash Bailouts from Taxpayers Does not Excuse Bank Misdeeds – USA Unemployment Rate at 9.6% (after losing 54,000 job in Aug 2010)

  • The Return of the Multi-Generational Family Household

    There are many good economic reasons to have multi-generational (at least 3 generations) households. There are some good social reasons too. There can be interpersonal benefits but also annoyances (which I think is why they decreased – plus we could afford it, the USA was living extremely richly).

    The Return of the Multi-Generational Family Household

    As of 2008, a record 49 million Americans, or 16.1% of the total U.S. population, lived in a family household that contained at least two adult generations
    …
    This represents a significant trend reversal. Starting right after World War II, the extended family household fell out of favor with the American public. In 1940, about a quarter of the population lived in one; by 1980, just 12% did. A range of demographic factors likely contributed to this decline, among them the rapid growth of the nuclear-family-centered suburbs; the decline in the share of immigrants in the population; and the sharp rise in the health and economic well-being of adults ages 65 and older.
    …
    Another factor has been the big wave of immigration, dominated by Latin Americans and Asians, that began around 1970. Like their European counterparts from earlier centuries, these modern immigrants are far more inclined than native-born Americans to live in multi-generational family households.

    However, the trend reversal has also played out among native-born Americans. And for all groups, the move into multi-generational family households has accelerated during the Great Recession that began at the end of 2007.

    The percentage of the population in such households now is 16%, still significantly below the high of 24.7% in 1940.

    Related: Mortgage Rates Falling on Fed Housing Focus – Personal Finance Basics: Long-term Care Insurance – Bankruptcies Among Seniors Soaring (2008)

  • Curious Cat Investing and Economic Carnival #15

    The global economy continue to be fragile and chaotic. At the same time companies continue to make large, and often increasing, profit. Here are some good blog posts on investing, personal finance and the economy.

    • The Economy is Weak and Prospects May be Grim, But Many Companies Have Rosy Prospects by John Hunter – “the prospects in emerging markets look incredibly good to me. Yes they will slow their growth a bit if the large economies stall, but I think it is foolish to avoid investments in China, Singapore, Brazil, Korea, India, Ghana, Malaysia, Indonesia. In fact that is where companies like Google, Tesco, Apple, Toyota and Amazon are going to be making lots of money. Emerging markets are volatile and the companies in them are too. This will continue.”
    • Extreme Early Retirement in Practice: How Two People Did It by Robert Brokamp – “We recently spent three months in Guatemala nestled between three volcanoes, on the shores of beautiful Lake Atitlan, and our average spending was $40 per day for the two of us, which equates to $14,600 per year. Our hotel price included daily cleaning, wi-fi, room service, cable TV, and a view.”
    • Are stocks cheap yet? Not if the economy is slowing, these numbers say by James Jubak – “A 20% drop in forecast earnings—the rough equivalent of an economic slowdown instead of a recession—would put the price-to-earnings ratio of the S&P 500 at 13. That’s below the average of 15 but not really very cheap given the degree of economic risk that an investor is taking on right now.”
    • Private Pensions: Another Gradual Catastrophe by Evan Tarte – “Despite the arguably noble intent of defined benefit plans and the PBGC, these plans demand crippling contributions from employers and inevitably the taxpayer, and make little sense in today’s market environment. PBGC’s current deficit stands at $22 billion”
    • Emergency Savings: is 6 Months Still Enough? by GE Miller – “with the average unemployment duration at 40.4 weeks, 6 months (or 26 weeks) is no longer enough, particularly when you take into account the possibility of medical emergency, pet operations, or other unforeseen circumstances. What is a good length these days? 1 year, at a minimum.”

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  • Is the Stock Market Efficient?

    I believe in weak stock market efficiency. And recently the market is making me think it is weaker than I believed :-/ I believe that the market does a decent job of factoring in news and conditions but that the “wisdom of crowds” is far from perfect. There are plenty of valuing weaknesses that can lead to inefficient pricing and opportunities for gain. The simplest of those are spotted and then adopted by enough money that they become efficient and don’t allow significant gains.

    And a big problem for investors is that while I think there are plenty of inefficiencies to take advantage of finding them and investing successfully is quite hard. And so most that try do not succeed (do not get a return that justifies their time and risk – overall trying to take advantage of inefficiencies is likely to be more risky). Some Inefficiencies however seem to persist and allow low risk gains – such as investing in boring undervalued stocks. Read Ben Graham’s books for great investing ideas.

    There is also what seems like an increase in manipulation in the market. While it is bad that large organizations can manipulate the market they provide opportunities to those that step in after prices reflect manipulation (rather than efficient markets). It is seriously annoying when regulators allow manipulators to retroactively get out of bad trades (like when there was that huge flash crash and those engaging in high frequency “trading” front-running an manipulation in reality but not called that because it is illegal). Those that were smart enough to buy stocks those high frequency traders sold should have been able to profit from their smart decision. I definitely support a very small transaction tax for investment trades – it would raise revenue and serve reduce non-value added high frequency trading (which just seems to allow a few speculators to siphon of market gains through front running). I am fine with speculation within bounds – I don’t like markets where more than half of the trades are speculators instead of investors.

    Related: Market Inefficiencies and Efficient Market Theory – Lazy Portfolios Seven-year Winning Streak – investing in stocks – Naked Short Selling

  • Good News: Credit Card Delinquencies at 17 Year Low

    The national credit card delinquency rate (the rate of borrowers 90 or more days past due) decreased for the sixth consecutive quarter, dropping to 0.6% at the end of the second quarter in 2011. This is the lowest mark observed in 17 years. Credit card debt per borrower increased $20 in the quarter to $4,699, though it remains near record-low levels (and yet still at a level that is far too high).

    Although credit card delinquencies were expected to drop, the data released today shows credit card delinquency rates improving by more than at any other time since the recovery began in 2009, both on a quarter-over-quarter basis (-18.9%) and on a year-over-year basis (-34.8%).

    “National credit card delinquency rates have fallen to levels not seen since 1994 as consumers continue to tighten their spending,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “TransUnion believes that the recovering economy is only indirectly impacting delinquency rates. More important and impactful to the decline in bank card delinquency are that consumers are using credit cards more responsibly; a large number of delinquent accounts have moved to charge-off status; and lenders remain conservative in their underwriting.”

    The record low-level of credit card debt that has continued post recession is supported by a separate TransUnion credit card deleveraging analysis released in July. The analysis found that consumers made an estimated $72 billion more in payments on their credit cards than purchases between the first quarters of 2009 and 2010.

    This is good news. We still need to reduce pay off much more of the excessive debt we took on living beyond our means the last few decades, but at least this is a small positive step. Overall consumer debt increased in the 2nd quarter, according to the Federal Reserve, and stands at over $2.45 Trillion. Revolving debt (credit cards) decreased slightly but non-revolving debt increased more. Consumer debt peaked near $2.55 Trillion in 2009 and recently bottomed just below around $2.4 in 2010. Consumer debt totals still need a great deal of improvement.

    Related: Consumer and Real Estate Loan Delinquency Rates 2000-2010 – Consumer Debt Down, but Still Over $2.4 Tillion in the USA –

  • Economic Consequences Flow from Failing to Follow Real Capitalist Model and Living Beyond Our Means

    The current frustration with economic conditions in the USA and Europe has at its core two main elements. First the anti-capitalist concentration of power in a few monopolistic and oligopolistic corporations (along with the support and encouragement of governments and the governments failure to regulate markets to encourage capitalist practices). And second the consequences of living beyond our means finally becoming much more challenging.

    What we have had has been very questionably capitalist. The largest reason for this “questionable” nature is not related to labor but instead to the inordinate power given to a limited number of large corporations. The corporations are suppose to not have “market power” in real capitalism. They have huge and growing market power. To me the main problem is that power disruption to the functioning of capitalist free markets.

    There is also the problem that we have been living far beyond our means. This has nothing to do with capitalism or not capitalism. It is as simple as you produce 100 units of goods and use 110 that can’t continue forever. The USA started building a surplus in the 1940’s, I imagine Europe did in the 1950’s. Since about the 1980’s both areas have been living far beyond their means. While they were consuming what they saved over the previous decades it wasn’t so bad. While they mortgaged their future to live lavishly today that was worse. We continue to live beyond our means and are beginning to see some consequences but we haven’t come close to accepting the lavish lifestyles we enjoyed (while Europe and the USA lived off past gains and off very advantageous trade with the rest of the world) is not possible any longer. We can’t just have everyone in Europe and the USA live exceeding well and the rest of the world support us. Eventually we have to realize this (or in any event we will experience it, even if we don’t realize it).

    Those 2 factors need to be addressed for our economic future to be as bright as it should be.

    Related: Too big too fail, too big to exist – Using Capitalism in Mali to Create Better Lives – Creating a World Without Poverty

  • The Economy is Weak and Prospects May be Grim, But Many Companies Have Rosy Prospects

    The fundamental truth right now is that the overall economy in Europe, the USA and Japan is weak and has some serious long term problems. But the connection between that and company weakness is not incredibly strong. Many companies have huge cash hoards, built up through the large profits they continue to make. Yes, the economy entering a serious downturn will hurt many companies. A railroad is going to lose some sales if retail sales decline (and so they don’t have to be shipped). Airlines (historically problematic companies to begin will) will struggle. Banks that pay exorbitant amounts to senior staff have trouble making money without handouts of taking huge risks that then result in more handouts once the risks fail (as usually a bad economy will expose the risks they have taken). Companies that can only do well based on large top line growth will suffer. But that isn’t all companies.

    When you look at companies like Google, Apple, Tesco, Danaher, Amazon even Toyota I really don’t see many problems looking forward. They seem perfectly capable of staying profitable, even growing profits, even in the face of economic decline in Europe, the USA and Japan (if that happens: it is possible, but not certain – very low growth is possible). Companies that have very good prospects at staying profitable, even getting more profitable going forward are hardly the type of investment I want to sell. Especially not to put it in the bank and get 0%, or a money market fund and pay someone for the privilege of having my money.

    The options for investing today don’t look so great. But I really don’t see any reason to be concerned about owning stocks that have good prospects to do well even if the quite a few large economies do poorly in the next decade. In fact I am happy to own them. Frankly the biggest worry I have is that the senior executives will loot the owners profits with exorbitant pay (this is not a worry at Toyota and less of one at Amazon). I would worry more about owning index funds in such an environment. But even as bad as things look now, I am not sure they will really turn out as bad as we fear – especially for many companies, for some yes, but many are well prepared for change).

    And the prospects in emerging markets look incredibly good to me. Yes they will slow their growth a bit if the large economies stall, but I think it is foolish to avoid investments in China, Singapore, Brazil, Korea, India, Ghana, Malaysia, Indonesia. In fact that is where companies like Google, Tesco, Apple, Toyota and Amazon are going to be making lots of money. Emerging markets are volatile and the companies in them are too. This will continue.
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  • Ken Fisher Disputes Some Investing Tips

    His point on dollar cost averaging is sensible. Markets go up, more than down, overall [the statistically best approach] if you have a lump sum to invest the best strategy would be to invest it all now. There is added risk with this however, which he would accept. Also it doesn’t change the main reason people end up dollar cost averaging (by default, with retirement savings from each paycheck).

    over long time horizons bonds are actually riskier than stocks… [also] there are more rolling 3 year periods where bonds lose money than there are where stocks lose money.

    He discusses these ideas, and many more in his book: Debunkery: Learn It, Do It, and Profit from It-Seeing Through Wall Street’s Money-Killing Myths.

    Related: Curious Cat investment books – Investment Risk Should be Evaluated as Part of a Portfolio, Rather than Risk of Each Individual Investment – Save Some of Each Raise

  • USA add 117,000 Jobs in July and Adjusts Previous Growth in May and June Up 56,000 More

    The report on employment released today was not good news but it was less bad than feared. Total nonfarm payroll employment rose by 117,000 in July, and the unemployment rate was little changed at 9.1%, the United States Bureau of Labor Statistics reported today. Employment growth in July, follows little growth over the prior 2 months. Total private employment rose by 154,000 over the month. Sectors experiencing growth include: health care, retail trade, manufacturing, and mining. Government employment continued to trend down.

    Some good news is found in the adjustments to the last two months job numbers. The change in total nonfarm payroll employment for May was revised from +25,000 to +53,000, and the change for June was revised from +18,000 to +46,000. That adds 56,000 jobs to the 117,000 jobs added in July and brings to the total for this report to 173,000 additional jobs. Still not great but much better than the last 2 months. The economy needs to add 125,000 a month to keep up with population growth.

    And currently the economy needs to add much more to make up for all the jobs lost due to the too big to fail institution created credit crisis. The damage done to the economy by those institutions and continuing to be done in order to support those companies remains enormous. I believe we need to see 230,000 jobs added a month consistently (in order to be making ground up for the damage done), before we can believe we are doing well.

    Remember it was just over 2 years ago we were losing hundreds of thousands of jobs a month. We are doing much better now, but fixing how broken things were is not easy. Between January of 2008 and February of 2010, the economy lost 8.75 million jobs. Since February 2010, 1.94 million jobs have been added. That means we have still lost 6,810,000 jobs and when you consider we have to add 125,000 a month to keep up we have 43 * 125,000 = 5,375,000 we haven’t added bringing a the total of jobs needed to over 12,000,000 (the number we need to add to get back to where we were). But truthfully we probably were at a bubble induced level at the peak so 12,000,000 is probably an overestimate of how many jobs we need to gain back.
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