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Tag: economy

  • Can We Expect the Health Care System in the USA to Become Less Damaging to the Economy?

    We have had over 20 years of health care costs going up more than inflation – every year. That is an amazing (and horrifyingly bad) record. We need very strong evidence to conclude we can even just reduce the increase in damage done year after year by the broken health care system.

    Getting to the point where we actually start reducing the increased damage done each year is a big leap from where we are (reducing the acceleration of damage [reducing from hugely above inflation to largely above inflation is better than not doing that but hardly a good sign – it is still worse than the year before, just the increase in badness is less than the increase in badness from the previous year).

    Health care is so bad I often see people try to look at data and see that the rate of getting worse is declining and seeing that as a positive sign. Things are still getting worse. And they are already extremely bad. I really can’t see arguing for things getting worse more slowly as being something we should be happy with. Even just making tiny improvements (given how bad we have let things get over the decades is not good enough). We need to actually reduce spending on health care. Certainly, the absolutely least we can expect is increasing less than inflation (that is an extremely low expectation – though one the health care system has failed at for decades). We shouldn’t accept such horrible performance.

    Once we actually can start making things better year after year (not just reducing the acceleration of badness) we likely have decades before we can reduce the enormous drain the USA health care system puts on all of us living here to a level that is just average for rich countries.

    There are pockets of good things being done in health care but so so so much more is needed.

    Further, at mid-year in 2011, our costs per employee are tracking about even with 2010 numbers. That raises the possibility of a 2012 with no premium increases for employees. It will be the 6th time in nine years with no premium increase.
    Some other positive results in 2010:

    • Emergency room visits were 71 per 1000 lives, or 38% of average. Serigraph people use the ER room only in a real emergency.
    • Inpatient surgeries were 51 vs. 80 average per 1000.
    • Radiology scans totaled 775 vs. 1300.
    • Claims related to poor lifestyle choices were only 3% of our total claims, versus 7.7% for our peers.

    These strikingly positive numbers are a testimonial to the engagement of the Serigraph workforce in reforming how care is delivered in this country. They are helping to mange this complex issue.

    Reforms such as a consumer-driven plan, on-site primary care, finding the best centers of value and transparency on prices and quality are making a difference, a huge difference.
    We still have a lot of innovation to do. For instance, we decided recently to go after depression, the second most costly chronic disease in the work place. Few companies, if any, have an enlightened managerial effort on that front.

    Great work by Serigraph.

    Related: The USA Can’t Afford to Pay for the Current Health Care System – Resources to improve health care system performance – articles on improving health care

  • Government Debt as Percent of GDP 1998-2010 for OECD

    This chart shows government debt as a percent of GDP based on OECD data. The chart is limited to central government debt issuance and excludes therefore state and local government debt and social security funds.

    Economic data is always a bit tricky to understand. It makes some sense that excluding social security would reduce the USA debt percentage a bit. But these debt as a percentage of GDP are lower than other sources show. There are obviously many tricks that can be used to hide debt and my guess is the main thing going on with this data is OECD intentionally trying to make things look as good as possible.

    Still looking at historical trends in data is useful. And I believe looking at data from various sources is wise. There has been a dramatic increase from 2008-2010. The USA is up from 41% of GDP to 61%. Spain is up from 34% to 52% (but given all the concern with Spain this doesn’t seem to indicate the real debt problems they have.

    Japan and France don’t have 2010 data, so I used a rough estimate of my own based on 2009 data. Greece has been over 100% since 1998 and now stands at 148%, 2nd worst (to Japan) for any OECD country (Europe, North America, Japan and Korea), Italy is 3rd. Ireland is at 61% (up from 28% in 2008). The UK is at 86%, up from 61%.

    Related: Government Debt as Percentage of GDP 1990-2009: USA, Japan, Germany, China… (based on IMF data) – Government Debt as Percentage of GDP 1990-2008 – Government Debt Compared to GDP 1990-2007 – Top 15 Manufacturing Countries in 2009

  • USA Added 244,000 Jobs in April

    Nonfarm payroll employment rose by 244,000 in April, and the unemployment rate edged up to 9.0% (from 8.8%) as the labor force grew slightly, the U.S. Bureau of Labor Statistics reported today. Also the number of jobs added is taken from the household survey while the unemployment rate is taken from the business payroll survey (they often have slightly different readings month to month). I, and many others, suspected the 8.8% figure might have been a bit low (and frankly the 9% figure may as well). In April of 2010 the unemployment rate was at 9.9%.

    The change in total nonfarm payroll employment for February was revised from +194,000 to +235,000, and the change for March was revised from +216,000 to +221,000. Bringing the total jobs added with this report to 290,000 (244,000 + 41,000 + 5,000) – which is a very good result. Now if we can keep this up for a year that would be great. Overall this provides very encouraging news on the job front.

    The number of unemployed persons stands at 13.7 million, up a little in April. Unemployment rates for several groups stood at: adult men 8.8%, adult women 7.9%, teenagers 24.9%, whites 8.0%, blacks 16.1%, Hispanics 11.8% and for Asians was 6.4%.

    In another positive sign, the number of long-term unemployed (those jobless for 27 weeks and over) declined by 283,000 to 5.8 million; their share of unemployment declined to 43.4%. This is still a serious problem, but at least it is improving a bit.

    The civilian labor force participation rate was 64.2% for the fourth consecutive month. The employment-population ratio, at 58.4%, changed little in April.

    The private sector added 268,000 jobs. Employment rose in a number of service-providing industries, manufacturing, and mining. Since a recent low in February 2010, total payroll employment has grown by 1.8 million. Private sector employment has increased by 2.1 million over the same period.

    Manufacturing employment rose by 29,000 in April. Since reaching an employment low in December 2009, manufacturing has added 250,000 jobs, including 141,000 in 2011. This is more great news. There has been real strength in manufacturing. Manufacturing is a real source of strength and if it can continue to be strong that will be very good news.

    Related: USA Adds 216,00 Jobs in March and the Unemployment Rate Stands at 8.8% – USA Added 290,000 Jobs In April 2010 – Unemployment Rate Increased to 8.9% in April 2009 – USA Unemployment Rate Rises to 8.1%, Highest Level Since 1983
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  • The USA Can’t Afford to Pay for the Current Health Care System

    The very frustrating aspect of the broken health care system in the USA is that it has been an enormous problem for decades. It isn’t that we have just discovered we have a fatally poor health care system in the last few years. The broken system has been obvious for decades and keeps getting worse. Thankfully in the last few years more and more of those with clout in the current economic system are standing up to demand improvement.

    Costs need to be removed from the system. Hundreds of billions a years should easily be removable by reducing paperwork and reducing waste in the system. As you say some reduction will also have to come in limiting spending that is being done now for worthwhile and worthless procedures. That should also easily save hundreds of billions a year. However in the decades of allowing this broken system to get worse and worse, it is not at all certain that merely taking $500 billion a year out of the costs will be enough.

    It might well require eliminating even more medical work and reducing the income of those that are taking from the system now. My guess is the most logical places for reducing income come from massively overpriced drugs, overpaid specialists, overpaid executives in insurance companies. I suppose some might think nurses should be paid less, that isn’t my belief, but we will see what happens.

    As sensible management of the system is adopted, over time, increasing the saving from eliminating waste should grow. Unfortunately we have wasted decades and so counting on us acting responsibly and adopting a focus on eliminating waste can’t be expected until we show a good 10-15 years of systemic effort on that front.

    In response to: Paying for health care

    Related: USA Spends Record $2.5 Trillion, $8,086 per person 17.6% of GDP on Health Care in 2009 – articles on improving the health care system in the USA – Broken Health Care System: Self-Employed Insurance – Health Insurers Propose Pricing and Coverage Without Respect to Health

  • Apartment Vacancies Fall to Lowest in 3 Years in the USA

    Apartment Vacancies in U.S. Fall to Lowest in Almost Three Years

    The vacancy rate declined to 6.2 percent from 8 percent a year earlier and 6.6 percent in the fourth quarter of 2010, the New York-based research firm said in a report today. The rate was the lowest since it reached 6.1 percent in the second quarter of 2008.
    …
    Effective rents, or what tenants actually pay, increased in 75 of the 82 markets Reis tracks, to an average $991 a month from $967 a year earlier and $986 in the fourth quarter. Landlords’ asking rents also climbed, to $1,047 from $1,027 a year earlier and $1,043 in the previous quarter, according to the report.
    …
    San Jose, California, had the most growth in effective rents during the past year, with 5.2 percent, followed by suburban Virginia and New York City, according to Reis. Effective rents declined 1.5 percent in Las Vegas during the year and grew the least in Orlando, Florida; and Colorado Springs, Colorado.

    Rents have been slowly recovering the last year, after the economic shocks of the credit crisis. People, moved back into parents house and more people started sharing apartments and houses in the last few years as people where thrown out of jobs due to the after effects of the financial actions by large financial institutions. Slowly the economy has been recovering and jobs have been slowly growing and as a result the rental market has been strengthening .

    Also the decline in construction the last few years has decreased the normal addition to supply. At the same time the population has continued growing. Some areas of the country seem to still have a large overcapacity in housing but areas that are adding jobs (such as Northern Virginia and New York City) are seeing increasing rents.

    I have 2 properties for rent in Arlington, Virginia.

    Related: Landlords See Increase in Apartment Rentals (July 2010) – USA Housing Inventory Puts Pressure on Prices (Sep 2010) – Apartment Rents Rise, Slightly, for First Time in 5 Quarters (Apr 2010) – It’s Now a Renter’s Market (Apr 2009) – Housing Rents Falling in the USA (Feb 2009)

  • USA Adds 216,00 Jobs in March and the Unemployment Rate Stands at 8.8%

    Nonfarm payroll employment increased by 216,000 in March, and the unemployment rate stands at 8.8%, the U.S. Bureau of Labor Statistics reported today. Revisions for January and February were very small (adding 5,000 jobs to the January totals and 2,000 to February). Since a recent low in February 2010, total payroll employment has grown by 1.5 million.

    This is more good news though the economy needs to add jobs more quickly to make a significant dent in the jobs lost since the misdeeds of large financial institutions precipitated the credit crisis and threw so many people out of work.

    Job gains occurred in professional and business services, health care, leisure and hospitality, and mining. Employment in manufacturing continued to trend up.

    Household Survey Data

    The number of unemployed persons (13.5 million) and the unemployment rate (8.8%) changed little in March. Since November 2010, the jobless rate has declined 100 basis points. Among the major worker groups, the unemployment rates are, for adult men, 8.6%; adult women, 7.7%; and for teenagers 24.5%.

    The number of long-term unemployed (those jobless for 27 weeks or more) was 6.1 million in March; their share of the unemployed increased from 43.9 to 45.5% over the month. In November of 2010 they accounted for 41.9% of the unemployed. In March of 2010 there were 6.5 million, which was 44.1% of all unemployed.

    In March, the civilian labor force participation rate held at 64.2%, which was down from 64.9% in March of 2010, and 65.8% in April of 2009.

    Related: Another 663,000 Jobs Lost in March, 2009 – Global manufacturing employment data 1979-2007 – Unemployment Rate Increased to 8.9% (May 2009) – USA Added 162,000 Jobs in March, 2010

    Establishment Survey Data
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  • Consumer and Real Estate Loan Delinquency Rates 2000-2010

    The chart shows the total percent of delinquent loans by commercial banks in the USA.

    chart showing consumer and real estate loan delinquency rates from 2000 to 2010

    The second half of 2010 saw real estate, agricultural, credit card and other loan delinquencies decrease. The rates are still quite high but at least are moving in the right direction. Residential real estate delinquencies decreased 138 basis points in the second half of 2010, to 9.94%, which brought them to just below the rate at the end of 2009. In the second half of 2010, commercial real estate delinquencies decreased 77 basis points to 7.97% (which was also exactly 77 basis points less than at the end of 2009. Agricultural loan delinquencies decreased 76 basis points, to 2.55% (down 53 basis points from the end of 2009). Consumer loan delinquencies decreased, with credit card delinquencies down 90 basis points to 4.17% and other consumer loan delinquencies down 27 basis points to 3.1%. The credit card delinquency rate decreased a very impressive 219 basis points in 210.

    Related: Real Estate and Consumer Loan Delinquency Rates 2000 through June 2010 – Real Estate and Consumer Loan Delinquency Rates 1998-2009 – Bond Rates Remain Low, Little Change in Late 2009 – posts with charts showing economic data
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  • Oil Production by Country 1999-2009

    The chart shows the oil production over the last decade by the top oil producing countries. Production totals include crude oil, shale oil, oil sands and NGLs (the liquid content of natural gas where this is recovered separately). Excludes liquid fuels from other sources such as biomass and coal derivatives.

    chart showing oil production by top producing countries (1999-2009)The chart shows the leading oil producing countries from 1999-2009. The chart created by Curious Cat Investing and Economics Blog may be used with attribution.

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    The chart show 3 clear leaders in production Russia, Saudi Arabia and the USA (with the USA firmly in 3rd place). Those 3 were responsible for approximately a third of the total oil production in 2009. Russia greatly increased production. During the last decade world production increased from 72 million barrels a day to 80 million barrels a day. Russia accounted for 51% of the increase, close to 4 million barrels a day.

    The next 11 countries are pretty closely grouped, with slightly increasing production over the period as a group. Brazil, the last country with over 2 million barrels of production a day in 2009, has the largest percentage increase in the period, producing 79% more in 2009 than they did in 1999. Russia increase production 62% over the period. The other countries ranged from a 23% increase (Canada) to a 25% decrease (Norway). The USA increased production 7% and China increased production 18%. World production increased 11%.

    Last year I posted a chart showing oil consumption by the top oil consuming countries over the last 2 decades; showing all countries using over 2 million barrels of oil a day. The USA consumed 18.7 million barrels a day in 2009. Only China was also over 5 million barrels, using 8.2 million in 2009. Japan was next at 4.4 million.
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  • USA Added 192,000 Jobs in February

    Nonfarm payroll employment increased by 192,000 in February, and the unemployment rate decreased to 8.9%, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, construction, professional and business services, health care and transportation. Revisions also added 58,000 jobs added in the previous two months. The change in total nonfarm payroll employment for December was revised from +121,000 to +152,000, and the change for January was revised from +36,000 to +63,000.

    The job gains are good news, but job growth has to sustain gains over 175,000 a month for at least 6 months (and gains over 250,000 would be much better) to begin to make a serious dent in the millions of jobs lost in the recession (weather likely restrained January job growth that showed up in the February figures if you take the average for the 2 months you get a gain of 127,500 jobs a month). Since a recent low in February 2010, total payroll employment has grown by 1.3 million, or an average of 106,000 per month. Approximately 125,000 jobs have to be added just to keep up with growth in the population. Until we are consistently adding 230,000+ jobs a months the employment picture is not improving strongly enough given the large number of recent job losses. Adding over 150,000 jobs a month is good, but more is needed to provide jobs for the large number of unemployed.

    The number of long-term unemployed (those jobless for 27 weeks or more) was 6.0 million and accounted for 43.9% of the unemployed. Decreasing the number of long term unemployed is a key measure, as significant gains are made it is a sign pointing to better economic conditions.

    Manufacturing employment rose by 33,000 in February. Almost all of the gain occurred in durable goods industries, including machinery (+9,000) and fabricated metal products (+7,000). Manufacturing has added 195,000 jobs since its most recent trough in December 2009; durable goods manufacturing added 233,000 jobs during this period.

    Construction employment grew by 33,000 in February, following a decline of 22,000 in January that may have reflected severe winter weather. Within construction, specialty trade contractors accounted for the bulk of the February job gain (+28,000).

    Related: USA Economy Adds 151,000 Jobs in October 2010, and Revisions Add 110,000 More – USA Unemployment Rate Remains at 9.7% (Feb 2010) – USA Unemployment Rate Rises to 8.1% (Feb 2009), Highest Level Since 1983
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  • Curious Cat Investing and Economics Carnival #12

    Welcome to the Curious Cat Investing and Economics Carnival: find useful recent personal finance, investing and economics blog posts and articles.

    • The Myth of Japan’s ‘Lost Decades’ by Eamonn Fingleton – “Japan’s surplus is up more than five-fold since 1990. And, yes, far from falling against the dollar, the Japanese yen has actually boasted the strongest rise of any major currency in the last two decades. How can such facts be reconciled with the ‘two lost decades’ story? I don’t think they can.”
    • Investment Risk Matters Most as Part of a Portfolio, Rather than in Isolation by John Hunter – “It is not less risky to have your entire retirement in treasury bills than to have a portfolio of stocks, bonds, international stocks, treasury bills, REITs… This is because their are not just risk of an investment declining in value. There are inflation risks, taxation risks…” (including structural imbalances introduced by the Feb depressing short term yields to provide billions to large banks from the pockets of savers).
    • Cheating Investors As Official Government Policy by Daniel R. Amerman – “When you put your savings into a money market fund, and the policy of the US government is to force interest rates to unnaturally low levels – you are being cheated out of the yield you should be receiving. When you buy a corporate bond or corporate bond fund – you are being cheated by overt government market interventions that have the explicitly stated purpose of lowering corporate borrowing costs.”
    • Force Yourself to Save by – “Save 50% of any bonus or raise… Theoretically you could save 100% of your raise and maintain the same lifestyle, but that’s no fun. What’s the point of a raise if it doesn’t include a new PS3?” (I have long favored putting a portion of each raise toward a saving plan – John)
    • Who holds the most U.S. Treasuries in the world? (Hint: It’s not China.) by James Jubak – “For a while China was the biggest holder of U.S. government debt. But now with $896 billion China has slipped to No. 2. As of last week, the leader of the pack is—the envelope, please–the New York Fed, which holds the Federal Reserve’s Treasury bills, notes, bonds, and TIPs. (TIPS are Treasury Inflation Protected Securities.) As of last week the Fed’s System Open Market Account held $1,108 billion in U.S. government debt. “
    • 15 Things You Need to Do, Before Reading Another Financial Blog – “Set up a system to monitor your next goal – Now that you have a goal, set up a system to monitor your progress. I have Mint email monthly progress reports on my financial goals. Another way is track your goal is by doing a monthly review.”
    • How Much House Can You Afford? by Ryan Guina – “if your mortgage payment is expected to jump $500 a month, set that money aside for a few months as part of your normal budgeting. Do this for other spending categories that may increase, such as utilities, home owner’s insurance, taxes, etc.”
    • MERS: Stop Foreclosing in Our Name by Barry Ritholtz – “Allow me to spell this out for you more specifically: MERS is an abomination, a legal blasphemy that should be destroyed before it unleashes the four horsemen of the apocalypse.”

    Related: investing books – articles on investing – Curious Cat Investing and Economics Search