Friday, April 21, 2017

HUD Tells Wealthy Surburban Westchester County That Having Single Family Residential Areas Is Discrimination Against Minorities: County Should Allow More Multi-Family (Apartment) Buildings

The following letter from HUD to Westchester County represents everything that is wrong with HUD and US housing policy.

In the HUD letter, the first two towns mentioned are Pound Ridge and Larchmont.

Pound Ridge has about 5200 people, about 1850 households, a median HH income of about $190,000 and a median home price of over $850,000.

Larchmont has about 6100 people, about 2300 households, a median HH income of about $150,000 and a median home price of over $1 million.

HUD Lettter excerpts:
Kevin I. Plunkett
Deputy County Executive
Westchester County
148 Martine Avenue, 9th Floor
White Plains, NY 10601

Re: United States ex rel. Anti-Discrimination Center v. Westchester County
06 civ. 2860 (DLC) Zoning Analysis

Dear Mr. Plunkett:

The US. Department of Housing and Urban Development has received your March 20, 2017 submission entitled "Westchester County Analysis of Impediments Supplement to Chapter 12 Zoning Analysis" ("AI Supplement"). HUD has reviewed the Al Supplement and determined that it is unacceptable because it continues to lack appropriate analyses of impediments to fair housing choice and fails to identify forward-looking strategies to overcome those impediments.
a. Failure to Address Segregation of White Residents

The AI Supplement focuses on "concentration" of minority residents but fails to analyze areas of white segregation. The discussion regarding Larchmont illustrates the problem. Nearly half of the acreage in the Village is dedicated to "high-density single~family" housing, while only 8% is dedicated to multifamily housing. Almost all of - 90% of the Village's acres is zoned for single family residential use and has an African American population of less than 1%. This indicates that African American residents are barely represented while white residents are overwhelmingly represented. Yet, the County fails to analyze whether zoning is a factor. [Footnote omitted.]

The analysis of Pound Ridge suffers from the same narrow focus. See pages 3-60 - 64. Pound Ridge does not allow any multifamily development as of right and there are only 17 multifamily units in the Town. Pound Ridge is 93.7% white and the housing stock is 99.2%
single-family. The AI Supplement concludes that there are no concentrations of African American or Hispanic residents and, therefore, the "zoning provisions are not posing as a barrier to diversification." Page 3-63. This conclusion is highly suspect. The concentration of white residents and the impact of limited multifamily development in Pound Ridge should have been addressed.

HUD finds that the Al Supplement is unacceptable and that the AI, therefore, does not satisfy the Settlement. HUD recognizes that the County will be unable to correct the above-described deficiencies in time to meet the Court's April 10, 2017 deadline to produce an AI that is acceptable to HUD. As such, notwithstanding the long history related to this litigation, HUD would not oppose a reasonable extension should the County seek one from the Court.


Jay Golden
Regional Director
Office of Fair Housing and Equal Opportunity
To HUD, it seems, being richer than the poor and living in a residential community of expensive single family homes is discriminatory.

It gets funnier (or sadder). Pound Ridge does not have sewers (homes use septic systems), a nearby commuter railroad to NYC, or other public transportation. It is one of the towns that is a signer of the EPA and DEC approved NYC Watershed Compact, which protects NYC water reservoir sources. The agreement restricts development and increases in impervious surfaces because it will increase runoff and the presence of not easily filtered pollutants (e.g., salt) into NYC water. Pound Ridge and private developers are limited by law and agreement in pursuing further development of land.

In perspective, many Westchester towns have a population equal to one or two Manhattan NYC square blocks with high-rise apartment, co-op or condo buildings. Can you imagine HUD coming into NYC and telling it that certain square blocks on the upper East Side or upper West Side of Manhattan, along Central Park West or Fifth Avenue, were discriminatory because the tenant mix of each expensive rental, co-op, or condo building did not match the national average of minorities without any showing that a member of a minority with the financial means to afford the high cost was rejected? That is about the equivalent of what HUD is saying to Westchester County.

Tuesday, April 18, 2017

Reprint Of A 7 Year Old Blog Post "Will Health Care Reform Be Legislative Vaporware?"

Below is a reprint of an over 7 year old blog post by me on December 20, 2009, "Will Health Care Reform Be Legislative Vaporware?"

The post below discussed the distinction between the passage of a well-intentioned health care law and the final desired health care benefits. Too often the media, politicians and the public act as if a law's passage and enactment is the end goal. They forget that a law is an intermediate step that sets in motion many agents to achieve the desired result. Until a law is implemented and running for several years, there is tremendous uncertainty as to the law's ability to achieve the original intended result, especially for such a large undertalking as reforming health care.
Sunday, December 20, 2009

Will Health Care Reform Be Legislative Vaporware?

Posted By Milton Recht

Vaporware, a term from the computer industry where software companies announce their forthcoming release of new beneficial software that never materializes, appropriately applies to health care reform legislation

Congress will pass and the President will sign a health care reform law, but will it accomplish its many goals and have the many promised health care benefits or will it become a law that does not achieve its intended results? Could it actually make the machinery of our health care system function more poorly?

We must not forget that the benefit of this product called "health care" is the outcome to the patient and not its costs or insurability.

Many of us treat a law, such as whatever will pass for health care reform, as a final delivered product with all the previously promised beneficial features. Health reform requires more than the passage of a law called health reform. It requires accomplishing and solving many difficult and not well-understood health care issues.

Many laws are simple in that they do not involve modifying the process of an entire sector of the US economy. Most laws are categorizations that add to or remove from existing processes. A law that declares an action criminal, a felony, a higher fine, a health hazard, taxable, etc. and by declaration adds or subtracts from an existing framework easily achieves its intended results because the passage of the law itself achieves the results.

The well intended passage (and I give Congress and the President the benefit of the doubt that their actions are well intended) of a law in an area as large, as complex and as intertwined as health care requires more than enactment for achieving its original goals. It requires much more than a declaration of Congressional wishes and a redefinition of health care, health insurance, uninsured, etc.

Until any health care law is fully functioning, there is a lot of uncertainty as to its effectiveness, no matter how well intentioned. In the health care debate, our upset was with process and costs, but not outcomes. We never heard that doctors were doing appendectomies wrong or that too many patients with appendicitis died. We heard that appendectomies cost too much out of pocket or that someone could not or did not get affordable insurance to cover the needed medical care.

What we do not yet understand about any health care reform law that passes Congress is how that law will affect health outcomes. It is quite possible, and likely, that any health law making as much of a change to health insurance and health care as will likely pass Congress, will also likely affect delivery and choices of treatment, doctor availability, and health outcomes.

Whether the law will lower costs, decrease the number of uninsured and improve health outcomes is unknown until medicine functions for some time under the new legislation. While many will say it is in any case a first step toward improved health care outcomes, increased insurance availability and lowered costs, and that Congress will modify it as needed, a poorly laid foundation will never result in a quality home. [Emphasis not in original.]

To me, health care reform legislative passage is vaporware. It is solely a promise of beneficial outcomes and intended benefits. Until, the law is functioning for a few years, after all its provisions take effect, will I and the rest of the US know whether a real, functioning, improved, lower cost health care system exists. Until such time, passage of the law is merely an announcement of intended benefits. It is vaporware.
Posted 12/20/2009 04:53:00 AM

Sunday, April 16, 2017

Over The Last 3 Years, Investors Put 8.5 Times As Much Money In Vanguard As In The Rest of The Mutual Fund Industry: $823 Billion Vs $97 Billion

From The New York Times, "Vanguard Is Growing Faster Than Everybody Else Combined" by Landon Thomas Jr.:
In the last three calendar years, investors sank $823 billion into Vanguard funds, the company says. The scale of that inflow becomes clear when it is compared with the rest of the mutual fund industry — more than 4,000 firms in total. All of them combined took in just a net $97 billion during that period, Morningstar data shows. Vanguard, in other words, scooped up about 8.5 times as much money as all of its competitors.
The triumph of index fund investing means Vanguard’s traders funnel as much as $2 billion a day into stocks like Apple, Microsoft and Amazon, as well as thousands of smaller companies that the firm’s fleet of funds track. That is 20 times the amount that Vanguard was investing on a daily basis in 2009. It is manageable, in large part, because no stock-picking is involved: The money simply flows into index funds and E.T.F.s, and through February of this year, nine out of every 10 dollars invested in a United States mutual fund or E.T.F. was absorbed by Vanguard.

By any measure, these are staggering figures. Vanguard’s assets under management have skyrocketed to $4.2 trillion from $1 trillion seven years ago, according to the company. About $3 trillion of this is invested in passive index-based strategies, with the rest in funds that rely on an active approach to picking stocks and bonds.

Thursday, April 13, 2017

82 Percent Of All US Actively Managed Funds And Over 90 Percent Of Actively Managed US Equity Funds Trailed Their Benchmarks Over 15 Years

From The Wall Street Journal, "Indexes Beat Stock Pickers Even Over 15 Years: New data show that 82% of all U.S. funds trailed their respective benchmarks over 15 years" by Daisy Maxey and Chris Dieterich:
Most actively managed U.S. stock funds were beaten by their market benchmarks over the past decade and a half, a record of underperformance that helps explain why stock pickers are losing billions of dollars in assets each month to low-cost passive investments that track indexes.

Over the 15 years ended in December 2016, 82% of all U.S. funds trailed their respective benchmarks, according to the latest S&P Indices Versus Active funds scorecard. This was the first year that the analysis included 15 years of data, helping smooth out periods of volatility that can affect the performance of active managers.
Source: The Wall Street Journal

Among more than a dozen categories tracked, 95.4% of U.S. mid-cap funds, 93.2% of U.S. small-cap funds and 92.2% of U.S. large-cap funds trailed their respective benchmarks, according to the data.

Tuesday, April 11, 2017

GM Is Twice As Valuable As Tesla: Confusion In The Media Between Market Capitalization And Enterprise Value

The broadcast and print news media is reporting that on Monday, April 10, Tesla surpassed General Motors as the most valuable US auto company. For example, to cite just two, see The Wall Street Journal article, "Tesla Rivals GM as the Most Valuable Auto Maker in U.S." and the New York Times article, "G.M. Takes a Back Seat to Tesla as America’s Most Valued Carmaker."

Tesla's market capitalization (equity common stock outstanding times per share price) did surpass General Motor's market capitalization during the day on Monday. Market capitalization is only one of several components of a company's total value.

The total value of a company depends on a company's choice of capital structure. Different companies have different capital and financial structures that include the use of varied financial instruments, such as common stock, preferred stock, short-term and long-term debt and bonds (usually netted against cash holdings), and other funding and investment vehicles.

The inclusion of the value of all sources of funding, investment, and ownership is called Enterprise Value.

The Entreprise Value of Tesla is $55.7 billion, according to Yahoo.

The Entreprise Value of General Motors is $113.9 billion, according to Yahoo.

GM's total value is over 2 times the total value of Tesla.

To use a commonplace, everyday example to understand the difference between the two values, equity and total values, consider the following. Two buyers are looking to purchase a home. Buyer A buys a $400,000 house with a 10 percent, $40,000, downpayment and a $360,000 mortgage. Buyer B buys a $$360,000 house with a 20 percent, $72,000, downpayment, and a $288,000 mortgage.

Buyer A has $40,000 equity in the purchased house.

Buyer B has $72,000 equity in the purchased house.

Does buyer B have the more valuable house because they have more equity, $72,000 versus Buyer A's equity of $40,000?

Of course not. A $400,000 house is more valuable than a $360,000 house. The capital structure of the purchase does not change the value of the houses.

With GM being the older of the two companies and the company with more capital investment in mass production facilities, it is not surprising that Tesla, a newer company, producing many fewer vehicles than GM could have a higher amount of equity, common stock, value and much less debt than GM. Tesla has a very small amount of debt for a company in a capital intensive industry, such as the auto industry. As Tesla matures and expands its production capabilities, it will grow its vehicle market share by taking on more debt.

When both companies have similar production capacity and likely a more similar capital structure, then a more comparable comparison of value will be able to be made. Until then, GM's total (enterprise) value is twice that of Tesla's.

Friday, April 7, 2017

Uber Introduction Reduced Alcohol-Related Auto Accidents In New York City

From The Economist, Daily Chart, "Ride-hailing apps may help to curb drunk driving: Alcohol-related car accidents declined in New York after the introduction of Uber:"

Source: The Economist
According to a working paper by Jessica Lynn Peck of the Graduate Centre at the City University of New York, the arrival of Uber to New York City may have helped reduce alcohol-related traffic accidents by 25-35%. Uber was first introduced in the city in May 2011, but did not spread through the rest of the state. The study uses this as a natural experiment. To control for factors unrelated to Uber's launch such as adverse weather conditions, Ms Peck compares accident rates in each of New York’s five boroughs to those in the counties where Uber was not present, picking those that had the most similar population density and pre-2011 drunk-driving rate.

The four boroughs which were quick to adopt Uber—Manhattan, Brooklyn, Queens and the Bronx—all saw decreases in alcohol-related car crashes relative to their controls. By contrast, Staten Island, where Uber caught on more slowly, saw no such decrease. It shouldn’t take ride-hailing apps to curb drunk driving, but any reduction is worth hailing.

Thursday, April 6, 2017

US Budget Spending By Percentage Categories

From Pew Research Center, "What does the federal government spend your tax dollars on? Social insurance programs, mostly" by Drew DeSilver:

Source: Pew Research Center
When thinking about federal spending, it’s worth remembering that, as former Treasury official Peter Fisher once said, the federal government is basically “a gigantic insurance company,” albeit one with “a sideline business in national defense and homeland security.” In fiscal year 2016, which ended this past Sept. 30, the federal government spent just under $4 trillion, and about $2.7 trillion – more than two-thirds of the total – went for various kinds of social insurance (Social Security, Medicaid and Medicare, unemployment compensation, veterans benefits and the like). Another $604 billion, or 15.3% of total spending, went for national defense; net interest payments on government debt was about $240 billion, or 6.1%. Education aid and related social services were about $114 billion, or less than 3% of all federal spending. Everything else – crop subsidies, space travel, highway repairs, national parks, foreign aid and much, much more – accounted for the remaining 6%.

Wednesday, April 5, 2017

US Physicians Earnings Vary By Region

From phillycom, "How much do doctors earn? Survey finds gender, regional differences" by Don Sapatkin:
Physicians in the mid-Atlantic U.S. earn less money — pulling in an average of $282,000 — than any other region in the nation, according to a new compensation report based on a recent survey of more than 19,000 doctors.

Physicians in the north central region of the country make the most, an average of $317,000, reported Medscape, a news website for medical professionals. The national average: $294,000 ($217,000 for primary care doctors and $316,000 for specialists).

Average Physician Pay by Region

Staff Graphic

  • Earnings were up about 5 percent from last year's survey, similar to increases each of the past several years.
  • Orthopedists make the most ($489,000), pediatricians the least ($202,000).
Information derived from "Medscape Physician Compensation Report."

16 US Cities That Exceed The National Average For Percentage Of People 18-34 Living at Home

From Money•ish, "Proof that millennials in Middle America are more independent" by Catey Hill:

Source: Money•ish

Thursday, March 30, 2017

Obama Left Trump And Future Presidents With A Growing Deficit Problem And The Worst US Debt Problem Since The End Of WWII: Projected Deficits Of 9.8 Percent Of GDP And Debt Of 150 Percent Of GDP

From CBO, "The 2017 Long-Term Budget Outlook" Report, March 30, 2017, (Full CBO report embedded at end):
If current laws remained generally unchanged, the United States would face steadily increasing federal budget deficits and debt over the next 30 years—reaching the highest level of debt relative to GDP ever experienced in this country.

Source: CBO

At 77 percent of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II. If current laws generally remained unchanged, the Congressional Budget Office projects, growing budget deficits would boost that debt sharply over the next 30 years; it would reach 150 percent of GDP in 2047. The prospect of such large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges.

Why Are Projected Deficits Rising?
In CBO’s projections, deficits rise over the next three decades—from 2.9 percent of GDP in 2017 to 9.8 percent in 2047—because spending growth is projected to outpace growth in revenues (see figure below). In particular, spending as a share of GDP increases for Social Security, the major health care programs (primarily Medicare), and interest on the government’s debt.

Source: CBO

Much of the spending growth for Social Security and Medicare results from the aging of the population: As members of the baby-boom generation age and as life expectancy continues to increase, the percentage of the population age 65 or older will grow sharply, boosting the number of beneficiaries of those programs.

In addition, growth in spending on Medicare and the other major health care programs is driven by rising health care costs per person, which are projected to increase more quickly than GDP per capita (after the effects of aging and other demographic changes are removed). CBO projects that those health care costs will rise—although more slowly than they have in the past—in part because of the effects of new medical technologies and rising personal income.

The federal government’s net interest costs are projected to rise sharply as a percentage of GDP for two main reasons. The first and more important is that interest rates are expected to rise from their current low levels, making any given amount of debt more costly to finance. The second reason is the projected increase in deficits: The larger they are, the more the government will need to borrow.
What Might the Consequences Be If Current Laws Remained Unchanged?
Large and growing federal debt over the coming decades would hurt the economy and constrain future budget policy. The amount of debt that is projected under the extended baseline would reduce national saving and income in the long term; increase the government’s interest costs, putting more pressure on the rest of the budget; limit lawmakers’ ability to respond to unforeseen events; and increase the likelihood of a fiscal crisis, an occurrence in which investors become unwilling to finance a government’s borrowing unless they are compensated with very high interest rates.
The full CBO Report, "The 2017 Long-Term Budget Outlook" follows:

Thursday, March 23, 2017

Since 2009, 21 US Cities Of The 100 Largest Became Majority Renters Versus Owners: Chart

From Bloomberg, "Renters Now Rule Half of U.S. Cities: The American Dream increasingly involves a lease, not a mortgage." by Patrick Clark:
Fifty-two of the 100 largest U.S. cities were majority-renter in 2015, according to U.S. Census Bureau data compiled for Bloomberg by real estate brokerage Redfin. Twenty-one of those cities have shifted to renter-domination since 2009. These include such hot housing markets as Denver and San Diego and lukewarm locales, such as Detroit and Baltimore, better known for vacant homes than residential development.
Source: Bloomberg

Tuesday, March 21, 2017

Why Drug Prices Are Different Internationally: My Comment To WSJ Commentary

From The Wall Street Journal, Opinion, Commentary, "How ‘Price Discrimination’ Helps Less-Affluent Countries: The Supreme Court takes up a patent-law case with repercussions far beyond U.S. borders." by Daniel Hemel and Lisa Larrimore Ouellette:
If this case were only about printer cartridges, we might not be worried about the outcome. Yet the Supreme Court’s decision will also apply to pharmaceutical products now sold for a discount in less developed countries. And it will apply to educational products like the low-cost XO tablets manufactured by Sakar International and distributed to schoolchildren world-wide.

If the patent laws cannot be used to prevent such products from being resold in the U.S., then you can bet that prices elsewhere will begin to rise toward U.S. levels. In countries where people live on a fraction of what Americans do, consumers might soon be required to pay ever greater shares of their income for medicine, for example. Even worse: Since pharmaceutical companies are subject to price controls in many countries, they might respond by pulling their drugs from some overseas markets.
My too short, due to WSJ character count limitations, posted comment to the above WSJ Commentary:
The article misunderstands how all companies price products internationally. US companies in non-US markets price products based on local competitive conditions, local consumer preferences and willingness to pay. Even software companies discount their software in foreign markets, in a very similar manner as drugs are discounted. Quickbooks regularly sells its online US Quickbooks Plus for Small Business at $40 per month, now on sale for $28 per month. Quickbooks UK website sells the same accounting software for 25 British Pounds, on sale now for 10 British Pounds. 25 Pounds is US $31.14, a 22 percent discount from the $40 US price. 10 Pounds is US $12.50, a 55 percent discount from the US sales price. Profit maximization is occurring and not charity. If importation is allowed, new domestic and international prices will be reset to maximize profits, based on local factors. That new price is dependent on local customer price sensitivity. The direction and amount of change is a guess.

Monday, March 20, 2017

Government Vs Market Management Of Health Care: Rationing Health Care Versus Resource Allocation By Prices

The following is a reprint of a currently relevant blog post I wrote almost 8 years ago on August 29, 2009, "Rationing Health Care Versus Resource Allocation By Prices:"
Many people ... who are worried about more government involvement in health care, cite rationing as a likely outcome. Their argument is that there will be a decision maker who decides what medical procedures are approved and what are not, or that in the alternative, the government will limit the amount of funds available for health reimbursement, which will force doctors or government officials to limit the availability of medical procedures, i.e., ration health care.

Those in favor of current proposals [in 2009, included at that time, the Affordable Care Act] for reforming our health system say the medical market already rations health care because many people cannot afford health insurance or are otherwise uninsured.

Functioning medical markets do not ration!

Markets set prices and producers and buyers make individual decisions based on these prices. Markets do not prevent anyone from producing a good or service if they are willing to invest the resources to do so. Likewise, markets do not prevent people from buying goods and services within their budgets. The individuals decide how they will spend their money. Individuals decide if they spend their money on a new car every few years or if instead they want some elective surgery, a new lcd tv versus a new computer, a fillet Mignon in a fancy restaurant versus a Big Mac, etc. The whole process is how an economy allocates resources based on peoples' preferences.

In a rationed economy, such as that proposed for health care reform, the government or some other decision maker decides how much the producers produce of an item and they also decide how much individuals can buy or use. The governing body artificially sets prices, and these prices are not signals to users or producers. There are no profit motives to create efficiency incentives or to reallocate resources to meet excess demand with extra production.

One of the differences between rationing and a market is that rationing creates tremendous inflexibility and rigidity in production and use that does not respond to changing needs, demands and resource availability and scarcity. Black markets often spring up to compensate.

If government only bakes bread instead of making pasta, you will eat a lot of bread and no pasta. A market-based system will never allow something like that to happen. A government-planned system could. Just visit Cuba or read about Russia thirty plus years ago.

Anyone who says our capitalistic system rations because something is expensive does not understand markets and market pricing or they are just trying to make health care reform look better based on incorrect logic.

Many have written much about how our current system of health and tax laws distorts the health marketplace. The employer tax deduction grossly distorts the price signals to the users and to the suppliers. Restrictive licensing laws and limited medical school enrollments curtail the supply of available doctors to meet the ever-growing demand.

The list goes on and on, but the President [Obama] and Congress are not willing to propose anything that will restore accurate pricing signals to the health market place or increase the supply of medical providers to meet demand and lower costs. A normal price signaling mechanism and removal of unnecessary barriers to entry into the medical field, as exists for almost every other product, would end most of the problems we see in health care today.

This post is derived from a comment I left on August 11, 2009, on Megan McArdle's blog post, "Rationing By Any Other Name" on the Atlantic, Asymmetrical Information Blog.

Monday, March 13, 2017

CBO Did Not Analyze (Dynamically Score) Macroeconomic Effects Of Repeal Of Obamacare, Including Unrelated Taxes, And Passage Of American Health Care Act: Removal Of Unrelated Taxes Likely Has a Positive Macroeconomic Effect.

From CBO, "American Health Care Act," March 13, 2017, Cost Estimate:
Macroeconomic Effects
Because of the magnitude of its budgetary effects, this legislation is "major legislation," as defined in the rules of the House of Representatives.1 Hence, it triggers the requirement that the cost estimate, to the greatest extent practicable, include the budgetary impact of its macroeconomic effects. However, because of the very short time available to prepare this cost estimate, quantifying and incorporating those macroeconomic effects have not been practicable. [Footnote omitted.]
Other parts of the legislation would repeal or delay many of the changes the ACA made to the Internal Revenue Code that were not directly related to the law’s insurance coverage provisions. Those with the largest budgetary effects include:
  • Repealing the surtax on certain high-income taxpayers’ net investment income;
  • Repealing the increase in the Hospital Insurance payroll tax rate for certain
    high-income taxpayers;
  • Repealing the annual fee on health insurance providers; and
  • Delaying when the excise tax imposed on some health insurance plans with high premiums would go into effect.
Removal and delay of the above-listed taxes likely would increase net business investment, employee hours worked and labor-force participation. Each of which, separately and together, would have a positive macroeconomic effect on the US economy and employment.

Complete Text Of CBO Cost Estimate Of American Health Care Act

From CBO, "American Health Care Act," March 13, 2017, Cost Estimate:
CBO and JCT estimate that enacting the American Health Care Act would reduce federal deficits by $337 billion over the coming decade and increase the number of people who are uninsured by 24 million in 2026 relative to current law.

American Health Care Act CBO Cost Estimate by Milton Recht on Scribd

Wednesday, March 1, 2017

Americans Own Fewer TVs: No TV Households Has Doubled

From Ars Technica, "Americans have fewer TVs on average than they did in 2009: And the number of households with no TVs at all grew." by Megan Geuss:
The latest data shows that in 2015, 2.6 percent of households had no TV at all, a jump from the previous four surveys in 2009, 2005, 2001, and 1997 in which a steady 1.2 to 1.3 percent of households didn’t own a TV. The 2015 data also showed that the number of people with three TVs or more dropped in 2015. That year, 39 percent of households had more than three TVs, whereas 44 percent had more than three TVs in 2009.

1997 - 2015 Chart of TVs Per Household
Source: Ars Technica

Interestingly, the number of households with one or two TVs increased in 2015 to 58 percent, from 54 percent in 2009.

Tuesday, February 28, 2017

Barack and Michelle Obama Sign With Penguin Random House For $60 Million Book Deal

From New York Post, "Penguin Random House crowned winner of $60M Obama book war" by Natalie O'Neill:
The bidding war over Barack and Michelle Obama’s book deal skyrocketed to more than $60 million before Penguin Random House was crowned the winner on Tuesday night

The publisher announced that the pair had signed with them after reportedly delivering the highest bid earlier in the day.
By contrast, publishers only plunked down $15 million for Bill Clinton’s 2004 autobiography, “My Life,” and $10 million for George W. Bush’s memoir, “Decision Points,” according to past reports.

Friday, February 17, 2017

Gluten-Free Eaters Have Higher Levels Of Arsenic And Mercury In Their Bodies

From National Institutes of Health, US National Library of Medicine, MedlinePlus, "Possible Drawback to Gluten-Free: Toxic Metals: Higher levels of arsenic, mercury found in people who follow this eating plan, study finds" by Robert Preidt:
Gluten-free products often contain rice flour as a substitute for wheat, rye and barley. And rice is known to accumulate arsenic and mercury from fertilizers, soil and water, said [Maria] Argos, an assistant professor of epidemiology in the [University of Illinois at Chicago (UIC)] School of Public Health.

For the study, the researchers analyzed U.S. National Health and Nutrition Examination Survey data from thousands of Americans, aged 6 to 80. The investigators identified 73 people who said they ate a gluten-free diet.

Compared to other survey participants, those who ate gluten-free diets had nearly twice the levels of arsenic in their urine, and 70 percent higher levels of mercury in their blood, according to the study.
Arsenic and mercury, which occur naturally in the environment, raise the risk of heart disease, cancer and neurological problems at certain levels, the researchers said.

Expected Changes In Consumer Demand Over The Next Decade Due To Changing Demographics: More Dog Wakers, Fewer Teachers

From BloombergMarkets, "Dog Walkers to Be More in Demand Than Teachers in Next Decade: Demographics to drive changes in spending patterns, report says" by rich Miller:
Its [a new report from the New York-based Conference Board] focus is on demographics, both the well-known aging of the Baby Boom generation and the less-publicized baby bust that began during the Great Recession as fertility rates dropped.

Thus the choice of profession suggested by the business membership and research association's report. Spending on pets is forecast to rise strongly as boomers -- perhaps pining for children who have flown the coop -- shower their attention and money on new-found furry friends.

Outlays on education will lag, though, as the potential student population comprising five- to 24-year-olds grows very slowly due to the downsized, post-Millennial Generation Z.
Expected Changes In Consumer Demand
Source: BloombergMarkets

Tuesday, February 14, 2017

Share Of Elderly Workers By Occupation: Bureau of Labor Statistics

From Bureau of Labor Statistics, Monthly Labor Review, February 2017, "Occupational choices of the elderly:"
From 1990 to 2010, the U.S. civilian labor force showed a substantial increase in average age. Over this 20-year period, the percentage of workers in the labor force ages 65 and older rose at an average annual rate of 3.4 percent, in contrast with a 0.9-percent average annual increase for those under 65. This difference was due partly to the difference in average annual population growth for the two age groups, 1.4 percent for the 65-and-older group and 1.1 percent for the under-65 group. But it was due largely to the increase in the labor force participation rate of the 65-and-older group: from 11.8 percent in 1990 to 17.4 percent in 2010. This increase contrasts with a slight decline in the labor force participation rate for those under 65: from 76.6 percent in 1990 to 73.9 percent in 2010. As a result, the percentage of older workers grew from 2.8 percent to 4.6 percent, even as their unemployment rate remained below that of younger workers. Similar increases for elderly workers are projected to continue at least through 2020. What impact does this aging of the labor have on the structure of occupations?
Table 1 {below] shows the share of workers from the elderly and 45–65 age groups in the major occupational groups. Among the occupational groups, the one with the greatest difference (both absolute and relative) in the share of workers from the two age groups is the food preparation and serving related group: 25.3 percent of the elderly work in this group, while only 3.1 percent of 45–65-year-olds do. Occupations in the group employ predominantly women, have a large share of part-time employment, and require relatively little education or strenuous activity. The group with the second-greatest absolute difference in the share of workers from the two age groups is management. Surprisingly, this occupational group has considerable part-time employment for the elderly (but not for younger workers).
Table 1. Shares of elderly (over 65) and 45–65-year-old workers, by occupational group
Occupational groupNumber of casesPercent share
45–65Over 6545–65Over 65
Business and financial operations1,2891394.93.9
Computer and mathematical sciences687362.61.0
Architecture and engineering525452.01.3
Life, physical, and social sciences256301.0.8
Community and social services493591.91.7
Education, training, and library1,6201846.25.2
Arts, design, entertainment, sports, and media435671.71.9
Healthcare practitioner and technical1,4391535.54.3
Healthcare support568592.21.7
Protective service471511.81.4
Food preparation and serving related8068963.125.3
Building, grounds cleaning, and maintenance1,2251104.73.1
Personal care and services7321302.83.7
Sales and related2,4803469.59.8
Office and administrative support3,32635012.79.9
Farming, fishing, and forestry19622.7.6
Construction and extraction1,338875.12.5
Installation, maintenance, and repair923593.51.7
Transportation and material moving1,7562036.75.7
Total civilian26,1533,537100.0100.0
Source: U.S. Bureau of Labor Statistics, Current Population Survey.
See original BLS article for additonal information about full-time and part-time employment of seniors.

Friday, February 10, 2017

New High In Citizens Renouncing US Citizenship: Upward Trend Since Foreign Account Tax Compliance Act (FACTA) Passage

From Bloomberg, "Americans Renouncing Citizenship at Record High: It all goes back to the Civil War" by Suzanne Woolley:
The number of Americans renouncing their citizenship rose to a new record of 5,411 last year, up 26 percent from 2015, according to the latest government data.
The rules got trickier in 2010, when, in an effort to cut down on tax evasion, the Foreign Account Tax Compliance Act (fabulously, Fatca, for short) was passed into law. It basically said foreign institutions holding assets for U.S. citizens had to report the accounts or withhold a 30 percent tax on them if the information wasn't provided. That led some foreign banks to shy away from opening accounts for expats.

Since Fatca came into being, annual totals for Americans renouncing citizenship have reached their four highest historic levels, as shown in the chart below from Andrew Mitchel LLC and its International Tax Blog.

Yearly Totals Of US Citizens Renouncing Citizenship
Source: Bloomberg

Thursday, February 9, 2017

CBO Slide Presentation On 2017 US Budget And Next Decade Economic Outlook

From the Congressional Budget Office, February 9, 2017, Presentation, "The 2017 Budget and Economic Outlook" by Keith Hall, CBO Director, to the National Economists Club:

In fiscal year 2016, for the first time since 2009, the federal budget deficit increased in relation to the nation’s economic output. The Congressional Budget Office projects that over the next decade, if current laws remained generally unchanged, budget deficits would eventually follow an upward trajectory—the result of strong growth in spending for retirement and health care programs targeted to older people and rising interest payments on the government’s debt [slide 7 in the CBO presentation below], accompanied by only modest growth in revenue collections. Those accumulating deficits would drive debt held by the public from its already high level up to its highest percentage of gross domestic product (GDP) since shortly after World War II.

CBO’s estimate of the deficit for 2017 has decreased since August 2016, when the agency issued its previous estimates, primarily because mandatory spending is expected to be lower than earlier anticipated. However, the current projection for the cumulative deficit for the 2017–2026 period is about the same as that reported in August.

CBO’s economic forecast—which underlies its budget projections—indicates that under current law, economic growth over the next two years would remain close to the modest rate observed since the end of the recession in 2009. Nevertheless, economic growth would continue to outpace growth in potential (maximum sustainable) GDP and thus continue to reduce the amount of underused resources, or slack, in the economy. The result would be increases in hiring, employment, and wages, along with upward pressure on inflation and interest rates. In the later part of the 10-year projection period, output growth would be constrained by a relatively slow increase in the nation’s supply of labor.

2016 Federal Budget Infographic

From the Congressional Budget Office, "The Federal Budget in 2016: An Infographic:"
The federal deficit in 2016 was $587 billion, equal to 3.2 percent of gross domestic product.
2016 Federal Budget Infographic

Wednesday, February 8, 2017

Sources Of 2016 US Trade Deficit By Product Categories

From MarketWatch, "Why the U.S. has a huge trade deficit" by Jeffry Bartash:
The trade gap rose slightly in 2016 to a four-year high of $502 billion, marking the 41st deficit in a row. The last time the U.S. ran a surplus was in 1975, according to U.S. Census figures.
Source: MarketWatch

Monday, February 6, 2017

To Lower Medical Care And Insurance Costs Increase The Number Of Medical Providers: My Wall St Journal Comment

My posted comment to The Wall Street Journal, Opinion, "It’ll Take More Than a Band-Aid to Fix Medicaid: Save the program by giving states money to provide high-deductible plans with health savings accounts." by Regina Herzlinger and Richard Boxer:
Like all other goods and services, medical care availability and prices follow supply and demand rules. To realize the potential that high-deductible insurance plans and consumer-controlled HSA's have to lower medical care cost, changes also must be made to increase the supply of medical providers.

The high barriers to entry in the medical profession must be lowered to increase the supply of providers. Give incentives to states to lower restrictions on the use of physician assistants and nurses to allow for independent routine diagnosis and care. Increase the number of visas for well-trained foreign doctors and nurses and allow for their quick licensing without burdensome additional training. Remove state level unmet need based criteria for opening a new hospital.

Health insurance is only a reimbursement for medical costs. As consumers gain medical care buying control and as the supply of medical providers increases, prices and usage will decline and create lower insurance premiums.

Thursday, February 2, 2017

Business Startups Concentrated In Fewer Cities

From The Wall Street Journal, "The Five Megacities Where Business Startups Have Boomed: New York, Miami, Los Angeles, Houston and Dallas house half of new businesses created after the recession" by Janet Adamy:
Consider that in the mid-1980s, 29 metropolitan areas that contained 45% of the country’s jobs were home to half of the national increase in companies after an earlier recession.

Now look at what happened after the painful 2007-09 economic downturn. The aforementioned five metro areas [New York, Miami, Los Angeles, Houston and Dallas] housed half of the nation’s net increase in new firms and accounted for 17% of employment between 2010 and 2014. Left behind are thousands of small towns and rural areas that stitch together much of America.

Source: The Wall Street Journal

Economists say this is particularly worrisome because it is businesses starting from scratch—and not older companies—that are the primary drivers of job growth. Even after the economy was five years into its recovery from the latest recession, three out of five metropolitan areas were seeing more firms close than open.

Tuesday, January 24, 2017

New Vehicle Fuel Economy Averaged 1.7% Improvement In 2016 And A 10-year Average Gain Of 1.6%

From MarketWatch, "America’s love of gas guzzlers is hampering progress on fuel economy" by Claudia Assis:
New vehicles sold in 2016 averaged 23.7 miles per gallon, compared with 23.3 miles per gallon in 2015 and 19.9 miles per gallon a decade ago, analysts at Tudor Pickering Holt said in a recent note.

That 1.7% improvement in 2016 is only a squeak more than the 10-year average gains of 1.6%:

Source: MarketWatch

One major headwind to fuel economy is Americans’ “seemingly insatiable appetite for trucks,” the analysts said. Trucks’ fuel economy averaged 21 miles per gallon last year, compared with cars at 29 miles per gallon. Six out of 10 new vehicles sold in 2016 were trucks, the highest share since at least 2000, they said.

Then there’s low penetration for hybrid vehicles, which had a market share of 2.9% last year, down from a peak 3.7% in 2013. Declining gasoline prices in the last couple of years are the most likely cause of falling hybrid share, the Tudor Pickering Holt analysts said.

US Family Wealth Increased From 1989 To 2013 Due To Population Aging And Increased Education

From Congressional Budget Office, "Changes in Family Wealth, 1989 to 2013" January 18, 2017, Presentation by Nadia Karamcheva, an analyst in CBO’s Microeconomic Studies Division, to the Savings and Retirement Foundation in Washington, DC:

Pages 28 and 29 from CBO presentation, with the full slide presentation following the two page excerpt:
Source: CBO, Page 28

Source: CBO, Page 29

Full CBO slide presentation follows:

Older people have more work experience and with greater experience comes higher wages with a benefit of increased savings. Older people also have had more time to accumulate wealth from savings and investments, to benefit from the compounding effect of time from the interest and gains on those savings and investments, and to have more time to pay down debt from their earlier years.

As I mentioned in my earlier posts, "US Income Inequality Is Linked To Education Levels," "Unequal Income Comes From Unequal Education," and "US Income Inequality Is Linked To Education Levels," more education leads to higher incomes.

With the known positive effects of age and education on income and wealth, it is not surprising CBO checked to see the effect of the changes in age and education of the US population from 1989 to 2013.

Wealth inequality increases between 1989 and 2013 were due to increased age and increased education. As long as the US population is increasing in average age and in average education levels, wealth inequality will increase. When and if the US population average age and education level stop increasing, then income and wealth inequality will stabilize and stop increasing.

Wednesday, January 18, 2017

Pass-Through Businesses Are A Majority Of US Companies And Employ More Than Half Of US Private Sector Workers

From Tax Foundation, "Pass-Through Businesses: Data and Policy" by Scott Greenberg:
Figure 1

Source: Tax Foundation

In addition, pass-through businesses [sole proprietorship, partnership, S corporation] are also responsible for more than half of private-sector jobs in the U.S. (Figure 2). In 2014, 57.3 percent of the U.S. private-sector workforce was employed or self-employed at a pass-through business [does not include unemployed individuals seeking work.] In numerical terms, U.S. pass-through businesses employed 73.0 million people in 2014, compared to 54.3 million employees of C corporations [may double count some individuals who were simultaneously self-employed as a sole proprietorship and employed by a different business as well.]

Within the pass-through sector, in 2014, S corporations had the most employees: 32.5 million people, or 25.5 percent of the private sector workforce. Although sole proprietorships are the most common form of business in the U.S., they accounted for only 19.6 percent of all private-sector jobs. This is because most sole proprietorships consist of one self-employed individual, without any other employees.

Figure 2

Source: Tax Foundation

In 49 out of 50 states, pass-through businesses employ over 50 percent of the private workforce. The one exception is Hawaii, where pass-through businesses account for 49.9 percent of private-sector jobs. In four states, pass-through businesses are responsible for over 65 percent of the private-sector workforce: Montana (68.6 percent), South Dakota (66.3 percent), Idaho (65.4 percent), and Vermont (65.2 percent).