Since the S&P/Case-Shiller 20 city home price index peaked in June 2006 it has fallen 19.5%. In the year ending July 2008 the decline was 16.3%. That is a record drop. In that year Las Vegas declined 29.9%, Phoenix 29.3% and Miami 28.2%. For the largest cities: New York City declined 7.4%, Los Angeles 26.2%, Chicago 10% and Dallas 2.5% (the second lowest decline – Charlotte declined 1.8%); Houston and Philadelphia, the 4th and 5th largest cities are not included in the 20 city index.
Only one city shows a decline in housing values since January, 2000: Detroit is down nearly 7%. Washington is up 95% since January, 2000 (even with a 15.8% decline in the last year), Los Angels and New York are tied for second at 93% increases. The 20 city index is up 66% from January 2000 to July 2008.
The S&P/Case-Shiller Composite of 20 Home Price Index is a value-weighted average of the 20 metro area indices for single family homes.
Source: Record Home Price Declines (pdf)
Related: Housing Prices Post Record Declines – Home Price Declines Exceeding 10% Seen for 20% of Housing Markets – Fourteen Fold Increase in 31 Years – The Ever Expanding House – Coming Collapse in Housing?
I have had difficulty finding good economic data on manufacturing jobs. I have posted about this previously but have trouble finding much worth posting about: Worldwide Manufacturing Job Data – Manufacturing Jobs. The Unites States Department of Labor, Bureau of Labor Statistics has published some interesting data and so here is a look at some of that data.
The table shows average annual productivity gains (output per hour, in USA dollars – I think it is not clear) – the 2007 output totals are from the United Nations data I posted about last week (Data on Top Manufacturing Countries).
| Average Annual Manufacturing Productivity Gains by Country | ||||||
|---|---|---|---|---|---|---|
| Country | 1979-1990 | 1990-1995 | 1995-2000 | 2000-2007 | 1979-2007 | 2007 Output $USA billion |
| Taiwan | 6.1 | 4.7 | 5.6 | 6.4 | 5.9 | |
| Korea | NA | 9.4 | 10.8 | 7.6 | NA | 241 |
| USA | 2.8 | 3.7 | 5.6 | 4.6 | 3.9 | 1,831 |
| France | 3.8 | 3.4 | 4.6 | 3.5 | 3.8 | 296 |
| Japan | 3.8 | 3.3 | 3.4 | 3.8 | 3.6 | 926 |
| United Kingdom | 4.1 | 2.8 | 2.7 | 3.9 | 3.6 | 342 |
| Germany | 2.1 | 2.9 | 3.7 | 3.8 | 3.0 | 670 |
| Spain | 3.3 | 3.1 | 0.8 | 2.1 | 2.5 | 208 |
| Canada | 2.1 | 3.4 | 3.8 | 1.1 | 2.4 | 218 |
| Italy | 3.4 | 3.8 | 1.4 | -.2 | 2.2 | 345 |
The countries that were part of the study but are not included in the table above: Australia, Belgium, Denmark, Netherlands, Norway, Sweden.
Manufacturing productivity increased in 14 of 16 countries in 2007, according to the study. The United States of America increase of 4.1 was the fourth largest among the 16 economies and was slightly above the 3.9 percent U.S. average annual increase since 1979. 15 of the 16 countries increased manufacturing output in 2007.
9 countries increased manufacturing hours worked in 2007, the USA increased 2.3% (below their average increase since 1979). Hours worked decreased for all countries in the period of 2000-2007 (UK has had the largest decrease 3.9% annual average decrease, the USA in next at 3.1%).
Manufacturing employment increased in 10 countries in 2007. From 2000-2007 the USA has experienced average annual declines of 3% in manufacturing employment (the second sharpest drop to the UK which has fallen 4%). From 1979-2007 the USA annual declines averaged 1.2% (only Taiwan.9% and Spain .1% showed increases). From 2000-2007 four countries show slight average annual increases: Spain .5%, Korea .4%, Taiwan .2% and Italy .2%. From 2000-2007 only 3 countries showed annual average decreases in output: Canada -.3%, Italy -.2% and UK – .1%.
Hourly manufacturing compensation has increased in all countries for the period 1979-2007 (data shown for this item is in each national currency: USA 4.6% average annual increases, Spain up 7.2% annually, Taiwan up 7%, UK 6.8%, Germany 4.4%, Japan 4.2%.
via: Canada’s Manufacturing Crisis in International Perspective
Related: posts on employment – Top 10 Manufacturing Countries 2006
re: New Rule: If your company is to big to fail, your company is too big to exist. The next Prez. needs to split up huge companies like we did with AT&T.
Exactly right. Companies too big to fail have massive negative externalities that should be managed through regulation. And the discussion (see link) of this claiming that the huge, anti-capitalist, companies that exist now are not monopolies and therefore anti-trust laws should not be used makes no sense. Anti-trust laws are not for monopolies. Trusts were huge anti-competitive organizations that sought to eliminate the free market and extract benefits by distorting the market. Those laws were adopted not to regulate monopolies but to regulate anti-competitive behavior.
The free market theory formulated by Adam Smith et.al. was based on perfect competition where no one entity could influence the market. In reality that is not possible but approximations of it can exist (we are far from such a state today, however). Fine, the anti-capitalist large corporations are not monopolies – they are oligopolistic that can still extract profits through their ability to distort the free market. Is the fact they are not a monopoly really that relevant?
Enforcing rules that prevent businesses from using their size and power to extract outsized profits is the right thing to do. Anti-trust laws are the proper tool. when politicians are paid lots of money by people with the gold to allow them to cripple the free market and create large corporations that profit, not by competing in a free market, but by manipulating the market that is a bad practice. It won’t change until people stop electing politicians that reward those that pay them for favors. And that is unlikely to happen anytime soon.
What we can hope is that there is some limit on how egregious the favors politicians grant those paying them money are. Maybe this latest escapade (and the costs of those favors to bankers) will cause a reduction in the favors granted. I don’t have high expectations for the changes though.
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The updated data from the United Nations on manufacturing output by country clearly shows the USA remains by far the largest manufacturer in the world. UN Data, in billions of current US dollars:
| Country | 1990 | 1995 | 2000 | 2005 | 2006 | 2007 |
|---|---|---|---|---|---|---|
| USA | 1,041 | 1,289 | 1,543 | 1,663 | 1,700 | 1,831 |
| China | 143 | 299 | 484 | 734 | 891 | 1,106 |
| Japan | 804 | 1,209 | 1.034 | 954 | 934 | 926 |
| Germany | 438 | 517 | 392 | 566 | 595 | 670 |
| Russian Federation | 211 | 104 | 73 | 222 | 281 | 362 |
| Italy | 240 | 226 | 206 | 289 | 299 | 345 |
| United Kingdom | 207 | 219 | 228 | 269 | 303 | 342 |
| France | 224 | 259 | 190 | 249 | 248 | 296 |
| Korea | 65 | 129 | 134 | 200 | 220 | 241 |
| Canada | 92 | 100 | 129 | 177 | 195 | 218 |
| Spain | 101 | 103 | 98 | 164 | 176 | 208 |
| Brazil | 120 | 125 | 96 | 137 | 170 | 206 |
| Additional countries of interest – not the next largest | ||||||
| India | 50 | 59 | 67 | 118 | 135 | 167 |
| Mexico | 50 | 55 | 107 | 122 | 136 | 144 |
| Indonesia | 29 | 60 | 46 | 80 | 102 | 121 |
| Turkey | 33 | 38 | 38 | 75 | 85 | 101 |
The USA’s share of the manufacturing output of the countries that manufactured over $200 billion in 2007 (the 12 countries on the top of the chart above) in 1990 was 28%, 1995 28%, 2000 33%, 2005 30%, 2006 28%, 2007 27%. China’s share has grown from 4% in 1990, 1995 7%, 2000 11%, 2005 13%, 2006 15%, 2007 16%.
Total manufacturing output in the USA was up 76% in 2007 from the 1990 level. Japan, the second largest manufacturer in 1990, and third today, has increased output 15% (the lowest of the top 12, France is next lowest at 32%) while China is up an amazing 673% (Korea is next at an increase of 271%).
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Chatting with Obama by Bill O’Reilly
I really wish people understood capitalism. Capitalism requires regulation. It was known to all the economist in Adam Smith’s time that the government must regulate or powerful forces that would not allow the free market to function as it should – which destroys the potential of capitalism. This is not some minor point, it is absolutely essential to the theory of how capitalism provides value to society.
The ignorance that equates allowing manipulation of the market by powerful forces undermining capitalism (which is supported by those that claim to support capitalism – “regulation distorting free markets”) with disrupting the free market annoys me. I know I should accept that ignorance is just rampant but sometimes I can’t get over it. I truly support capitalism and seeing it abused by so many ignorant pundits and politicians is distressing.
And when those with influence constantly reinforce ideas based on ignorance then many, that can’t think for themselves, accept idiotic ideas like “free markets” should allow oligopolies to consolidate reducing the benefits of capitalism, that polluters should be allowed to push negative externalities onto the public, that allowing trust fund babies to receive massive inheritances is good (capitalism is meant to reward those that contribute, not reward those who were related to someone useful) and that the inheritance tax is bad (it is the BEST tax that exists, arguably along with taxes on negative externalities) and on and on.
The idiotic idea that government regulation of markets is interference is equivalent to saying police interfere with freedom by enforcing laws against violent crime. Yes the watchmen must be watched. You can have bad policing and bad regulation; but the idea that policing the free market, in itself is wrong, is so ignorant we have to stop accepting such claims as if they were anything but ravings of radicals or ignorant people (or people that are both).
By the way I am using ignorant with the sense of “lacking knowledge or comprehension of the thing specified.” Sometimes the word is used to claim the other person’s opinion is wrong, which is not an accurate way to use the word. It is my opinion that those espousing crazy ideas like, free markets are those without regulation, don’t understand capitalism is based upon the idea of perfect competition. If they do, but have decided that fundamental aspect (along with negative externalities, rewards based on who your parents are instead of what you produce…) of capitalism is wrong, but they have a new theory that somehow updates capitalism I am waiting to hear about it. I am basing my guess of their ignorance on their statement seeming to be completely disconnected with capitalist theory.
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The growth in the number of jobs in the USA continues to be bad. The growth in jobs has been very poor thus far this century. The good news has been unemployment has been fairly low, it now sits at a 4 year high of 5.7% (which is not great but not horrible by historic standards).
Update: today the labor department announced the unemployment rate increased to 6.1%.
This year the news has been worse, with actually declining numbers of jobs and some economics see No job turnaround on horizon:
…
“I’m not expecting increases in employment until next year because in the second half of this year we’ll see very lethargic economic growth,” said Joel Prakken, chairman of Macroeconomic Advisers. The Conference Board has created a new reading called the Employment Trends Index, which combines a number of different economic readings to predict when employment will turn higher or lower. The index, which typically signals three to six months before job losses will turn to job gains, has yet to show signs of a recovery.
“We think the unemployment rate will keep growing, probably reach between 6 to 6.5% by mid 2009 and only start declining in the second half of next year,” said Gad Levanon, senior economist at The Conference Board.
Related: What Do Unemployment Stats Mean? – Economic Fault: Income Inequality
Kiva has added a fellows blog – which is a great idea. The fellows are funded by Kiva (fellows are unpaid) to go to spend time in the countries Kiva facilitates loans for working with the local partners. This post is about Rita Bashnet (in photo) an entrepreneur from Nepal:
…
Five years ago, Ms. Rita took her first loan of NRs. 10,000 (USD $150) and purchased some extra seed and fertilizer in the hopes of expanding her small vegetable patch. With the profits from this initial investment and a second loan from Patan Business and Professional Women (they offer a graduated loan program), she then purchased her first dairy cow.
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After hearing about a program that subsidized the installation of methane gas storage tanks, Ms. Rita took another loan and applied for the program. With this new system, she is now able to capture the valuable gas released from her cow’s waste in a simple controlled-release storage tank. Today she no longer purchases gas from the city and can even sell some during times of shortage.
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Ms. Rita exemplifies the potential of microfinance. A combination of access to capital and strategic investment has allowed her and her family to drastically improve their economic situation in a short five years.
Great story, and exactly my hope for using capitalism to improve the standard of living for people around the globe. I notice today, for the first time, some of those seeking loans are about to have their listings expire unfunded. Kiva gives listings 30 days to be funded. I have no problem if some loans are not funded (I want to help entrepreneurs by providing funding to build a business – some loans are for things like adding a room onto their house, which is fine but not what I want to support with interest free loans from me). But, this is a big change from when I couldn’t find anyone to loan to (they had so many people looking to lend that they didn’t have enough loans to fund). If you haven’t loaned money through Kiva (or you haven’t added to your loan portfolio recently), please consider it now. If you do, send me your Kiva lender link and I will add it to Curious Cat Kivans. My biggest wish for this blog is to get more readers listed on that page.
Related: Using Capitalism to Make a Better World – Funding Entrepreneurs in Nicaragua, Ghana, Viet Nam, Togo and Tanzania – 2006 Nobel Peace Prize to Economist – Frontline Explores Kiva in Uganda – Trickle Up
The Entrepreneurship Lottery by Scott Shane
Generating significant financial value is something done by a very small percentage of start-ups, but a handful that do generate a lot of value.
Scott Shane is a Professor of Entrepreneurial Studies at Case Western Reserve University
Related: Easiest Countries from Which to Operate Businesses – Capitalism in China – Frontline Explores Kiva in Uganda
Wholesale Prices Rising at Fastest Pace Since 1981
New federal government data showed that the cost of materials used by businesses increased 1.2 percent in July and have risen 9.8 percent during the past 12 months. It was the largest yearly increase since 1981, as businesses absorbed sharp increases in energy and other commodity costs.
Today’s report follows recent news that consumer prices are also rising faster than expected — and faster than the Federal Reserve’s generally accepted target rate of around 2 percent.
Inflation can cause serious damage to your personal finances. As prices increase if you don’t get a raise (or your investments don’t raise) to match the increased costs you must pay your financial situation deteriorates. One benefit, to those with 30 year fixed rate mortgages, is that you get to pay back your loan with inflated dollars. This can be a huge advantage for some, and a huge loss for whoever holds the mortgage.
Related: inflation risk for investments – Inflation is a Real Threat – Food Price Inflation is Quite High – posts on inflation
The Declining Value Of Your College Degree by Greg Ip:
For decades, the typical college graduate’s wage rose well above inflation. But no longer. In the economic expansion that began in 2001 and now appears to be ending, the inflation-adjusted wages of the majority of U.S. workers didn’t grow, even among those who went to college. The government’s statistical snapshots show the typical weekly salary of a worker with a bachelor’s degree, adjusted for inflation, didn’t rise last year from 2006 and was 1.7% below the 2001 level.
…
To be sure, the average American with a college diploma still earns about 75% more than a worker with a high-school diploma and is less likely to be unemployed. Yet while that so-called college premium is up from 40% in 1979, it is little changed from 2001
The job market is more challenging than it was, it seems to me. Counting on being able to steadily progress during your career, without any gaps or times when you must accept much less than you hoped, is risky. This is one more reason why it is so important to spend less and save more in the good times in your career.
Related: What Do Unemployment Stats Mean? – Engineering Graduates Again in Great Shape – USA Job Growth – The IT Job Market