February 2, 2007

January Vehicle Sales: The Beat Goes On

Filed under: Business Moves — Tom @ 3:44 pm

Here’s a summary of this AP story at Fox News yesterday:
- Ford — down 19%. GM – down 16.6%. Both say it’s because of lower fleet sales to rental-car companies.
- Daimler Chrysler — up 3.2%.
- Toyota — up 9.5%.
- Honda — up 2.5%.

This Reuters report yesterday said:

….. (Nissan’s) adjusted U.S. sales rose 4.5 percent in January, led by strong sales gains for its new Altima and Infiniti G35 models.

Nissan division sales were up 4.3 percent in the month compared with a year earlier after adjusting for the number of sales days, while Infiniti division sales up 6.8 percent, a Nisan (sic) executive said.

What do they mean, “Adjusted?” Here’s what they mean:

January had 25 selling days compared with 24 days a year earlier. Without the adjustment, the sales rise for Nissan would have been about 4 percentage points higher.

Yikes — The AP specifically said that the numbers they reported at the first link above were unadjusted. This means that Ford’s GM’s reported declines, adjusted for the number of selling days, were about 3.4% steeper. Similarly, Chrysler and Honda had slight declines on an adjusted basis, while Toyota’s raw increase of 9.5% is 5.1% adjusted.

As you might expect, Don Wildmon of the American Family Association (AFA) and boycottford.com (up to over 672,000 signatures as of Friday AM; that’s 13,000 more than just a week earlier) was on Ford’s horrid January with a blast e-mail early Friday morning.

Please note that my position on the boycott since I learned of it has been this: “I’m not a big fan of boycotts, and I would rather that Don Wildmon and the American Family Association had not initiated one against The Ford Motor Company.” But they have, and as I have noted at several other previous posts (here [4th item], here, and here), Ford continues to ignore AFA’s boycott at its grave peril.

What I’ve Just Learned about GDP Reporting (and a Correction Needed at WSJ)

Filed under: Economy,MSM Biz/Other Ignorance,Taxes & Government — Tom @ 11:45 am

In the course of researching prior year results on Wednesday for the 4th quarter 2006 GDP post, and after following up with the Bureau of Economic Analysis to make sure I was correct, I learned that BEA does an “annual revision” to the previous three calendar years of GDP results every July. Info about the revision is included in each year’s July GDP press release.

What does this mean? Well, that the numbers for previous years have changed with very little notice or fanfare. It also means that if you look at the BEA report at this link and want to look at quarterly instead of annual results, the quarterly results don’t “add up” to the revised annuals (seems like the quarterlies should be retro-adjusted, but I’m not in charge).

Here are the changes since 2000 from “final” to “annual revision”:
- 2000 — from 2.2% to 3.7%
- 2001 — from 0.2% to 0.8%
- 2002 — from 1.9% to 1.6%
- 2003 — from 3.7% to 2.5%
- 2004 — from 4.2% to 3.9%; one more adjustment possible (revising 2004-2006 in July 2007)
- 2005 — from 3.5% to 3.2%; two more adjustments possible (revising at 2004-2006 in July 2007, and revising 2005-2007 in July 2008)
- 2006 (with “advance” fourth quarter result; preliminary, final, and three years of annual revisions still remain)

This is a long way of getting to the point that the graph below (corrected here) from Thursday’s Wall Street Journal is not correct, because the bar for 2003 should be 2.5%:


Additionally, the Journal’s claim in the related subscription-only editorial that “growth since the Bush tax cuts passed in mid-2003 has averaged more than 3.6%” is probably incorrect. I can only say “probably,” because BEA hasn’t adjusted the third and fourth quarter of 2003 to reflect the annual revisions. Even without the adjustments, if you assume no change to the Q303′s 7.5% and Q403′s 2.7%, the result for the 3-1/2 years ending December 31, 2006 comes in at 3.72%. If 2003′s substantial annual adjustment were spread to the individual quarters (which, as noted, it hasn’t been), the reduction to Q303 and Q403 will probably cause the overall result to be below the Journal’s claimed 3.6%.

Regardless of the errors, the Journal editorial’s fundamental premises are still spot-on:

Yesterday’s report that fourth quarter GDP rose a healthy 3.5% was merely the most recent repudiation of the media and Beltway bears who have predicted a recession in each of the past four years. The latest scare came last fall, as the decline in housing accelerated and many of Wall Street’s Keynesian forecasters predicted the consumer would slump along with it.

…. the Bush tax cuts passed in mid-2003 (helped) to drive prosperity around the world but without the U.S. getting any credit for this remarkable performance. By comparison, whenever growth reaches even 2% in Europe these days, they throw a party.

The Growing Online Contribution to Overall Retail Sales

Filed under: Business Moves,Economy,MSM Biz/Other Ignorance — Tom @ 9:41 am

Biz Weak’s March 5 issue has this tidbit (appears to be free for now) relating to online sales, which has ever-increasing relevance to what you hear about retail sales in the physical world:

When it comes to analyses of consumer spending, online sales are often overlooked. But retail e-commerce sales growth far outpaces that of overall consumer spending and shows no sign of letting up. That means online sales will only grow in importance when it comes to gauging the health of consumer spending.

Fourth-quarter retail e-commerce sales surged 24.6% from the previous year, according to the U.S. Census Dept. That rapid growth is a reason why fourth- quarter non-auto and non-gasoline retail sales looked much better than the widely followed chain-store sales figures.
As more consumers buy online, e-commerce sales account for a larger chunk of overall retail spending. Sales of $108 billion in 2006 topped those at electronics and appliance stores. And in the final quarter of 2006, online shopping accounted for 3% of total retail sales, nearly double the share at the end of 2002.

Retailers do NOT routinely report their online sales in their monthly reports, typically expressing results as “same-store sales compared to a year ago.” This means that the TOTAL strength of the retail sector is consistently being underreported.

This chart shows that if online sales continue to grow at a 20% rate during the coming year, you should mentally add about a half of a percentage point to reported retail sales (the difference between the combined 4.48% and the reported 4% shown in the example) to approximate what’s really happening overall:

An alert business press should start looking harder at the impact of the continued growth in e-commerce on the overall retail results — especially in evaluating whether or not the retail sector in total is giving a boost to the economy or dragging it down. Will they?

Quick Take Ahead of the Jobs Report (UPDATE: +111,000; Unemployment Rate 4.6%; UPDATE 2: BIG prior month revisions)

Filed under: Economy,Taxes & Government — Tom @ 8:35 am

Unlike in prior months, business matters will keep me from looking at the detail any further than what you see here.

Here is the advance info.

First, ADP’s employment report for January: +152,000; after predicting a minus-40,000 last month when the actual was +167,000 (per the Bureau of Labor Statistics Establishment Survey), it’s going to be a while before this report is taken seriously again. However, if ADP’s number is some kind of leading indicator, or if they are detecting trends earlier than Uncle Sam, it may mean a disappointment today.

Next, other predix from Reuters:

According to the latest Reuters poll of economists, the U.S. Labor Department’s closely watched employment report on Friday is expected to show that 149,000 non-farm payroll jobs were created in January, up (they obviously mean “down” — Ed.) from 167,000 in December.

Based on the latest derivatives auction conducted on Wednesday by Goldman Sachs, interdealer broker ICAP and the Chicago Mercantile Exchange, traders’ median expectation for the January payrolls meeting was at 134,700.

Finally, unemployment rate predictions have been hard to find, but the Chicago Trib says:

When the Labor Department’s January jobs report comes out Friday morning, some experts are predicting the unemployment rate will drop to 4.4 percent, from December’s low 4.5 percent reading.

The actual BLS report will be released at 8:30 AM. The link to it will be here.

I get a sense that the markets would prefer that this report NOT be a blockbuster, as beating expectations might open up inflationary fears, but we’ll see.


UPDATE, 8:31 AM: Well, if I’m right about the markets, I think they’ll like this, though the news is less than outstanding (but see second UPDATE):

Nonfarm payroll employment rose by 111,000 in January, and the unemployment rate was essentially unchanged at 4.6 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job growth continued in several service-providing industries over the month, and construction employment also rose. The number of manufacturing jobs continued to decline.

The unemployment rate went up because the additional number of people working according to the Household Survey (used primarily to gauge the unemployment rate) barely budged by 31,000, while the number of unemployed went up by 168,000. The Household Survey had shown the economy adding well over a million jobs in the past four months.

I guess it’s time for the press to cue in the “slowing” meme again, though I think it’s too early to buy that until I see ISM’s non-manufacturing report.

UPDATE 2, 8:50 AM: Holy moly, “never mind” on that “less than outstanding” stuff. The January report revised December’s job growth to 206,000 (+39,000 from last month’s 167,000), and November’s to 196,000 (+42,000 from last month’s revised 154,000). So with revisions, there were 192,000 more people working (111+39+42) at the end of January than were thought to be working as of the end of December. That’s pushing “wow” territory.

The markets may actually be MORE relieved about January’s 111,000 number because the previous two months’ revised results are so high — figuring that three months in a row with high levels of job growth might mean an overheating situation that would lead to Fed interest rate hikes sooner rather than later.

UPDATE 3, 8:55 AM: I think this sentence from BLS is a good rendering of 2006: “In 2006, payroll employment rose by an average of 187,000 per month.” That’s pending one final revision to December.

UPDATE 4, 9:20 AM: John Boehner’s e-mail announcement only mentions January’s 111,000-job pickup and misses the big prior-month revisions, making it easier for the press to do the same.

Question of the Day: On Teacher Pay

Filed under: Education,Quotes, Etc. of the Day,Taxes & Government — Tom @ 6:25 am

From OpinionJournal.com:

$34.06 an Hour
That’s how much the average public school teachers makes. Is that “underpaid”?

This Is a Pretty Amazing Stat (Number of People Who Don’t Have a Credit Score)

Filed under: Money Tip of the Day — Tom @ 6:20 am

From his subscription-only “Getting Going” Column Wednesday:

You have zero debt, a hefty salary, a fat portfolio — and no credit score.

Yes, it could happen. Some 50 million Americans don’t have enough credit activity to qualify for the most commonly used credit score.

My advice: As a precaution, occasionally wipe the dust off your credit cards, give them a little exercise at the local mall and then promptly pay off the resulting bills. Sound silly? Consider it financial self-defense.

I think in reality that many of the 50 million Clements cites are people who are poor and have no bank account of any kind. I also believe many others are elderly, living in paid-off houses, and have adequate incomes; in general, they won’t have a need for credit.

But there are apparently plenty of middle-class and better-off folks who should consider what Clements suggests. His point that you don’t have to pay interest on credit cards — just use them — is what I thought to be the case when I did this post a few days ago.

Reason Number 2,356 Why Government Regulation Happens and/or Expands

Here’s another casino (HT Techdirt; previous item on the same topic is here at the first story at link) backing out of paying a player his winnings because of a software glitch.

Horse, manure.

Foreclosure-Avoidance Fraud Menace Grows with Increase in Financially Troubled Homeowners

From a sidebar at MSNBC.com — I could write a book about the lowlifes that populate the business of hijacking homes from underneath troubled homeowners trying to avoid foreclosure, but probably couldn’t do so without violating the blog’s PG-13 policy.

So instead, here are “Tips for Avoiding Foreclosure Fraud” from Colorado’s Attorney General:

Foreclosure fraud is becoming a common problem in the United States, according to experts and law enforcement officials. Homeowners can lose all the equity in their homes or their homes as part of these scams, which are sometimes called “foreclosure rescue scams.”

Here are some tips on how to avoid these scams:

— Try contacting the mortgage lender to work out a payment plan if you are having trouble meeting your mortgage.
— Don’t sign any documents before reviewing them carefully.
— Be aware that signing any kind of deed, such as a warranty deed or quit claim deed, means you are selling your home.
— Contact a private attorney or housing counselor approved by the U.S. Department of Housing and Urban Development to help review any documents before signing. Information about foreclosure and approved housing counselors is available at www.hud.gov/foreclosure or by phone at 800-569-4287.
— Be suspicious of anyone who contacts you first or offers “bargain loans” or “easy credit.”

State Income Taxes: Ohio Comes Out Very Poorly

Filed under: Taxes & Government — Tom @ 6:05 am

From the Tax Foundation (HT Club for Growth) — a table that shows all of the states and how they tax income:

  • AK, FL, SD, TX, WA, and WY have no income tax (How dooooo they do it?).
  • TN and NH (HT to Kevin for catching) apparently only tax interest and dividends.
  • Ohio’s highest marginal rate of 6.87%, is definitely in the above-average echelon of rates. A quick eyeball of the table tells me that 15 states (AR, CA, ID, IA, ME, MN, MT, NE, NJ, NC, OR, RI, SC, UT, VT) plus DC have a higher top rate. Ohio’s highest rate kicks in at a relatively high level ($200,000), but the rates at most income levels leading up to the highest rate range from 4.8% to 6.3%, which are wayyyyyy too high.

Positivity: Nigeria’s ‘Lady Mechanics’

Filed under: Positivity — Tom @ 6:00 am

From Lagos, a “read the whole thing” piece:

Flat tire? Looks like a job for Nigeria’s ‘Lady Mechanics’
A thriving enterprise trains disadvantaged women in Africa’s most populous nation to learn a trade once considered for ‘men only.’

By Sarah Simpson | Contributor to The Christian Science Monitor
from the January 26, 2007 edition

The unlikely mechanic steps out of her office and dons a fake tiger-skin cowboy hat, ready to inspect the latest vehicle to roll into her open-air garage. Sandra Aguebor, an activist known to Nigerians as the Lady Mechanic, is on the case.

The energetic mother of two rose from humble beginnings to national prominence as the creator of the Lady Mechanic Initiative. It’s a thriving enterprise that trains disadvantaged women in Africa’s most populous nation to learn a trade once considered for “men only.”

With support from overseas diplomatic missions, businesses, and aid groups, Ms. Aguebor has turned a personal passion into a successful project in female empowerment.

Aguebor began by stopping to help women whose cars had broken down on chaotic, crime-ridden Lagos streets and giving them a quick lesson or two in basic car maintenance while she changed tires or got their cars started.

“When I see a woman and her car has broken down and she looking at it as if it is a cooking pot in the kitchen – I get so angry!” she says.

So Aguebor set up the Lady Mechanic Initiative in 2000 and is now passing on her lessons to some 70 young women training as car and generator mechanics placed in 12 garages across Lagos State. The girls get a monthly allowance of about $25, and can expect to earn nearly ten times that once trained; perhaps more if they open their own garage.

In a country where more than 70 percent of the population lives on less than $2 a day, that’s good earning potential.

Nigeria has a strong educated elite from which numerous women have risen to positions of power and success in business, and, since the end of military rule in 1999, they have increasingly made their mark in politics, too. But for less-educated urban Nigerian women, earning income is largely restricted to petty trading, hairdressing, or domestic work – all poorly paid and with little social status.

“Being a mechanic means I will have value in my community. Normally mechanics are men, so I’ll win respect,” says 16-year-old Oluwabukola Olayode, one of Aguebor’s youngest apprentices.

All of Aguebor’s recruits are underprivileged or vulnerable girls. Many had to drop out of school because their families couldn’t afford it, or wouldn’t support them, says Aguebor. Some of them have even worked as prostitutes before joining the Lady Mechanic Initiative.

“Whether school dropouts or commercial sex workers, they have been brought into the garage to learn a skillful profession which can improve their life and make them more independent,” says Aguebor. …..