March 9, 2007

If the Business Reporters at AP Know What’s ‘Real,’ They Don’t Show It

Filed under: Economy,MSM Biz/Other Ignorance,Taxes & Government — Tom @ 7:08 pm

The 2006 Real (after Inflation) Increase in Household Net Worth Was Greater Than 2005′s — But You Wouldn’t Know That from Reading the Associated Press’s Accounts. And this is not the first time AP has ignored what’s “real.”

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Here is how the Federal Reserve’s report on household net worth was covered by AP reporter Jeannine Aversa (bold is mine):

Net Worth of U.S. Households Skyrockets in Final Quarter of 2006

The net worth of U.S. households climbed to a record high in the final quarter of last year, boosted mostly by gains on stocks, the Federal Reserve reported Thursday.

Net worth — the difference between households’ total assets, such as houses and bank accounts, and their total liabilities, such as mortgages and credit card debt, totaled $55.6 trillion in the October-to-December quarter.

That marked a 2.5 percent growth rate from the third quarter, the previous quarterly record high. Stocks gains helped fuel the increase in net worth, although real-estate gains played a role, too.

For all of last year, households’ net worth rose by 7.4 percent, a slower pace than the 7.9 percent increase registered in 2005.

AP made 2006 look worse than 2005, when 2006 was better. “Really.”

The real growth in net worth after inflation for 2006 was 4.9% (7.4% above minus 2.5% inflation [Dec. 2006's reading of 201.8 is greater than Dec. 2005's reading of 196.8 by 2.54%; go to this link for the data, and select the very first report]), compared to 4.5% in 2005 (7.9% above minus 3.4% inflation [Dec. 2005's reading of 196.8 is greater than Dec. 2004's reading of 190.3 by 3.41%]). This means that 2006 was better for growth in REAL household net worth, NOT “a slower pace.”

This is not the first time an AP report has made it appear that a 2006 economic performance indicator was worse than 2005, and “really” wasn’t. This previous post shows that an AP reporter took a lower nominal gain in retail sales in 2006 compared to 2005 and concluded that 2006 was a slower year for retail sales. As with the above household net worth situation, the truth was that after considering inflation, the real increase in 2006 retail sales was better than 2005.

Somebody needs to tell AP’s business reporters that what is real is all that “really” counts.

Cross-posted at NewsBusters.org.

Employment Report for February (Unemployment Down to 4.5%; +97,000 Feb. Jobs; +152,000 with Catch-ups)

Filed under: Economy,Taxes & Government — Tom @ 2:04 pm

NOTE: This post has been moved to the top for the rest of the day because of its relative importance.

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Pre-report Info

  • ADP’s National Employment report, with newly revised methodology, came in at 57,000.
  • Rick MacDonald of Action Economics, writing at MSNBC, says that the ADP number, which excludes government job additions and has what he claims is a downward bias, translates to an 87,000 prediction for the government’s report. McDonald reports a wide range in expectations: 25,000 at the low end, 165,000 at the high end, and 90,000 as the consensus.
  • This report from Reuters tell us that the betting (literally) by derivatives traders is for +82,500, while polled economists came in at +100,000. This article and another standalone piece note that “the Monster Worldwide ….. Employment Index rose to 177 in February from 168 in January — a jump of 5.4 percent. It was 157 a year earlier.” It’s also at an alltime record high, which Monster believes bodes well for March hiring.

The BLS Report (Link here)

From the Household Survey:
- Unemployment rate — 4.5% (down from 4.6%)
- Increase in number of people working — DECREASE of 38,000

From the Establishment Survey:
- Net new jobs added in February — +97,000.
- Catch-up adjustments: December 2006 — revised to +226,000, which is 20,000 higher than the 206,000 in January’s report; January 2007 — revised to +146,000, which is 35,000 higher than the 111,000 in originally reported in January.
- Net additional people working at the end of February compared to what was reported in January — 152,000 (97+20+35).

Comment

It’s hard to complain when the unemployment rate goes down. The jobs increase, especially after including the catch-up adjustments, is acceptable after so many good months and a relatively cool February weatherwise. It’s becoming obvious that reporting only the initial number without the catch-up adjustments gives an incomplete picture of the employment situation, so it will be interesting to see how or if the press reports the revisions that were made to December and January.

Media Coverage

See for yourself: Here’s AP, and here’s Reuters.

I think AP’s opening paragraph is an all-too-typical example of making sure something negative gets into a story that should be, at least objectively, positive:

The nation’s unemployment rate dipped to 4.5 percent in February even as big losses of construction and factory jobs restrained overall payroll growth. Wages grew briskly.

The prior-month revisions got into the fifth paragraph. And of course, AP has the obligatory reminder of President Bush’s low polling numbers on the economy and the Democratic Party line about income inequality.

Reuters did quite a bit better with its first two paras (Update, Mar. 11 — though the “smallest gain in two years is a premature assertion in light of recent experience with revisions — see this post that will go up on March 12 for more):

WASHINGTON — The U.S. economy added a slightly weaker-than-expected 97,000 jobs in February, the smallest gain in more than two years, as increases in service-sector employment offset declines in construction and manufacturing, a government report showed on Friday.

However, substantial revisions to employment in January and December boosted payrolls by 55,000 more jobs than previously reported, the Labor Department said.

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UPDATE: House Minority Leader John Boehner’s e-mail today (web page here), reacting to the BLS report, overlooked the catch-ups, but did refer to over 7.5 million jobs added since August 2003. That is indeed the case (go here and select the Seasonally Adjusted version of the very first table to replicate):

Employment0207

Not bad for 3-1/2 years — an annual average of about 2.14 million.

The point should not be missed that the job growth began as the effect of the tax cuts passed earlier in 2003 — the ones that reduced capital gains tax rates, reduced taxation of dividends, and reduced the top income-tax rates — started kicking in. Voodoo, schmoodoo.

UPDATE 2: I regret to report that during that 3-1/2 year period, only 153,000 of those jobs were added in Ohio, and only 56,000 in Michigan. These two states combined, which have about 7% of the nation’s population, added only about 2.8% of the jobs. Yikes. (Feb. 2007 is not available yet for either state, but won’t materially change the results.)

UPDATE 3: Businomics reminds us that the BLS report shows that “Wage rates continued to grow at a moderate-to-high rate.”

UPDATE 4, Mar. 10: Dan Clifton at the American Shareholders Association blog made some very good points yesterday, and you should see the chart that is in the post (bolds are mine):

Today’s report was the 24th consecutive month of upward revisions (to prior months — Ed.).

This morning’s Marketwatch headline proclaimed today’s report of 97,000 jobs is the lowest level since January 2005 when the month recorded a level of 95,000 new jobs. However, this is very misleading. Since January there have been four initial monthly reports under 100,000 jobs for the month. January 2005 was initially reported at 75,000 but was revised higher to 95,000. September and October 2005 were initially reported as 48,000 and 37,000 respectively. Yet, their final revisions 105,000 and 107,000. More recently, October 2006 was initially reported as 86,000 new jobs but the revised number came in at 109,000.

These (February) numbers will be revised higher and bring the level over 100,000. Yet, the naysayers will still be saying job growth is slowing. But this (is) wrong. If you look at the charts above we can see how off BLS has been with the initial reports.

I hope to begin tracking those revisions shortly.

An Unimpressive Win for the State of Ohio

Filed under: Economy,Taxes & Government — Tom @ 1:56 pm

Ohio government officials and legislators are unreasonably nearly giddy over this news from about a week ago:

COLUMBUS – Just a week after a major Wall Street credit-rating agency expressed serious doubts about the health of Ohio’s economy, Site Selection, a national economic magazine, ranked the state first in the nation when it comes to private investment in business expansion.

Legislative leaders were quick to jump on the ranking as validation that recent economic reforms have placed the state on the right track, even as the state’s jobs picture continues to trail the national average.

The Governor’s Cup was awarded for 2006, the last year of Gov. Bob Taft’s administration. It noted the state had 431 facilities that invested at least $1 million, created at least 50 new jobs, or added at least 20,000 square feet of new floor area.

I regret to report my belief that getting to Number 1 on the Site Selection list is NOT necessarily a good thing. It pales in importance relative to the state’s Business Tax Climate ranking (#49 in 2007), or when Tax Freedom Day takes place (Ohio’s was April 25 in 2006, which is the 16th worst, i.e., 34th best).

The Site Selection list should be seen as a list of which states are the best at giving tax, infrastructure, and other breaks to those new and existing companies that can best navigate the various bureaucracies. If a state is really good at helping such companies, it won’t necessarily translate to improving the statewide economy all that much. Being too good at it may actually hurt the state, as the rest of the tax burden has to be borne by individuals, families, and existing businesses not “playing the game.”

So being #1 with Site Selection may actually contribute to the poor rankings in the areas above that really count. The credit-rating agency mentioned in the first paragraph of the excerpt surely has not been fooled.

Excerpt of the Day: On Secret-Ballot Union Elections

From an editorial yesterday at OpinionJournal.com, recounting a heroic insistence by a group of congressmen demanding secret-ballot elections (excerpted items quoted out of order for effect):

It reads, “we are writing to encourage you to use the secret ballot in all union recognition elections.” It continues: “We understand that the secret ballot is allowed for, but not required ….. However, we feel that the secret ballot is absolutely necessary in order to ensure that workers are not intimidated into voting for a union they might not otherwise choose.”

Bully for them. But there’s a punch line, which is where it came from, namely:

….. a missive sent to Mexico in 2001 and signed by 16 Democrats in Congress.”

Five of the signers have since left Congress; the other 11 voted last week for the Employee Free Choice Act. And by the way, the letter’s lead signatory is Representative George Miller of California, who also happens to be the lead sponsor of the House bill. Which means the same person lecturing Mexican officials on the primacy of secret ballot elections has been heading up the effort to end them for 140 million U.S. workers.

Couldn’t Help But Notice (030907)

Technically it’s not even a surge yet, but there are interesting signs that whatever you want to call it, it’s working.

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Mice as “beef” — and the world yawns.

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The growing workforce — It’s not about what you’d expect.

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A partial move towards business sanity by a struggling Ford — They’ll need to do more of this and be more visible about it for the desired effect, which would be to take sales out of the ditch. Update, Mar. 14 — Obviously it appears that sanity was too much to hope for, so it’s back to slow-but-sure suicide watch.

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Gosh, does this mean that “the world” doesn’t really hate us, as we’ve been told ad nauseam for at least the past 6 years?

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NixGuy has been doing more with Airbus than I have (here, here, and here most recently), but I stumbled across this stunner (in bold) from last Friday:

UPS Inc. (UPS), the world’s largest shipping carrier, said Friday it will cancel its order for 10 Airbus A380 freighters, following delivery delays. The decision will leave the European aircraft manufacturer with no firm orders for its jumbo freighter.

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Ronald Bailey at Reason’s Hit and Run (HT Instapundit) thinks the Walter Reed Hospital situation foretells what the healthcare system would look like if nationalized health care ever takes hold here. He’s probably right, and it would not be pretty.
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From the Congressional B******t Budget Office earlier this week:

President Bush’s proposed federal budget is based on too-rosy revenue estimates and would probably not produce its advertised surplus ….. in five years, according to new estimates from the Congressional Budget Office.

As you may know, I think they’re right, except that it won’t take five years — as long as nobody screws it up, it will be more like three.

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Mini-update to this item from MondayThis AP item at MSNBC claims that banks are lightening up on their more extreme credit-card and lending practices because of the perceived threat of harsh legislation (not to mention hearings that took place this week). Can’t prove it, of course, and no one will ever acknowledge it, but it’s too coincidental to ignore. Update, Mar. 10: From Jeff at Credit/Debt Recovery“This is the kind of treatment the creditors deserve; this is what should have happened right after bankruptcy reform was passed.”
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Glad THAT problem is solvedWhy didn’t I think of this: “Postal Service fixes long waits by removing clocks”

A Suggested Import: Try Mexican Immigration Law in the US

Wizbang blog section member John Lillipop had a great post about a week ago on how Mexico handles immigration that references this Michael Waller column from a couple of years ago.

Suffice it to say that if we had immigration laws similar to Mexico’s, we would not have an illegal-immigrant problem. How Mexico continues to skate on the hypocrisy of lecturing us about letting everyone in while having very draconian immigration laws and procedures itself itself is a mystery the open-borders advocates at the Wall Street Journal and other places ought to take some time to explain to us.

In the meantime, Waller has a good suggestion that will, unfortunately, probably never happen:

Let’s call Mexico’s bluff on its unwarranted interference in U.S. immigration policy. Let’s propose, just to make a point, that the North American Free Trade Agreement (NAFTA) member nations standardize their immigration laws by using Mexico’s own law as a model.

‘Manufacturing Dissent’ Should Expose Michael Moore’s Charlatan Tactics. Will It?

The trailer, which I don’t think is particularly well done, is here.

The substance is this (bolds are mine):

“What he’s done for documentaries is amazing,” said (Debbie) Melnyk, 48, a native of Toronto and a freelance TV producer, who even now expounds on the good she says Moore has done. “People go to see documentaries now and, as documentary makers, we’re grateful.”

But according to (Rick) Caine, 46, an Ohio-born journalist and cameraman, the freewheeling persona cultivated by Moore, and the free-thinking rhetoric expounded by his friends and associates were not quite what they encountered when they decided to examine his work. “As investigative documentarists we always thought we could look at anything we wanted,” Caine said. “But when we turned the cameras on one of the leading figures in our own industry, the people we wanted to talk to were like: ‘What are you doing? Why are you throwing stones at the parade leader?’”

….. Their film “Manufacturing Dissent” will have its premiere on March 10 at the South by Southwest Film Festival in Austin, Texas. To say it sheds an unflattering light on Moore — whose work includes the hit “Fahrenheit 9/11″ and the Oscar-winning “Bowling for Columbine” — would be an understatement.

….. In part the “stuff” amounts to a catalogue of alleged errors — both of omission and commission — in Moore’s films, beginning with his 1989 debut, “Roger & Me.” That film largely revolved around Moore’s fruitless attempts to interview Roger Smith, then the chairman of General Motors, after his company closed plants in Moore’s birthplace, Flint, Michigan: an interview that occurred, Melnyk and Caine said, although Moore left it on the cutting-room floor.

….. In “Manufacturing Dissent” Caine and Melnyk — whose previous films include “Junket Whore,” about movie journalists, and “Citizen Black,” about Conrad Black — note that the scene in “Fahrenheit 9/11″ in which President George W. Bush greets “the haves, and the have-mores” took place at the annual Al Smith Dinner, where politicians traditionally make sport of themselves.

….. Others, including the writer Christopher Hitchens, and filmmakers Albert Maysles and Errol Morris, take exception to Moore’s methods, which have involved questionable lapses in chronology and what some would call a convenient neglect of pertinent material.

The examples cited (exposing an interview that happened when Moore claims none took place, and Moore’s deliberating misinterpreting a joke as a serious statement) indicate that the film will, finally, portray Moore as a manipulative opportunist and not a serious filmmaker. Though it appears to deserve it, I would suspect that the documentary will get little attention.

Bank Votes ‘No Confidence’ and Is Leaving Michigan; the Reaction to the Decision Partly Explains Why

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 6:05 am

If this corporate decision doesn’t get Michigan Governor Jennifer Granholm to reconsider her tax-increase plan, which OpinionJournal.com describes today as calling for “higher levies for almost every activity inside the state with a moving part,” I don’t know what will.

Here’s the hard news from earlier in the week:

In the latest blow to Detroit’s stature as a business hub, Comerica Inc. announced today that it’s pulling its headquarters out of the city and relocating to Dallas.

The bank, which traces its Detroit roots back to 1849, said only 200 positions will move out of state, leaving some 7,300 Comerica employees in Michigan.

But losing its last major bank is a psychological hit to a region already reeling from thousands of automaker job cuts and Pfizer Inc.’s January announcement that it will close its Ann Arbor compound, pulling more than 2,000 jobs out of the area. Other recent losses include Kmart’s Troy-based headquarters and a slew of auto supplier bankruptcies that have resulted in downsizing.

….. “It’s a major blow to Michigan and Detroit,” said Brian Pollice, a partner and leader in Plante & Moran’s bank consulting practice. “What it says to Michigan and Detroit is that Comerica has better opportunities elsewhere. That’s what they are betting on. The perception is that Michigan’s economy is not going to grow.”

Moving out of Michigan could be a plus for Comerica in the eyes of Wall Street investors, Pollice added.

….. “Wall Street wanted to see the move. If you look at the value of a bank in the South, you’d easily be looking at 10 to 20 percent premium in value over a Michigan bank.”

The reaction of some of Detroit’s supposed leading lights on Wednesday was less than impressive:

DETROIT — A group of Detroit ministers staged a protest in front of Comerica Inc.’s downtown tower at 11:30 a.m. today to protest the bank’s decision to move its headquarters to Dallas later this year.

The Rev. Charles E. Williams, president of the Mary Terrell Council for Community Empowerment in Detroit, said the group issued symbolic pink slips to the bank’s board of directors and its top management. He said the group will encourage consumers with bank accounts at Comerica to find another bank that cares more about Detroit.

“We’re calling on the community to leave Comerica as Comerica is leaving Detroit,” said Williams. “At least 200 key jobs at Comerica will be leaving Detroit that will have an affect on our housing economy, daycare economy, our food and everything else in Detroit.”

There’s obviously nothing wrong with calling for closing accounts and the like, but the fact is that the ministers are protesting a symptom and not the problem. Instead of taking out their frustrations on an employer who is cutting 200 jobs, Rev. Williams et al should be picketing a governor who has diddled while 81,000 jobs have gone away (Bureau of Labor Statistics data for Dec. 2002 to December 2006; start here to recreate) — during a time period when the rest of the nation’s economy has added millions upon millions of jobs.

Tens of thousands of former Michiganders “voted with their feet” for several years before Comerica decided it would be a good idea to start following them. It is likely that many, if not most, of the ministers believe that Governor Granholm’s additional taxes are the answer to the state’s problems. If I’m correct, that only further vindicates Comerica’s decision.

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ALSO: The OpinionJournal.com editorial has a lot of other choice and instructive information about the state’s organized labor-driven fiscal and retirement quagmire.

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UPDATE: NixGuy makes the point that Comerica is moving its HQ to a state without an income tax.

Positivity: Unidentified Samaritan saves toddler who dashed onto train

Filed under: Positivity — Tom @ 6:00 am

From Queens, NY:

Updated: 2:27 p.m. CT March 1, 2007

In the split second that his mother let go of his hand, 22-month-old Stuart Tito scampered onto a subway train as it pulled away.

“I looked down, he wasn’t there,” Blanca Amarilis told the Daily News in Wednesday editions. “I said, ‘Stuart!’ and a man told me he went on the train. It was so fast. I prayed to God to protect my son and let me find him again.”

A mysterious Samaritan came to the rescue — returning the toddler to his panicked family.

Stuart dashed onto the subway car as his mother let down her guard for a split second to wipe his baby brother’s runny nose.

That was enough time for Stuart’s little legs to carry him onto the Manhattan-bound No. 7 just as the doors slammed shut and it pulled away.

A woman on the train saw it happen. She scooped up Stuart, got off at the next station, double backed and spotted Stuart’s anxious-looking father, Victor Tito, 32.

“Is this your son?” she asked.

“Yes!” he responded, enveloping his son in a hug….