April 26, 2011

Kasich v. Strickland Jobs Face-Off: After One Quarter, Kasich Ahead

Filed under: Economy,Taxes & Government — Tom @ 9:33 pm

Longtime BizzyBlog readers know that yours truly is a big fan of looking at the raw numbers, i.e., the NOT seasonally adjusted ones, to get a handle on what is really happening on the ground. That’s because, especially in highly volatile times (as in the past few years), the seasonally adjusted numbers don’t always return results that make sense.

To make the following charts clear to relative newcomers, it is very typical for an economy to lose jobs in January, as Christmas-season help is no longer needed. Typically February and March are months where employment picks up, but often not by enough to offset the December losses. Seasonally adjusted jobs figures attempt to smooth these fluctuations out. Over time, they do a good job. Within individual months, the results are sometimes shaky.

So with that out of the way — After three months in office, Ohio’s economy under John Kasich has lost fewer jobs than were lost during Ted Strickland’s first three months in office:


In January and February, Kasich, who is presumptively accountable for this year’s results because his election created realistic expectations for improvement among those who make the decisions to add, keep, and eliminate jobs, outperformed Strickland (who was similarly accountable in 2007, but whose election created lukewarm to negative expectations). Strickland caught up a bit in March. Strickland could argue that he was operating in more of a headwind in the first quarter of 2007, as the nationwide economy grew by an annualized 0.9% vs. the roughly 1.5% or so currently estimated for 2011′s first quarter. Additionally, as seen above, the country lost more jobs (again, NOT seasonally adjusted) during the first quarter of 2007 than it appears to have lost during the first quarter of 2011 (pending revisions and annual comprehensive adjustments).

Nonetheless, Kasich is legitimately ahead by a margin that more than makes up for the Stickland counter-arguments.

I anticipate updating this info periodically. It should indeed be interesting.

Without a Shrinking About.com, NYT’s 1Q10 Financials Would Show an $8 Million Loss

NYTlogoWithPaper0209The New York Times announced its first quarter 2010 results on Thursday. As is the case with most companies when they would rather not talk about the bottom line, the Times instead concentrated on its “operating profit.”

A detailed look at the release reveals a group of contracting, money-losing journalistic endeavors propped up by an also-shrinking Internet enterprise.

Here are the first few paragraphs of the company’s release:

The New York Times Company (NYSE: NYT) announced today 2011 first-quarter diluted earnings per share of $.04 per share compared with $.08 in the same period of 2010. Excluding severance and the special items discussed below, diluted earnings per share were $.02 per share in the first quarter of 2011 compared with $.11 in the first quarter of 2010.

Operating profit was $31.1 million in the first quarter of 2011 compared with $52.7 million in the same period of 2010. Excluding depreciation, amortization and severance, operating profit was $60.5 million in the first quarter of 2011 compared with $83.3 million in the first quarter of 2010.

“Our operating performance reflects the continuing transformation of our Company, which intersected with an important milestone in the first quarter,” said Janet L. Robinson, president and chief executive officer, The New York Times Company. “While the challenges for our Company and for the larger economy are not yet behind us, the recent launch of Times digital subscription packages on NYTimes.com and across other digital platforms brings our plan for a new revenue stream to life, offering us another reason for optimism about the future of our Company.

The term “net income” only appears in the financial statements themselves, and is absent from the roughly 2000-word release. Net income for the quarter was $5.2 million, down 63% from $14.2 million in the first quarter of 2010, which itself was propped up by a $10.2 million gain (per footnote c in the report) on the sale of a paper-mill joint venture.

Focusing on the current quarter, here is my estimate of how the allocation of net income shakes out:


I allocated corporate costs based on revenues, which absent any specific information is as good a rationale as any. The News Media Group eats all interest costs because the Times paid cash and from what I recall did not have to borrow to buy About in 2005. Though entirely allocated to the News Media Group, the “Other items” could arguably favor About Group even more, as they include a $5.8 million gain on the sale of job listing aggregator indeed.com (the News Media Group really doesn’t deserve credit for that), a $5.7 million loss on the paper mill joint venture sale (News Media Group-related), and $1.4 million in income taxes.

Note that About Group’s operating profit of $14.3 million is almost half of the company’s $31.1 million in operating profit. Absent a favorable change in direction, it seems that the Times will not likely be able to continue counting on About to keep spinning off enough income to cover up everyone else’s losses. About’s revenues were down about 9% from a year ago, while its operating profit was down about 14%.

Thus as stated earlier, the Times is “a group of contracting, money-losing journalistic endeavors propped up by an also-shrinking Internet enterprise.” If you expected another establishment press entity to expose this inconvenient truth about the Times, forget about it: Michael Liedtke’s coverage at the Associated Press Thursday afternoon didn’t even recognize the existence of the About Group.

Given what the Times’s various publications have done to poison the well of fairness and objectivity over the years, I can only echo Instapunditeer Glenn Reynolds in saying “Faster please.”

Cross-posted at NewsBusters.org.

The Housing Story: ‘Down Doobie Doo Down Down’ Continues

Filed under: Economy,Taxes & Government — Tom @ 2:25 pm

First, some mood music, from the glory days of lip-synching:

I know the song is called “Breaking Up Is Hard To Do,” but I’ve always thought of it as the “Down Doobie Doo Down Down” song.

“Down Doobie Doo Down Down,” as seen in this chart created from data at the Census Bureau, is what the U.S. new-home market is:


Setting aside the slide that got us there, 1Q11′s trailing 12 months sales of 306,000 is not only by far the lowest in the 48 years since records have been kept, but also, as demonstrated here, certainly the lowest since World War II. The first quarter of 2011 came in at a ridiculously 71,000.

One can argue of course that the years of the mid-2000s were way overheated, but the current level of sales is totally unacceptable, and still getting worse. Barring a surprise, April’s 12 trailing months will come in below 300,000; April 2010′s 41,000 unit sales uptick caused by the expiration of the homebuyer’s credit will almost certainly not be replicated.

Housing won’t come back until the Obama administration lets the market clear out its debris. From all appearance, they’re not going to let it happen any time soon. Until they do, the ongoing nature of this disaster is on them, and them alone.

Regulatory Thuggery at the NLRB

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 10:02 am

I heard about this late last week, but with this administration, it’s virtually impossible to document all the horrors in real time.

According to the Obama National Labor Relations Board, a unionized company can’t set up a non-union plant in another state, even if doing so will have zero negative effect on employment at unionized plants. The NLRB decided this AFTER aerospace giant Boeing had already invested $2 billion and 17 months in the project.

I’m not kidding.

A Wall Street journal editorial on Thursday called the NLRB ruling “one for the (dark) ages.”

They’re not kidding (bolds are mine):

We knew that Big Labor had political pull at the Obama-era National Labor Relations Board, but yesterday’s complaint against Boeing is one for the (dark) ages. By challenging Boeing’s right to build aircraft in South Carolina, labor’s bureaucratic allies in Washington are threatening the ability of states to compete for new jobs and investment—and risking the economic recovery to boot.

In 2009 Boeing announced plans to build a new plant to meet demand for its new 787 Dreamliner. Though its union contract didn’t require it, Boeing executives negotiated with the International Association of Machinists and Aerospace Workers to build the plane at its existing plant in Washington state. The talks broke down because the union wanted, among other things, a seat on Boeing’s board and a promise that Boeing would build all future airplanes in Puget Sound.

So Boeing management did what it judged to be best for its shareholders and customers and looked elsewhere. In October 2009, the company settled on South Carolina, which, like the 21 other right-to-work states, has friendlier labor laws than Washington. As Boeing chief Jim McNerney noted on a conference call at the time, the company couldn’t have “strikes happening every three to four years.” The union has shut down Boeing’s commercial aircraft production line four times since 1989, and a 58-day strike in 2008 cost the company $1.8 billion.

This reasonable business decision created more than 1,000 jobs and has brought around $2 billion of investment to South Carolina. The aerospace workers in Puget Sound remain among the best paid in America, but the union nonetheless asked the NLRB to stop Boeing’s plans before the company starts to assemble planes in North Charleston this July.

The NLRB obliged with its complaint yesterday asking an administrative law judge to stop Boeing’s South Carolina production because its executives had cited the risk of strikes as a reason for the move. Boeing acted out of “anti-union animus,” says the complaint by acting general counsel Lafe Solomon, and its decision to move had the effect of “discouraging membership in a labor organization” and thus violates federal law.

It’s hard to know which law he’s referring to.

Laws? They don’t need no stinking laws.

Once again, this is what tyranny (“arbitrary or unrestrained exercise of power; despotic abuse of authority”) looks like.


… Beyond labor politics, the NLRB’s ruling would set a terrible precedent for the flow of jobs and investment within the U.S. It would essentially give labor a veto over management decisions about where to build future plants. And it would undercut the right-to-work statutes in 22 American states—which is no doubt the main union goal here.

… (Obama’s) appointees are determined to impose it by regulatory fiat—no matter the damage to investment and job creation.

In my view, this also has important implications for companies considering going public. The best way to get around the NLRB’s ruling for nonpublic companies is to set up a different company with a slightly different ownership structure to do work in more business-friendly states. That option was either unavailable or more difficult to finesse for publicly held Boeing. Sarbanes Oxley has already made going public difficult enough.

Lest we forget, Boeing is headquartered in Chicago, which celebrated like crazy when the company moved its HQ there from Washington State in 2001. Hmm — There’s a potential partial use for that South Carolina building.

Those who ridicule the notion that “It’s the Uncertainty, Stupid,” i.e., that business uncertainty caused by arbitrary government and regulatory action and inaction is holding back the economy, please take note. Nearly three full years after the POR (Pelosi-Obama-Reid) Economy deliberately-induced regime of uncertainty began doing its damage, it is by far THE biggest factor causing the economy to underachieve.

Tennessee Senator Lamar Alexander’s WSJ op-ed today addresses the real implications for another important industry:

… now unions want to make it illegal for a company that has experienced repeated strikes to move production to a state with a right-to-work law. What would this mean for the future of American auto jobs? Jobs would flee overseas as manufacturers look for a competitive environment in which to make and sell cars around the world.

Our goal should be to make it easier and cheaper to create private-sector jobs in this country.

That this is not the Obama administration’s goal could not be more obvious.

Positivity: In historic TV Q&A, Pope Benedict speaks about suffering, comatose persons, persecution

Filed under: Positivity — Tom @ 5:57 am

From Vatican City:

Apr 22, 2011 / 11:37 am (CNA/EWTN News).- Making broadcasting history on Good Friday by becoming the first Pontiff to be on a TV Q&A program, Pope Benedict XVI appeared in the Italian pre-recorded show “In His Image,” responding to seven questions sent from around the world about suffering, coma, persecution of Christians, the resurrection and Mary.

The full text of the questions and the Holy Father’s answers follows: