June 28, 2011

Case Shiller Home Price ‘Boost’ Disappears After Seasonal Adjustment; AP, S&P Like the Raw Numbers Better

While the vast majority of those in the establishment press doggedly insist on reporting seasonally adjusted numbers in most economic spheres, there is an odd exception: Standard & Poor’s Case-Shiller Home Price Indices.

Not that it’s completely the press’s fault. S&P emphasizes the raw numbers over the seasonally adjusted ones, and for a pretty good reason: The raw numbers represent what’s really happening on the ground with home prices. In the current economy, the seasonal calculations can’t really be said to reflect typical seasonal patterns. Of course, this logic should apply to other key areas, particularly employment, but we (or maybe it’s the reporters) are apparently not mature enough to understand large monthly swings in jobs added or lost, or able to see them in the context of previous years.

Given that the press usually hangs its hat on seasonal numbers, you’d think they’d be more than a little shy about copying S&P’s press release, which today described a very small increase as a a “boost” in home prices, which disppeared after seasonal adjustment, as seen below:

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Bloomberg Predictably Drops ‘Unexpectedly’ From Consumer Confidence Report

BloombergLogoIt looks like someone in the establishment business press might be getting a little touchy about the razzing they continually receive for delivering “unexpectedly” bad economic news.

As captured by Glenn Reynolds at Instapundit and corroborated in this Google News description, Bloomberg’s 10:16 a.m. report on consumer sentiment told readers that “Consumer confidence unexpectedly fell in June to a seven-month low, indicating that slowing employment gains are weighing on Americans’ outlooks.”

At 11:31 a.m. — to be clear, not influenced by Reynolds’s post, which went up shortly after noon — a sanitized version of the report by Alex Kowalski and Jillian Berman read as follows:

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CNN’s Felicia Taylor Goes to Psychics for Economic Predictions

Filed under: Economy,MSM Biz/Other Ignorance,Taxes & Government — Tom @ 11:50 am

cnnlogoMy first reaction to this was, “Well, if this became a common practice, at least we’d hear the word ‘unexpectedly’ a lot less often.”

Over at Mediaite on Friday (some R-rated content is at link; HT Doug Powers at Michelle Malkin’s place), Josh Feldman ripped CNN business reporter Felicia Taylor, whose background includes stints at the Financial News Network, CNBC, for devoting nearly three minutes to the economic predictions of psychics.

I watched the segment myself, hoping against hope that it would come off as a spoof. It didn’t.

Here’s some of what Feldman had to say (internal link, bold and italics are in original):

First off, let’s tackle the idea that such methods bring comfort to people who are suffering through these difficult economic times. If certain individuals wish to consult psychics to feel better about their future, go right ahead. There are dozens of articles from the last few years showing that, as the economy is getting worse, the psychic business is booming. But why in the world would this be taken seriously by a mainstream news organization?

Here’s where it gets really weird: One woman thinks she can predict the future of the economy based on Ben Bernanke’s moon sign. (On a related note: What the heck is a moon sign?) She predicts that Bernanke will have great success sometime in the late summer/early fall, though this might not necessarily have anything to do with the economy. Maybe he wins a free ocean cruise vacation or something. And by October Bernanke is “really, really happy.” Well, that settles it, then. Show’s over, folks, you can all go home! The Fed Chairman is scheduled to be really, really happy in about four months’ time, so you have absolutely nothing to worry about!

What’s particularly hilarious about this segment is how seriously Taylor seems to take this subject and how she tries to talk about serious economic subjects with individuals who make a living making up random crap about people’s lives.

What’s also particularly hilarious is how CNN is racing to the bottom in the ratings even faster than MSNBC:

Thursday, June 23, 2011:
- Total day, Total Viewers — MSNBC 443,000; CNN 393,000
- Primetime, Total Viewers — MSNBC 871,000; CNN 621,000

Thursday, June 24, 2010:
- Total day, Total Viewers — MSNBC 464,000; CNN 447,000
- Primetime, Total Viewers — MSNBC 883,000; CNN 690,000

Year-over-year Declines:
- Total day, Total Viewers — MSNBC, minus 4.5%; CNN, minus 12.1%
- Primetime, Total Viewers — MSNBC, minus 1.4%; CNN, minus 10.0%

You don’t have to possess any special powers to know that if CNN spends much more time looking to psychics for economic predictions, its ratings will continue to tumble.

Cross-posted at NewsBusters.org.

Three Reasons Future Budget Deficits Are Worse Than Projected

Filed under: Economy,Taxes & Government — Tom @ 9:02 am

Yours truly has mentioned all three of the items which follow as obvious shortcomings in Congressional Budget Office projections several times. Here they are in one place, courtesy of Lawrence Lindsey in a Wall Street Journal op-ed (bolds are mine):

… we should be prepared for upward revisions in official deficit projections in the years ahead—even if a deal is struck. There are at least three major reasons for concern.

First, a normalization of interest rates would upend any budgetary deal if and when one should occur. At present, the average cost of Treasury borrowing is 2.5%. The average over the last two decades was 5.7%. Should we ramp up to the higher number, annual interest expenses would be roughly $420 billion higher in 2014 and $700 billion higher in 2020.

The second reason for concern is that official growth forecasts are much higher than what the academic consensus believes we should expect after a financial crisis. That consensus holds that economies tend to return to trend growth of about 2.5%, without ever recapturing what was lost in the downturn.

But the president’s budget of February 2011 projects economic growth of 4% in 2012, 4.5% in 2013, and 4.2% in 2014. That budget also estimates that the 10-year budget cost of missing the growth estimate by just one point for one year is $750 billion. So, if we just grow at trend those three years, we will miss the president’s forecast by a cumulative 5.2 percentage points and—using the numbers provided in his budget—incur additional debt of $4 trillion. That is the equivalent of all of the 10-year savings in Congressman Paul Ryan’s budget, passed by the House in April, or in the Bowles-Simpson budget plan.

Third, it is increasingly clear that the long-run cost estimates of ObamaCare were well short of the mark because of the incentive that employers will have under that plan to end private coverage and put employees on the public system. Health and Human Services Secretary Kathleen Sebelius has already issued 1,400 waivers from the act’s regulations for employers as large as McDonald’s to stop them from dumping their employees’ coverage.

But a recent McKinsey survey, for example, found that 30% of employers with plans will likely take advantage of the system, with half of the more knowledgeable ones planning to do so. If this survey proves correct, the extra bill for taxpayers would be roughly $74 billion in 2014 rising to $85 billion in 2019, thanks to the subsidies provided to individuals and families purchasing coverage in the government’s insurance exchanges.

Under current government policies and economic projections, they should be far more concerned about a return of their principal in 10 years than about any short-term delay in a coupon payment in August.

I would only amend Reason 2 to read: “The second reason for concern is that official growth forecasts are much higher than what it is achievable while the current administration and its policies are in place.”

All of these factors show why the country is very likely to get to the “Maxed Out America” threshold — debt owed to the public amounting to 90% of GDP — much sooner than the CBO’s prediction of 2021. Economist Larry Kotlikoff believes 2017 is “optimistic,” and only possible if interest rates don’t move.

I’m afraid it’s much, much sooner. Kotlikoff didn’t cite problems with the economic growth assumptions or the Obamacare bleeding Lindsey noted. I pointed out in the linked column that the tax-collection shortfall may be even greater because so many employees who are getting work are getting it as relatively low-paid temps — which of course is a product of the POR (Pelosi-Obama-Reid) Economy’s crippling atmosphere of uncertainty.

All of this explains why “The Real Answers No One Will Touch” need to become the real answers.

Positivity: How an iPad and Innovative Thinking Gave Voice to an Autistic Child (and Changed a 99 Year-Old’s Life)

Filed under: Positivity — Tom @ 5:58 am

Inspiring, even without the technology, the discussion of which begins at the 8:40 mark:

Related (video at link): “99-Year-Old’s iPad Changed Her Life