The Mess That Greenspan Made - Part 32

Jobless and Obese

This Washington Post story looks at the relationship between unemployment and obesity as a subset of the population in parts of the country (mostly low-skilled workers) make things even more difficult for themselves by showing up to job interviews with added girth.

Recent studies and surveys have shown a distinct relationship between unemployment and obesity, particularly for lower-skilled workers who struggle to find work — a search made more challenging by their weight.

In Hagerstown, where blue-collar jobs have gone overseas or to cheaper parts of the country, 8.4 percent are unemployed — well above Maryland’s 5.9 percent rate. Last month, Gallup identified the area as the third-heaviest place in the United States, with almost 37 percent of its residents obese. Local studies put the number even higher.

This is a fascinating subject on many levels.

First, obesity rates vary widely (no pun intended) within the U.S. based on demographics and cultural norms that seem pretty hard to reverse (note that there’s a “least obese” chart with the WaPo article and most areas are either in the West or the Northeast).

Also, obesity amongst the poor (or, unemployed in this case) is something fairly new in history as hundreds of years ago it used to be just kings and royal families who were obese and this was considered to be sign of wealth. Poor and fat is pretty common today.

Moreover, the food industry and awful government dietary guidelines are only making the problem worse in the U.S. as it costs a little more to eat better, assuming you knew how (which most people don’t). Those out of work and packing on the pounds are likely doing so, in part, because they’re cutting back on spending and buying high calorie/low cost food that the U.S. food industry excels at producing.

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Late last week, I chatted with Cory Fleck of the Korelin Economics Report and, instead of the usual subject of precious metals, we talked about a few unrelated topics that have a lot in common with each other, namely, the remarkable rise in Canada home prices over the years that has been accompanied by surging personal debt and financial literacy around the world.

The .mp3 file is again available here at the blog – just click on the image to the right – or you can go directly to this page over at KER.

It really has been a remarkable transformation for our neighbors to the north as property buying from overseas, a banking system that is fundamentally different from the one we have in the U.S., and an extended boom in the natural resource sector have combined to help keep home prices aloft. When factoring in an increasing appetite for personal debt, this has resulted in what seems to be an unstoppable housing market, though it’s important to remember that nothing keeps going up forever.

The chart below from this earlier item tells the story better than words can.

We also talk about a similarly disturbing trend, this one on financial literacy around the world from this earlier item and we both lamented the fact that financial literacy data for Canada was not available so that it might be viewed in context with the charts above.

[To access commentary that Tim only shares with subscribers, join Iacono Research.]
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U.S. Retail Sales in April Disappoint

The Commerce Department reported(.pdf) that retail sales rose far less than expected last month, up just 0.1 percent in April after big upwardly revised gains during the prior two months and a sharp slowdown over the winter.

The consensus of analysts was for a gain of 0.4 percent in the headline figure, but the miss was even worse when excluding automobiles and gasoline as expectations were higher but sales were even lower, flat and down 0.1 percent, respectively.

Sales rose for 8 of the 13 major categories, but big declines in a few groups offset nearly all of the modest gains elsewhere. Sales at both miscellaneous stores and electronics & appliance stores tumbled 2.3 percent while sales at non-store retailers and restaurants & bars both fell 0.9 percent to pace the declining categories.

Clothing store sales rose 1.2 percent, gasoline station receipts were 0.8 percent higher, and automobile sales were up 0.7 percent to lead the rising categories.

If not for the huge upward revision to prior months – the March increase was adjusted up from 1.2 percent to 1.5 percent for the biggest gain in four years and February’s 0.7 percent gain rose to 0.9 percent – this report would have been even worse.

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Tuesday Morning Links

Dow and S&P 500 Hit New Highs – WSJ
China Slowdown Deepens – Bloomberg
Economists React: China Slows Down – WSJ
Tim Geithner’s new book faces blowback – CNN/Money
Russians ditch ruble en masse, data shows – Reuters
Russian Dilemma: Why EU Sanctions are a Bluff – Spiegel
Rise of Oceans Due to Melting Antarctic Ice Sheet Is ‘Unstoppable’ – The Wire
This Is What a Holy Shit Moment for Global Warming Looks Like – Mother Jones
Mom with HP printer shows the ease of making counterfeit bills – Financial Post
The Mysterious Death of Entrepreneurship in America – The Atlantic
Success in life doesn’t depend on college choice – Reuters
Australia aims to nearly halve budget deficit – AP
Consumers: ‘We don’t need our stuff’ – USA Today

Stocks: Sell in May? No way! – CNN/Money
India shares at record high on exit polls – BBC
Copper price hits two-month high – Australian
Corporate bond rally is next to bust, some fear – MarketWatch
‘Stealth correction’ could cause quite a stock market ride – CNBC
The Great Hedge-Fund Mystery: Why Do They Make So Much? – New Yorker
Treasuries Rise on Bets Inflation to Be Subdued – Bloomberg
Gold retreats as euro falls, stocks rally in Europe – Reuters
BNP Paribas revises gold forecast up to $1,255 an ounce from $1,095 – BullionStreet
Gold price likely to get a big hike from the new Indian government – Arabian Money
Gold’s pent-up demand – Mineweb

Vermont hikes minimum wage to $10.50 – CNN/Money
Jobless and Obese? Why You’re in Trouble – Fiscal Times
Euro Bonds Lose Sway in Blow to Draghi Stimulus Plan – Businessweek
Bundesbank ready to back ‘significant’ ECB easing – MarketWatch
German Investor Confidence Drops for Fifth Straight Month – Bloomberg
How China Is Eclipsing Japan in Asia — An IMF Snapshot – WSJ
China’s GDP (PPP) to surpass the United States? – Bruegel
China Housing Market at ‘Tipping Point’ This Year – Caixin Online
Why the Nation’s Hot Housing Market Is Cooling, Slightly – WSJ
7 places where property prices are falling – MarketWatch
Cleveland Fed: Slow Growth Help Hold Down U.S. Inflation – WSJ
Yellen Wage Signals Showing Slack May Be Missing Cost Speedup – Bloomberg

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