Economy | timiacono.com

Economy Expands at 4.0% Annual Rate in Q2

The Commerce Department reported that the U.S. economy expanded at a rate of 4.0 percent in the second quarter, well above the consensus estimate of 3.0 percent, and the contraction during the first quarter was revised up from a -2.9 percent rate to -2.1 percent.

Inventory growth was the primary reason for the strong expansion as this component contributed 1.7 percentage points to the overall growth rate after subtracting 1.1 percentage points to the first quarter rate. Consumer spending also contributed 1.7 percentage points with durable goods sales, particularly autos, responsible for the bulk of the increase.

This report also included regular annual revisions to the data that showed growth in 2011 and 2012 was worse than previously believed but that 2013 was much better. Based on the quarterly rates, 2011 growth was revised down from 2.1 percent to 1.7 percent and, in 2012, the economy expanded at a rate of just 1.6 percent versus 2.0 percent  as previously reported. Data for last year was revised sharply higher, up from 2.6 percent to 3.1 percent.

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The Rise of China, the Decline of Japan

From this item the other day at the Wall Street Journal’s Real Time Economics blog comes the graphic below from a recent IMF study that shows how the rest of Asia has become increasingly dependent upon China, rather than Japan, for exports.

In cases such as Australia and New Zealand, the change is profound.

Of course, since some of these are large percent changes from a small base such as in the Philippines, the data can be a bit misleading, however when countries like Taiwan reduce their exports to Japan by two-thirds while quadrupling their exports to China, that’s huge.

It’s no wonder that China feels the need to flex its muscles from time to time and you can’t help but wonder how things will work out in Japan over the long run, given their dramatic rise, fall, and then stagnation over the last four or five decades.

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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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Middle-Aged and Back with Mom & Dad

This LA Times story about Californians in their 50s and 60s moving back in with their parents has been making the rounds over the last day or so and for good reason – it’s yet another indication that, despite rising stock prices, rising home prices, and an improving economy, something is still seriously wrong here in the good ‘ol US of A.

It would seem the most surprising thing about this is that people actually agree to be interviewed on the subject like Debbie and Ron Rohr below who were photographed at the Salinas home of Debbie’s mother (at least Debbie had the good sense, apparently, to take down the Peter Frampton Olivia Newton-John posters from her old room).

At a time when the still sluggish economy has sent a flood of jobless young adults back home, older people are quietly moving in with their parents at twice the rate of their younger counterparts.

For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents’ homes swelled 67.6% to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development.

The jump is almost exclusively the result of financial hardship caused by the recession rather than for other reasons, such as the need to care for aging parents, said Steven P. Wallace, a UCLA professor of public health who crunched the data.

“The numbers are pretty amazing,” Wallace said. “It’s an age group that you normally think of as pretty financially stable. They’re mid-career. They may be thinking ahead toward retirement. They’ve got a nest egg going. And then all of a sudden you see this huge push back into their parents’ homes.”

Many more young adults live with their parents than those in their 50s and early 60s live with theirs. Among 18- to 29-year-olds, 1.6 million Californians have taken up residence in their childhood bedrooms, according to the data. Though that’s a 33% jump from 2006, the pace is half that of the 50 to 64 age group.

At first, this seemed like one of those stories where you’ve got a huge increase to a small number and that makes for a sensational headline and story, but the simple fact that there is now only an 8-to-1 ratio between 50-64 year olds and 18-29 year olds who live with their parents (and not as caregivers) seems pretty disturbing, at least to me.

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