Economy | timiacono.com

Young and Dumb Again

Via this story by Catherine Rampell at the Washington Post comes the graphic below showing how personal savings rates have changed over the years by age group.

Recall that the personal savings rate is simply disposable income less spending, so, if you’ve got a negative savings rate, it means you’re probably not putting away much (or anything at all) for retirement while subsidizing your spending by going further into debt.

The 0-34 crowd is quickly getting back into the “buy stuff with money you don’t have” mindset as the yellow line has recently diverged sharply from the others. Presumably, some of this is being forced upon them due to wages rising slower than the cost of living.

Also, it’s interesting to note that, at the peak of the financial crisis/deleveraging , we barely got back to the savings rate of the early 1990s which, as compared to prior decades was well below the 12-13 percent norm.

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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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