Quick Look: Weekly Jobless Claims

Quick Take: Some improvement, but still not enough. One print does not a trend make. Last week was revised from 418k to 422k.

Weekend Musings: On Models, Non-farm Payrolls and ADP

“All models sweep dirt under the rug. A good model makes the absence of the dirt visible.” Emanuel Derman

There’s been a lot of talk buried in the reaction from Friday’s job report and the disparity between the BLS’s report and the ADP report; some people say that it’s irrelevant and offer up a misguided list of reasons. Others seem to recognize that the ADP number is meant to be used as an input into the overall picture and not the end all to be all when it comes to “forecasting” the NFP number.

A Wolf In Sheep’s Clothing

Much has been written about Goldman and the Timberwolf deals since the now infamous “shitty deal” showdown between Senator Levin and GS officials last fall. In reading the majority/minority report issued last week in its entirety, there’s a few things that really stuck out to me.

Obama Is Lying To Us Right Before Our Eyes (Again)!

Obama just claimed in his speech at GW University that “tax cuts” somehow “cost” us $500 billion/year for the next decade.  I’m not sure how a lack of revenue can somehow be semantically transformed into an expense (cost), but putting logic, reason, facts, and basic accounting aside for a second, I’d just like to peel-back some of Obama’s baseless rhetoric and look at some cursory facts I was able to confirm in literally under 2 minutes.

In this same speech, Barry discussed how we need to return to the fiscal discipline of the 1990′s, you know, when we ran a balanced if not surplus budget.  Last I checked we’ve spent the past ~10 years involved in at least two wars (or “wars” depending on your definition), whereas in the 1990s, once we left the Gulf after Desert Storm, we really didn’t have any major large-scale war efforts (I don’t think Bosnia or Kosovo compare to our current wars by any financial metric).

So, two these two Obama-isms, I present the following easily-obtainable data and chart:

Clearly, around the turn of the century, our Defense budget was around $350 million/year.  By 2010, that had more than doubled to $800 million/year, no thanks to the ongoing and of questionably sane military efforts in Iraq and Afghanistan.  At this rate, our 2012 Defense budget is going to be ~3 times what it was in 2000!

And Obama is blaming our current budget deficit on tax cuts?

HUH!?!?

**This is not intended to be an in-depth examination of Government spending, but simply instructive as to the sort of bogus rhetoric our Government feeds us every day.  Such rhetoric is rife with cognitive bias (quite intentionally), in this case, among others, seriously framing error.

Dean Baker On Unemployment, Other Recent Econ Data: Only in Washington would this be hailed as good news…

So goes Dean Baker’s comments on the most recent BLS jobs report.  While virtually every media outlet I follow (pretty much all of them that matter, and then some) hailed the report as positive for the economy, anyone who actually went through the numbers (Calculated Risk did this as well, sans the colorful rhetoric) can see that all is not nearly as rosy as politicians, the media, and the Fed would have us believe (emphasis mine, as usual):

Those who know arithmetic were a bit more sceptical. If the economy sustained March’s rate of job growth, it will be more than seven years before we get back to normal rates of unemployment. Furthermore, some of this growth likely reflected a bounceback from weaker growth the prior two months. The average rate of job growth over the last three months has been just 160,000. At that pace, we won’t get back to normal rates of unemployment until after 2022.

That’s a long time to make ordinary workers suffer because the folks who run the economy are not very good at their job.

A Closer Look At Arbitrary Numbers & Taxes

In the past week I’ve read at least 4 popular authors talk about increasing taxes on “the rich,” a group defined by – for reason(s) completely unbeknownst to me – one of two thresholds, either $250,000/year or belonging to the top 1% of earners (somewhere around $400,000-$500,000/year/household).  I have no problem increasing taxes on the SUPER rich, say, over $1,000,000/year, but to suggest that we should increase taxes on almost every successful doctor, dentist, lawyer, and small-to-medium business owner in the country seems a bit ludicrous to me.  Those who don’t make this magical $250,000/year may consider this outrageous, but many people who make that much, while certainly not poor by any stretch of the imagination, aren’t living anything like the opulent life of the guy in the DirectTV commercials.

Mark Cuban Says ESPN Has A “Twitter Problem.” Huh?

Mark Cuban – owner of professional basketball team the Dallas Mavericks – has a curious post out this weekend, wherein he claims that ESPN and its anchors have utterly failed in embracing twitter and using it to drive traffic to the network’s website (and I suppose to a lesser extent, it’s channels).  His words, emphasis mine:

Today, sports news finds millions and millions of sports fans first via twitter. Unfortunately for ESPN.com, they don’t control any ad space on your tweet stream.  ESPN no longer makes a penny from the first sports news you receive. Thats not good for them.

Top 25 Hedge Fund Managers Made Almost $1 Billion EACH in 2010 (Not an April Fools Joke)

You read that heading right.  According to Absolute Return+Alpha, the top 25-earning hedge fund managers made over $22 BILLION (yes, with a B) last year, with 6 of the top 10 making over a billion (again, with a B) each. To put things in perspective, if you made more than $10,000,000 last year, you were in the top 0.01% (well, 0.0095%) of filers.  These guys made 50, 100, 300x that much.

“Data” From Trade & Industry Groups Is NOT To Be Trusted, Part 74,301

I don’t care whether the data if from the National Retail Federation, the Mortgage Bankers Association, the National Association of Home Builders or, my personal favorite, the National Association of Realtors or any other industry group.  It’s ALL garbage!  DO.NOT.TRUST.THEM!  They exist for the singular and sole purpose of drumming-up business for their members; retailers, mortgage brokers, home builders, and realtors, respectively.  Their “data” and “analysis” will, with almost 100% certainty, grossly overstate any realistic projections and even worse, produce misleading historical “data” to boot!

Compare Recent data from the National Association of Realtors (pdf) with the data from analytics company Corelogic (CoreLogic_December_2010_HPI, I have the Excel file but can’t upload to WordPress).  NAR says the price on existing home sales increased 0.5% in 2010, while the price on new homes increased 2.2%.  Corelogic’s national single-family combined home price index shows a -5.46% change.

Who do you believe?  The industry group that represents people who make money when houses are bought/sold for the most amount of money, or an independent analytical shop that uses a pretty robust methodology (reproduced below)?

The CoreLogic HPI incorporates more than 30 years worth of repeat sales transactions, representing more than 55 million observations sourced from CoreLogic industry-leading property information and its securities and servicing databases. The CoreLogic HPI provides a multi-tier market evaluation based on price, time between sales, property type, loan type (conforming vs. nonconforming), and distressed sales. The CoreLogic HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate “constant-quality” view of pricing trends than basing analysis on all home sales. The CoreLogic HPI provides the most comprehensive set of monthly home
price indices and median sales prices available covering 6,208 ZIP codes (58 percent of total U.S. population), 572 Core Based Statistical Areas (85 percent of total U.S. population) and 1,027 counties (82 percent of total U.S. population) located in all 50 states and the District of Columbia.

Not only does the National Association of Realtors (and really, ALL trade groups) issue over-optimistic future predictions (to get people to buy/sell houses), but they misrepresent historical data!  That should be a crime (if it isn’t already)!

I’m not saying Corelogic’s data is 100% accurate, but I will take their #’s over a trade group’s every.single.time.

UPDATE: Jonathan Miller of Miller/Samuel has a good post about this as well, and includes the NAR’s explanation of their bogus methodology.  Highly recommended read!

Lies, Damn Lies, & Statistics, or: Things That Weren’t The Cause of The Financial Crisis

Ever heard the joke “How many European Economists does it take to come to the wrong conclusion about the cause(s) of the American housing crisis?”  No?  Really? Well, anyway, the answer, it seems, is three:

For many, the US housing market was the epicentre of the global crisis. This column suggests that the US bankruptcy code, which in some cases protects a large section of the individual’s house, leads to overinvestment in housing – a bias that may have helped massage the US housing bubble in the decade preceding the global crisis.

The authors of this article would be well-served to spend an afternoon overhearing conversations in the food court of one of our many thousands of shopping malls (or maybe worse, Walmarts).  Were they to do so, methinks they’d quickly re-examine their thesis, methodology, and conclusions.  The average American knows about as much about state bankruptcy law as they do about quantum computing.

Maybe some Lawyers consider the worst-case financial scenario of personal bankruptcy when buying/paying for a home, but Lawyers account for less than 1% of employees (if not much less), and I find it extremely hard to believe many others even consider such an unpleasant outcome.

This leads us to a larger and far more important lesson: