The Real GDP numbers from BEA disappointed the market in an otherwise strong earnings season. Is this “Post Recession” actually stronger than the last two? Well, I guess that depends on how and when (in this case what quarter you start measuring). What about using leading indicators that turned in december 2008? I guess the average growth would have looked a lot worse (Q1 – 4.9, Q2 – 0,7 after last revisions). We conventionally use “positive gdp” as an post recession indicator and therefore Dr. Mark J. Perry starts in Q3 2009 – first quarter of positive growth after the crisis:
But how does GDP growth in this recovery (assuming the recovery started in third quarter of 2009) over the last four quarters (1.6%, 5%, 3.7% and 2.4%) compare to output growth in the four quarters following the last two recessions in 1990-1991 and 2001? Pretty good actually, see the graph above showing real GDP growth in the one-year periods (four quarters) following the last three recessions.
Sure, real GDP growth has slowed from 5% to 3.7% to 2.4% over the last three quarters, but following the 2001 recession real GDP slowed even more, from 3.5% to 2.1% to 2% to 0.1%. And looking at the average growth over the four quarters following the last three recessions, the average 3.18% real GDP growth over the last year was higher than the 1.93% following the 2001 recession and higher than the 2.63% following the 1990-1991 recession. Keep in mind that the economic recovery that started in 1991 was the longest (120 months) and strongest economic expansion in the history of the U.S.
- Read the post on Carpe Diem.
“Beautiful people tend to be paid more — roughly 5% more for men and 4% for women, according to research by economist Daniel Hamermesh, who also found a large penalty for being particularly unattractive. They tend to get better grades. (A study published last year in the journal Labor Economics found attractiveness had a positive and significant correlation with high school GPA.) And they’re likely to get lighter sentences as criminal defendants and higher damage awards as plaintiffs, according to studies of real and simulated trials.”
According to experiments at the University of Munich and Florida State University – beauty is not always a blessing:
“In fact, when women rated women, attractive female candidates were actually punished. Women selected the attractive female candidate only 12% of the time, well below the 33% level predicted by chance. (Men in this experiment did not appear to punish attractive male candidates.)
Are women in general more jealous? Read more: Beauty and the Buck: A Financial Tale – Personal Finance – Employment – SmartMoney.com.
IMF reveals that Saudi Arabia is the country that has the largest public stimulus pacage in the G-20:
“Saudi Arabia responded to the crisis with the largest fiscal stimulus relative to GDP in the G-20, which the IMF deemed appropriate. The IMF website forecasts real GDP growth to be 4 percent for Saudi Arabia in 2010.”
Thanks to the oil I believe – Via Marginal Revolution.
“California Governor Arnold Schwarzenegger has vetoed a bill that would have mandated overtime pay for agricultural workers who are on the job for more than eight hours in a day. California is already the only state to provide overtime pay to employees working over 10 hours; this bill would have gone significantly further. According to the Los Angeles Times:
Saying he didn’t want to damage California’s agricultural economy, Gov. Arnold Schwarzenegger on Wednesday vetoed a first-in-the-nation bill that would have given farmworkers the same rights to overtime pay enjoyed by all other hourly workers in California.
Applying the eight-hour day to agriculture would be burdensome to business and reverse longstanding labor practices, Schwarzenegger wrote in a veto message.
Farms have long been excluded from many of the restrictive labor laws that other industries have to deal with. Besides not being subject to paying overtime in most states, a 1938 law specifically exempts farms from some child labor standards, allowing them to hire minors as young as 12 to work outside school hours. But the California law is just the latest in a series of attempts across the country to impose new regulations on the agricultural sector. The Department of Labor recentlystepped up enforcement of child labor regulations and is promising a “review of regulations governing child labor in agriculture.” At the same time, Congress is considering outlawing young farm workers altogether. If this trend continues, expect to pay significantly more for your (already overpriced) organic vegetables.”
I bet you use multiple products from some of these companies every day:
No. 1: Apple
Brand value: $57.4 billion
No. 2: Microsoft
Brand value: $56.6 billion
No. 3: Coca-Cola
Brand value: $55.4 billion
No. 4: IBM
Brand value: $43 billion
No. 5: Google
Brand value: $39.7 billion
No. 6: McDonald’s
Brand value: $35.9 billion
No. 7: General Electric
Brand value: $33.7 billion
No. 8: Marlboro
Brand value: $29.1 billion
No. 9: Intel
Brand value: $28.6 billion
No. 10: Nokia
Brand value: $27.4 billion
The key – become a necessity! Get the details from Forbes.com: Top Brands
“The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.6 million in the year-earlier quarter, the U.S. Census Bureau said in a report today. The ownership rate, meaning households that own their own residence, was 66.9 percent, the lowest since 1999.”
Home Vacancies Rise as U.S. Ownership Falls to Lowest in Decade reported Bloomberg earlier this week.
Why? Marginal Revolution’s “guesstimate” is 25% sticky prices, 50% lack of aggregate demand and 25 % structural.
“I don’t like complicated regulation. I think we should not need financial reform. What we need is definancialization. What we need to do is break the financial community’s grip on society. And you can do it very easily by transformation of debt into equity. Banks have an interest in building debt, but equity in society is vastly more stable than debt.”
Read the rest of the interview with Nassim Nicholas Taleb, the author who predicted the meltdown in 2008, here. Missed it? Go to the Amazon page here.
“Derk Jan Eppink’s campaign, Say no to EU Tax whose objective is that there be “No introduction of direct EU taxes or increase in national VAT contributions to the EU” and to “Restrict the EU budget to no more than 1 percent of European GNP, for more efficient use of the existing means”, is highly welcome.”
Read The Adam Smith Institute’s latest post: Taxpayers of Europe, Unite!
The Amazon share’s potent performance pre and post the credit crunch:
There are many analysts who think it is a matter of time before iPads and other portable computers replace the the Kindle permanently – while others strongly disagree. To maintain competitiveness Amazon has slashed the price from $259 to $189 - and they succeeded so far. But is this euphoria short-lived for the Kindle? With peers threatening their market share, the developers have to respond soon. Fortunately, you can read Amazon books on multiple devices – and the open, innovative strategy has been lucrative for their shareholders. I believe thay can do it again. This is why iPad hasn’t killed the Kindle, according to Daniel Lyons in Newsweek:
“People have realized that the iPad might be good for a lot of things, but isn’t really the best device for sustained reading over several hours. It’s too heavy, for one thing—about a pound and a half compared with 10 ounces for the Kindle, which can be held in one hand, like a paperback. As Kessel puts it, in a bit of an understatement, “The Kindle and the iPad are very different products.”
Another problem is that the iPad’s bright LCD screen can be tiring on your eyes compared with Kindle’s black-and-white “electronic paper.” The Kindle’s screen also works better in bright sunlight. Kindle has better battery life—it can run up to two weeks on a charge, if you keep the wireless switched off. That compares with 10 hours for an iPad. Plus, with Kindle you have no contract and no monthly fee, and you have wireless access in 100 countries—a nice feature for travelers.”
Read the article here.
The Economist compared BP CEO, Tony Hayward’s parachute to other high-profiled bosses throughout history in the table below. Go to story: Golden Parachutes.
I will again remind you that the opposite of love isn’t hate, its apathy. We’ve noted the lower volume during rallies and the higher traffic during the declines — a sign of distribution — but a simpler truth may be emerging, that of burnout. After four — or five, or six — bubbles and bursts, folks are both bitten and shy by the gamesmanship in the marketplace.
Read the article on MarketWatch: History doesn’t always repeat itself but it often rhymes
Stocks from firms whose CEOs dined with Obama outperformed the S&P:
“Since becoming President, Barack Obama has held seven lunches with small groups of chairmen and chief executive officers, including Jeff Bezos of Amazon.com (AMZN), Ken Chenault of American Express (AXP), Ursula Burns of Xerox (XRX), and Howard Schultz of Starbucks (SBUX). In four of the lunches, the guests’ companies, as a group, outperformed the Standard & Poor’s 500-stock index 30 trading days after the repast. In two cases, the groups’ shares underperformed the S&P 500 a month after lunch with the Commander-in-Chief. Altogether, the six lunch groups outdid the S&P by more than two percentage points. Thirty days haven’t elapsed since a seventh lunch held on July 1.”
A coincidence? Start the investigation on BusinessWeek here.