Category Archives: Economics

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When the government tells you that inflation is down, look more closely at what has come down.

The picture looked homey enough, mom and dad at the table in the dining room, dad looking into the kitchen at his daughter and son and the family dog . . . and The Wall Street Journal’s photographer, Kristen Zies. 🙂

Decent looking middle-class home, kitchen with the light grey cabinets which came into fashion not long ago, grey-and-white quartz (?) countertop, stainless steel appliances, but, shudder!, laminate flooring. And, for Jake and Marie Tromberg, inflation has hit hard.

Inflation Hurts Most for the Things We Can’t Skimp On

Costs for child care, rent and car insurance are up. Inflation might be easing, but it doesn’t feel that way.

by Harriet Torey and Terell Wright | Monday, August 8, 2024 | 5:30 AM EDT

Inflation is slowing. So why doesn’t it feel that way?

After all, price increases for lots of items, like cable and shampoo, are indeed cooling. Prices for vehicles, gasoline, TVs and plane tickets have even dropped over the past year. And the overall pace of year-over-year inflation as measured by the Labor Department’s consumer-price index was down to 3% in its most recent reading—much, much lower than the recent high of 9.1% that it clocked two years ago.

But prices for many of the things that are hard to do without are still posting eye-watering increases. Rent and electricity bills are up 10% or more over the past two years, and car-insurance costs are up nearly 40%, according to the Labor Department’s index. Shoppers might be able to trade down from prime steak to cheaper cuts of meat at the supermarket, but they can’t really do the same thing with the water bill.

Car insurance? In Virginia, where the Tromburgs live, there’s a $600 non-compliance fee if you let your insurance lapse, and you still have to reinsure the vehicle. The Commonwealth may suspend your vehicle’s registration (license plates) and possibly your driver’s license. Insurance companies operating in the Commonwealth must notify the Department of Motor Vehicles if a vehicle’s insurance lapses.

“We’re beginning to run out of rope in how much we can substitute out,” said David Bieri, an economist and professor at Virginia Tech.

Rising prices have been front and center in the U.S. over the past three years, affecting how Americans feel about the economy and how they are planning to vote. A softening jobs market will only amplify their concerns.

I am reminded of 2016, when the government did everything it could to to persuade people that the economy was doing just fine, thank you very much, in their attempt to get Hillary Clinton elected:

Problem: Most Americans don’t believe the unemployment rate is 5%

by Heather Long | September 6, 2016 | 3:18 PM EDT

Heather Long

Americans think the economy is in far worse shape than it is.The U.S. unemployment rate is only 4.9%, but 57% of Americans believe it’s a lot higher than that, according to a new survey by the John J. Heldrich Center for Workforce Development at Rutgers University.

The general public has “extremely little factual knowledge” about the job market and labor force, Rutgers found.

It’s another example of how experts on Wall Street and in Washington see the economy differently than the regular Joe. Many of the nation’s top economic experts say that America is “near full employment.” The unemployment rate has actually been at or below 5% for almost a year — millions of people have found jobs in what is the best period of hiring since the late 1990s.

But regular people appear to have their doubts about how healthy America’s employment picture is. Nearly a third of those surveyed by Rutgers believe unemployment is actually at 9%, or higher.

Republican candidate Donald Trump has tapped into this confusion. He has repeatedly called the official unemployment rate a “joke” and a even “hoax.”

At the time, while the official unemployment number, U-3, was 4.9%, the U-6 unemployment number[1]U-6: Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons … Continue reading was 9.6%, pretty much in line with what the Rutgers survey guessed. As George Orwell put it in 1984, “The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”

Back to the Journal:

Families with young children are also paying higher prices for child care. Costs have risen 6.4% over the past two years, in line with the overall CPI. Because daycare bills can be as big as the rent payment or the mortgage, even a relatively small increase can feel like a lot.

The median price to put an infant in center-based care in 2022 was more than $1,400 a month in major metro areas, according to the Labor Department. A 6.4% increase puts that bill closer to $1,500.

(Brendan and Alexis) Madigan’s daycare costs have risen much faster. The daycare bill for their older daughter shot up last month to $1,650 from $1,200 a month. Daycare for their younger daughter, who starts in two weeks, will be $1,800 a month. They searched for cheaper options but quickly realized that the price was the standard.

“I would have hoped that where my career path is at, and with my wife working as well, that we would have some financial flexibility,” said Madigan, 32.

Doing some back-of-the-envelope “cipherin'”, as Jethro Bodine would have put it, that comes out to $3,450 per month, or $41,400 a year. Assuming a total tax bite of 33%, that would require gross earnings of $55,062 just to pay for daycare! Does it really make sense for both of the Madigans to work, just so their kids can be reared by daycare workers? The Madigans live in Durham, North Carolina, a metropolitan area to be sure, but not the most expensive place in the US.

There’s more at the Journal’s original, mostly going over statistics and throwing in some human-interest stories, but the message is clear: inflation has come down significantly on the things people do not have to buy every week or every month. But on the expenses of daily life in America, people are having to pay more and more.

References

References
↑1 U-6: Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.
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Welfare for the well-to-do

If you watch the Weather Channel, whenever one of the bad winter storms hits, or hurricanes, tropical storms, etc, you’ll see that they always have a graphic showing how many “customers” are without power. Customers does not equal people, but residential and commercial units consuming power. As ’empty nesters,’ we count as one customer, but are two people. When the first tropical storm/category 1 hurricane hit the Lone Star State earlier in July, the Weather Channel was telling us about how long customers in Texas were dealing with near 100ºF temperatures with no sparktricity for air conditioners. Primarily distributed by overhead wires, electricity is our most vulnerable to the weather utility.

Heat pumps are having their moment. Are they right for you?

More homeowners are opting for heat pumps, once thought to be ill-suited to cold Northeast winters.

by Frank Kummer | Monday, July 29, 2024 | 5:00 AM EDT

For decades, Scott Nelson’s Oceanside Service has been installing traditional residential cooling systems and gas-powered furnaces in Jersey Shore communities such as Long Beach Island.

Within the past few years, however, the Allenhurst-based contractor has seen a big change: More homeowners are opting for heat pumps, once thought to be ill-suited to cold Northeast winters. The switch is fostered by warming winters, more efficient heat pump units, and federal and state incentives.

“We give everybody the option,” Nelson said, referring to a traditional system versus a heat pump. “And 8 out of 10″ have been buying heat pumps.

Heat pumps are having their moment, boosted in recent years by federal tax credits and other incentives that align their cost more closely with traditional fossil-fuel powered units, while also being highly efficient.

And there it is! You, the taxpayers, are on the hook to buy HVAC systems for Other People! And the homeowners in “Jersey Shore communities such as Long Beach Island” are much wealthier than the typical taxpayer in Flyover Country USA. In June of 2024, the median sale price in Long Beach Island, NJ, was $2,250,000, up 32.4% from the same time in 2023.[1]Data accessed on July 29, 2024, and may show differently in the future, as the referenced real estate site updates information as it is received.

The momentum could grow with the Environmental Protection Agency’s announcement last week of $4.3 billion in grants for projects in 30 states aimed at reducing climate change and air pollution, fostering environmental justice, and accelerating a transition to renewable energy. Pennsylvania received nearly $400 million, and New Jersey and a coalition of other states received nearly $250 million, all funded by the Inflation Reduction Act (IRA) as part of the Biden administration’s agenda.

The grants will be used to fund various programs, including those that encourage a switch to heat pumps such as Pennsylvania’s Priority Climate Action Plan.

So, even more of your taxed-away dollars — or that money borrowed from investors and repaid with interest — being given to Other People.

Our HVAC system, a circa 1995 heat pump system, was destroyed in the 2021 flood, and the $6,100 it cost to replace it came from our pockets, not the taxpayers. Remember that $6,100 figure; it will be important later. How much moolah is Uncle Sam giving to people wealthier than you? Skipping down a few paragraphs we find:

Heat pump installations can quality for federal tax credits valued at up to 30% of the cost paid for the unit, or up to $2,000 per year, for air-source heat pumps. There’s a rebate up to $8,000 for an ENERGY STAR-certified electric heat pump for space heating and cooling.

Pennsylvania anticipates using money from the Infrastructure Act to offer rebates starting in 2025 for heat pumps installed in low- to moderate-income households.

Further down, readers are told that the up-front costs for a heat pump are about $15,000, versus roughly $8,000 for a gas furnace. I guess that my $6,100 wasn’t so bad, huh?

Philadelphia has plans to try and push heat pumps, but has 440,000 mostly brick rowhomes, with an average age of 80 years. Many have insufficient electrical service to power a heat pump system. My heat pump system has not one but two 220-volt, 50-amphere circuits, one for the exterior condenser unit, and another for the blower unit in the crawlspace, which includes heating elements for the ’emergency’ heat cycle. With our ‘backup’ heating system, a propane fireplace, we’ve never needed to use the ’emergency’ heat cycle. A modern, 200-amp circuit breaker panel is needed for installation of a heat pump system, so many of the Philly rowhomes would also need an electrician to upgrade that before any heat pump system could be installed.

There’s more than just that, though. As Frank Kummer, the article author noted, many Philadelphia houses, particularly the rowhomes, “still have boilers that use radiators and baseboard heat. Those likely would need ductless, mini-split heat pumps.” While it is possible to mount mini-split units on interior walls, doing so is more complicated, and more expensive than mounting them on exterior walls.

This is a program that is nothing more than welfare for the already well-to-do. The heat pump systems do have tax credits, but that doesn’t mean that homeowners can simply stroke a check for $15 grand, and be able to wait for their tax credits. While some rowhouse neighborhoods like Fishtown are gentrifying, and might have some better-off homeowners who would consider heat pumps as they remodel, it’s more difficult to see how the working-class people in Philly’s working-class neighborhoods could do so. If their gas furnaces have to be replaced, it’s still cheaper for them to replace with new gas furnaces than heat pumps, as Mr Kummer’s article tells us.

And so I go back to the beginning, and how electricity is our most vulnerable to the weather utility. If you live in a Philly rowhome, and the power goes out on a bitterly cold February day, whether you had a heat pump based system, or your old natural gas fired boiler for radiators, both would be out. But a low-end home generator from Lowe’s or Home Despot can provide enough 110-volt, 20-amp power to run your natural gas furnace, while you’d need a substantial generator, providing 220-volts to run your heat pump system.

I have no objection at all to people being able to choose what kind of heating system they want; I do find it objectionable that the government has its snotty nose in these decisions, and that the feds are providing what amounts to welfare for already prosperous people.

References

References
↑1 Data accessed on July 29, 2024, and may show differently in the future, as the referenced real estate site updates information as it is received.
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The left are pro-choice on exactly one thing

Journalist James Ochoa of The Street has said that Ford is sending “mixed signals” about its “commitment” to plug in electric vehicles, but he’s got that wrong. Reality is that car buyers have sent signals that the left do not like concerning the silly things!


Ford execs send mixed signals about EV commitment

The Dearborn-based automaker’s moves are a grim reflection of the EV market

James Ochoa | Sunday, July 21, 2024 | 5:09 PM EDT

Despite CEO Jim Farley’s enthusiasm about electric vehicles, navigating the avenues of the EV marketplace has been a rocky road at best for Ford (F).

In its earnings report released in April, the Blue Oval reported that its electric car division, Model e, lost $1.3 billion in the first quarter of 2024. Meanwhile, the automaker’s commercial and fleet vehicle division, Ford Pro, made $7,300 per vehicle on the nearly 400,000 vehicles it sold.

Meanwhile, the electric Model e division lost $130,000 on each of the nearly 10,000 EVs it moved in the same period.

Think about that: Ford was losing twice the cost of its most expensive electric vehicle, the F-150 lightning, on each unit sold.

During the company’s earnings call, Farley expressed that much work had to be done to make its EVs positively impact the company’s bottom line.

“We’re being very consistent about our discipline on profitability,” Farley said. “We expect every one of our EVs to make money in the first 12 months, and that is a very disciplined process.”

But here comes the kicker:

Part of Ford’s “disciplined process” is outsizing the need to build more profitable vehicles. Unfortunately for the environment, those vehicles aren’t electric vehicles but rather massive, fuel-burning, heavy-duty pickup trucks.

In a recent announcement, Blue Oval said it’s investing $3 billion to boost the output of the Super Duty, the bigger, bulkier sibling of the popular F-150 pickup trucks. These trucks, equipped with up to a 7.3-liter V8 engine, are popular with tradespeople and laymen who want extra power for towing larger objects like boats.

The article continues to tell readers about the investments the company is making to produce more of the Super Duty, which is a version of the F-250 or F-350, not the F-150 — because Ford is having trouble keeping up with the demand for the trucks. And here’s the money line:

While Ford’s Model e division loses $130,000 on each EV, Ford makes an estimated $20,000 in profit on every Super Duty.

Translation: in a market in which the federal government is providing tax credits and incentives to buy plug-in electric vehicles, Ford still cannot sell enough of them to come close to breaking even, while the company not only makes money on its larger trucks, but is just barely, if that, keeping up with the demand. While there are obviously some people who want EVs, the majority of the new vehicle buying market simply don’t want them.

But, of course, the federal government, and some state governments, want to force-feed the American people on things they do not really want. President Biden put in place a mandate that all new vehicles sold in the United States must be zero-emission by 2035, but his term ends in January. The expected Democratic nominee, Vice President Kamala Emhoff[1]Just because she does not respect her husband enough to have taken his name, I will not show him similar disrespect. launched her own presidential campaign in 2019, and her stated positions were even more stringent than Mr Biden’s:

  • A bold target to exceed the Paris Agreement climate goals and achieve a clean economy by 2045;
  • Investing $10 trillion in public and private funding to meet the initial 10-year mobilization necessary to stave off the worst climate impacts;
  • Modernize our transportation, energy, and water infrastructure;
  • Accelerate the spread of electric vehicles, solar panels, and wind turbines;
  • Make big investments in battery storage, climate-smart agriculture, advanced manufacturing, and the innovative technologies that will build our carbon-free future;
  • By 2030, we will run on 100 percent carbon-neutral electricity, all new buses, heavy-duty vehicles, and vehicle fleets will be zero-emission;

As we have previously reported, the Southeastern Pennsylvania Transportation Agency (SEPTA) bought 25 battery-electric buses from California manufacturer Proterra in 2016, but all have been parked since 2020 because they were pieces of feces had problems. In November of 2022, one of the mothballed Proterra buses spontaneously caught fire, which a SEPTA spokeswoman confirmed was traced to lithium ion battery units inside the bus.

  • All new buildings will be carbon-neutral; and
  • Transition our public lands from producing the fossil fuels that represent 24 percent of national emissions to carbon sinks.

In 2023, the United States was the world’s largest crude oil producer, as it had been for the previous five years, and has the world’s greatest proven recoverable oil reserves. In 2023, the US was by far the world’s largest natural gas producer, at 1,035,000,000,000 cubic feet, 76.4% more than #2 Russia’s 586.4 billion ft³, and over four times as much as third place Iran.

The propane fireplace that is our secondary heat source.

Mrs Emhoff would curtail our oil and natural gas production where she could, raising prices for consumers, and sending more of Americans’ hard-earned dollars to foreign countries to buy oil and natural gas, and, of course, cut the number of jobs in oil and natural gas production in the US.

That is all pie-in-the-sky, and four years of economic reality ought to temper her proposals, but it tells us that Mrs Emhoff doesn’t care about what the American people actually want, as measured by our own economic choices. We vote every couple of years for political candidates, but we vote every single day of our lives with our economic choices. Those people buying gasoline-powered vehicles are voting against the Democrats’ plans to require zero-emission cars and trucks, at least for themselves. Those people buying or remodeling with natural gas furnaces and ranges are voting against the liberals’ stated policies.

The United States has been blessed with tremendous natural resources, including huge oil and natural gas resources. The US also has the world’s largest coal reserves, 250.3 billion tons, 56.1% more than second place Russia’s 160.3 billion tons. Mrs Emhoff and the Democrats would squander that great natural wealth by leaving it untapped, costing the American people wealth and jobs, and sending more of our remaining wealth overseas to buy things we currently produce ourselves.

References

References
↑1 Just because she does not respect her husband enough to have taken his name, I will not show him similar disrespect.
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Philadelphia’s war on the city’s poor

Philadelphia is one of our nation’s oldest cities, founded by William Penn in 1682, and legally incorporated in 1701. An old city, built up rapidly before the rise of the automobile, it has a lot of residential areas built primarily for working class people. Now the city is cracking down on modern living in older neighborhoods.

PPA began cracking down on sidewalk parking and five other offenses. The results are in: There’s plenty of bad behavior.

Enforcement officers have been writing tickets in all neighborhoods in the city, though the violations are more prevalent in denser areas such as Fishtown, North Philadelphia, and South Philadelphia.

by Thomas Fitzgerald | Monday, July 1, 2024 | 5:00 AM EDT

Space is tight on the streets of Philadelphia, and some people seem to consider parking on the sidewalk or blocking an accessible curb cut as a necessity that harms nobody. Continue reading →

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Philly advocates for prostitutes want the johns arrested, but not the hookers

It has always struck me as odd that something which is completely legal to do for free can be illegal to do for money, but such is prostitution and the buying of sex. But an OpEd in Tuesday’s Philadelphia Inquirer raised a point that I suspect the authors didn’t realize:

Want to eradicate the sex trade in Kensington, Mayor Parker? Arrest the people buying sex.

Traffickers and sex buyers perpetuate sexual exploitation and keep the commercial sex trade alive. Philadelphia police should arrest them instead of those who are already exploited. 

by Shea Rhodes, Mary DeFusco, and Ann Marie Jones | Tuesday, June 18, 2024 | 5:00 AM EDT

As experts in sexual exploitation, sex trafficking, and systems of prostitution, we disagree with Mayor Cherelle L. Parker’s recent decision to empower the Philadelphia police to make arrests for prostitution in Kensington.

People in prostitution should not be arrested or charged with prostitution offenses. The practice of prosecuting people in prostitution perpetuates a harmful ideology that they are criminals, rather than people who are being exploited.

Traffickers and sex buyers perpetuate sexual exploitation and keep the commercial sex trade alive. Police should arrest them instead.

Parker’s decision will also create additional barriers for victims attempting to exit “the life” of sexual exploitation. Criminal convictions serve as an additional hurdle for survivors to seek meaningful employment, housing opportunities, immigration opportunities, federal student loans, and more.

Continue reading →

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If the public schools were performing well, there’d be no push for helping people to use private schools.

If Helen Gym Flaherty, the former Philadelphia City Councilwoman and now failed mayoral candidate reads The Philadelphia Inquirer, she must be foaming-at-the-mouth angry at a story in Monday’s newspaper. Mrs Flaherty based her campaign on her support for public schools, and had a campaign appearance in front of the Edward T Steel Elementary School, which she claimed to have saved from “going charter.”

We noted, at the time, that Steel Elementary, was ranked 1,205th out of 1,607 Pennsylvania elementary schools, 1% of students scored at or above the proficient level for math, and 8% scored at or above that level for reading. Another respondent had the charts.

The Philadelphia Federation of Teachers, Mrs Flaherty, and the city’s political left are aghast that state money could be used to private schools, but there’s an obvious point to be made: if the public schools were doing a good job, there’d be no real pressure for private schools! Continue reading →

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Once again, the hoitiest and the toitiest rally in favor of #Hamas So, what happens to the Stanford grads when it comes to their employment prospects?

Stanford University, 2024-25 tuition only: $21,709 per quarter, a private university in the Pyrite State, has a joyous image of commencement featuring a pretty, blonde girl openly smiling and cheering and clapping her hands in the California sunshine headlining the university’s website main page, or at least they do on Monday, June 17th, at 7:42 AM EDT. Stanford, one of the truly prestigious universities in the United States, sort of an Ivy League of the West school, attracts students from around the world, applying in a highly selective environment.

One would think that, as savvy and smart as those students are, they’d occasionally check the news, and ought to have seen stories noting that corporations which recruit top students are wary of hiring those who’ve been taking part in the pro-‘Palestinian,’ pro-Hamas demonstrations which have taken place. Continue reading →

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Jonathan Zimmerman, get your head out of the clouds! Well heeled Ivy League professor wants Ivy League students to forget high paying "sellout jobs", go into social justice fields, and then whine on TikTok about how underpaid they are

We have previously noted University of Pennsylvania professor of education and history and Philadelphia Inquirer columnist Jonathan Zimmerman on several occasions. Dr Zimmerman has been very supportive of the freedom of speech, but he’s just managed to miss the point in his latest writing.

The biggest problem at Penn is matching what we say about student careers with what we do

Half of our undergraduates enter the fields of consulting or finance. Penn talks the talk of public service, then teaches young people to line their pockets.

Continue reading →

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Baristas unionize, coffee shop owner closes the doors

In the heyday of unionization, unions were representing workers who actually had some skills, workers who could not easily be replaced, because their skills were needed to do their jobs, and it took a long time to develop those skills. Perhaps, just perhaps, pulling a cup of coffee isn’t that difficult a skill to learn?

Well, perhaps being polite is harder to learn than pulling a cup of coffee!

All OCF Coffee House locations close permanently, a week after workers moved to unionize

Continue reading →