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Unemployment durations

The St. Louis Federal Reserve has added two new series about unemployment. They now track unemployment median (FRED_UEMPMED) and average durations (FRED_UEMPMEAN), in weeks. For whatever reason, the median only extends back since 1967, whereas the average extends back from 1948. I personally prefer to look at median, which is the number of weeks half of the people stay unemployed, because it is less sensitive to truncation (when people abandon job search).

The statistics are a bit worrisome. First of all, there is an unmistakable upwards trend in duration of employment - which is more visible in the average series. The current median is 18 weeks - more than 4 months - the highest it’s been on record. In early 2007, the most recent bottom in employment rate at around 4.5%, it was about 8 weeks. In the 1982 crisis, when unemployment hit 11%, the median unemployment rate was only about 12 weeks.

For a given fixed unemployment rate, if we have longer median unemployment, it means one thing: fewer people are laid off, but when they are, they do not go back to work for a longer time.

There is plenty of room for debate as to why this would be the case. Puritans would tell you that people are getting lazy, and unemployment benefits are just too good. Socialists might deplore that this is a proof of opportunity inequality: a certain class of people is targeted for layoffs, and when they lose their current job, all hope is lost. Skeptics would question the accuracy of the statistics.

Whatever the case, it does not look good to me - unemployment is becoming a serious hardship.

  Link: A paper from the NY Fed   Link: A paper from the SF Fed   Median unemployment duration: FRED_UEMPMED   Average (mean) unemployment duration: FRED_UEMPMEAN   Median unemployment duration and unemployment rate: FRED_UEMPMED and FRED_UNRATE   Book: Unemployment Dynamics in the United States and West Germany   Book: Hardest Times: The Trauma of Long-Term Unemployment

Keep the change?

I heard on the radio recently that with the spike in metals last year, it would be unprofitable for the US Mint to issue pennies — that is, the cost of production and raw materials would exceed one pence. Each penny weighs 2.5g, and is made mostly of zinc, and plated with 2.5% of copper. So the US Mint retails zinc to you at .4 cents per gram.

According to the charts below, zinc topped at around $2 / lb, which is 0.44 pence per gram. (Copper is only about 8 times more costly.) That penny jar is starting to look attractive!

Once upon a time, money was under a metallic standard. Ever wondered why the name, pound sterling? That’s right, it was worth one pound of sterling silver during Edward I. By the way, that’s why you have ridges along the rim of coins: it was to prevent people from scraping tiny bits from existing coins, then using this metal to create new coins. The government, most famously under Nero, engaged in the activity on a more industrial scale. For private citizens, it’s a Federal crime; for government, we prefer the technical term of recoinage. It’s a very graphic and visible way of debasing money. So, if we keep using those pennies, we will have to resort to these gross, ancient means once again.

I have no doubt that, during my lifetime, the pence will be recoined or go the way of the farthing.

  Link: How to debase French cheese - a video   Link: Short descriptive of Nero’s recoinage initiatives   Link: What’s in a pence   Link: Adam Smith, on the origin of the pound   Link: Encyclopedia Britannica, on the origin of the pound, appears to disagree   Link: The farthing ceased to be legal tender in 1960, after 7 centuries of existence   Zinc peaked at 2$ / pound: IMF_PZINC   Copper is about 8 times more expensive: IMF_PCOPP   Consumer price index in the last 200 years: MW_U_S__Consumer_Price_Index_   Book: The Ascent of Money: A Financial History of the World   Book: Coinage in the Roman Economy, 300 B.C. to A.D. 700 (Ancient Society and History)   Book: The Wealth of Nations : Books 1-3 : Complete And Unabridged   Book: Britannica Encyclopedia (Encyclopaedia)   Book: The Decline and Fall of the Roman Empire (Modern Library Classics)

Temperature and Precipitation data

I have added weather data from NCDC. The new data contain monthly precipitation, in millimeters, and average temperature. There are 10,571 new series. It’s not terrific data, and contains a lot of inconsistencies, but it did it for me. Some start around year 1830; that’s only the tail end of the little Ice Age. That brings the current total number of series to 101,702.

Overall, that means access to 24,178,953 data points, or about 237 points per series.

Oh, by the way, for technical reasons, we cannot insert data points before 1753, the year the UK converted to the Gregorian calendar. For instance, we have UK inflation rates from year 1250 or so (a couple of generations after the Magna Carta!) and population data from 1 A.D., but are unable to use them.

  Link: National Climatic Data Center   Link: Blame It on the Rain: How the Weather Has Changed History   Link: The Little Ice Age: How Climate Made History 1300-1850   Temperature in Geneve, Switzerland: temperature geneve switzerland   UK Inflation Rate: uk inflation rate   Precipitation in Oakland, CA: GHCN_PRCP_425724930

If it rains in Brazil, buy Starbucks

In my post about commodities, I mentioned a book called ‘If it rains in Brazil, buy Starbucks.’

Now, I’ve not read the book, but it made me wonder. We know that, for instance, gold miners are leveraged to the price of the underlying. Presumably, the argument in the book is that raining means that the coffee crops will be plentiful, increasing supply, and driving down the price of coffee.

But how about non-vertically integrated businesses at the end of the chain? I know nothing about Starbucks, but let’s imagine for a second that it buys raw coffee, then turns around and retails it. Cheaper coffee means higher profit margins.

But there are so many bits in the chain — oil price and transportation costs, government price controls, contribution of raw coffee material in COGS, etc., that one has to wonder whether the relationship is so simple.

Sometimes it’s just easier to look at the charts. So I downloaded about 6000 precipitation series from all over the world. They range back from 1890 or so. And from what I see, it doesn’t look like a sure thing.

Turns out, by the way, that the economics of coffee is a much discussed topic - most probably because of the IMF involvement in the matter.

  Link: Wikipedia on the economics of coffee   Link: Where coffee grows   Coffee price (raw) and rain in Sao Paulo, Brazil: IMF_PCOFFOTM and%20sao paulo precipitation   Coffee price (retail) and rain in Sao Paulo, Brazil: BLS_CUUR0000SEFP01 and%20sao paulo precipitation   Coffee prices: IMF_PCOFFOTM and IMF_PBEVEW and BLS_CUUR0000SEFP01   Rain in Seattle and in Sao Paulo. Surprising.: seattle precipitation and%20sao paulo precipitation   Retail-raw coffee price spread and SBUX: BLS_CUUR0000SEFP01/IMF_PCOFFOTM - IMF_PCOFFOTM/IMF_PCOFFOTM and sbux   Starbucks equity and rain in Sao Paulo. I see nothing.: stock sbux and sao paulo precipitation   Gold and miners’ equity: daily gold price and stock auy and stock ng and stock bhp and stock rtp   Book: If It’s Raining in Brazil, Buy Starbucks

The End of Energy Obesity: Breaking Today’s Energy Addiction for a Prosperous and Secure Tomorrow

Peter Tertzakian, author of the excellent ‘A thousand barrels a second,’ has a new book out. He discusses it with Jim Puplava in the Financial Sense NewsHour.

I’ve just ordered his new book and haven’t had time to read it yet. Interestingly, he mentions Switzerland, Denmark, and Japan as countries who have a better ‘energy diet’.

In ‘A thousand barrels a second,’ he uses GDP as a measure — during his interview, he talks about quality of life, and I’m not sure what that means. As you can see below, GDP still correlates with energy, but European countries have reduced their dependency on oil.

  Link: financialsense Tertzakian interview   Link: financialsense Rubin interview   Switzerland oil consumption vs gdp: switzerland oil consumption vs switzerland gdp levels   Japan oil consumption vs gdp: japan oil consumption vs japan gdp levels   Denmark oil consumption vs gdp: denmark oil consumption vs denmark gdp levels   Germany oil consumption vs gdp: germany oil consumption vs germany gdp levels   US oil consumption vs gdp: bp oil consumption us vs us real gdp   China oil consumption vs gdp: bp china oil consumption vs china real gdp   Switzerland energy consumption vs gdp per capita: switzerland energy consumption vs switzerland gdp capita   Japan energy consumption vs gdp per capita: japan energy consumption vs japan gdp capita   Book: The End of Energy Obesity: Breaking Todays Energy Addiction for a Prosperous and Secure Tomorrow   Book: A Thousand Barrels a Second: The Coming Oil Break Point and the Challenges Facing an Energy Dependent World   Book: Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization   Book: Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy   Book: The Prize: The Epic Quest for Oil, Money & Power   Book: 7 Deadly Scenarios: A Military Futurist Explores War in the 21st Century

Commodity, retail and equity prices

Every so often, I hear (occasionally populist) arguments assuming that the price of a raw material goes in lockstep with the retail price. This is not always the case, due to various factors, including:

* all commodities markets are thinly traded,
* some commodities, like energy, have large infrastructure,
* future supply depends on current mining projects, weather, and political stability,
* like manufactured goods, there are inventories, or reserves, and
* the quality of reserve varies and its exploitation depends on ability to raise credit and current price, and equity price of takover targets.

The CPM gold yearbook has a chart on commodities and retail prices, if memory serves.

  Light sweet crude oil and price at the pump: oil price and EIA_Annual_All_Types_of_Gasoline_U_S_City_Average_Retail_Price   Jewelry and gold: BLS_CUUR0000SEAG02 and usa daily gold   Coffee: IMF_PCOFFOTM and IMF_PBEVEW and BLS_CUUR0000SEFP01   Gold and miners’ equity: daily gold price and stock auy and stock ng and stock bhp and stock rtp   Natural gas and oil: fred gasprice and fred oilprice   Book: The CPM Gold Yearbook 2009 (Wiley Trading)   Book: If It’s Raining in Brazil, Buy Starbucks

Housing starts hit a 7-month high

Those greenshoots. Sure, it’s not as bad as it was, but still a long way to go to even reach the low levels of previous bottoms, in absolute terms!

  Link: FT.com article   Housing starts for single family homes: fred houst1f   Housing starts for 2-4 family homes: fred houst2f   Housing starts for single and 2-4 family homes: fred%20houst1f and fred houst2f   Housing starts (total), per capita, annual: fred houst / us population

Even more Bureau of Labor Statistics

Another 17000 time series added from BLS. We now have:

* International labor statistics (IN)
* International price index (EI)
* Employment cost index (EC)
* Employment costs for employee compensation (CM)
* Employment benefits survey (EB)
* Employment, hours, and earnings - national (CE)

  Link: CPI data from the BLS   France unemployment rate: france unemployment rate annual   France unemployment rate: france unit labor cost   French labor participation: france labor force participation   Employees with medical care (%): bls employee benefits medical care   Book: Contours of the World Economy 1-2030 AD: Essays in Macro-Economic History

Uploaded Bureau of Labor Statistics CPI data

I once witnessed a heated argument over whether the King of Morocco was briefed (and cared) about the price of milk in Morocco. Don’t let such rumors circulate about you! We warehouse 20 thousand times series from the BLS.

If your butler doesn’t let you in on the street price of bread, find out from us. Without facing the pestilence of commoners.

  Link: CPI data from the BLS   Link: Tornqvist formula used for substitution in the chained CPU   Consumer price index: cpi   Price of milk: BLS_CUSR0000SEFJ01   Whiskey: BLS_bls whiskey cu   Health insurance: bls health insurance cu   Rental and home prices (CA): rent of primary%20residence san jose and sfxr   CPI adjustments (base, substitution): BLS_CUUR0000AA0 and BLS_CUUR0000SA0 and BLS_SUUR0000SA0   Book: Forty Centuries of Wage and Price Controls   Book: Prices and Production and Other Works On Money, the Business Cycle, and the Gold Standard

Hugh Hendry on FT.com

Hugh Hendry sits down with FT. He is a deflationist.

He mentions “prices falling on high street“, which “never happened”
He mentions his outlook on gold, as well as yields of the 30 and 10 year notes. He also mentions money supply.
He mentions China money supply going up 26%, and the FTSE, but I don’t have the data for that (yet).

  Link: ft.com interview   Link: Hugh Hendry's commentary   Consumer price index: fred cpi   Long bond: us long term rate   10 year note: H15_TCMNOMY10_Annual   Money stock: mzm   Gold: daily gold   GDP and inflation (zoom on 1934): us real gdp and us inflation   Dow Jones: mw djia   China/dollar exchange rate: FRED_DEXCHUS   Japan GDP: japan gdp