Opinion

Felix Salmon

Chart of the day: The USA’s lost decade

Felix Salmon
Mar 2, 2010 15:05 UTC

Free Exchange reprints this fantastic chart from the Economist:

ChartsUSDecade_0.jpg

The really fascinating charts, for me, are the second two. The one in the middle shows how consumption grew a little bit faster than income through the 70s, 80s, and 90s — but then the gap between the two completely spiralled out of control in the 2000s. There’s your credit boom and inevitable crunch right there.

And I can’t help but look at the payrolls chart in the light of the anti-immigration sentiments of Lou Dobbs and the like. It’s a lot easier to welcome foreigners to your shores when your payrolls are growing by 20% a decade than when they’re shrinking.

Incidentally, I think there’s a misprint in the graphic: the third chart shouldn’t have that asterisk, since the growth rate in that one is per decade, not per year. It seems silly to do it that way, I would have made all the growth rates annual, and maybe added a population-growth or bar to the final chart.

COMMENT

I was born in Indiana, Doctorjay. How am I an immigrant?

In the second chart, it shows an increase in personal income. In the third, it shows a decrease in non-farm payroll. Did farmers get a raise big enough to cover that spread, or are these charts using separte sets of data?

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House-price chart of the day

Felix Salmon
Jan 12, 2010 14:45 UTC

This is my new favorite toy: a fabulous interactive house-price charting tool from the Economist.

After playing around with this chart for a while, it seems to me that the US housing bubble was really not that big by international standards. So why was its bursting so harmful? Partly because of the sheer size of the US market — but more importantly because the US saw a much greater deterioration in underwriting standards than most other countries, and therefore faced a much larger wave of defaults.

It seems to me that different bubbles are associated with different degrees of harm. A stock-market bubble is bad, a housing bubble where the buyers can afford their homes is worse (because it’s still leveraged), and a housing bubble where the buyers can’t afford their homes is the worst of all. In the US, of course, we had the latter type.

(Via Kedrosky)

COMMENT

I’ve been looking at the Australian housing market, which after a small dip at the end of 2008 is back to booming. There doesn’t seem to be any relationaship between interest rates, population increase or new construction and the price of houses. see graphs http://demokratia.jesaurai.net/2010/10/1 0/the-fallacy-of-supply-and-demand/

Herd mentality and loss aversion seem to be better explainations. The expectation of rising prices raises prices, and the expectation of falling prices lowers them. This is why fiscal and monetary policy has little direct effect. They only act as a psycholgical drivers on those that beieve in the accepted group theories of supply and demand.

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Information consumption charts of the day

Felix Salmon
Dec 9, 2009 14:50 UTC

I love these charts, from a new paper (37-page PDF here) on how much information Americans consume each day:

2.tiff 4.tiff 5.tiff

The last one is the most surprising to me — but it’s largely a function of the fact that a lot of technological prowess goes into compression and decompression of television signals, while that isn’t needed in computer games. As you can see from the hourly chart, we still spend more than five times as much time in front of the telly as we do gaming.

As someone who stares at a computer screen for most of the day, and doesn’t even have a television, I’m a bit surprised at the fact that people still seem to be spending far more time with the latter than with the former. Indeed, even radio still seems to outweigh computers in terms of total hours used — and over half of radio listening still takes place at home, as opposed to at work or in the car, according to the Arbitron data used for this report.

But look closely at the report, and things become blurrier. It’s not clear what they did with the radio figures, but it looks to me as though they included time spent in the car but excluded time spent at work. And the computer figures exclude time spent at work, although it’s unclear what they do with people who work from home.

In other words, this isn’t total information consumption: it’s just the information we consume at home and in our cars, rather than at work. Given the increasing erosion of the line between work and home, I do wonder why that decision was made. But in any case, even after excluding the workplace, Americans still consumed 3.6 zettabytes of information in 2008, and will surely consume more in 2009. And the information we get from computers (as opposed to computer games) is barely visible in that number.

(HT: Matlin)

COMMENT

If I listen to the radio while interneting, it that time counted double?

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Information visualization of the day, unemployment edition

Felix Salmon
Dec 8, 2009 22:53 UTC

Latoya Egwuekwe deserves some kind of prize for this. Looking at the unemployment rate is one thing; really seeing it is another. Very, very well done.

(Via Fallows)

COMMENT

Ha! Ya gott me Saroff. Only, I’m not Goetz.

Felix: ‘Cause it was recently reposted there. And you love Gawker. They write about bicycles all the time.

Doesn’t matter. I’ve annoyed even myself here.

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Chart of the day, unemployment edition

Felix Salmon
Nov 9, 2009 16:45 UTC

Another great chart from the people at nytimes.com: this one shows how unemployment has risen among various different segments of the population, since January 2007. Here’s what’s happened to the 12-month average employment rate for black men without a high-school degree under 25 years old:

unemp.tiff

Meanwhile, here’s the chart for white women ages 25 to 44 with a college degree:

women.tiff

COMMENT

Mike says the chart shows “confirmation of the differences in productivity across groups”. Doesn’t that just demonstrate the institutionalized lack of equality of opportunity that even “cold-hearted” Republicans have been historically (past tense emphasized) supportive?

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Chart of the day, underemployment edition

Felix Salmon
Oct 12, 2009 20:43 UTC

The Atlanta Fed charts how the number of people who work part-time but would like to work full time has doubled since the beginning of the recession. That’s not normal, even by the standards of previous harsh recessions:

image3411.jpg

Anybody care to hazard a guess why this time is so different? The underemployment rate is a whopping 17%, so it’s not just that the rate has doubled from a low base.

(Via Rampell)

COMMENT

how about too much in the way of average marginal tax rates, unemployment benefits and/or safety nets? i mean, there’s never been less incentive to work.

Chart of the day: FHA delinquencies

Felix Salmon
Oct 9, 2009 14:26 UTC

FHA-delinq-&-Mother-of-All-.jpg

Whitney Tilson passes on this chart, showing delinquencies at the FHA. He notes that the FHA is a crucial source of support for the housing market right now, providing a whopping 23% of all mortgages. If you have a subprime credit rating of 600, you only need to put 3.5% down to get an FHA loan; even if you have a positively wrecked credit rating of 500, you can still get a mortgage with only a 10% downpayment. And the people brokering a lot of these loans are often the selfsame shady characters who represented the worst face of the subprime bubble.

How high will the 2008-vintage delinquency rates eventually go? That’s the crucial question, since those mortgages represent more than 20% of the entire FHA portfolio. They’re already high, at 19.4%, but they could go much higher, given that the 2007-vintage loans are over 30%.

We’ve seen this movie before; we know how it ends. There’s going to be an FHA bailout, and it’s going to be big. The only question at this point is just how big it’s going to be.

COMMENT

It’s not the graph so much as it is need to look at the TRIPPLING in the NUMBER OF FHA INSURED LOANS.

The problem is that the verticle axis is a percentage, and it doesn’t convey that though the percentage of defaults may be down, the NUMBER of defaults is exploding

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Map of the day, McDonald’s edition

Felix Salmon
Sep 23, 2009 17:59 UTC

mcd_us_high.jpg

This beautiful map comes from Stephen Von Worley, who has mapped the contiguous USA by how far any given point is from the nearest McDonald’s. Turns out the McFarthest Spot, somewhere in South Dakota, is 107 miles, as the crow flies, from a Golden Arch. There’s something for South Dakota to be proud of!

(Via Matthies)

COMMENT

Being from South Dakota…I can tell you there is no Mcdonalds in Glad Valley or Meadow SD. Both towns are less than 100 people…What was he using for his information

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Silly chart of the day, data-fitting edition

Felix Salmon
Aug 29, 2009 22:37 UTC

Paul Kedrosky finds this chart in a Bloomberg story: it’s the kind of thing which really reinforces one’s belief in the wonders of data-fitting.

japangraph.jpg

The story isn’t actually particularly clear on exactly what the graph is showing, and specifically what “adjusted for currencies” means:

The Nikkei doubled between October 1998 and April 2000 in dollar terms, as the chart illustrates. The S&P 500 has risen 34 percent since March when the Dollar Index, a measure of the dollar against currencies in six major U.S. trading partners, is factored in.

So it seems that the BofA analysts who came up with this chart first converted the Nikkei to dollars, only to then convert the S&P 500, which was in dollars all along, out of dollars. Hm. And they chose pretty random start points: what makes 1980 in Japan analagous to 1990 in the US?

But the most breathtaking claim of all is right there in the Bloomberg headline: “S&P 500 May Surge 40% in Duplication of Japan”.

In other words, the people who came up with this chart are not saying that the US is going basically nowhere over the long term. Instead, they’re saying that there could be a big further rally in the S&P 500 over the short term. On the basis of the fact that the Nikkei rose sharply, in dollar terms, at the tail end of the last decade.

I feel quite safe in saying that of all the years to compare 2009-2010 to, 1999-2000 are probably not the most useful. And looking at what Japanese stocks did ten years ago will tell us absolutely nothing whatsoever about what US stocks are going to do now. No matter how many clever charts you come up with, or ridiculous justifications for the conclusions of your silly exercise in data-fitting:

“Even in economies overcoming credit booms, rallies can be powerful and last much longer than you think,” Bank of America’s Sadiq Currimbhoy, Arik Reiss and Jacky Tang wrote.

Well yes, if you’re caught up in the exuberant tail-end of a global stock-market bubble, maybe. But that spike in the yellow line that BofA thinks we might repeat on our orange line? Was basically a function of excesses like Softbank having a market capitalization of $200 billion. If you want to bet on that kind of thing happening in the US over the next year or two, feel free. But I’ll happily bet against you.

Update: Henry Blodget has the original Merrill report; it seems to admit how tortured the numbers it’s using are, and doesn’t go so far as to actually predict a 40% rally from these levels.

COMMENT

The real ridiculousness of this chart is how the creator expects the coincidental graph markings (10 years apart and for different economies!) to accurately predict future trends. Why not then just go around and find equally matching charts and use them? Number of Twitter users in Brazil. Holiday sales figures for Krispy Kreme Donuts. Willie Nelson’s popularity over the length of his career. Who knows? Maybe this guy is onto something!

Daniel
http://www.sudlows.com/

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