The 2011 Microrecession in U.S.-China Trade Data

Last week, the U.S. Census Bureau issued the latest data it collects on the balance of trade of goods and services between the United States and China. The chart below shows what we find when tracking the year-over-year growth in the amount of U.S. imports from China and U.S. exports to China from January 1985 through September 2011, which provides an indication of the relative economic health of both nations.

What we find in the chart above is that the rate of growth of what the U.S. imports from China was very low in September 2011, at what we would describe as being "near-recessionary" values, continuing the pattern we've been observing since June 2011.

This indicates that the economic sluggishness most people perceived during the summer of 2011 was real, because a growing economy would tend to pull in more imports.

But we also see that China's economy is also going through its own slowdown, although it appears to still be growing more strongly than the U.S. economy.

Switching over to our doubling rate charts, we see that U.S. exports have sustainably doubled in value four times since January 1985, and are nearing the fifth doubling line:

We observe that the pattern of U.S. export to China since 2008 is very different from the preceding 23 years - it appears as though U.S. exports to China have begun following a seasonal pattern, with the peak in exports occurring in December.

Meanwhile, we find that China's exports to the United States have been growing at a much slower pace since 2008:

The U.S.' imports from China typically follow a seasonal pattern, with the peak occurring between the months of August through October, which coincides with the stocking of consumer goods for the Christmas shopping season in the United States. Although the value of the goods and services the U.S. imports from China is at near record levels (they hit an all-time high in August 2011), the quantity of goods being imported from China into the U.S. is falling.

So how can the value of what the U.S. imports from China be near its all-time record while the volume of goods being shipped is falling? Easy! It's because the value of the U.S. dollar is falling with respect to the value of China's currency:

To put it bluntly, the falling value of the dollar is making it relatively more expensive to buy imports from China than it was a year ago. And that's why U.S. port traffic is down, and U.S. port employees are working less, even though the U.S. appears to be spending more money on Chinese imports this year as compared to last.

And most paradoxically, President Obama is demanding China do more to allow the U.S. dollar to fall with respect to the Chinese yuan, even though it's clearly already happening and is producing the effects he desires.

But then, it's not like President Obama pays much attention to serious economic matters of any kind, unless they reinforce his mispreconceptions.

Image Credit: The Economist

Too Many *!@#$^& Friends!!!

Is it time to clean up your "Friends" list?

It was for me. I finally got to the point where Facebook was stopping me from "liking" any more pages, accepting any more friends. Basically, I was in social media jail! If you can't even join YOUR OWN new page, you've got too many connections! If were to Unlike my favorite page for any reason, I couldn't add it back. It was time for me to clean house. Maybe it is for you, too? Here's how I approached it!

The first thing I chose to do is eliminate business, ministry and "cause" pages so that I'm focused more on relating to actual people. You'll be surprised how many untended pages you might be connected to. Also, when you go through your list you'll see a lot of people have duplicate profiles. Housecleaning was much needed for me! I had sent Friend Requests to so many people with cute faces that I would never meet, wasn't interested in meeting and often didn't even speak English.

I went through a phase where I "friended" and accepted requests from almost ANYBODY. I guess I felt like I was getting my name out there. You may have done the same. The funny thing is this: my connections with real people have exploded over the last several days after doing a little bit of housecleaning. That means I was probably missing some real connections in the cluttler of my newsfeed and pages.

There are studies out there that say we can only truly manage 150 online relationships anyway. Therefore, the focus should be on building the best, most fruitful, most fulfilling 150 we can!! That's my new goal...wonderful relationships with more of the right people!

Blessings!

Income Inequality by Age Group in 2010

Which age group in the U.S. has the greatest amount of income inequality among its members? The choices are:

1. Age 15-24


2. Age 25-34


3. Age 35-44


4. Age 45-54


5. Age 55-64


6. Age 65-74


7. Age 75 and older

We won't keep you in suspense - the chart below reveals the answer!

Are you surprised to see that teens and young adults between that ages of 15 and 24 have the greatest amount of income inequality, as measured by the Gini Coefficient?

If it helps understand why, consider that this age group really represents the point at which Americans enter into their first jobs. It covers everyone from those who haven't graduated from high school, but are working in part-time, minimum wage level jobs on up through recent college graduates in difficult, high paying disciplines like petroleum engineering.

Meanwhile, we see that the level of income inequality drops dramatically for adults between the ages of 25 and 34, which corresponds to individuals who have fully entered into their careers. The amount of income inequality by age group then increases through Age 65-74.

To a large extent, what you're seeing here is the effect of education level upon the lifetime earnings of individuals, where those with higher levels of education tend to have greater income growth over time.

But that doesn't explain it all. Most individuals hit their peak earning years in their mid-to-late 40s, which wouldn't explain why income inequality continues to increase for older individuals.

Here, we need to consider the role of investment income. Assuming that the most successful income earners also consistently save or invest a portion of their income over time, if they realize positive rates of return, they can continue boosting their income above and beyond what they earn through wages and salaries.

That's a big reason why we see that individuals Age 65-74 have the second greatest amount of income inequality by age group - the most successful individuals are benefiting from a lifetime of saving and investing, while others within this age group earn much lower amounts of income, or none, through investing.

We next see that income inequality falls dramatically from Age 65-74 to Age 75 and older. This drop largely corresponds to the depletion of retirement savings that individuals set aside during their working years, which reduces the amount of income they might receive from the reduced principal they have invested.

Meanwhile, for this age group, individuals who were less successful in establishing retirement savings benefit from government income transfer programs like Social Security, which provides disproportionately large benefits to the people who earned the lowest incomes during their working years.

We'll close by sharing Payscale.com's chart showing the typical incomes earned by individuals just graduating college with degrees in the top-paying fields of 2011:

Best Undergrad College Degrees By Salary

Methodology Annual pay for Bachelors graduates without higher degrees. Typical starting graduates have 2 years of experience; mid-career have 15 years. See full methodology for more.

Data Source

U.S. Census. Current Population Survey. Annual Social and Economic Supplement. Table PINC-01. Selected Characteristics of People 15 Years Old and Over by Total Money Income in 2010, Work Experience in 2010, Race, Hispanic Origin and Sex. Accessed 13 November 2011.

The S&P 500 Through 11/11/11: Continuing on Track

Since our last update, the S&P 500 has largely continued to move on track:

We can confirm however that investors appear to have shifted their attention to the fourth quarter of 2012, rather than 2012-Q3, in setting their forward-looking focus for setting today's stock prices:

Given small increases in the expected rate of growth of dividends per share in the fourth quarter of 2012 that have occurred since our last public update, we can expect stock prices to run to the high side of the forecast range shown on our first chart (as the purple zone). We may adjust this zone accordingly to account for that change in our next update.

Since is this the first time in a while that we've shown both these charts together, we'd like to point out that it they seem to provide a pretty good evidence demonstrating what's called the "unit root hypothesis" in economics, where the effect of a shock (in this case, the emergence of deflationary expectations at specific points of time from April-August 2010, and later in March-April 2011, and more significantly in July 2011), resulted in a significant, and so far, permanent shift in stock prices.

Overall, the trajectory of stock prices with respect to their underlying dividends per share over time more resembles a Lévy flight than they do the result of Brownian motion.

Walking Funny

I was out looking at real estate recently. The agent was walking me to look at condos but she had a funny way of walking. As I followed behind her, I found her extremely difficult to follow because she kind of stopped and started and even swung her legs in a way that it looked like she was about to change directions. To say it was frustrating would be an understatement!  I am a naturally fast walker. I almost ran over her at least twice!  She had said the unit was towards the back of the property but didn't tell me where. I wasn't sure where we were going or I might have gone ahead or walked in front.

Imagine trying to follow or even walk with someone when you aren't sure what direction they're going even moment to moment? I'm still mad thinking about it. I never called her back if I'm honest about it. I really don't want to deal with that stress.  Maybe I'm making too much of it, but you weren't there!

Anyway, here's the point to my true story: do the people around you - those relying upon you for direction - know what direction you're going?  Do you look like you're going one way and then swing back the other at the last second? Do people even know your intended destination?  If not, they might be feeling pretty frustrated right now. I'm sure they love you, so they aren't mad. They might even want to help you get there.  But they have a hard time when you're walking funny instead of walking straight.

11/11/11: Creepy Number Day

Try this math at 11:11 AM today!

Take the last 2 digits of the year you were born, then add the age you will be this year.

If the result creeps you out, well, that's because you're an idiot. Before you feel insulted by this 411 though, don't you have bigger things to worry about?....

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