What Economic News?

Want to know what economic data is being released soon? What are the important ones to know? Is there a consensus forecast?

The answer to these questions and more can be found on the Bloomberg Economic Calendar page.

FREAKONOMICS: $2.99 GAS

There is an interesting post on the Freakonomics blog today. It concerns a new program Chrysler is offering buyers of vehicles that have marginal to poor fuel economy. These vehicles would have to be discounted considerably to sell at current fuel prices.

My comments are below. Read the original post. There are already quite a few comments.

Dear Steven Levitt,
A few comments concerning your post "$2.99 Gas".

"I believe consumers systematically exaggerate the importance of gas prices to their budgets. The typical American just doesn’t spend that much money on gas."

Below is another way of looking at fuel cost impact on consumers.
Average miles of 12,000 per year.
21 miles per gallon @$2.10 = 10 cents of fuel per mile. Cost per year, 12,000 miles. @ $2.10 = yearly cost of $1,200.
21 miles per gallon @ $4.20 = 20 cents of fuel per mile. Cost per year, 12,000miles. @ $4.20 = yearly cost of $2,400.

Where in the household budget does this $1,200 come from? Certainly not from a HELOC [Home Equity Line of Credit]. Possible answer: Consumer credit cards. Other readers may want to look into this.

Ways this could be worse for a group of drivers, perhaps 10% of total.

• Driving a vehicle that gets less than 21 MPG [16 MPG?]
  
• Driving more miles per year [20,000?]

This group will see the costs below.

• @ $2.10 a gallon, 16 MPG, 20,000 miles per year = $2,625
• @ $4.20 a gallon, 16 MPG, 20,000 miles per year = $5,250

This group sees a > $2,000 increase in yearly fuel costs. Certainly not a paltry sum.

A very interesting article can be found at http://www.boston.com/news/local/massachusetts/articles/2008/05/06/frustrated_owners_try_to_unload_their_guzzlers/
A few selected sentences are below.

• "SUV sales for the month of April alone fell 32.3 percent from a year earlier and small car sales rose 18.6 percent."
• "For example, wholesale prices of used small cars increased from $8,480 to $9,240 between December and March as gas prices rose from $2.98 to $3.22 per gallon."

THE MARKET is indicating that small cars are more valuable. Consumers are responding to fuel price signals.

Regarding the credit card program that Chrysler is offering. This is just a financial product. There are few to no barriers that keep Ford and GM from offering the same product. The credit card issuers are probably having high level sales meetings with them right now. The Chrysler gas program could and probably will be matched in days and weeks [just like 0% financing and employee pricing programs].

"Average New Vehicle Gets 21 MPG" [2006 data]
Source: http://www.consumeraffairs.com/news04/2006/07/fuel_economy.html

"The number of miles driven per year is assumed to be 12,000 miles for all passenger vehicles."
Source: http://www.epa.gov/oms/climate/420f05004.htm

Thanks for covering this timely and interesting topic.

Sincerely,
David Damore

FREAKONOMICS: IS CREDIT DUE?

The Boston Celtics analyze game events in a systematic way. The use some sort of tagging or labeling system. This allows them to analyze what is working and what is not for individual players, situations and floor locations etc.

Should the analyst get credit if Boston wins?

The coaching staff does analysis; they get credit when they analyze, strategize and effectively implement a wining game plan.

My Reply to the Freakonomics post is below

The point may be that when events are labeled or tagged in a system they can be analyzed. Proper analysis leads to learning. Learning leads to knowledge. Applied knowledge leads to desirable results.

The Freakonomics post may spur the imagination of a reader and they will create the next _____ [fill in the blank].

Too many people think there are no opportunities. Thinking, creativity, ideas, analysis and applied efforts will lead to…

Mr. Zarren is attempting to do something that may or may not be successful. But he is DOing something.

People should be encouraged to THINK and be Creative and to give it a shot, win or lose.

What do you think?

David

— Posted by David Damore

WSJ: THE JUGGLE - Why We Now Have No TV: And (Kind Of) Like It

From The Juggle
WSJ.com on choices and tradeoffs people make as they juggle work and family.
Posted by Sara Schaefer Munoz

Great article in the Wall Street Journal.

One columnist and her family go TV free.

Read the article and a bazillion comments HERE.

My comments are below.

Do you get paid to watch TV?
If not why waste your time with it?
You live more, learn more and become more by investing your time in activities that benefit YOU & YOUR FAMILY.
Read, learn, do, succeed... Try it.
You might actually enjoy a life free from the grips of the boob tube.

David

Freakonomics: Who Hires During a Recession?

Interesting question. The original post can be found here [see #12] or read my comments below.


Almost all firms & industries hire and replace employees all the time [recession or not].

People are fired [need to be replaced], people quit [need to be replaced], business is growing [more people need to be recruited and hired].

In the instance of a business liquidating, everybody loses their jobs and no one is hired.

Every few months I get calls/emails from mortgage firms looking to hire me [it is not my industry and I see it as an unappealing option].

Almost every firm and industry is hiring all the time.

Airlines might be an exception to the rule.

If there is an HR person in the airline industry reading this post… How do you see it?

INFLATIONARY PRESSURES

Cable TV Price Inflation

People are concerned about rising prices. Food, fuel and cable TV. Food and fuel are relatively new in the inflation game. Cable TV prices have been outpacing inflation for what seems like forever. You will find a New York Times article here about cable price inflation from nearly 20 years ago.

Several years ago it was reported here that "The average cable bill rose 5.6 percent in 2005 — to $43.04."

Question #1

At what price would you cancel your pay TV service [$50, $100, $200, $400 per month]?


Question #2:

How long can the price of a product or service increase before revenue decreases by either substitution or ending use of the product or service?