Tuesday, November 25, 2014

Good news and bad news for workers: corporate profits rose in third quarter


  - by New Deal democrat

The BEA's revised release for 3rd quarter GDP included its calculation of corporate protifts, which rose 1.5% over the 2nd quarter, and once again made an all time high.

This is both good news and bad news.

The good news is that corporate profits, deflated by unit labor costs, also made a new high. This is a long leading indicator, meaning that it usually starts to decline one year or more before a recession starts. This in turn means that more jobs should continue be added to the eonomy over the next year.  Companies with shrinking profits do not hire new workers; companies with increasing profits do.

The bad news, of course, is that corporate profits continue to monopolize virtually all of the monetary gains since the economy started to expand in the second half of 2009.  Wages are still not sharing in the bounty.

I'll have more at XE.com later, and I'll post a link  UPDATE:  Here's the link.  I discuss this release in the broader context of the economy. It is virtually across the board good news.

Sunday, November 23, 2014

Gasoline "Breaks on through to the Other Side"...

... of the oil choke collar.

 - by New Deal democrat

This is from Gas Buddy this morning:



The price of gas has fallen to $2.82 a gallon.  That is lower than at all times in the last 4 years.

Remember that for every $0.10 gas prices decline, after you factor in the typical mileage driven for a vehicle, times the number of drivers in the US, that is something like another $36 billion a year that consumers can save or spend on other goods.

Update:  Here are a few statistics to help understand how much the US consumer is saving on gas.

The average vehicle in the US is driven 11,318 miles/year:

http://www.epa.gov/cleanenergy/energy-resources/refs.html

The average gas mileage in the US fleet is about 24 miles per gallon:

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/13/cars-in-the-u-s-are-more-fuel-efficient-than-ever-heres-how-it-happened/

There are about 250 million vehicles in the US:
http://www.latimes.com/business/autos/la-fi-hy-ihs-automotive-average-age-car-20140609-story.html

That's about 9 billion gallons of gas per month total in the US.

Every 10 cent decline put $900 million dollars a month in consumers' pockets.

Gas now is about 35 cents a gallon cheaper than it was last November. That means about $3 billion dollars this month that can be saved or spent elsewhere.