The Mortgage Delinquency Rate Hits An All-Time High

In two of my classes this week we discussed the housing crisis over the last few years. The latest news is reported in Mortgage loans: Record number are late. According to the article, "In the third quarter, 9.64% of all mortgage loans were delinquent..." and "The combined percentage of loans in foreclosure or at least one payment past due was 14.41% on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey."

In a related article Foreclosure plague: It's spreading, McAllen, Texas is reported to have the fastest growing rate. And with the high unemployment rate, the foreclosure and delinquency rates could go higher. To see a map of the unemployment rates for each state, go to Where does your state rank?

Leggo Your Eggo: There's a Waffle Shortage

That is the title of a news article which you can read here. According to the article, "Kellogg is rationing its Eggo products due to flooding and equipment problems at two bakeries. The shortfall could last through mid-2010." So the solution? The article says "Remaining inventory will be rationed to stores across the country "based on historical percentage of business.""

Why not let the price rise? That way there won't be lines of people waiting to get them or people calling the stores or the stores having to establish waiting lists. Are stores going to set limits on how many you can buy? What if you are the first person in the store, are they going stop you from buying all that is there?

Three years ago strange things happened when Play Station 3 came out. Instead of charging a higher price at first, it was at the normal price. So there were long lines and certain people got first dibs. You will be surprised who. Read about that at this link.

Late Breaking News Bulletin: The depression is over! We're out of the red!

So said an enthusiastic character in the 1934 movie Stand Up and Cheer!. Here is the video clip of the man getting worked up about how everything has turned around. The text is below the clip in case the sound is not good enough.



Here is a link to the video file: We're out of the red!

Mr. Cromwell, I've got great news for you.
The depression is over.
Over, do you realize that.
Factories are opening up.
Men are going back to work by the thousands.
Our farm products are being sold the world over.
Savings accounts are heaping up.
The banks are pouring out new loans.
There is no unemployment.
Fear has been banished.
Confidence reborn.
Poverty has been wiped out.
Laughter resounds throughout the nation.
The people are happy again.
We're out of the red.

Here is the movie's IMBD synopsis: "President Franklin Roosevelt appoints a theatrical producer as the new Secretary of Amusement in order to cheer up an American public still suffering through the Depression. The new secretary soon runs afoul of political lobbyists out to destroy his department." I guess they were trying to make people feel better. Unemployment was 25% in 1933. This was one of the first big roles for Shirley Temple.

Get out of here and get me some money too

That is a line from a song that Peggy Lee (1920-2002) is well known for singing. Below is a video of her singing it with Benny Goodman (1909-86) and his orchestra. KRTU played it on the radio this morning and I have been meaning to post this for awhile. The lyrics are printed below the video.



The video is online at Peggy Lee - Why Don't You Do Right (1943). Here are the lyrics which I got at Why Don't You Do Right.

Why Don't You Do Right

You had plenty money, 1922
You let other women make a fool of you
Why don't you do right, like some other men do?
Get out of here and get me some money too

You're sittin' there and wonderin' what it's all about
You ain't got no money, they will put you out
Why don't you do right, like some other men do?
Get out of here and get me some money too

If you had prepared twenty years ago
You wouldn't be a-wanderin' from door to door
Why don't you do right, like some other men do?
Get out of here and get me some money too

I fell for your jivin' and I took you in
Now all you got to offer me's a drink of gin
Why don't you do right, like some other men do?
Get out of here and get me some money too
Why don't you do right, like some other men do?
Like some other men do

For People Who Still Have Jobs, Women's Wages Have Risen Faster Than Men's During The Recession

This was reported in a Wall Street Journal article called Women's Wages Outpaced Men's During Recession. The increase in median wages for women was 3.2% while it was 2.0% for men. The article gives a pretty thorough run down on how various demographic groups have done during the recession. Men now have an 11% unemployment rate while women have 8.4%.

Being Happy Might Hurt Your Bottom Line

This came up in two articles recently. The first is Don’t Worry, Be Happy: The Warranty Psychology. The article suggests that people are very happy when they make a big purchase like a refrigerator. So they are willing to pay alot for an extended warranty, especially if they got a discount on the product. But the price of the warranty is often too high. If a product has a 10% chance of failure, you don't want to pay more than 10% of the product price for the warranty. But people often do. To avoid this, the article concludes with "The lesson is simple: Stay grouchy while shopping."

The other article is Sadder But Wiser. It discusses research by Joseph Forgas, a professor of psychology at Australia's University. The article says "Sometimes, he finds, it pays to be sad." Also, " a bad attitude makes us more critical of what we are told and less easily duped."

Here is more:

"Not only can a mild malaise keep us from being bamboozled, but we are more perceptive and have sharper, more accurate recall when we're down in the dumps. The professor tested people on their ability to remember items viewed on a cluttered table. On a dreary, drizzly day, people "had better eyewitness memory for what they saw" than those tested "on a bright, sunny day.""

"The Icelandic mood may have been knocked down a peg or two by the collapse of the country's economy, but that may not be such a bad thing. Could it be that Iceland's positive disposition is what got it into such a mess in the first place? If a dour mood dispels credulity, then where better to peddle monumental scams than in a nation awash in good feelings?"

"The method-acting crowd long ago perfected the technique of dredging up memories of life's awful moments to produce compelling stage tears. A similar technique could have business applications. A maudlin and well-timed musing on the death of your childhood dog could save the company millions.

On the flip side, a salesman looking to close a deal should do his best to induce a warm wave of good feelings. Remember, a happy customer is a rather less critical customer. The customer may want to adopt a crotchety counter-strategy akin to the old saw about not going grocery shopping when hungry: Don't do any sort of shopping when you're cheery."

One more thing. Don't have a nice day.

Sports, Economics and Politics Collide When Government Officials Get World Series Tickets

The article is Lawmakers Score Ticket Deal: Baseball Sells Officials Scarce World Series Seats at Face Value, Far Below Going Rate. Why would teams give up profit? My guess is that something else is in the offer, something only politicians can trade. Here is the intro to the article:

"Tickets for Wednesday's World Series game are nearly impossible to come by at face value. But that isn't the case if you are a member of Congress or one of their aides.

Federal lawmakers and people who work for them have gotten their hands on scores of tickets to the sold-out World Series games this year between the New York Yankees and Philadelphia Phillies courtesy of a perk not available to the public.

Major League Baseball and the teams sell a limited number of prime seats to lawmakers and congressional aides at face value, often hundreds of dollars less than the going rate.

The league has sold about 75 World Series tickets to a total of 15 lawmakers or aides in the past week, according to Pat Courtney, a spokesman for Major League Baseball. Mr. Courtney declined to identify which lawmakers and aides sought the tickets.

Because the recipients pay for the tickets, the offer complies with ethics rules for Congress and the executive branch. The arrangement, however, highlights what some ethics watchdogs say is a loophole in recently tightened congressional ethics rules, which ban officials from receiving just about any gifts.

"Anytime you have access to something that regular people don't have, it should be considered a gift," said Melanie Sloan, executive director of the nonpartisan Citizens for Responsibility and Ethics in Washington. "Regular people can't call the Major League Baseball office and get tickets.""

Want Your Neighbors To Know How Much You Made Last Year And Your Net Worth? Move To Norway

Every year the govenment publishes the "skatteliste" or "tax list" "to uphold the country's tradition of transparency." Some people say that this is the way democracy is supposed to work. But not everyone agrees. For example

"Besides providing criminals with a useful tool to find prime targets, he said the list generates playground taunts of my-dad-is-richer-than-your-dad.

"The children of people with low wages are being teased about it in the schools," Stordrange said Thursday. "People with low salaries are being met with comments at the grocery store, 'How can you live on these low wages?'""

The article is Lutefisk and loot: Tax records open in Norway

Some Women Actually Want Polygamy Legalized

The reasons seem to be mainly economic. It was in a
New York Times article. It was an actually an exerpt of another, longer article (link below). Here is what the Times article said:

"Women in Siberia are lobbying to legalize polygamy, a Cambridge University anthropologist reports in The Guardian in London. The critical issue is demography. Population is falling and there are fewer men than women. Caroline Humphrey, the anthropologist, said: “Women say that the legalization of polygamy would be a godsend: it would give them rights to a man’s financial and physical support, legitimacy for their children, and rights to state benefits.” Meanwhile, some Russian nationalists claim that introducing polygamy in the country would provide husbands for “10 million lonely women” and fill Mother Russia’s cradles."

The more in depth article, which discusses research by an anthropologist is 'Half a good man is better than none at all: 'A study of polygamy in Russia suggests we have a lot to learn about how to beat the recession.

Structural Unemployment In The News

In my principles of macroeconomics courses and my survey of economics course we have covered the different types of unemployment. They are seasonal, structural, frictional and cyclical. One of the articles is called Even as layoffs persist, some good jobs go begging. Here is the intro:

"In a brutal job market, here's a task that might sound easy: Fill jobs in nursing, engineering and energy research that pay $55,000 to $60,000, plus benefits.

Yet even with 15 million people hunting for work, even with the unemployment rate nearing 10 percent, some employers can't find enough qualified people for good-paying career jobs.

Ask Steve Jones, a hospital recruiter in Indianapolis who's struggling to find qualified nurses, pharmacists and MRI technicians. Or Ed Baker, who's looking to hire at a U.S. Energy Department research lab in Richland, Wash., for $60,000 each.

Economists say the main problem is a mismatch between available work and people qualified to do it. Millions of jobs with attractive pay and benefits that once drew legions of workers to the auto industry, construction, Wall Street and other sectors are gone, probably for good. And those who lost those jobs generally lack the right experience for new positions popping up in health care, energy and engineering."

The "mismatch between available work and people qualified to do it" sounds very much like how I define structural unemployment in class. This article uses one of the kinds of structural unemployment I discuss in class, when there is a fall in demand for the good or service you help produce. That is what many people face.

Another kind of structural unemployment is when you are replaced by a machine or technology. There is a computer program called "Stats Monkey" that will write a story about a baseball game when it is fed the stats from the boxscore and the complete play-by-play of the game. You can read about it at The Robots Are Coming! Oh, They’re Here. So it looks like some sports writers will be losing their jobs. This is okay as long as computer programs can't write blog entries:)

Crime and Punishment: Required Reading in My Economics Class

Okay, it is not the book Crime and Punishment by Fyodor Dostoevsky (this is a link to the entire book online). I will come back to this book. My students are required to read a chapter by this name from the book The Economics of Public Issues. It is only 5 pages long while the famous book is over 500.

One of the interesting things mentioned in this chapter is research by Steven Levitt. It deals with the question of whether or not more police officers means less crime, everything else being held constant. The problem is that cities with high crime rates will have to hire more police officers (it is the opposite for low crime cities). So it is hard to find a meaningful correlation. But this paragraph from the book shows how he got around that problem:

"In the case of police, Levitt has found that election cycles tend to have a strong independent effect on the size of police forces, enabling him to identify the impact of police on crime rates. Because crime is such a hot political issue, both mayors and governors have strong incentives (and the ability) to push for more police funding in election years. The result is that even though police forces in major cities tend to remain constant in nonelection years, they grow by about 2 percent in an average election year. Although this may sound small, it is (1) large enough to have a significant impact over several election cycles, and thus (2) large enough to detect clearly in the data."

So we can see that crime goes down when more police get hired in election years. Each city gets compared to itself, so the problem mentioned above is avoided.

Now back to the Dostoevsky book. Below are two passages that relate to economics and one sounds like the invisible hand.

"But Mr. Lebeziatnikov who keeps up with modern ideas explained the other day that compassion is forbidden nowadays by science itself, and that that's what is done now in England, where there is political economy." (economics used to be called political economy)

"if I were told, 'love thy neighbour,' what came of it?" Pyotr Petrovitch went on, perhaps with excessive haste. "It came to my tearing my coat in half to share with my neighbour and we both were left half naked. As a Russian proverb has it, 'Catch several hares and you won't catch one.' Science now tells us, love yourself before all men, for everything in the world rests on self-interest. You love yourself and manage your own affairs properly and your coat remains whole. Economic truth adds that the better private affairs are organised in society--the more whole coats, so to say—the firmer are its foundations and the better is the common welfare organised too. Therefore, in acquiring wealth solely and exclusively for myself, I am acquiring, so to speak, for all, and helping to bring to pass my neighbour's getting a little more than a torn coat; and that not from private, personal liberality, but as a consequence of the general advance."

More online versions of the book.

Anxious? High Strung? You Might Be The Ideal Worker

There was an interesting article a few weeks ago in the New York Times magazine called Understanding the Anxious Mind by ROBIN MARANTZ HENIG. It discusses a study of anxiety that looks at subjects from birth as they age. Here is one interesting exerpt:

"LOOKING AT THE neurology of anxiety raises the inevitable question of why a trait that causes so much mental anguish would have evolved in the first place. For the species as a whole, it is most likely an advantage to have some group members who are hypervigilant and who see everything as a threat, always ready to sound an alarm and leap into action. For the individual, though, being inhibited can mean having fewer mating opportunities, not to mention the psychic burden, wearing yourself ragged with a brain that’s always on high alert.

In the modern world, the anxious temperament does offer certain benefits: caution, introspection, the capacity to work alone. These can be adaptive qualities. Kagan has observed that the high-reactives in his sample tend to avoid the traditional hazards of adolescence. Because they are more restrained than their wilder peers, he says, high-reactive kids are less likely to experiment with drugs, to get pregnant or to drive recklessly. They grow up to be the Felix Ungers of the world, he says, clearing a safe, neat path for the Oscar Madisons.

People with a high-reactive temperament — as long as it doesn’t show itself as a clinical disorder — are generally conscientious and almost obsessively well-prepared. Worriers are likely to be the most thorough workers and the most attentive friends. Someone who worries about being late will plan to get to places early. Someone anxious about giving a public lecture will work harder to prepare for it. Test-taking anxiety can lead to better studying; fear of traveling can lead to careful mapping of transit routes.

Kagan told me that in the 40 years he worked at Harvard, he hired at least 200 research assistants, “and I always looked for high-reactives. They’re compulsive, they don’t make errors, they’re careful when they’re coding data.” He said he would bet that when the United States sends people up in space, the steely, brave astronauts were low-reactive as infants, and the mission-control people down on the ground, doing the detail work that keeps the craft aloft, were high-reactive.

An anxious temperament might serve a more exalted function too. “Our culture has this illusion that anxiety is toxic,” Kagan said. But without inner-directed people who prefer solitude, where would we get the writers and artists and scientists and computer programmers who make society hum? Kagan likes to point out that T. S. Eliot suffered from anxiety, and that biographies indicate that he was a typical high-reactive baby. “That line ‘I will show you fear in a handful of dust’ — he couldn’t have written that without feeling the tension and dysphoria he did,” Kagan said."

What If You Discovered That You Liked Celine Dion? (How One Company Tried To Determine Buyers' Tastes And Preferences)

The article is called The Song Decoders and it was in the New York Times magazine a couple of weeks ago. It is about a company called Pandora. I think the intro gives you a good idea of what they do. It is below but the entire article is very interesting and raises the question of "can you scientifically predict someone's tastes for a given product?" In economics, we say that tastes and preferences affect demand but we usually don't talk much about them. That is what makes this article so important. Now the intro:

"On first listen, some things grab you for their off-kilter novelty. Like the story of a company that has hired a bunch of “musicologists,” who sit at computers and listen to songs, one at a time, rating them element by element, separating out what sometimes comes to hundreds of data points for a three-minute tune. The company, an Internet radio service called Pandora, is convinced that by pouring this information through a computer into an algorithm, it can guide you, the listener, to music that you like. The premise is that your favorite songs can be stripped to parts and reverse-engineered.

Some elements that these musicologists (who, really, are musicians with day jobs) codify are technical, like beats per minute, or the presence of parallel octaves or block chords. Someone taking apart Gnarls Barkley’s “Crazy” documents the prevalence of harmony, chordal patterning, swung 16ths and the like. But their analysis goes beyond such objectively observable metrics. To what extent, on a scale of 1 to 5, does melody dominate the composition of “Hey Jude”? How “joyful” are the lyrics? How much does the music reflect a gospel influence? And how “busy” is Stan Getz’s solo in his recording of “These Foolish Things”? How emotional? How “motion-inducing”? On the continuum of accessible to avant-garde, where does this particular Getz recording fall?

There are more questions for every voice, every instrument, every intrinsic element of the music. And there are always answers, specific numerical ones. It can take 20 minutes to amass the data for a single tune. This has been done for more than 700,000 songs, by 80,000 artists. “The Music Genome Project,” as this undertaking is called, is the back end of Pandora.

Pandora’s approach more or less ignores the crowd. It is indifferent to the possibility that any given piece of music in its system might become a hit. The idea is to figure out what you like, not what a market might like. More interesting, the idea is that the taste of your cool friends, your peers, the traditional music critics, big-label talent scouts and the latest influential music blog are all equally irrelevant. That’s all cultural information, not musical information. And theoretically at least, Pandora’s approach distances music-liking from the cultural information that generally attaches to it."

Fed Officials Disagree On Threat Of Inflation

The Fed, or Federal Researve Board, controls monetary policy in the United States. The more money in the economy, the more demand for all goods and services, holding all other factors constant (this total demand is called aggregate demand or AD). The price level in the economy and the total output or quantity produced in the economy is determined by the interaction of AD and aggregate supply (in this case I am interested in something called short-run AS or SRAS-so yes there is a long-run AS but that is not the important issue here).

The graph below shows two possible AD lines. Notice that as AD moves to the right, the price level (and therefore the inlfation rate) will increrase faster and faster. So we need to be careful not to let AD move past QF, which is called the full-employment GDP or level of output. But right now Fed officials disagree as to how close AD is to this point. The closer it is, the more careful we have to be in increasing the money supply.

A Wall Street Journal Article, Fed Vice Chairman Sees Tamed Inflation Threat. Here are the conflicting statements:

""I expect the persistence of economic slack, accompanied by stable longer-term inflation expectations, will keep inflation subdued for some time," Mr. Kohn said. "The substantial rise in the unemployment rate and the plunge in capacity utilization suggest that the margin of slack in labor and product markets is considerable. Long-term inflation expectations remain stable, and inflation itself could move "appreciably lower" should expectations decline, Mr. Kohn noted."

And

"His views contrast with those of others, including St. Louis Federal Reserve Bank President James Bullard, who this week warned that the existence of "slack" could be exaggerated, posing potential inflation problems in the medium term."

In the graph below, I have two AD lines, on representing the comments of each economist. The one for Kohn has alot more room to move to the right without increasing prices or inflation very much. If he is right, then there is alot more the Fed can do to help the economy recover. But if Bullard is right, and if the Fed tries to add money and AD to the economy, prices will rise very quickly because the SRAS line starts getting very steep past QF.

Beeville, Texas Makes The Wall Street Journal

But, unfortunately, the news is not good. It is all about how the town has been impacted by the recession. The article is Drop in Natural-Gas Prices Deflates South Texas. Here are the first few paragraphs:

"BEEVILLE, Texas -- The county clerk's office in this South Texas town was abuzz last year as natural-gas prospectors pored over property records, searching for the next place to sink a well.

But things are much quieter now in the domed courthouse in the town square; natural-gas prices have plunged and energy companies have pulled way back on drilling, particularly in older gas fields like those that dot this part of the state.

People across the country who heat their houses with natural gas have benefited from falling gas prices, which have dropped nearly 65% from their high in July 2008 of more than $13 per million British thermal units, to about $4.78 per million BTUs on Friday.

But here in Beeville, about 100 miles southeast of San Antonio, the price drop has made life a little tougher. The unemployment rate has climbed to 10% from 6.9% a year ago; the jobless rate is the highest here since 1993 and is among the highest in this part of the state. Residents say there are fewer cars on county roads and fewer customers at the local movie theater's evening shows.

Things were different last year, when oil and gas companies flocked here to search out energy reserves. That push boosted the local economy, starting with landowners who saw fatter royalty checks and industry workers who found themselves in strong demand. It spread, too, through companies that provide services to the industry and the restaurants and stores where the additional money was spent."

Smoking As A Negative Externality

I discussed negative externalities in all of may face-to-face classes this semester. Negative externalities are costs imposed on third parties without compensation. There a was recent story called Smoking Bans Protect Nonsmokers' Hearts by LAURAN NEERGAARD, AP Medical Writer. Here are the key experpts:

"More than 126 million nonsmoking people in the U.S. are regularly exposed to someone else's tobacco smoke. The surgeon general in 2006 cited "overwhelming scientific evidence" that tens of thousands die each year as a result, from heart disease, lung cancer and a list of other illnesses."

A review of

"...11 key studies of smoking bans in parts of the U.S., Canada, Italy and Scotland ...found drops in the number of heart attacks that ranged from 6 percent to 47 percent."

"While heavier exposure to secondhand smoke is worse, there's no safe level ... even less than an hour's exposure might be enough to push someone already at risk of a heart attack over the edge."

"within minutes, the smoke's pollution-like small particles and other substances can start constricting blood vessels and increasing blood's propensity to clot — key heart attack factors."

Does The Increase In The Price Of Gold Mean More Inflation In The Near Future?

We are discussing inflation this week in my principles of macro course. In August of 2008, the Consumer Price Index, or "CPI" equaled 219.086 (meaning that what cost $100 in 1983, cost about $219 in Aug. of 2008-that sounds like alot of inflation, with prices more than doubling over this time but it really isn't as I explain below). You can see this data at Consumer Price Index. In August of 2009, the CPI = 215.834. So prices actually fell by about 3.25 points. That is 1.48% of 219.086, so prices are 1.48% lower than they were a year ago. The last year the CPI fell for a whole calender year was 1954.

But, the CPI = 210.228 in December of 2008. So prices have actually gone up since then and they are up by 2.67% (just in 8 months). For a 12 month period, that would be about 4%. But you might have already figured out that prices must have fallen in the last few months of 2008. They also fell in the last few months of both 2006 and 2007. Maybe they will fall again. The CPI was actually 215.693 in June 2009 and dropped to 215.351 in July 2009. With 215.834 in August, we can see that prices are starting to hold steady. It seems like the high unemployment and excess capacity in the economy will keep prices from rising very much.

But, gold recently shot up to 1,045 an ounce, for a new high. That is from the article Gold Jumps to Record as Inflation Outlook Fuels Investor Demand. It said:

"Gold rose to a record on speculation that currencies will depreciate, spurring inflation and boosting the appeal of the precious metal for investors seeking to preserve their wealth.

Gold futures climbed as high as $1,045 an ounce in New York, topping the previous record of $1,033.90 in March 2008. The spot price is headed for a ninth straight annual gain, the longest rally since at least 1948. The dollar fell as much as 0.7 percent against a basket of six major currencies.

“Gold is acting like the ultimate currency,” said Chip Hanlon, the president of Delta Global Advisors Inc. in Huntington Beach, California. “Central banks are following the same monetary course and trying to stimulate and inflate their way back to growth. Everyone’s concerned about the dollar, but it’s not like you can hate the dollar and fall in love with the euro or the yen.”"

As I mentioned earlier, we have actually had a good rate of inflation since 1983. The CPI for all of 1983 = 99.6. Let's call it 100. For all of 2008, it was 215.3. So prices increased 2.153 times. For prices to rise that much in 25 years, they increase 3.11% compouned annually. That is because 1.0311 raised to the 25th power = 2.153. This is very close to what we call price stability. If we started from 1991, over the last 17 years the compouned annual inflation rate is just 2.73%.

Does It Pay To Go To College?

That is one of the questions raised by a recent NY Times Sunday magazine article by DAVID LEONHARDT called The College Calculation. It mentions that:

"The median earnings of full-time workers with bachelor’s degrees was nearly $47,000 in 2007, according to the Census Bureau. The median for someone who had attended college but failed to get a four-year degree was nearly $33,000, and the median for a high-school graduate was nearly $27,000. Compare these numbers with the typical education debt that a college student has on graduation day — $20,000 — and it’s clear that a college education is worth the debt."

But

"One well-known study, co-written by Alan Krueger... offered some support for the skeptics. It tracked top high-school students through their 30s and found that their alma maters had little impact on their earnings. Students who got into both, say, the University of Pennsylvania and Penn State made roughly the same amount of money, regardless of which they chose."

Other studies come to different conclusions:

"Several studies have found a large earnings gap between more- and less-educated identical twins. Another study compared young men who happened to live close to a college with young men who did not. The two groups were similar except for how easy it was for them to get to school, and the upshot was that the additional education attained by the first group lifted their earnings. “College can’t guarantee anybody a good life,” says Michael McPherson, an economist who runs the Spencer Foundation in Chicago, which finances education research. “But it sure ups the odds substantially.”"

Just to show the issue is not fully settled:

"Yet the skeptics do make one crucial point. Nationwide, half of all students who start college don’t end up with a four-year degree. Not only do these dropouts spend less time in class, but they also miss out on the signalling benefit of the degree — a mark of those who, among other things, have the discipline to finish what they start."

The Unemployment Rate Hits 9.8%, But It Has Been Worse

And it was not that long ago it was worse. Look at the history of the annual unemployment rate since 1970 in the graph below. I am giving 2009 a rate of 9.0, the average montly rate so far.



In both, 1982 and 1983, the UE rate was over 9%. Things could get worse, but we are not there yet. Notice that until very recently, we had been doing well. The following chart shows Percent of population Employed. The recent trend is not good, but we are still higher right now than almost every year before 1985.



Now let's look at inflation. It is pretty obvious we have been doing very well for a long time.



To show how bad things were not that long ago, from 1975-83, the average annual inflation rate and the average annual unemployment rate were both 7.7%. Here are the rates for each of those years.



Data sources were:

Consumer Price Index

Unemployment data

Maybe Exercise Can Help Improve Your GPA

There was an interesting article in the New York Times Sunday magazine a couple of weeks ago by Gretchen Reynolds called What Sort of Exercise Can Make You Smarter? Here are some key experpts:

"...exercise changes the structure of the brain and affects thinking."

"...exercise stimulates the creation of new brain cells."

"In an experiment published in the journal of the American College of Sports Medicine, 21 students at the University of Illinois were asked to memorize a string of letters and then pick them out from a list flashed at them. Then they were asked to do one of three things for 30 minutes — sit quietly, run on a treadmill or lift weights — before performing the letter test again. After an additional 30-minute cool down, they were tested once more. On subsequent days, the students returned to try the other two options. The students were noticeably quicker and more accurate on the retest after they ran compared with the other two options, and they continued to perform better when tested after the cool down. “There seems to be something different about aerobic exercise,” Charles Hillman, an associate professor in the department of kinesiology at the University of Illinois and an author of the study, says."

"Why should exercise need to be aerobic to affect the brain? “It appears that various growth factors must be carried from the periphery of the body into the brain to start a molecular cascade there,” creating new neurons and brain connections... For that to happen, “you need a fairly dramatic change in blood flow,” like the one that occurs when you run or cycle or swim."