June 11
A Kaiser survey found that individual premiums between 2010, when ObamaCare was enacted, and 2022 were up 58%. Family premiums rose more than 63%. Inflation was only up 36% over that period. You didn’t build that, President Obama did, and terribly. ObamaCare increases demand without an offsetting increase in supply. Very importantly, ObamaCare had no impact on overall health outcomes. Behavior did not change.
https://www.wsj.com/articles/your-government-at-work-a93c4fb3
Markets and Stocks
The market is fine. The trend is to the upside. I think market leadership will broaden out, more stocks will do well.
I really like industrials particularly CAT, DE and ETN.
Nvidia remains a great investment but I would wait for its price action to stabilize before buying more or starting a new position.
Fed policy will not change at the meeting of the FOMC which begins today and finishes Wednesday. In his press conference after the conclusion of the meeting, Powell will reiterate that the Fed is committed to its 2% inflation target. The Fed will signal just one or two rate cuts before year end. But as always, it will all depend on the data.
For the Fed to achieve its 2% inflation target, wage inflation must slow to around 3.5%.
The labor market is loosening but for prime age workers 25-55 years the employment market is strong.
In short, what matters is the relative tightness of the labor market, not the level of gains.
The unemployment rate is the best measure of tightness and a 4% rate, up from the 3.4% low is consistent with a tight but loosening labor market.
@jasonfurman The payroll survey shows 2.7m jobs added over the last year including 272K added last month. The household survey shows 0.4m jobs added over the last year including 408K lost last month. Why? And what does it mean?
Good thread here. In short, what matters is the relative tightness of the labor market, not the level of gains.
The big loser in the EU elections for parliament was the Green Party. Climate change is real. But politicians and environmentalists must start to recognize two facts, at the moment green energy is more expensive than carbon energy and effective action on climate change requires a globally coordinated effort.
Economics
NBER working paper 32552 analyzed the 2021 expansion of the Child Tax Credit.
The 2021 Child Tax Credit (CTC) expansion increased government benefits to families, and especially to families with the lowest incomes.
Economic theory predicts that this policy intervention would have led to a reduction in labor supply among adults in those families.
Our review of available research suggests that employment within broadly defined demographic groups was not reduced by the 2021 CTC changes.
However, we present evidence that employment was reduced among mothers with relatively low levels of education — the demographic group that was most affected by the CTC expansion.
For the 2021 CTC expansion, theory and evidence were in the strongest alignment when the research design that produced the evidence was most focused on the demographic groups most likely to be affected by the expansion.
https://www.nber.org/papers/w32552
Two points: the increased benefits did reduce employment among mothers with low levels of education. Dependency among this group increased. Second, if the public wants more support for families then the public must be willing to pay for it. How about instituting a national sales tax to fund any expansion of the welfare state? Do you think support for expanded income transfers to families would increase or decrease if everyone, everyone had to pay the cost through the national sales tax?
Politics
Elections in 27 countries for the European Parliament ended on Sunday with early projections giving far-right parties a strong showing, a result that, if confirmed, would amount to a powerful gauge of voter dissatisfaction and a stinging rebuke for the political mainstream. See Bloomberg.
My reaction: Europeans strongly oppose illegal migration. Europeans are fed up with slow economic growth and with high energy prices.
On free speech and social media, a writer for the New York Times says:
Here is a puzzle at the center of online life: How should we balance freedom of speech with the flood of slanderous statements, extremist manifestoes and conspiracy theories that proliferate on the internet? The United States decided decades ago to let private companies solve that quandary themselves. The Supreme Court made this position official in three major rulings in the 1990s and early 2000s.
But lawmakers aren’t sure about this arrangement, now that giant online platforms are the new town square. The left says Facebook, YouTube, TikTok and the rest should take more content down, especially hate speech and disinformation. The right says the companies, which removed posts about Covid and the 2020 election, shouldn’t set the rules for discussions about politics and culture.
My thought: when the New York Times stops shoveling progressive BS, I will pay more attention to the views of the paper regarding free speech
Chicago is in an economic doom loop.
@John Arnold posted: Debt/pension obligations are throwing Chicago into doom loop of poor services -> higher taxes -> loss of tax base, with 6 companies having relocated in past 2 yrs:
Boeing -> VA
Tyson -> AR
Citadel -> FL
Catepillar -> TX
TTX -> NC
Guggenheim Partners -> FL
Science
NBER working paper 32548 studies hurricane forecasting.
What is the impact and value of hurricane forecasts?
We study this question using newly-collected forecast data for major US hurricanes since 2005.
We find higher wind speed forecasts increase pre-landfall protective spending, but erroneous under-forecasts increase post-landfall damage and rebuilding expenditures.
Our main contribution is a new theoretically-grounded approach for estimating the marginal value of forecast improvements. We find that the average annual improvement reduced total per-hurricane costs, inclusive of unobserved protective spending, by $700,000 per county.
Improvements since 2007 reduced costs by 19%, averaging $5 billion per hurricane. This exceeds the annual budget for all federal weather forecasting.
https://www.nber.org/papers/w32548
Good hurricane forecasting pays for itself. AI will improve hurricane forecasting.
Sociology
Tyler Cowen summarizes a Washington Post article: It was less than two years ago that officials in British Columbia, the epicenter of Canada’s drug overdose crisis, unveiled what they called “bold action.”
The experiment, backed by Canada’s police chiefs, was to decriminalize the possession of small amounts of some drugs — including methamphetamine, cocaine, fentanyl and heroin — for personal use. The approach, officials said, would reduce the stigma that can discourage users from seeking treatment and the criminal records that can prevent them from rebuilding their lives.
If the three-year trial produced results, it could be a template for the rest of the country.
But now, with complaints about public drug use rising and a provincial election looming, they’ve abruptly reversed course. The center-left New Democratic Party government, which championed the policy, last month received approval from Ottawa to recriminalize drug possession in most public spaces. See Marginal Revolution.
My words: addicts do not seek treatment. Something bad enough and significant enough has to happen before addicts realize change is necessary. The public hates seeing addiction up close. Naples would not tolerate a “shooting gallery” around 5th Avenue.