The Post Turkey Apocalypse, Part 1

It's time once again for Political Calculations' week-long celebration of the most American of American holidays: Thanksgiving!

But this year, we're looking over a grim scene following the aftermath of what we described as the Turkey Apocalypse last year. Has the situation for America's Thanksgiving holiday gotten any better in the following year?

Let's start by looking at the number of turkeys produced in the United States through 2010. Here, we find that the number of turkeys fell by 3 million, or 1.2%, to 244 million, the lowest level recorded since 1989, the year for which our National Turkey Federation first provides data.

That's a small drop compared to the previous year's decimation, which was the largest ever recorded over a single year period of time.

Let's next look at how much America's turkey farmer's are getting per turkey.

Here, after looking at both nominal and inflation-adjusted prices, we find that U.S. turkey producers raked in more money per turkey produced in 2010 than ever before, with the dollar amount of income from each turkey produced rising in real terms by $3.22, from $14.69 to $17.91. That's a 21.9% year over year increase!

Using our Supply or Demand tool, the combination of that apparent increase in price with a decrease in quantity tells us that the price of turkeys has increased in 2010 due to a relative decrease in their supply.

But how can a 1.2% decline in the number of turkeys produced result in a 21.9% increase in their price? We'll tackle that question in our next Thanksgiving week post!

Markets in Everything: Useless Devices

How much demand can there be for a machine that's utterly useless?

Believe it or not, more than you might ever have thought, because Brett Coulthard, the hobbyist who devised the contraption depicted in the video above, is making the leap into entrepreneurship by launching the Frivolous Engineering Company (HT: Core77).

And like many entrepreneurs, he's encountering many challenges as he gets set to introduce a new, improved version of the original useless device, the "Ultimate Useless Machine":

The good news is that all the parts have arrived and production of Version 2 of the Useless Machine has begun, and our on-line store should be up and running in the next few days.

Bad news: Now that production has started we're getting a better idea of the actual labor costs for making the machines and we've had to bump up the price for the 'pre-soldered' Machines from $40 to $45.

The big problem Frivolous Engineering has right now is a shortage of qualified labor. I'm trying to hire someone who is good at soldering but until then (and depending on demand) the pre-soldered machines will most likely be produced only in limited quantities.

Hopefully, he'll get those problems straightened out soon - keep your eyes posted on the new company's website for more details on how to buy the ultimate useless machine for that special someone this holiday season!

The Distribution of Income for U.S. Women in 2010

According to Forbes, Oprah Winfrey earned approximately $290 million in 2010.

That is, quite possibly, the highest income earned by any American in 2010. Going by data from the Social Security Administration, only 81 people in the United States had wage or salary income above $50 million in 2010. Since we can safely assume that most of those individuals at this highest end of the income spectrum would be clustered near the $50,000,000 mark, the odds that Oprah Winfrey actually earned the highest income of anyone in the U.S. in 2010 are very good.

It's all the more remarkable because of how Oprah Winfrey derives her income: by developing and providing entertainment media that successfully targets American women. In a sense, Oprah's annual income represents the direct transfer of the income earned by lower-earning women to her.

To get a sense of the scale of that transfer, we've tapped the U.S. Census' data on the total money income distribution of women in the United States in 2010. Our results are presented in the chart below:

If you're one of the 125,084,000 American women Age 15 or older who earned income of any type in 2010, you can see how you compare with all other women by entering your 2010 income into the tool below. Our tool will tell you what percentage of American women earn as much, or less than you!

Annual Income Data for 2010
Input Data	Values
Your Annual Total Money Income

Your Income Percentile Ranking Among U.S. Women
Your Income Percentile
Approximate Number of American Women Who...
... Earn Your Income or Less
... Earn More Than You

The default income entered in the tool is the approximate median total money income for all women Age 15 or older in the U.S, regardless of whether they work full or part time, or even if they don't work at all or simply volunteer and earn no income. As the estimated median point, half of all women in the United States will have incomes below this mark, while half will have incomes above that amount!

Of course, if you're Oprah, you'll find that 100% of American women earned as much, or less than you. Make that "much less" than you!

We'll close with one final tidbit of information. Oprah Winfrey's estimated $290 million income in 2010 represents 0.0092% of all the income earned by women in the United States in 2010.

Image Sources

The inset images on our chart were taken from the U.S. government's Homelessness Resource Center and Girlshealth.gov web sites!

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

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.

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?....