by Calculated Risk on 8/12/2013 09:53:00 AM

From the WSJ: Spending Cuts in Line With Commitments to Creditors But Economy Continues to Contract. First the good news:

Budget data from Greece's central government showed Monday a primary surplus for the first seven months of the year, turning around a steep deficit seen the previous year, according to the country's Finance Ministry.

The data showed that the primary surplus reached €2.6 billion ($3.47 billion) against a deficit of €3.1 billion a year earlier.

The data, which don't include payments on debt interest, local government and social security fund budgets, show that Greece is likely to secure a primary budget surplus for the year, for the first time in more than a decade.

And then the bad:

Greece's improving fiscal performance, however, has taken a toll on its economy, which is contracting for a sixth straight year under the weight of austerity.
...
Greece expects the economy to shrink by 4.2% this year, though government officials have indicated that a stronger-than-expected tourism season this summer could provide some relief to the economy and result in a milder contraction of some 4% for the year. Many private-sector economists believe that this is too optimistic and that the economy could shrink for another year after the country's jobless rate hit 27.6% in May.

Maybe there will be a change in plans after the German election in September, but right now they are creating an economic wasteland and calling it progress.

by Calculated Risk on 8/11/2013 09:52:00 PM

Monday:
• 2:00 PM ET, the Monthly Treasury Statement for July. The CBO has projected a deficit of $96 billion in July 2013, down $10 billion from July 2012 after accounting for "quirks of the calendar".

Weekend:
• Schedule for Week of August 11th (busy week!)

• U.S. Population Distribution by Age, 1900 through 2060 (hopefully cool graphic!)

The Nikkei is down about 0.9%, and the Shanghai up 0.3%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down 4 and DOW futures are down 30 (fair value).

by Calculated Risk on 8/11/2013 06:34:00 PM

As I follow up to my earlier post on the number of births in 2012, here is an animation of the U.S population distribution, by age, from 1900 through 2060. The population data and estimates are from the Census Bureau (actual through 2010 and projections through 2060).

In 1900, the graph was fairly steep, but with improving health care, the graph has flattened out over the last 100 years.

Note: Prior to 1940, the oldest group was 75+.  From 1940 through 1985, the oldest group was 85+.  Starting in 1990, the oldest group is 100+.

Watch for:
1) the original baby bust preceding the baby boom (the decline in births prior to and during the Depression). Those are the people currently in retirement.

2) the Baby Boom is obvious.

3) By 2020 or 2025, the largest cohorts will all be under 40.

Animation updates every second.

by Calculated Risk on 8/11/2013 11:28:00 AM

This provisional data for 2012 was released in June and shows a possible impact of the great recession ...

From the National Center for Health Statistics: Recent Trends in Births and Fertility Rates Through December 2012. The NCHS reports:

The provisional count of births in the United States for the 12-month period ending December 2012 was 3,958,000, essentially unchanged from the 3,953,593 births (preliminary total) for 2011. The trend in the number of births was down, having declined steadily from the historic high of 4,316,233 in 2007 through 2011 but slowing from 2010 to 2011, and is essentially flat from 2011 to 2012.

The provisional fertility rate in the United States for 2012 was 63.2 births per 1,000 women aged 15–44, unchanged from the rate in 2011. Like the number of births, the trend in the fertility rate was down, having declined steadily from the recent high of 69.3 in 2007 through 2010 but slowing from 2010 to 2011, and is unchanged from 2011 to 2012.

Here is a long term graph of annual U.S. births through 2012 ...

Click on graph for larger image.

Births had declined for four consecutive years, and are about 8.3% below the peak in 2007 (births in 2007 were at the all time high - even higher than during the "baby boom"). I suspect certain segments of the population were under stress before the recession started - like construction workers - and even more families were in distress in 2008 through 2012. And this led to fewer babies.

Notice that the number of births started declining a number of years before the Great Depression started. Many families in the 1920s were under severe stress long before the economy collapsed. By 1933 births were down by almost 23% from the early '20s levels.

Of course economic distress isn't the only reason births decline - look at the huge decline following the baby boom that was driven by demographics. But it is not surprising that the number of births slow or decline during tough economic times - but that appears to be ending now.

My guess is births will increase further in 2013 as confidence slowly improves.

by Calculated Risk on 8/10/2013 06:24:00 PM

From USA Today: Relief at the pump: Gas prices on the decline

The federal Energy Information Administration forecasts 2014 will average $3.37 a gallon vs. an estimated $3.52 a gallon in 2013. That would be the lowest national average since 2010, when gasoline averaged about $2.80.

"Once we get to mid-September, we'll see prices drop 10 to 20 cents a gallon,'' says Tom Kloza, chief oil analyst for price tracker Gasbuddy.com. "Typically, demand drops the last 100 days of the year and bottoms out in December."

Here is the current EIA forecast:

The U.S. Energy Information Administration (EIA) expects that the Brent crude oil spot price, which averaged $108 per barrel over the first half of 2013, will average $104 per barrel over the second half of 2013, and $100 per barrel in 2014.
...
EIA expects the WTI discount to widen to $6 per barrel by the end of 2013 as crude oil production in Alberta, Canada, recovers following the heavy June flooding and as midcontinent production continues to grow.
...
EIA expects the regular gasoline retail price to average $3.59 per gallon in the third quarter of 2013, and the annual average price to decline from an average of $3.63 per gallon in 2012 to $3.52 per gallon in 2013 and to $3.37 per gallon in 2014.

U.S. crude oil production increased to an average of 7.5 million barrels per day (bbl/d) in July 2013, the highest monthly level of production since 1991.

WTI oil prices have been moving sideways over the last month after increasing in early July, with WTI at $105.97 per barrel.  Brent is at $108.22. A year ago, WTI was in the low $90s, and Brent was around $113 per barrel - so the spread has narrowed considerably, although the EIA expects the spread to widen a little later this year.

Using the calculator from Professor Hamilton, and the current price of Brent crude oil, the national average should be around $3.54 per gallon. That is just below the current level according to Gasbuddy.com.

The following graph is from gasbuddy.com. Note: If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent.

Orange County Historical Gas Price Charts Provided by GasBuddy.com