Political Calculations
Unexpectedly Intriguing!
September 29, 2016

In the course of our projects, we occasionally come across data that is pretty interesting in and of its own accord. In the following chart, we've opted to show the cumulative distribution of individual income for the United States, China and the World, as expressed in terms of U.S. dollars (USD) adjusted for their purchasing power parity (PPP).

Cumulative Distribution of Individual Income, 2013

Since the data applies for 2013, we've also opted to indicate the U.S. poverty threshold for a single individual for that year, $11,490, and have estimated the income percentile into which someone with that income in the U.S. (21.6), China (94.0) or the World (86.6) would fall.

Additional food for thought: Extended Measures of Well-Being: Living Conditions in the United States: 2011, which gives an indication of the relative wealth of the impoverished portion of the U.S. population.

Data Sources

Hellebrandt, Tomas, Kirkegaard, Jacob Funk, Lardy, Nicholas R., Lawrence, Robert Z., Mauro, Paolo, Merler, Silvia, Miner, Sean, Schott, Jeffrey J. and Veron, Nicolas. Transformation: Lessons, Impact, and the Path Forward. Peterson Institute for International Economics Briefing. [PDF Document]. 9 September 2015.

U.S. Department of Health and Human Services. 2013 Poverty Guidelines. [Online Document]. Accessed 27 August 2015.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Person Income Tables. PINC-01. Selected Characteristics of People 15 Years Old and Over by Total Money Income in 2013. Total Work Experience, Both Sexes, All Races. [Excel Spreadsheet]. 16 September 2014.

Labels: ,

September 28, 2016

The Kaiser Family Foundation and the Health Research & Educational Trust have released the results of their 2016 Employer Health Benefits Survey, which gives an idea of how much the health insurance coverage provided by U.S. employers costs.

Those costs are divided between employers and their workers. In the case of health insurance premiums, the cost is shared between U.S. employers and workers. For 2016, U.S. employers will pick up an average of 82% ($5,309) of the full cost of the premiums ($6,438) for workers who select single coverage and an average of 71% ($12,865) of the full cost of health insurance ($18,142) for workers who select family coverage.

U.S. employees however are fully responsible for paying the deductible portion of their health insurance coverage, which is the actual cost of the health care they might actually consume before they would realize the full benefits of having health insurance coverage. For 2016, the average deductible for any type of health insurance is $1,478 for single coverage and we estimate an average deductible of $2,966 applies for family coverage.

Combined together, these costs represent the amount of money that the average American employee can expect to pay before their health insurer would begin paying the majority of costs for the actual health care they consume. The following chart indicates the average annual costs for employers and employees for health insurance premiums and deductibles in 2016.

2016 Average Costs of Health Insurance Premiums and Deductibles for Employed Americans

Most of these values are directly provided in the 2016 Employer Health Benefits Survey, however we've estimated the average cost of the deductibles for employees selecting family health insurance coverage by calculating the weighted average deductible that applies for each major category of health insurance coverage according to the percentage enrollment for each plan type in 2016, whether conventional, Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Point of Service (POS) or High Deductible Health Plan (HDHP).

For 2016, U.S. workers with single health insurance coverage will pay 33% of the combined total cost of health insurance premiums and deductibles before reaching the threshold where the health insurer is responsible for paying the majority of their health care expenses. U.S. workers with family health coverage can expect to pay up to 39% of the combined total cost of health insurance premiums and deductibles before they reach that threshold.

U.S. workers pay no income taxes on the amount of money their employers contribute to paying their health insurance premiums on their behalf. That exemption has existed since World War 2, when the U.S. government passed legislation to allow U.S. firms to provide these alternative compensation benefits in order to attract and retain skilled employees at a time when the wage and price controls of that era prevented them from being able to directly pay them more.

Data Source

Kaiser Family Foundation and Health Research & Educational Trust. 2016 Employer Health Benefits Survey. Exhibits 5.1, 6.3, 6.4, 7.7 and 7.20. 14 September 2016.

Labels: ,

September 27, 2016

In the private sector, the decision to take on debt can be considered to be a bet on the future.

By and large, when a new debt is incurred, it means that both borrower and lender have made a determination that the borrower will have sufficient income over the period defined by the terms of the loan to pay back the money they borrowed. To the extent that borrowed money will paid back with the income from newly generated economic activity, private sector debt can provide an indication of economic growth.

More specifically, the change in the acceleration (called "snap" or "impulse") of private sector debt can indicate the direction of the growth of the economy, where a positive impulse would be consistent with expansionary conditions being present in the economy and a negative impulse being consistent with the presence of contractionary forces in the economy.

Three months ago, we speculated that the U.S. economy would benefit from a positive change in the acceleration of private sector debt during the second quarter of 2016. And sure enough, that's what happened - and really for the first time in years, it has happened without the assistance of quantitative easing.

Acceleration (Change in Year Over Year Compounded Growth Rate) of Private Debt in the United States, January 2006 - June 2016

From 2016-Q1 to 2016-Q2, the real growth rate of the U.S. economy ticked upward from 0.8% to 1.1%, coinciding with a positive shift in the acceleration in the growth of private sector debt during the quarter. At the same time however, the trailing year average for the real GDP growth rate trended downward, largely as a result of the headwinds faced by the oil production and manufacturing sectors of the U.S. economy.

Annualized Real GDP Growth Rate in the United States, January 2006 - June 2016

Looking toward the current quarter, there is early evidence that points to an increase in the acceleration of private debt in the U.S. economy in the early months of 2016-Q3, suggesting a more positive outcome for GDP than was recorded in 2016-Q2 lies ahead.

References

U.S. Federal Reserve. Data Download Program. Z.1 Statistical Release (Total Liabilities for All Sectors, Rest of the World, State and Local Governments Excluding Employee Retirement Funds, Federal Government). 1951Q4 - 2016Q2. [Online Database]. 16 September 2016. Accessed 16 September 2016.

National Bureau of Economic Research. U.S. Business Cycle Expansions and Contractions. [PDF Document]. Accessed 16 September 2016.

U.S. Bureau of Economic Analysis. Table 1.1.1. Percent Change from Preceding Period in Real Gross Domestic Product.
1947Q1 through 2016Q2 (second estimate). [Online Database] Accessed 16 September 2016.

ClearOnMoney. Credit Impulse Background. [Online article]. Accessed 28 October 2015.

Keen, Steve. Deleveraging, Deceleration and the Double Dip. Steve Keen's Debtwatch. [Online article]. 10 October 2010. Accessed 28 October 2015.

Labels: ,

September 26, 2016

The third full week of September 2016 saw the month's second Lévy flight event, which began in the aftermath of the Federal Reserve's FOMC meeting on Wednesday, 21 September 2016. We can see the result of that event, which coincides with investors appearing to have shifted their forward-looking focus from 2017-Q1 back out to the more distant future quarter of 2017-Q2 in the following chart.

Alternative Futures - S&P 500 - 2016Q3 - Modified Model 01 - Snapshot on 2016-09-24

That shift occurred after the Fed indicated that it would once again hold off on increasing short term interest rates in the U.S., where investors had pulled in their forward-looking attention to the nearer term a little over two weeks earlier, as several Fed officials suggested they would support hiking those rates at the Fed's September meeting.

We don't think that investors were focused so much on 2017-Q1 as much as they were roughly evenly splitting their focus between the very near term quarter of 2016-Q3 and the distant future quarter of 2017-Q2. With the Fed's confirmation that they would not be hiking U.S. short term interest rates in 2016-Q3, investors quickly refocused their attention on the more distant future of 2017-Q2, with stock prices changing to be consistent with the expectations associated with that future quarter.

On a separate note, this upcoming week will see the end of our use of the modified futures-based model we developed back in Week 3 of July 2016 to address the effect of the echo of historic stock price volatility upon our standard futures-based model of how stock prices work, which we knew in advance would affect the accuracy of the model's forecasts during 2016-Q3.

We have enough data now to confirm that our modified model was much more accurate than our standard model during the past several weeks in projecting the future trajectories that the S&P 500 would be likely to follow given how far forward in time investors were collectively looking in making their current day investment decisions. The following chart shows how the echo of the extreme volatility that was observed a year earlier affected our standard model's projections.

Alternative Futures - S&P 500 - 2016Q3 - Standard Model - Snapshot on 2016-09-24

Although we show the echo effect from the previous year's volatility ending after 28 September 2016 in these charts, that may be somewhat misleading, as we're really entering a period which is reflecting the echo of a relatively short interlude in the greater stock price volatility that defined the latter half of 2015. As such, we expect that the trajectory of the S&P 500 will deviate from our standard model's projections during the next two weeks, but not as greatly as it did during the last several weeks.

We will have another prolonged opportunity to test drive our modified model in 2016-Q4.

Meanwhile, here are the headlines that caught our attention as newsworthy from their market-moving potential during Week 3 of September 2016.

Monday, 19 September 2016
Tuesday, 20 September 2016
Wednesday, 21 September 2016
Thursday, 22 September 2016
Friday, 23 September 2016

Elsewhere, Barry Ritholtz rounded up the week's positives and negatives for the U.S. economy and markets.

Labels: ,

September 23, 2016
Source: National Science Foundation - https://www.nsf.gov/news/special_reports/science_nation/blindsight.jsp

Can different parts of the human brain be reprogrammed to do tasks that are very different from those they would seem designed to do?

That's an intriguing possibility that has been raised by the findings of recent research at Johns Hopkins, which found some very remarkable differences in the way that the region of the human brain dedicated to processing visual information works between sighted and blind individuals. Their findings suggest the possibility that what would appear to be very specialized areas of the brain can indeed be trained to perform other tasks.

To find out, the researchers ran functional MRIs of 36 individuals, 17 who had been blind since birth and 19 who had been born able to see, who might be considered to be the control group in their experiment. What they wanted to test is whether there would be significant differences in how the visual cortex region of the brain might process non-sensory information between blind and sighted people.

Why non-sensory information? Because earlier experiments had indicated that the visual cortex region of the brain can reprogram itself to process information from other senses, like hearing and touch, one of the researchers, Marina Bedny, wanted to find out if that region could be retasked to do something entirely unrelated to its seemingly predefined purpose. Something far removed from anything to do with the senses and processing sensory information.

So she picked algebra.

We're pretty sure that many people, particularly algebra students, would agree that algebra is about as far removed from the human sensory experience as one can get! But as an an exercise in abstract, structured logic, it represents a skill that must be learned rather than an inherent ability, which made it an ideal mental process for which to monitor brain activity in the researchers' experiment.

During the experiment, both blind and sighted participants were asked to solve algebra problems. "So they would hear something like: 12 minus 3 equals x, and 4 minus 2 equals x," Bedny says. "And they'd have to say whether x had the same value in those two equations."

In both blind and sighted people, two brain areas associated with number processing became active. But only blind participants had increased activity in areas usually reserved for vision.

The researchers also found that the brain activity in the visual cortex of blind individuals would increase along with the increasing difficulty of the algebra problems each were asked to solve.

And that's where the promise of the researchers' findings lies:

The result suggests the brain can rewire visual cortex to do just about anything, Bedny says. And if that's true, she says, it could lead to new treatments for people who've had a stroke or other injury that has damaged one part of the brain.

If the John Hopkins researchers' findings hold, it suggests that better treatments for brain damage related to strokes, concussions and other injuries can be developed, which until this research finding, would not have been considered to have as good a potential prognosis for recovery based on our previous understanding of how the brain works.

There's a lot of science that has to happen between now and that more promising future, but that future has just gotten a lot cooler than it used to be!

Reference

Kanjlia, Shipra, Lane, Connor, Feigenson, Lisa and Bedny, Marina. Absence of visual experience modifies the neural basis of numerical thinking. Proceedings of the National Academy of Sciences of the United States of America. Early Edition, 19 September 2016. [Online article]. 28 July 2016.

Labels: ,

About Political Calculations



blog advertising
is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Applications

This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

Visitors since December 6, 2004:

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links
Charities We Support
Recommended Reading
Recommended Viewing
Recently Shopped

Seeking Alpha Certified

Archives
Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.