5 Year Inflation Expectations

One way to estimate expected inflation is to look at the pricing of various securities. The government sells several types of securities that mature over a number of different time frames. To estimate what investors expect inflation to be over a given period you can look at the interest rate they charge on constant maturity securities versus inflation adjusted securities.

By subtracting the interest rate on constant maturity securities from inflation indexed securities you determine the premium that investors require in exchange for uncertainty of not knowing what inflation will be in the future. If investors expect higher inflation then they will demand a higher interest rate so that their returns aren't wiped out by inflation.

So by looking at the spread between these securities you can get a picture of what investors expect inflation to average over the lifetime of the securities.

Here are the data for 5 year constant maturity and inflation-indexed securities:

These graphs show the difference between the two securities, or the expected average 5 year inflation:

The rate as of 7/29 is 2.07%, and the average rate over the last 6 months is 2.11%.

A Puzzle? GDP Productivity and Employment to Population Ratio

Something I haven't seen in a comparison before is the relative change in GDP to the relative change in the employment to population ratio. With all the talk of structural versus non-structural unemployment, PSST versus low aggregate demand, and the liquidity trap versus NGDP targeting, I figured I would take a look at the historical relationship between relative changes in GDP and relative changes in the employment to population ratio.

Here's what the Federal Reserve Bank of St. Louis shows as the GDP/Employment relationship:

I didn't run any stats on the correlation because, well, I didn't have enough time on my lunch break, and because the graph is clear enough: GDP is highly correlated with the employment to population ratio, especially over the last 30 years.

I wanted to look closer at trends, so I graphed each of the series separately, along with their 20 year running averages. You'll notice that the average rate of growth of each has been declining for the last few decades.

Is this what weight loss is supposed to look like?

Half way through our 12 week weight loss challenge and only one person is on track to meet their goal of 10% weight loss. Three others are nearly on track to meet the goal, and at the current rate on average the group will only lose less than 8%.

Is this fairly common for a group of people losing weight?

Update: Final Stats - 3 people reached the goal of 10% weight loss in 12 weeks. The average weekly weight loss was 2.1 lb for the 3 winners and .6 lb for the 4 individuals who failed to meet their goal.

Misconceptions about High-Fructose Corn Syrup

This research has been out for a bit, but It has some fascinating information. There's been a ton of research the last few years about fructose and its implications for various health outcomes, with lots of competing hypotheses and conclusions. This won't be the final word, but in his article John White attempts to set some facts straight.

From the abstract:

Misconceptions about high-fructose corn syrup (HFCS) abound in the scientific literature, the advice of health professionals to their patients, media reporting, product advertising, and the irrational behavior of consumers. Foremost among these is the misconception that HFCS has a unique and substantive responsibility for the current obesity crisis. Inaccurate information from ostensibly reliable sources and selective presentation of research data gathered under extreme experimental conditions, representing neither the human diet nor HFCS, have misled the uninformed and created an atmosphere of distrust and avoidance for what, by all rights, should be considered a safe and innocuous sweetener.

One of the things I found interesting was Figure 1: Total per capita daily energy and change in percentage of total energy by nutrient food category:

 It's pretty shocking to me how large the changes in caloric intake in the last 35 years has been, including the sources from which the energy is derived. Regardless of the fructose issue, we are getting WAY more energy from fats, flour, and cereal products than we were in 1970, as well as way more total energy.




White, John S. Misconceptions about High-Fructose Corn Syrup: Is It Uniquely Responsible for Obesity, Reactive Dicarbonyl Compounds, and Advanced Glycation Endproducts? J. Nutr. 2009 139: 1219S-1227


For further updates, see the following:

The State of the Science on Dietary Sweeteners Containing Fructose: Summary and Issues to Be Resolved http://jn.nutrition.org/cgi/content/full/139/6/1269S
Finding:

It is difficult for consumers to identify the sweetener–fructose, glucose, sucrose, HFCS, or their mixtures–in a particular food, either naturally occurring or added. Therefore, it does not appear to be practical to base dietary guidance on selecting or avoiding these specific types of sweeteners. Furthermore, typical foods and diets seldom contain pure fructose or pure glucose but contain mixtures of different sweeteners. All of the naturally occurring sweeteners are caloric and consumers, on average, consume more energy than they expend. A simple message regarding the importance of consuming lower amounts of energy, including those from caloric sweeteners, seems to be the appropriate approach.

Fructose Ingestion: Dose-Dependent Responses in Health Research  http://jn.nutrition.org/cgi/content/full/139/6/1246S
Findings:

1. Moderate doses of fructose have neutral or diametrically opposite effects to those expected for very high or excessive fructose intakes and show evidence of improved glycemic control.  
2. There is reason to believe that moderate fructose ingestion could be beneficial for public health, whereas excess intake would be a risk to health. Practical applications will depend on further research on a wider range of health risk factors than those mentioned here. 
3. There is no international consensus on what is moderate and what is excessive fructose intake, although quantitative description from elsewhere is discussed. 
4. Epidemiological studies are difficult to interpret. The roles of GL and other factors collinear with fructose intake need to be examined.
5. Intervention studies in humans often use fructose at doses that are excessive compared with amounts generally eaten by adults; such are not interpretable for purposes of public health policy in adult nutrition. 
6. There is scant information on the role of fructose dose in the health of young persons. 
7. Animal studies often use doses of fructose in excess of what humans would normally consume and so have a high potential to mislead about the public health aspects of fructose.

Basically, we don't know enough about fructose, or other sugars in general, and how each type specifically effects our health. This is shown in the following summary by researchers.

Dietary Sweeteners Containing Fructose: Overview of a Workshop on the State of the Science  http://jn.nutrition.org/cgi/content/full/139/6/1210S

Finding:

All agreed that studies should be conducted that: 1) reflect current consumption data of both the total amount of fructose and its usual food sources; 2) measure the appropriate biochemical indices and health-related endpoints; 3) compare fructose, glucose, sucrose, starch, and HFCS; and 4) test the effects within a variety of populations, including those who are physically active and sedentary, are lean and overweight or obese, and who have diabetes, insulin resistance, and/or hyperlipidemia.

Update:
For a good discusion of this subject, including the addition of more recent research, see Paleo Basics: Fructose Fact Vs. Fiction by Don Matesz.

Persons Employed and Per-Person Productivity

Following up on yesterdays post on capacity utilization, here's a graph of yearly percent changes in persons employed and per-person productivity. Clearly, Arnold's beef lies with the person's employed aspect of this.

Update: To make the data and trends more clear, I've modified the graph using 10 year rolling averages:

Data via The Conference Board.

Civilian Capacity Utilization Index, a modification of Arnold Kling's LUCY

Since Arnold Kling believes we're still in a recession he's updated and modified his capacity utilization index, LUCY, which he now calls daughter of LUCY:

You take total nonfarm payroll employment and divided it by the population over 16. (This is basically just an employment to population ratio.) Divided each monthly number by the peak value, reached in December of 1999, then multiply by 100.

He prefers this as a means of identifying recessions, as opposed to the official NBER dating methods. This peaked my curiosity, and induced me to create my own index, the nephew of LUCY. I went to the BLS and took the Employment status of the civilian noninstitutional population 16 years and over, and created an index that is similar to Arnold's except that it uses yearly averages and civilian employment instead of monthly averages and nonfarm employment (which includes noncivilian employment). Here's what the data look like:

 

For Comparison, here's GDP and recession data from FRED2:

Arnold concludes:

I think that labor capacity utilization is the right way to measure economic activity. It says that economic activity has been in a declining mode for most of the past ten years. Relative to that decline in economic activity, GDP has done remarkably well. That says that productivity growth has been fairly rapid.

To me, this looks like economic restructuring. Many workers have lost jobs because their contributions are not valued by employers. Entrepreneurs need to figure out business models that can profitably employ the available workers.

Looking at the two graphs above I would quibble with his view of economic activity. If we exclusively focus on the employment to population ratio to determine economic activity then all the massive productivity gains that have been made in the past century will be invisible to us.

Having gainfully employed citizens is important for the overal health of the country, but by itself the employment ratio tells us little about the agregate productive capability or output, and does not sufficiently inform us on the health of the economy.

U.S. drone strikes in Pakistan

View U.S. drone strikes in Pakistan in a larger map

Via Peter Bergen and Katherine Tiedemann's drones database at the New America Foundation