Tag Archives: US

12.20.2012 | Where is the World Economy Going?

Yesterday, the UN published a preview of its world economic outlook. While projections are always debatable, their graphs provide a snapshot of key economic issues.

GDP Outlook:

Oil Prices:

Grain Prices:

These projections and comments from a Société Générale Report also are helpful. Most enlightening, perhaps, is the potential drag on the world economy from the euro zone.

Sources and Resources: Société Générale data is from Business Insider while the preview of the UN Report is here. For a summary, this NY Times article discusses its dismal outlook.

Posted by: adminEcon
Tags: austerity, Australia, Businessinsider, China, developed economies, developing economies, euro zone, fiscal cliff, GDP growth, grain prices, oil prices, Societe Generale, US
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11.18.2012 | Caffeine Highs and Lows

Among the biggest coffee drinkers in the world, euro-zone consumers are cutting back.

As one Milan café owner explained, “Since the beginning of the year most of our regulars cut their coffees from around four to two a day. Sometimes, instead of getting a cappuccino or other types of more expensive coffees, they just have an espresso. This is the effect of the crisis.”

Meanwhile, in Brazil, partially because of good weather, supply is up for the highest quality beans (arabica) that the Italians and Spanish prefer. In addition, not only have some Europeans begun to switch to cheaper robusta beans but also growers who had withheld their beans awaiting higher prices are now facing a decline that might mean they will sell at a lower price.

It all adds up to classic demand and supply. Because of declining income, the demand curve for troubled euro-zone economies shifted to the left. Meanwhile, with bountiful crops, supply shifted to the right. The result? Price tumbled. And indeed, arabica coffee prices are down 30 percent from a year ago.

Sources and Resources: While I discovered the current status of coffee beans in a Barron’s column, my coffee prices, here, and consumption, here (source of table below), this August WSJ article tells more about European demand and was the source of the above quote. Also, for a nice combination of stats and stories, you might enjoy this Reuters video.

Per Capita Coffee Consumption: 2006/2007

Posted by: adminEcon
Tags: arabica coffee beans, coffee drinkers, coffee prices, demand, equilibrium, espresso, euro zone, euro-zone recession, Finland, Italy, Spain, supply, UK, US
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11.08.2012 | Beer Economics

In China, 1/2 liter of beer costs 9 minutes of work.

To calculate how many minutes of work it takes to buy beer in 150 countries, Swiss bank UBS researchers divided the median wage in that country by the price of 1/2 liter from a retailer. Their results? Beer drinking is most costly for workers in India (55 min.), Philippines (48 min.), Colombia (47 min.) and Nigeria (29 min.). At the other end of the list is the US (5 min.), Czech Republic (7 min.), Germany (8 min.), the Netherlands (9 min), and China (9 min.)

The UBS report reminded me that national beer consumption relates to affluence. According to the American Association of Wine Economists (yes, really) the connection between beer and per capita income is an upside down “U.” As individual incomes increase up to $22,000, so too does beer consumption. Then though, when wine and spirits become affordable, people move from beer to pricier liquor. Currently, nations with emerging markets represent two-thirds of the world’s beer consumption. (The ascent of China’s beer drinking curve in the graph below is striking.)

So, when anyone mentions beer, we can think about of purchasing power, economic growth and demand from the developing world.

A Final Fact: Beer has also been in the news as a source of government revenue. President Hollande just said France’s beer tax will rise by 160% to fund programs for young people and the elderly. Meanwhile, 2 years ago, after Russia spiked its beer tax by 200%, beer purchases declined.

Sources and Resources: This BBC article on the impact of the impending French beer tax was a good read as was the Economist’s details on the UBS beer cost study. More academic, the AAWE paper was the source of my beer drinking information about developing nations. Please note that all information from UBS and The Economist is current while data and the graph from the AAWE is from 2010 and before.

World Beer Consumption, 1961-2007

Posted by: adminEcon
Tags: American Association of Wine Economists, beer consumption, beer taxes, China, developing nations, economic growth, emerging markets, France, India, per capita income, purchasing power, Russia, The Economist, UBS, US
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09.28.2012 | Pork Problems

Announcing the cancellation of this year’s bacon eating contest, Major League Eating (“the world body that governs all stomach-centric sports’) said, ”We cannot, in good conscience, allow [top ranked eater] Joey Chestnut to eat bacon during a global pork shortage,…We estimate that Joey alone could eat 20 pounds of bacon in 10 minutes of competition.”

Where is the pork shortage?

First stop, the US:

Skyrocketing corn prices make feeding pigs so expensive that farmers are killing their livestock. Actually, we have a pork glut now–up 31% between last August and this August according to the USDA. But less livestock will probably create a shortage during 2013.

Next, the European Union:

Britain’s National Pig Association (NPA) reports steep declines in Poland’s, Sweden’s, and Ireland’s pig population. Compounding the problem, in the UK, the NPA says sow herd size will probably drop by 20%.

And finally, China:

With global pork prices ascending, will China need even more inventory for its Strategic Pork Reserve (SPR)? Created during 2007 after porcine blue ear disease diminished the Chinese pig population, the SPR continues to stock hundreds of millions of pounds of frozen pork that are ready for release when prices spike. (But, according to the NY Times, frozen pork only lasts 4 months so maintaining the supply is more complicated than just keeping frozen meat.)

This returns us to the bacon eating contest cancellations. With pork so pricey, pancake contests are getting more publicity. Here, an economist would point out the unintended consequences. Who would have thought that a congressional ethanol mandate could have pushed corn prices upward, the pig population downward, and led to more pancakes???

Sources and Resources: My information on pig populations came from a Foreign Policy blog, a Washington Post blog, this Huffington Post article, and on China’s SPR, here. To describe Major League Eating, I used their publicity.

Posted by: adminEcon
Tags: animal feed, bacon eating contests, bacon shortages, China, corn, demand, ethanol, Major League Eating, National Pig Association, pancakes, pig populations, Poland, pork prices, Strategic Pork Reserve, supply, Sweden, UK, US
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09.01.2012 | Living Solo: Part 2

Soup and ready-made meals sales are soaring in Brazil. The reason is probably more singles. In the United Arab Emirates, if you are over 30 and female, there is a 60% chance you are unmarried. For Japan, 31.5% of all households are one-person.

Looking at Japan, we would see a contracting population but more households. The reason is a growing singles population that has a distinct economic impact. A person in an affluent nation who moves into a new apartment needs consumer durables (goods lasting 3 years or more) that include a refrigerator, furniture, a TV, maybe a washing machine. Single people tend to live in apartments rather than houses.

There are some universal causes of single living. People are getting married later, there is more divorce, we are living longer and marriage is no longer as attractive. In China and India, male baby selection results in too many bachelors looking for wives.

Where are we? While single person households are increasing around the world, we should be wary of generalizing. We can remember, though, that when more people live alone (please see graph below), it is a major demographic shift that affects demand for certain consumer goods and services.

This Economist article provides an excellent overview of the trend toward living alone around the world and was the source of my graph. It also led me to a Euromonitor report on Japan’s singles. For unmarried mothers specifically, this NY Times Magazine article was interesting because of its focus on 2 families and also provided a sound statistical base.

Econlife Living Solo: Part 1 is here.

Posted by: adminEcon
Tags: aging, Brazil, consumers, demand, demographics, divorce, durable goods, households, Japan, living alone, marriage, single women, United Arab Emirates, US
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