How Americans Voted With Their Feet From The Recent Recession

Here is an interesting graphic about the recent population mobility trends in the US, following the recent crisis or an illustration of how people reacted to the recession by voting with their feet.

personal finance – Mint.com (for a crisper view click here to mint.com)

From mint.com, ``In times of plenty, relocating for work usually means a better job or a higher standard of living. But in today’s tough economy, many are finding that they just can’t find work or maintain their standard of living where they currently live. It’s especially bad in New York and California, two places where the economy is suffering and the cost of living remains high. Many of these financial refugees are ending up in Texas, a place where the cost of living is low. And many of those that are relocating are in the very lowest income bracket, a further indication that money is their motivation for moving." [emphasis added]

The Wall Street Journal has a better perspective:

``But first the biggest loser, which was Michigan for the fourth year in a row. More than two families left the state for every family that moved in. The fall of GM and Chrysler has obviously hurt. But two-term Governor Jennifer Granholm has also made her state the test case for the policy mix of raising taxes on higher incomes, increasing regulation, and steering taxpayer money at favored programs like job retraining and renewable energy. It hasn't worked for Michigan, even with the auto bailouts.

``Ms. Granholm continues to be a regular economic policy adviser to the White House. Yikes.

``The next two biggest net losers were Illinois and New Jersey, while California and New York also continued to have far more departures than arrivals.

``Ten states gained net arrivals: Oregon, Arkansas, Nevada, Wyoming, Idaho, Colorado, Georgia, New Mexico, Texas and North Carolina. Of those, only Oregon sways decidedly to the political left and it has benefited from the economic refugees fleeing California.

``Six of the eight states with no income tax were magnets for families, while eight of the 10 highest income tax states had more people packing. Democrats in state capitals and Washington have convinced themselves that "soak the rich" tax policies can help balance budgets, but the main effect seems to be to stimulate bon voyage parties.[unintended consequences of taxation-Benson]

``As for the biggest winner, well, our readers won't be surprised to learn that it was Washington, D.C. by a large margin. United Van Lines moved nearly seven families to the federal city last year for every three it moved out. As always when the feds gear up the income redistribution machine, the imperial city and its denizens get a big cut of the action.

``As in ancient Rome, the provinces are being required to send tribute to subsidize those living in the capital, which produces few services save transfer payments. No wonder the provincials are starting to rebel—even in Massachusetts."

My comment:

-Low taxes benefits from migration inflows
-High taxes suffers from population loss
-like maggots, political lobbyists, fast expanding government bureaucracy, and other political entities throng to the center where political favors are dispensed.

Making Progress In Global Child Mortality

The good news is that more lives are being saved.

According to the Economist, (bold emphasis mine)

``MORE children are surviving beyond their fifth birthday, according to a new report from the United Nations Children's Fund (Unicef). The child mortality rate—the number of under-fives dying per thousand live births—declined from 90 in 1990 to 65 in 2008, a drop of over a quarter. The number of deaths has fallen from 12.5m in 1990 to 8.8m last year, the lowest since records began in 1960. The biggest improvements are in Latin America and the former Soviet Union, where mortality rates have fallen by more than half. Progress in sub-Saharan Africa, which now accounts for half of all deaths, has been slower, but Niger, Malawi, Mozambique and Ethiopia have seen reductions of more than 100 per 1,000 livebirths since 1990. The report notes that despite big improvements in preventing malaria, one of the three main causes of deaths, much more needs to be done to treat the other two causes, pneumonia and diarrhoea."

A longer timeline chart from the New York Times below highlights on the secular trend of child mortality rate improvement...




The New York Times, (bold emphasis mine)

``The child mortality rate has declined by more than a quarter in the last two decades — to 65 per 1,000 live births last year from 90 in 1990 — in large part because of the widening distribution of relatively inexpensive technologies, like measles vaccines and anti-malaria mosquito nets.

``Other simple practices have helped, public health experts say, including a rise in breast-feeding alone for the first six months of life, which protects children from diarrhea caused by dirty water.

``Wealthy nations, international agencies and philanthropists like Bill and Melinda Gates have committed billions of dollars to the effort. Schoolchildren and church groups have also pitched in, paying for mosquito nets and feeding programs.

``Taken together, they have helped cut the number of children under 5 who died last year to 8.8 million — the lowest since records were first kept in 1960, Unicef said — from 12.5 million in 1990.

From Rotary International

Overall, globalization, greater informational flows and increased community based approaches have led to such tremendous gains.

Social Media Gains Acceptance From Older Users

An interesting observation from the Forrester on the demographics of social networking usage.

They reckon that most of the recent growth has emanated from the elder generation.

From Researchrecap on the Forrester study (bold emphasis theirs)

``Social media can no longer be dismissed as a quirky habit of young adults."

``Social technologies continue to grow substantially in 2009. Now more than four in five US online adults use social media at least once a month, and half participate in social networks like Facebook. While young people continue to march toward almost universal adoption of social applications, the most rapid growth occurred among consumers 35 and older.

``Adults younger than 35 approached universal social participation. As we noted last year, adults ages 18 to 24 and those ages 25 to 34 adopt social media similarly. Only three percent of 18- to 24-year-olds and 10% of 25- to 34-year-olds are socially Inactive. What’s more, a staggering 89% of the younger crowd are Spectators, while nearly as many are Joiners. And almost half create content, far higher than any other age group. Adults ages 25 to 34 also grew their participation across all categories — especially in social networks.

``Adults ages 35 to 54 rapidly adopted Joiner activities. Much of the growth in social networks today comes from people older than 34. Compared with last year, this group grew its participation by more than 60%, and now more than half of adults ages 35 to 44 are in social networks. Adults ages 45 to 54 grew their Joiner behavior nearly as much, but still lag behind the 35- to 44-year-olds; 38% of those ages 45 to 54 use social network sites regularly. These consumers also increased their Creator activities to the point where one in five produce social content.

``Adults 55 and older started to share and connect with each other online. Seventy percent of online adults ages 55 and older tell us they tap social tools at least once a month; 26% use social networks and 12% create social content.

A graphic on the technology ladder

Empirical experience suggests that this could be true even outside the US. And this likewise suggest that many traditional activities (radio, tv) could be replaced by social media networks bearing the same features.

Amazing innovation from free markets that has increasingly been advancing our standards of living.

Will The US Technology Industry Function As The New Economic Driver?

Pew Research gives us some interesting clues in the changes of consumer habits or consumer preferences of Americans in today's crisis dominated environment.

Seen from the the investing dimension, if we are to bet on a new economic paradigm emerging from today's crisis, some of the "recent" trends may portend or serve as prologue to the future.

According to Pew Research (bold emphasis mine), ``In hard times, the Pew Research survey finds that many Americans are changing their minds about which everyday goods and services they consider essential and which ones they could live without. The survey also shows that "old-tech" household appliances have fared the worst in the public's reassessment of the line between luxury and necessity in their daily lives.

``Of 12 items tested1, six dropped significantly in the necessity rankings from 2006 to 2009, while the other six basically held their own. All of the "old-tech" household appliances on the list dropped in their necessity ratings. For example, the proportion of people who rate a clothes dryer as a necessity fell by 17 percentage points in the past three years. There are similar declines for the home air conditioner (16 points), the dishwasher (14 points) and the television set (12 points).

``A few of the "middle-aged" household appliances and services also declined. The microwave, a kitchen staple since the late 1980s, is currently viewed as a necessity by less than half the public, a 21-point drop in the past three years. The proportion who rate cable and satellite television service as a necessity fell 10 percentage points since 2006, nearly matching the declining value of a television set."

Adds Pew, ``In contrast, none of the newer information-era gadgets and services has fallen in Americans' assessment of what they absolutely need to have. Cell phones and home computers continue to be seen as a necessity by half of the public, unchanged from three years ago. High-speed Internet access is seen as a necessity by about three-in-ten adults, also unchanged from 2006. Two items that came onto the consumer scene in this decade -- iPods and flat-screen TVs -- are still seen as a necessity by a very small share of the public, but that share hasn't declined during the recession."

Why is this important?

First, it shows that the weight of consumer activities or consumer preferences appears to be shifting towards communications in the form of high end TV, iPod or the internet. Despite the recession, while other appliances are suffering from consumption retrenchment, positive growth is still seen on technology based devices or equipments.

This gives further validation to some studies alluding to the ongoing explosive growth in non traditional media as social networking, see our previous post, Wikinomics: The Exploding Growth In Social Networking Media

Next, note that today's crisis won't last forever which possibly means that some of the recent trend shifts may accelerate when economic growth will be restored.

Third is the issue of demographics.

The cellphone and landline usage depicts of the technology "generational gap" trends between youth and the elderly.

Again from Pew, ``The survey also finds that some consumer products, including some high-tech devices that have entered the marketplace relatively recently, appear so far to be "recession-proof." About half of respondents in the current survey (49%) and a similar proportion in 2006 consider a cellular telephone to be a necessity. That overall finding obscures a considerable generation gap: Currently 60% of adults under the age of 30 say a cell phone is a necessity, compared with 38% of those 65 years old or older. But this generation gap is not significantly larger today than it was three years ago; in fact, views on the need for a cell phone have not changed significantly among any age group since 2006.

``An equally dramatic generation gap opens when Americans are asked whether landline telephone service -- the familiar home phone -- is a luxury or a necessity. But this gap runs in the opposite direction. More than eight-in-ten (84%) adults ages 65 and above say a landline phone is a necessity, while only 49% of those younger than 30 agree. And younger adults are nearly four times as likely as older adults to say an in-home phone is a luxury (51% vs. 14%)."

Our point is that the younger generation appear to be more adaptive in utilizing applications from technological innovation, although even the elderly seems to be fast catching up.

And considering that in 2020, demographic trends as seen from the chart above by nationmaster.com indicates of the probable shift in the weightings of the population distribution in the US, where its bulk is expected to comprise the age levels of 25-39. This effectively extrapolates to today's biggest technology users as the core market for the technology industry.

In short, we may expect a huge surge in industry growth in terms of penetration level or in the diffusion of users.

Barring the risks of imposition of extreme regulations which may restrict and choke off innovations, my predisposition is for unexpected or underappreciated technology originated economic recovery for the US. Albeit I think any solid recovery may not be seen anytime soon as the US could be faced with growing risks of hyperinflation.

Nonetheless, the present outperformance of the technology rich bellwether the Nasdaq relative to the broadmarket as signified by the S&P 500 seems to provide some foundation for such thesis.

As Don Tapscott and Anthony Williams wrote in Wikinomics, ``The future, therefore, lies in collaboration across borders, cultures, companies, and disciplines. Countries that focus narrowly on "national goals" or turn inward will not succeed in the new era. Likewise, firms that fail to diversify their activities geographically and develop robust global innovation webs will find themselves unable to compete in a global world. Effectively it's globalize or die."

The Future According To The Futurists

Since we are in the practice of spotting trends but not limited to financial markets, an interesting article from practicing Futurists (the the study or forecasting of trends or developments in science, technology, political or social structure, etc.-dictionary.com or futurologists) outlines 10 predictions for 2009 and beyond.

The 10 forecasts has been excerpted from the World Future Society (Hat Tip Ray Kurzweil) All highlights mine.

1. Everything you say and do will be recorded by 2030. By the late 2010s, ubiquitous, unseen nanodevices will provide seamless communication and surveillance among all people everywhere. Humans will have nanoimplants, facilitating interaction in an omnipresent network. Everyone will have a unique Internet Protocol (IP) address. Since nano storage capacity is almost limitless, all conversation and activity will be recorded and recoverable. -Gene Stephens, "Cybercrime in the Year 2025," July-Aug 2008, p. 34

2. Bioviolence will become a greater threat as the technology becomes more accessible. Emerging scientific disciplines (notably genomics, nanotechnology, and other microsciences) could pave the way for a bioattack. Bacteria and viruses could be altered to increase their lethality or to evade antibiotic treatment. Another long-term risk comes from nanopollution fallout from warfare. Nanoparticles could potentially cause new diseases with unusual and difficult-to-treat symptoms, and they will inflict damage far beyond the traditional battlefield, even affecting future generations. -Barry Kellman, "Bioviolence: A Growing Threat," May-June 2008, p. 25 et seq.; Antonietta M. Gatti and Stefano Montanari, "Nanopollution: The Invisible Fog of Future Wars," May-June 2008, p. 32

3. The car’s days as king of the road may soon be over. More powerful wireless communication that reduces demand for travel, flying delivery drones to replace trucks, and policies to restrict the number of vehicles owned in each household are among the developments that could thwart the automobile’s historic dominance on the environment and culture. If current trends were to continue, the world would have to make way for a total of 3 billion vehicles on the road by 2025. -Thomas J. Frey, "Disrupting the Automobile’s Future," Sep-Oct 2008, p. 39 et seq.

4. Careers, and the college majors for preparing for them, are becoming more specialized. An increase in unusual college majors may foretell the growth of unique new career specialties. Instead of simply majoring in business, more students are beginning to explore niche majors such as sustainable business, strategic intelligence, and entrepreneurship. Other unusual majors that are capturing students’ imaginations: neuroscience and nanotechnology, computer and digital forensics, and comic book art. Scoff not: The market for comic books and graphic novels in the United States has grown 12% since 2006. -World Trends & Forecasts, Sep-Oct 2008, p. 8

5. There may not be world law in the foreseeable future, but the world’s legal systems will be networked. The Global Legal Information Network (GLIN), a database of local and national laws for more than 50 participating countries, will grow to include more than 100 counties by 2010. The database will lay the groundwork for a more universal understanding of the diversity of laws between nations and will create new opportunities for peace and international partnership. -Joseph N. Pelton, "Toward a Global Rule of Law: A Practical Step Toward World Peace," Nov-Dec 2007, p. 25

6. Professional knowledge will become obsolete almost as quickly as it’s acquired. An individual’s professional knowledge is becoming outdated at a much faster rate than ever before. Most professions will require continuous instruction and retraining. Rapid changes in the job market and work-related technologies will necessitate job education for almost every worker. At any given moment, a substantial portion of the labor force will be in job retraining programs. -Marvin J. Cetron and Owen Davies, "Trends Shaping Tomorrow’s World, Part Two," May-June 2008, p 41

7. The race for biomedical and genetic enhancement will-in the twenty-first century-be what the space race was in the previous century. Humanity is ready to pursue biomedical and genetic enhancement, says UCLA professor Gregory Stock, the money is already being invested, but, he says, "We’ll also fret about these things-because we’re human, and it’s what we do." -Gregory Stock quoted in "Thinking Globally, Acting Locally, Living Personally," Nov-Dec 2007, p. 57

8. Urbanization will hit 60% by 2030. As more of the world’s population lives in cities, rapid development to accommodate them will make existing environmental and socioeconomic problems worse. Epidemics will be more common due to crowded dwelling units and poor sanitation. Global warming may accelerate due to higher carbon dioxide output and loss of carbon-absorbing plants. -Marvin J. Cetron and Owen Davies, "Trends Shaping Tomorrow’s World, Part One," Mar-Apr 2008, p. 52

9. The Middle East will become more secular while religious influence in China will grow. Popular support for religious government is declining in places like Iraq, according to a University of Michigan study. The researchers report that in 2004 only one-fourth of respondents polled believed that Iraq would be a better place if religion and politics were separated. By 2007, that proportion was one-third. Separate reports indicate that religion in China will likely increase as an indirect result of economic activity and globalization. -World Trends & Forecasts, Nov-Dec 2007, p. 10

10. Access to electricity will reach 83% of the world by 2030. Electrification has expanded around the world, from 40% connected in 1970 to 73% in 2000, and may reach 83% of the world’s people by 2030. Electricity is fundamental to raising living standards and access to the world’s products and services. Impoverished areas such as sub-Saharan Africa still have low rates of electrification; for instance, Uganda is just 3.7% electrified. -Andy Hines, "Global Trends in Culture, Infrastructure, and Values," Sep-Oct 2008, p. 20

My comment:

Some of the scenarios mentioned above seems like stuff from the movies, e.g. Sandra Bullock’s "The Net" (Sorry I forgot the titles, if you recall pls suggest).

Although the massive progression, integration and convergence of technology could have both good and bad side effects.

The bad side includes the risks of losing civil liberties, more government intrusion (think national ID), potential conflicts arising from demographic shifts especially in terms of religion and advances in weaponry system which can be exceptionally sophisticated and or even more lethal.

The good side includes longer lifespan due to massive improvement in science, a more advanced and sophisticated lifestyle, alternative means of transports, diversified energy sources and more progressive economies (due to greater division of labor).

Finally, for any of the above scenario to take shape, profitability and investments will be an important underlying concern. This means prospective investment themes.