A case study in crap data put to meaningless use

❝ On Monday, I cast doubt on the many stories about how Black Friday retail sales were off to a disappointing start. This is an important story because retail is such a critical part of the U.S. economy, and because such a large share of the industry’s sales occur during the roughly five weeks between Thanksgiving and Christmas. But the more important point — at least for my purposes — is that the initial reports, thanks to the National Retail Federation, are a case study in how to obtain meaningless data and then put it to bad use.

❝ The NRF reported a 3.5 percent drop in spending. “Average spending per person over Thanksgiving weekend totaled $289.19, down slightly from $299.60 last year,” the organization said in a statement. This information was based on asking consumers how much they figured they would spend this year versus a year ago…

A lousy guess turns out to be wrong. Q’uelle surprise!

❝ I make a big deal about the retail trade group’s record of inaccuracy every year for a few reasons: it is important for investors — and indeed, citizens — to be grounded in reality. Most human progress is the result of the work of scientists, technologists and logicians who rely on facts and testable theories…

❝ This is crucial because retail sales are such a big deal. Almost 16 million people work in retail, or about 10.9 percent of the U.S. labor force. It accounts for a huge percentage of the overall economy. Retail sales provide a window into consumer sentiment, as well as corporate revenue, profits and investment decisions. By some measures, consumer spending counts for almost two-thirds of gross domestic product.

❝ …It is of course way too early to have the final retail sales data, but we do have some early numbers based on actual sales. First Data Corp., a point-of-sales transaction processor, says that it examined data from almost 1 million merchants and concluded that sales so far this holiday shopping season are up 9 percent from a year earlier. Furthermore, perhaps in a sign of the state of the industry’s health, sales of electronics and appliances rose 26.5 percent, compared with a lackluster 2.3 percent gain last year. First Data also found that the average transaction grew by more than $41 year over year.

Oh.

❝ First Data noted that its analytical methodology “is based on actual consumer transactions rather than surveys or speculation.” The company has access to this information because it processes actual credit-card and debit-card transactions.

RTFA. We’re in an extended season of mediocre surveying, surprising results, poor planning afflicting anyone making decisions based on “truthiness”.

Barry is speaking to investors; but, his point of view on hard data needs to be taken to heart across the spectra from politics to Giftmas shopping.

Thanks, Barry Ritholtz

Graduate from college – going home, staying or moving on?

net-migration

❝ This year’s election has forced Americans to take notice of class divisions between workers. And while these divisions may at first ring of lazy stereotypes — the rural Rust Belt worker without a college degree and the coastal urban college-educated worker — they’re rooted in a real dynamic. Many of the most skilled workers — young people with college degrees — are leaving struggling regions of America for cities, specifically for cities in Southern and coastal states.

There are clear economic reasons for their choice. Dense metro areas tend to produce more jobs and make workers more productive. Wages, for all kinds of workers, are also higher.

❝ In theory, these incentives should prompt workers of all levels of education to move to metro areas. But moving outside one’s region is relatively rare these days, and even more rare for someone without a college degree

❝ For America’s first century, internal migration was largely driven by farming — moving west to new land. But toward the end of the 19th and in the early 20th century, migration began to be driven by people moving to American cities — small and large.

This pattern added a twist after World War II, when more people began moving outside their local region, particularly to the Sunbelt. Before the 1940s, roughly 15 percent of Americans lived outside a census division in which they were born, and by 1970 that had jumped to 25 percent.

❝ But in the 1980s, people started moving less. Internal migration has been in gradual decline ever since across all demographic groups…In the regional competition for the most skilled and most mobile workers in America, noncoastal states are at a disadvantage. Although they have some large cities, they tend to be farther from other large cities than is the case in the coastal areas…This advantage provided by clusters of cities is helpful for coastal states, which tend to contain many big metro areas, like San Diego, Los Angeles, San Jose and San Francisco in California, or the so-called Acela corridor stretching from Washington to Boston. But it can be bad news for inland areas with one or two large cities that are farther apart…

Folks in the article make the best point – for me – and that is the jobs also have to be someplace you want to live. Otherwise, it’s just a stop along the way…

Finland is banning coal by 2030 and aims for carbon-neutral by 2050


Click to enlargeReuters/Vesa Moilanen/Lehtikuva

❝ Finland, which gets about 10% of its energy from coal, said this week that it will stop using the fuel by 2030.

The Finnish ministry of economic affairs and employment let slip the news when it released its climate and energy strategy…Plenty of other countries, including the UK and France, are slowly phasing out coal. But Finland’s commitment is more concrete. Canada too announced last week that it would phase out coal by 2030.

❝ Finland’s long-term goal is to become carbon neutral and — perhaps by 2050 — rely entirely on renewable energy, the strategy document said. In the nearer term, by 2030, as well as cutting out coal, it aims to increase the share of renewable energy in its mix by 50%.

Not that 50% is a big increase. Renewables like wind and hydropower are only a tiny fraction of Finland’s current energy mix, in contrast to its Nordic neighbors: Norway runs on 100% renewable power thanks to its geothermal and hydro resources, while Denmark and Sweden have both built a lot of wind infrastructure in recent years…

❝ The strategy said that new investment should not be made in coal, either to build new plants or refurbish old ones. The document will go to parliament on Nov. 30.

It’s even easier for me to be enthusiastic, now, about nations outside the GOUSA working creatively towards a healthier environment. Americans seem hellbent to stay on the downbound train.

Força Chapecoense

3000
Click to enlargeFernando Remor/EPA

“Que essa seja a última imagem dos nosso guerreiros”

❝ Police in Colombia have confirmed that at least 75 people were killed when a plane carrying, among other passengers and crew, the first-team squad of Brazilian top-flight team Chapecoense, went down close to the town of Cerro Gordo in the early hours of Tuesday. Initial reports said there were six survivors, including players and a travelling journalist, but police said one person had died in hospital. The plane was carrying 72 passengers and nine crew members.

❝ Based in the city of Chapecó in the state of Santa Carina, Chapecoense were en route to Medellín to play the first leg of the final of this year’s Copa Sudamericana (South America’s answer to the Europa League), against the current Copa Libertadores holders Atlético Nacional. Colombia’s El Tiempo newspaper reported there were 22 players from the squad on board as well as 22 football journalists. A 23rd Chapecoense player, whom the newspaper did not name, had been supposed to travel with his team-mates but was not on the plane…

Team sports are a special part of athletic life. They were a year-round part of my childhood. Growing up when I did, where I did, meant The Beautiful Game wasn’t central to my young life. For most of the world – that centrality would be automatic.

Once in a great while a disaster claims the lives of athletes, a whole team, managers, medicos, trainers, heros and hardly-ever starters. They had a life together that also was something with a life of its own. And now death.