Colorado One of the Best States for Property Tax

This map from the Tax Foundation shows that Colorado has some of the lowest property taxes in the nation:

This should not be interpreted as a proxy map for which states have the lowest overall tax burden, for example. Note that Texas has relatively high property tax. But, Texas has no income tax so there's little we can discern about taxes in general from this map.

But when thinking about property taxes, it is useful to note that property taxes are especially damaging to people on fixed incomes like retirees and disabled people. Old people with low incomes, for example, would do fairly well in a state with high income tax and low property tax. But if property taxes are high, those seniors would get pummeled by repeated increases  in the property tax.

Denver Continues to Outpace the Nation in Latest Case-Shiller Home Price Index Data

Case-Shiller released new home price index data for July this week. As has been the case since 2012, the data shows continued increases in home prices. The first graph shows the index value for both the nationwide 20-city composite index, and the metro Denver index:

 

While the trend has clearly been upward in recent years, we are now seeing that a plateau has been hit in both the Denver metro area and in the composite index. Of course, the metro Denver plateau around ten percent points to continued strong gains in prices, and is a reason for current homowners and landlords to be happy. first time homebuyers, on the other hand, have less reason to be happy. 

At the national level, though, the composite index suggests more of a cooling in the market. Growth rates are clearly down from where they were back in 2013, and outside of Denver and San Francisco, price growth has moderated throughout many of the cities covered in the index.  Index growth is now flat around 5 percent, and has been so since last September. With interest rates at historic lows, this further suggests an inflexibility in the market that refuses to take off in spite of high accomodative monetary policy. 

In Denver, however, in-migration continues to drive strong price increases, though. The second graph compares the rate growth of the composite index and the Denver index.  Denver is clearly outpacing the nation overall.

Note also that the 2-city composite index is still below its former peak level. July 2015's index number was still 11.9 percent below the peak level, reached during July 2006. Metro Denver's July value, however, was well above its former peak and is at an all-time high. During July, the metro Denver index was 22.1 percent above the 2006 peak achieved during August 2006.

Comparing Whole Countries on Murder Rates Is Often Misleading

We often see the United States compared to a variety of other countries in terms of life expectancy, murder rates, and more. But, it's a bit dishonest to compare a country the size of Portugal, for example, with the United States.Portugal has ten million people and is not geographically diverse. The United States has more than 300 million people, and is extremely diverse in its geography.

So, it makes much more sense to compare the particular states within the US with foreign countries, and most people tend to underestimate the diversity in factors such as life expectancy and murder rates among states.

For example, the murder rate in Oregon (2.0 per 100,000) places it about 160th among 218 countries measured. That's quite low, and well below the US overall rate of  4.7 (per 100,000), which places it at 91st in the world. In other words, there are many places in the US that are well below the national murder rate, including Iowa, Wisconsin, and Colorado. If we were use this more detailed analysis, we would find that, in spite of claims that the US is a relatively high-crime country, much of the US is actually quite moderate, or even low, in this regard.

Were we to do this, we would then be asking ourselves not why the US murder rate is what it is. We would be asking ourselves what it is about Maryland, Louisiana, and South Carolina that are driving up the US murder rate.

Indeed, this should be done for other large countries as well. Mexico is a large country, so it's of little value to simply speak of the murder rate in Mexico as high. The question is this: where is the murder rate high in Mexico?

If we look at this analysis from The Economist, we find that the murder rate in much of Mexico is on a par with Costa Rica and the Bahamas.  And almost no one ever says "don't go to the Bahamas, or you'll be beheaded!" The perception of Mexico is as a high-crime area, and the Bahamas are seen as a serene place to vacation. But the answer is really more complicated than that.

The murder rates in Mexican states vary so widely that Yucatan state has a murder rate equivalent to the very low-crime country of Finland, while Chihuahua state has a rate equivalent to El Salvador, one of the alleged murder capitals of the world.

And if you want to take a vacation soaking up some sun in Cabo? No problem, amigo, because the murder rate in Baja California Sur is lower than the murder rate in Texas.

The overall murder rate is 18, but note the diversity:

 Source: The Economist.

And here are two wonderful maps I came across, which appear to be from an earlier version of the UNODC Global Study on Homicide.  Russia is another case where it's obviously useless to talk about the country-wide murder rate.

Colorado Foreclosures Down 19 Percent During Second Quarter

Foreclosure totals in Colorado during the second quarter of 2015 remained well down from the 2009 peak totals. There were 2,282 foreclosure filings during the second quarter of this year, which was a drop of 19 percent from the second quarter of 2014. There were 1,063 foreclosure sales at auction during the second quarter of this year, dropping 34 percent from the second quarter of last year.

Back in 2009, filings had peaked at 12,135 during the second quarter, and sales peaked at 6,686 during the first quarter of 2010:

Foreclosures are on schedule to end the year way down from 2014. So far, this year, there have been 4,154 filings and 2,208 sales at auction, which means at mid-year, filings and sales are both down 33 percent from where they were at mid-year last year. 

For more, see the state of Colorado full report:

2015_2ndQ Foreclosure Report by Ryan McMaken

A Quick Look at Median Household Income Up to 2013

The Census Bureau won't release 2014's median household income for another month or so, but we can have a look at trends up through 2014, for now. These numbers are not adjusted for inflation.

For 2013, the median household income in Colorado was $63,371. In the US for the same period, it was $51,939.

As we can see in the first graph, the Colorado median income level has been above the US level since 1990.

 

We can also see that over time, this gap has been growing. The second graph shows the gap between the Colorado median income and the US median income: 

 

The gap was negative from 1986 to 1989 when Colorado's median income was lower than the US. But since then, the gap has generally grown, and reached $10,000 for the first time in 2007. In fact, 2013's gap was the largest ever recorded with Colorado's median income coming in at 11,432 above the US level. 

The final graph shows percentage change in median income for each area. Colorado's YOY changes are much more volatile, as would be expected from an area so much smaller than the US overall. The sheer size of the US and its economy prevent large swings. However, there is a slight downward drift in the US median income increases over time. In other words, US median income seems to be going up by a smaller amount over time. In Colorado, what was a downward drift during the 1990s, appears to have stabilized somewhat since 2003. The YOY change in Colorado from 2012 to 2013 (10.6 percent) was the second largest ever recorded, second only to 1990's growth rate of 14.6 percent. The US rate of change for 2013 was 1.8 percent.

COTD: Metro Denver Home Prices Head Up in FHFA Index

The Federal Housing and Finance Agency has released it Expanded-Data home prince index data through the second quarter of 2015. The latest data shows the largest year-over-year increase in Colorado home prices since 2001.  The first graph shows the YOY change for both Colorado and the US. note that home price growth in larger in Colorado than is the case nationwide. 

In Colorado, the YOY home price growth, according to this index, was 11.2 percent from the second Q of 2014 to the same period of 2015. That's up from 9.9 percent for the 1st Q of 2015. YOY changes in the index for Colorado has generally been above 9 percent since the 4th Q of 2012.   

For the US overall, the YOY change for the 2nd Q of 2015 was 6.2 percent, which was up from 6.1 percent measured during the 1st Q of 2015. 

The second graph shows the index values themselves since 2001. We see that both the US and Colorado have generally followed the same growth pattern over the past 15 years, but since 2012, Colorado has increasingly been outpacing the US. 

With a relatively small amount of new home construction, coupled with a continuing inflow of new residents, it is no surprise that home prices have begun to outpace the nation since the nation overall is not sustaining the type of population growth has experienced in recent years.

Worker Participation Rate Falls to 37-Year Low in July

The conservative media (specifically Breitbart and CNS) are reporting that labor participation rates are at a 38 year low:

A record 93,770,000 Americans were not in the American labor force last month, and the labor force participation rate remained at 62.6 percent, exactly where it was in June -- a 38-year low, the Labor Department reported on Friday. 

In 1975, when the Bureau of Labor Statistics began keeping such records, 58,627,000 Americans were not in the labor force...

Rather than just take their word for it, let's look at the trend over time. Here’s what that looks like in a graph (BLS data):

So, yes, the trend is rather unmistakably upward.

The number of people not in the labor force is calculated by comparing  the number of people working to the total population over the age of 16.

I prefer to use numbers that aren’t seasonally adjusted, so in the NSA numbers, the total number of people not in the labor force in July 2015 was 92,349,000 (slightly different from the CNS number).
So, as the population has increased, the number of people who are working has gotten smaller. Taken as a percentage, it looks like this:

As of July 2015, the labor force participation rate was 63.2 percent. Again, these are not seasonally adjusted. But, just a quick look at the graph tells us that we have to go back to the late 1970s to find similar labor force participation rates.

Obviously, there are seasonal cycles in employment, so for the sake of making sound comparisons, we should only compare July’s numbers to previous July numbers, though, so if we look back at the same month in previous years, we find that we have to go back to July 1977 to find a comparable rate. Specifically, in July 1977, the labor participation rate was 63.4 percent.

So the CNS article is more or less correct. Labor participation is at a 37 or 38 year low, depending on how you look at it.

But what does this mean for the economy? Part of the decline in the labor is simply attributable to the increased number of retirees in the economy. The Chicago Fed claims that “just under half”of the decline in the work force since 1999 can be attributable to demographic trends such as retiring baby boomers. Fair enough. But what about the rest?

That’s where discouraged workers come in, who have given up looking for work. The ranks of discouraged workers should also include people who retired earlier than they would have had they been able to hold onto their jobs after 2009. Other phenomena driving an exodus from the work force will be people going back to school in an attempt to get a better job, and also people who used to be wage earners in a two-income household, but now have concluded that wages are no longer high enough to justify the opportunity cost of working. These people may have quit work to offset costs such as child care, which is only worth it if your wages come in well above the cost of daycare.
When we consider all of this, there’s good reason to suspect that the job market really is quite lackluster. If wage growth were performing well, people would be enticed back into the labor force, and the participation rate would rise.

Now, one could make the argument that fewer people need to work because, perhaps, wages are going up. After all, if worker productivity (and thus wages) are going up, then households will not need as many wage earners to maintain an acceptable (to them) standard of living. Theoretically, if the economy were really humming along due to increases in worker productivity, we would also see people leaving the workforce.

But that’s unlikely in the current economy, because if we look at real hourly compensation (which reflects productivity), we don’t see much reason to believe that productivity and wages are going up:

Real compensation has really gone nowhere since 2006, so there’s little reason to believe that people are leaving wage work behind because they don’t need it anymore. (This is portrayed as an index with base year of 2009, so if all recent values are around 100, then we know that there's been little movement.) If we look at the percent change, year over year, we see that real wage growth is about where it was during the early 1980s, which is certainly nothing to get excited about. The overall trend seems to point toward more of a clustering around a zero-percent rate of growth in compensation during the past decade:

The falling labor participation rate is often mentioned with the assumption that declining labor participation proves that the economy is withering. This is not necessarily true, given that automation can increase worker productivity and thus reduce the need to work as much to achieve what the workers deems to be an acceptable standard of living. Indeed, many urban workers today work fewer hours than urban workers 80 or 90 years ago, and have a much higher standard of living. Also, increases in the labor force during the 70s were partially driven by women entering the labor force in large numbers.

But, looking at the past thirty years and at current wage data, we can guess that people are leaving the work force now, not because they are so satisfied with their standard of living, but because they are discouraged workers, have retired earlier than they might have, have gone back to school, or have just resigned themselves and their household to a lower standard of living. The falling number of workers belies that continued claim in the media and by government press releases that things are getting better and better, and that with just a little more patience, happy days will be here again.
Moreover, with a declining work force and flat wages, who's going to finance all those Social Security and Medicare payments that are paid out relentlessly to an increasing retiree population, but financed by a shrinking workforce?