Record Dividends as the U.S. Creeps Deeper Toward Recession

To contact us Click HERE

According to S&P's latest Monthly Dividend Action Report [Excel spreadsheet], the month of November 2012 was a record month that saw some 3,327 U.S. companies make some kind of declaration involving their dividends (that's not the record!) Here are the astounding numbers:

197 companies acted to increase their cash dividend in the 8th best month on record (since January 2004), and the most in any November on record. The all-time record for regular dividend increases announced in a single month is 246, which was set in February 2007.

228 companies acted to make a special cash dividend payment to their investors, the most ever. To put that number in context, the most announcements that companies would pay an extra dividend in an entire year was 233 in 2007. For the period of time for which we have data, the average number of extra dividends announced per month from January 1994 through October 2012 is 33. The previous record of 97 in one month was set in December 2010.

But this drive to pay out dividends in 2012 before the tax rates on them goes up in 2013 masks the deteriorating situation for many companies in the U.S. The number of companies announcing they would cut their cash dividend payments in the month of November 2012 rose to 27, up one from the previous month.

To put that increase in perspective, the average number of companies that act to decrease their cash dividends in a non-recession month is 4. The 54 dividend cuts that have been announced in just the last two months alone is more than would be expected in an entire average non-recession year.

In the chart above, it takes at least 10 companies announcing dividend cuts in a given month for the U.S. economy to be considered to be in recessionary territory. Through November, U.S. companies have announced 151 dividend cuts in 2012.

U.S. Jobs Five Years After Their Peak

To contact us Click HERE

We're going to look at the change in the U.S. employment situation since the total level of employment in the U.S. peaked five years ago in November 2007, but first, let's look at the change since October 2012.

Through November 2012, the U.S. employment situation for young adults Age 20-24 was good, for all older adults it was bad, and for teens, it was "meh".

Overall, some 6,000 more teens and 62,000 young adults than in October 2012 gained jobs, while some 190,000 fewer individuals Age 25 and older were counted as being employed. Doing the math, the net change in the number of jobs in the month from October 2012 to November 2012 came in for a loss of 122,000.

The total number of employed Americans fell by that number to 143,262,000 in November 2012, which is 3,333,000 less than the so-far all-time peak number of of 146,595,000 Americans who were counted as having jobs in November 2007.

The number of employed teens in the U.S. has declined from 5,927,000 in that month to 4,479,000 some five years later. Over this period of time, the number of young adults Age 20-24 with jobs has fallen by 405,000 from 14,001,000 to 13,596,000 and the number of older adults has fallen by 1,480,000 from 126,667,000 to 125,187,000.

Looking at the total decline in the number of employed Americans through November 2012, jobs lost by U.S. teens account for 43.4%, young adults for 12.2% and adults Age 25 and older account for 44.4% of all jobs that have disappeared from the U.S. economy over the last five years.

In November 2007, teens represented 4.0% of the entire U.S. workforce. In November 2012, teens account for just 3.1% of the reduced U.S. workforce. At this point, jobs that were most likely to have been held by teens are 14 times more likely to have been negatively affected by the employment situation over the past five years than their numbers among the entire U.S. workforce would suggest.

In retrospect, it seems that the U.S. Congress' action to boost the minimum wage by nearly 41% in three stages from 2007 through 2009 without doing anything to boost the revenues of teen employers by an appropriate percentage to compensate them for their higher costs of doing business during this period of time wasn't such a hot idea.

Random Thoughts

To contact us Click HERE

How do we know that the Fed pays attention to the things we write? Previously, commenting on the apparent lack of effect that the Fed's latest round of quantitative easing has had on stock prices, we observed:

1. The Fed is doing it wrong. In the two previous rounds of QE, the Fed purchased large quantities of U.S. Treasuries. So far in this round, the Fed is only purchasing Mortgage Backed Securities. The stock market just doesn't get the same bang for the buck as when the Fed buys up Treasuries, which acts to reduce long-term interest rates across a wider swath of the economy, which is really what helped boost stock prices in earlier rounds.
2. QE, as an effective policy, is running out of gas. The interest rates that the Fed might hope to lower in its QE programs started off at a much lower level, and a lot closer to their minimum zero level, than in its previous incarnations. With less room to maneuver, the Fed's actions just don't have the same oomph they once did.

And now, the Fed has announced that they've gotten the message and are going to start "doing it right" and also buy Treasury securities, which will give this latest generation of QE more "oomph". Interestingly, they've also announced the economic targets that must be satisfied before they will discontinue the plan. All together, that suggests to us that they're thinking the future for the economy in much of 2013 will be somewhat worse than other official sources are letting on....

It looks like that as far as the pace of layoffs in the U.S. is concerned, the impact of Hurricane Sandy lasted for just three weeks.

Assuming that the volatility we've previously noted dies down, we should have enough data to begin projecting the new trend in initial unemployment benefit claim filings within a few weeks.

Suppose we converted a house to run entirely off the grid on green, renewable energy sources like solar or wind, so that we would never again have to pay an electric bill or generate any carbon emissions for the power it consumes, as President Obama would seem to desire all Americans do. What possible environmental harm would we cause by lighting it with the soon-to-be-banned 100-watt incandescent bulbs, which we might note are far more friendly for the environment and are much less costly than their CFL replacements? And if the answer is "none", why must we have the government progressively ban all incandescent light bulbs from production?

On a development note, we can't help but notice that if we combined the site traffic our tools for determining individual, family and household income distribution percentile rankings, they would collectively represent the most popular tool ever on Political Calculations. So guess what will be coming soon!...

And speaking of coming soon, here's our Christmas countdown clock!

A First Look at 2013's Quarterly Dividends

To contact us Click HERE

We now have dividend futures data through the fourth quarter of 2013. Our chart below shows how the expected future for dividends looks:

Given all the dividend-related activity following the 6 November 2012 election in the United States, where companies have acted to pull dividends from 2013 into 2012 instead to beat a now guaranteed dividend tax increase, we anticipate that there may be quite a bit of error in the actual dividends that will be paid in 2012-Q4 and for 2013-Q1. We believe the value that will actually be recorded for 2012-Q4 will be about $0.42 per share higher than what we've shown on the chart above based on how much money appears to have been transferred from 2013-Q1.

Looking at the history of the expected future for that quarter, 2013-Q1's expected cash dividend of $7.88 per share is down considerably from the high value of $8.30 per share that was expected to be paid in that quarter back on 17 October 2012. Almost all of the decline in the level of expected dividends for 2013-Q1 has taken place since 15 November 2012.

Looking forward now in time, the expected level of cash dividends for the S&P 500 looks as if the first three quarters for the U.S. economy in 2013 will be lackluster. The fourth quarter looks as if it will be better by comparison, but even here we've already seen some erosion in investor expectations for that future quarter.

Here, the expected dividends for that quarter first debuted on 13 December 2012 at $8.90 per share. That has fallen to $8.84 through the futures for 19 December 2012.

We hope you've enjoyed 2012. As we've long forecast, 2013 will be a very different story....

Your Paycheck in 2013: Part 1

To contact us Click HERE

How much money will Uncle Sam allow you to keep from your paycheck in 2013 in the form of federal income taxes?

Thanks to the so-called "fiscal cliff" standoff in Washington D.C., the answer, for now, is exactly the same as you would have taken home in 2012. That fact will hold true even if the reported deal struck and passed in the U.S. Senate early on 1 January 2013 is passed by the House of Representatives later in the day.

That's because President Obama has previously directed the IRS to not issue any change in the directions it provides for withholding income taxes from individual paychecks to the nation's employers until a deal is finalized. As a result, the rules that the IRS issued for employer withholding taxes in 2012 will continue to remain in force, at least for the time being.

And because those same withholding tax rates, income thresholds, personal exemptions and allowances will continue to apply into 2013, the amount of money that the U.S. federal government will take from your paycheck represents roughly a 2.6% increase over what it would otherwise be, thanks to the return of bracket creep for the first time in nearly 30 years.

That means that 2013 will mark the first time since 1984 that the corrosive effect of inflation upon personal income will be allowed to affect the amount of taxes withheld from individual paychecks.

While bracket creep specifically refers to the situation where individuals suddenly find themselves paying higher levels of taxes even though their inflation-adjusted income may not have increased at all, in this case, it will affect every working American who has federal income taxes withheld from their paychecks because the IRS' inaction also means that the size of the personal exemption and withholding allowances that they might claim through their W-4 form is not being increased to account for the effect of the inflation that has occurred since 2011.

But then, those are the income tax increases that most people are unlikely to notice on their paycheck. By contrast, they won't be able to help but notice that the size of the take-home portion of their paychecks is shrinking by 2% of their income thanks to the expiration of President Obama's temporary "stimulus" Social Security payroll tax cut, which isn't affected by the "fiscal cliff" standoff over federal income taxes. Here, the Social Security tax rate on personal income will return to 6.2% from its 2012 level of 4.2%, no matter what happens with the fiscal cliff situation. [There is no change in the portion of Social Security taxes paid by U.S. employers, who have continued to separately pay 6.2% of their employees' income to Social Security - Social Security has been running deeply in the red in part due to President Obama's "stimulus" tax cut.]

Our tool below reveals what your paycheck, minus any state income tax withholding, will look like for now in 2013:

Your Paycheck and Tax Withholding Data
Category	Input Data	Values
Basic Pay Data	Current Annual Pay
	Pay Period	Daily Weekly Biweekly Semimonthly Monthly Quarterly Semiannually Annually
Federal Withholding Data	Filing Status	Single Married
	Number of Withholding Allowances	0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
401(k) or 403(b) Contributions	Pre-Tax Contributions (%)
	After Tax Contributions (%)
Flexible Spending Account Annual Contribution Data	Health Care Spending Account
	Dependent Care Spending Account
What if You Had a Raise?	Desired Raise (%)

Your Paycheck Data
Category	Calculated Results	Values
Basic Income Data	Proposed Annual Salary (Including Raise!)
	Typical Paycheck Amount
Federal Tax Withholding Amounts	U.S. Federal Income Taxes
	U.S. Social Security Taxes
	U.S. Medicare Taxes
401(k) or 403(b) Contributions	Pre-Tax Contributions
	After-Tax Contributions
	Total Contributions
Flexible Spending Account Contributions	Health Care Spending Account
	Dependent Care Spending Account
Take Home Pay Estimate	Net Paycheck Amount

We'll update our tool once Washington D.C. gets its act together.

Speaking of which, if you want to find out how much federal income taxes would be being withheld from your paycheck in 2013 if not for President Obama's bracket creep, or to find out how much higher they might be if no deal is ever reached and the IRS has to go back to the income tax rates of 2001, our tool "Your Paycheck Over the Cliff" will answer those questions for you.

Previously on Political Calculations

We've been in the business of calculating people's paychecks (not including state income tax withholding) since 2005!

• Your 2005 Paycheck
• Your 2006 Paycheck
• Your 2007 Paycheck
• Your 2008 Paycheck
• Your 2009 Paycheck
• Your Paycheck in 2010
• Your Paycheck in 2011
• Your Paycheck in 2012
• Your Paycheck in 2013: Part 1

But before we forget, your employer pays a lot more to keep you on the payroll than just your paycheck! The tool below shows how much it costs to employ you in 2011-12!

• How Much Does It Really Cost to Employ You? (2011-12 Edition)

And you should also be aware that the employer's portion of Social Security and Medicare taxes (aka "FICA" taxes) have replaced corporate income taxes almost dollar-for-dollar over the years. Don't let anybody pull the "U.S. corporations aren't paying a fair share of taxes" line with you - they're really paying almost exactly the same share of all U.S. taxes that they have been for the last several decades!

Why There Are Only 12 Days of Christmas

To contact us Click HERE

By now, you may be getting very tired of the Christmas carol equivalent of "The Wheels on the Bus Go Round and Round".

We're talking of course about "The Twelve Days of Christmas" song. You know, the one with "five goooooolden rings" and "a partridge in a pear tree".

What most people don't fully appreciate about the carol is just how much stuff is being doled out in the twelve days it spans. Not even PNC Wealth Management, the people who calculate the value of the gifts being given out on each day in the song each year, really get it.

You see, they treat the math as if only one gift is being given out on each of the 12 days, whether it be a single set of 10 lords-a-leaping on Day 10 or 3 French hens on Day 3. But here's the thing - if you pay close attention to the lyrics, many of the gifts are repeated on each subsequent day after being given out.

So instead of just one partridge in a pear tree, the recipient of all this true love would actually have 12 - one partridge in a pear tree for each day the song goes on. The "goooooolden rings" would be pretty cool to get, because you'd be getting 40 of them, which you could then equally divide among the 40 milking maids would would start arriving in batches of eight on Day 8.

Needless to say, this is a lot of stuff to keep track of, which is why we've created today's tool, which you can use to keep track of how many total items have been transferred as gifts through each day of Christmas. Just enter the day, and we'll tell you just how many items we're talking about....

Days of Christmas
Input Data	Values
What Day of Christmas Is It?

How Many Gifts Have Been Given to Your True Love?
Calculated Results	Values
Gifts Given on Entered Day of Christmas
Total Gifts Accumulated Through Entered Day of Christmas

And there you have it. Going back to the title of our post "Why Christmas Only Has 12 Days", we find that after 12 days, the gift recipient in the song has accumulated 364 items - enough for every other day of the year (except for leap years, but don't tell the 10 lords.)

You can get a visual sense of all the gifts given during these twelve days in the following image, which was the inspiration for today's post!

This is our final post for 2012 - we'll see you again in the new year. In the meantime, we'll leave you with the only tolerable version of "The Twelve Days of Christmas" that we could find:

Have a Merry Christmas!

I've Been Banned

To contact us Click HERE

CREDIT: True Dinos

CREDIT: True Dinos

So much for having a conversation.  


I visited the FaceBook page, True Dinos, of a young Earth creationist (YEC) run a fellow named Aaron Tulllock.  You can no longer see my posts, because I've blocked by the administrator for "being a troll." 
What did I do?
I asked about the design of the vas deferens and the recurrent laryngeal nerve. [See Smack Down.] Here's what left of the comments about Intelligent Design.

CREDIT: True Dinos

Then there was my comments on this post. Since True Dinos is also a biblical literalist, I informed him that the bible literally claims that the Sun revolves around the Earth. When pressed by another YEC called The Question Evolution Project, I provided not only the biblical verses, but a link to other biblical literalists who truly believe in geocentrism. [Regular readers might know my earlier blog posts Your Elementary School Teachers Were Right and LA Times Does Story on Geocentrism.] He never responded; in fact, his comments on True Dinos have been wiped.
Since The Question Evolution Project was unwilling to confront his obvious hypocrisy on the bible being literally true, I visited The Question Evolution Project FaceBook page. Because I had the audacity to debate, he promptly blocked me . 
Oh, what am I to do now? 
If any of the administrators from those pages wish to comment on this blog, they are free to do so.  All I ask is that they not do so anonymously. They are free to use whatever language they see fit to use. They will not be banned.
A bit more about these two pages.
Aaron Tullock (True Dinos) claims to have sighted a living pterosaur in 1995 in Marion County, Texas. The fossil and geologic evidence shows quite dramatically that  these reptiles became extinct about 65.5 million years ago. An excellent resource for those interested in pterosaurs is Pterosaur.net.
The paleontologists there say

Unusual winged animals reported from around the world have been suggested by some cryptozoologists and creationists to be modern-day pterosaurs that survived the end-Cretaceous extinction event. From Africa, people have reported a semi-aquatic winged animal called the kongamato while on New Guinea and the surrounding islands sightings are claimed of a gigantic, bioluminescent, crested flying creature (the duah) and a smaller, long-tailed version, the ropen. Fossil evidence demonstrates overwhelmingly that pterosaurs did not survive beyond the end of the Cretaceous, and the sightings of pterosaur-like animals that have been reported appear to be a combination of hoaxes and misidentification of large birds and bats. So-called modern pterosaurs are generally ugly, dark, carnivorous, bat-winged horrors—they sound more like imaginary generic flying monsters than the pterosaurs we know from the fossil record.

Like these other foundational scientific theories, the theory of evolution is supported by so many observations and confirming experiments that scientists are confident that the basic components of the theory will not be overturned by new evidence.

Plus technically speaking, pterosaurs aren't dinosaurs, although they did coexist.
Now for The Question Evolution Project.  In their About section, they write "true science is not afraid to examine contrary evidence and allows alternative theories to the interpretation of the evidence." Agreed. Science does not make progress without questioning.  Consider the Copernican revolution or the quantum revolution. So why was I banned? I presented biblical evidence that didn't fit their preconceived notions about what the bible says. 
On the other hand, "the Admins have other things to do besides engage in lengthy debates." It's strange that for people that being interested in "scientific evidence and its interpretation" and "intellectual honesty and freedom," they refuse to discuss anything.  How does The Question Evolution Project feel about questions? They say "[the site] is for people who can think for themselves and dare to ask questions," but don't ask them if they're geocentrists, because that will get you banned.
One last item, The Question Evolution Project claims that evolution is not a fact."  What do scientists say about that?  
The National Academy of Sciences says 

Like these other foundational scientific theories, the theory of evolution is supported by so many observations and confirming experiments that scientists are confident that the basic components of the theory will not be overturned by new evidence.

The American Association for the Advancement of Science states

But the phenomenon of gravity, like evolution, is an accepted fact.

I imagine The Question Evolution Project will just say we're being bullies.