Friday, January 14, 2011

Best data of the week

The cost of college in the US continues to spiral out of control with little correlation to the value of college education. Why?

Why, did the housing market explode and then collapse? Increased access to cheap money allowed many people to buy a first home and many more to trade up into the McMansion of their dreams.

Well, much the same has occurred in the education market. Instead of demanding a better product (a degree that can lead to a job that justifies the cost), increased access to cheap money has allowed college pricing to spiral out of control.

Consider these stats:

* The median U.S. home price is currently $170,600, down 26% from its peak of $230,200 in July of 2006.

* The Dow Jones is currently 11,672, down 18% from its peak of 14,198 in October of 2007.

* The US has lost roughly 3.8 million since the start of the recession.

* Yet, the annual tuition for a private four-year college in America is now $27,293, up 29% from five years ago.

The initial jobless claims data spiked earlier this week which was a surprise, but the data around the holidays tends to be a little screwy. However, remember when the data unexpectedly dipped before Christmas it lead to great rejoicing :)

However, again I'd point to the Nonseasonally adjusted data for the scary data of the week. These are the raw numbers before they are smoothed for statistical purposes.

While the seasonally adjusted claims number was 445k new claims, the nonseasonally adjusted number was a huge 770k new claims in the first week of January. These are the actual number of out of work people filing claims and while this number always spikes after the holidays it is a big number that warrants watching.

NJ Governor Christie is looking to cut rising healthcare costs.

"Christie wants benefits changes that make the health insurance system more like the private sector or the federal government, with employees paying about one-third of the costs of whatever benefits plan they choose. The government picks up the other two-thirds.

That would amount to a significant increase from the 1.5 percent of salary employees now pay. A teacher earning $60,000 now pays $900 a year toward a plan that costs $22,000, Christie said. Under his proposal, that teacher would contribute $7,333 a year for an identical plan.

The changes also could result in inferior benefits, as some workers would be forced to accept plans with higher deductibles and copays or limited choice of doctors, to keep down costs.

Christie said health benefits for current workers and retirees cost New Jersey taxpayers $4.3 billion a year and growing. He said the state cannot afford to have worker benefits eating a larger and larger portion of state, local and school budgets."

These are not going to be popular decisions, but these are the sort of decisions that may be coming to NY as well.

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