The Variable Rate Bond that keeps on maturing

So...  I just don't have it in me to go though the history of all of this.  But if you recall the miasmic variable rate bond the Pittsburgh Water and Sewer Authority had out there and thought maybe it was all resolved merely because it has not been in the news of late...  well...

No... it all is hanging out there evermore. See this PR just fired out there late on a Friday afternoon (the time period you use to send PRs to die): Fitch Rates $72.75MM Pittsburgh (PA) Water & Sewer Auth Bonds, Series B-1 of 2008 'A/F1'. They were contracted to do the rating, which suggests to me a new debt offering is out there.

Note...  "seventh supplemental bond indenture".... but who is counting any longer?  Been a long time since the variable rate basis of the PWSA bonds was even noticed. I still want someone to audit those bonds just to come up with a number for how much of the debt went toward anything remotely defined as capital investment.. and how much just went into financial machinations to pay itself off.  If not an audit, there has to be a case study for someone to deconstruct.  For a public finance handbook.

and completely random stream of consciousness....  but don't you think they could use the potassium permanganate to find some of the leaks in the system.  Probably not the best idea I guess, but I bet it would work.  Crowdsource finding the purple throughout the city...    iPurple?

Trending

So if you caught this story in the Trib yesterday..  Pittsburgh region's profile rising among Chinese, The chart below may say it all with China and India being the largest drivers by far of recent immigrant flows coming to and settling in Pittsburgh.  File under factoids that surprise folks locally, but yet there are more folks born in Asia living in Pittsburgh these days than there are folks born anywhere in Europe. I've had people strenuously argue the point with me.  Surprising most likely because the switch happened in just the last decade and maybe because some do not realize how long ago it was that European immigration into Pittsburgh slowed. When you realize than the local foreign born population born in Europe is much much older than the population born elsewhere outside of the US... in a decade or so the composition of the local foriegn born population is going to be an even larger majority Asian.  Basically, there is no reason to think the trends in the chart below can't be extrapolated into the foreseeable future.

What 'up' is

So if you read this headline today: Pittsburgh leads nation in foreclosures in early part of 2012


Relax a bit.

If you get past the headline you will note that it is talking about how Pittsburgh had the biggest percentage increase in foreclosures. Biggest quarterly percentage increase more precisely.

If you read the actual press release RealtyTrac put out you will learn a few interesting things.  Even with Pittsburgh topping the percentage increase, it still does not come close to cracking the top 20 regions in terms of the actual foreclosure rate.  That must say something about how low foreclosures here were before that even after such a big jump we are not ranked high afterwards.

Also.. and more importantly, the weird factoid on Pittsburgh's increase was a quarterly jump and as pointed out in both the article and press release there were some anomalous things going on in the numbers resulting from the robosigning.  Also note the press releases other big observation:

Despite the quarterly increase in more than half of the metro areas tracked in the report, first quarter foreclosure activity was still down compared to the first quarter of 2011 in 135 out of the 212 metro areas (64 percent).

Now go back and read the headline. 

There are bad investments and there are bad investments

One of the owners of the Rivers Casino says the business is a terrible investment. Just terrible.  In context you can't ignore that the statement is made as part of litigation to lower the property's assessed value for tax purposes. 

So here is the deal.  Maybe he is right, maybe he isn't.  The Rivers Casino could be an awful investment or a great one.   What is a bit clearer is that the value of the casino has only gone up since he invested in the business.  When Don Barden and his coinvestors were supplanted as the equity owners of the casino there were no table games in PA casinos. No assurance there would be table games in the future. Since then the law changed and they all jumped into table games quickly.. because it made such financial sense.  Table games have been very very lucrative for Pennsylvania casinos.  Not only do tables games incur a lower tax rate on gross revenues but they bring more people through the door which has been pushing up slots revenues as well. Add in the detriorating economy at the time and other reasons to think that the price paid at the time was actually pushed down from what it might have been a year earlier or a year later.  One way or another the value of the casino has gone up since that investment was made.

Consider that if it was a bad investment, the new owners were clearly warned of that fact by just how well all the previous investors fared. The 'bad' part of the investment was not hidden and assuming the investors were not unsophisticated they took all the available information into account when deciding what price to pay.

Remember it was not just the late Don Barden who took a bath, but his co-investors and even the folks who backed the loans he took out.  That would include the Detroit public pension system.. someone may need to check to see what the outcome was of that story.  The point is that the casino was probably worth what it was paid by the new owners at the time they made the investment.. and the whole enterprise can only have increased in value since. 

Recall Don Barden's financing scheme for the casino early on.....

The incredibly disappearing (super?) voter

So a curious election to be parsed and parsed.  Of note seems to be the low turnout.  Without looking back at the long historical data explicitly, it is a good guess that it was the lowest number of ballots cast in an Allegheny County election cycle ever.  I bet the presidential campaigns will be parsing the turnout data down to its lowest quantum before November comes around in order to figure out who did, and who didn't, make it the voting booth.  I guess we don't have booths any longer.  

Works out that the election yesterday had 6-7% fewer ballots cast than just last year's primary cycle. It is hard to compare different elections, but there were reasons to vote this cycle. A couple heavily contested congressional races to begin with and at least the rump of what was a competitive Republican primary for president.  Overall though it was far less than half the ballots cast 4 years ago when the Pennsylvania primary was still a big deal in the Democratic race for the Democratic nomination. 

That scale of decline over just a year can't be attributed to a decline in the voting age population in itself...   but I tell you what is a part of it.. There is an ongoing a decline in the population in ages that make up most of the county's supervoters.  Still an older voter demographic I assure you, but when it comes to voter turnout even small changes in elderly demographics gets magnified in the ballot counts.  Worth looking into.

Anyway... here is the recent history in ballots cast in Allegheny County elections.  In this range for sure yesterday was the single lowest ballot count.

Rumor has it

Some say there is an election today.  If they say so.  Actually in the region here the primaries of note in a couple congressional races probably will increase turnout here compared to much of the state.

Anyone notice Pennsylvania's web page looks like it has had a major overhaul.  Is that new or am I just really slow to notice?

and if only politics was like a drawing for the daily number....  Pennsylvania would have a 75% chance of having a native son win the Republican primary for president today. I guess it does not work that way.

Yet despite the foregone end in the Republican primary, which is the highest profile contested (technically at least) race this cycle, the number of new voter registrations appears a bit higher than normal..  likely because that primary was not accepted to be overcome by events until near the voter registration deadline.

Routine is as routine does

I have to admit I am somewhat mystified as to why this story is running now.  Wouldn't this story have made a lot more sense running earlier in the year, or last year, or the year before??  But hey, if you missed this in the PG over the weekend: In Ohio, reassessments are routine.  Still makes me say again that the story of property assessment in Allegheny County is about as close as you can get to Groundhog Day over and over again.


There are lots of angles to the story of how Ohip conducts property assessments.  Here in Allegheny County, once most of the assessors were fired the subsequent assessment functions have been outsourced to firms like Sabre Systems and Cole, Layer Trumble, both of which are Ohio firms.  Why Ohio firms? Because there would be no reason for a Pennsylvania firm to become an expert in mass property assessments given the dearth of assessments going on in the state. Ohio, as the article notes, has statutorily routine reassessments and it is no coincidence that the firms that do that kind of work are located there.  Problem is that because there are no local firms specialized in mass reassessment work, there is that much less local knowledge built up.  So we have created a self-reinforcing cycle: no local expertise in mass assessments for tax purposes leads to less than optimal reassessment work which then creates greater public angst against doing any property assessment at all.  Methinks some actually want the assessment system in Pennsylvania to fail.


Yet the real story at the moment may be just how moderate the angst level has become over all things assessment.  Really.  All numbers need context and the story yesterday mentions early on that there are 44 thousand assessment appeals Allegheny County must deal with as a result of the assessment.  Sounds like a big number... 44 thousand and all.   That is 44 thousand out of almost 600 thousand individual parcels in Allegheny County.  When you take into account all the public rhetoric encouraging virtually everyone to appeal the number of appeals at this point is remarkably small.  For an assessment from values over a decade old at this point, it would have been unreasonable to expect much fewer appeals.  Even if every single valuation was notionally 'perfect' I have to believe 5-10% of folks here would file an appeal just on principle.


Anyway...  for the greater pespective: what may be the greatest coverage of local assessment anger is all in this one photo of 2,000 angry denizens of the South Hills.  Anger for 1,999 of them at least and one kind of happy looking dude if you can find him. 

Aberration or trend?

Looking at data for the Port Authority as reported to APTA, if you look at year over year changes in ridership, the most recent data for February 2012 an interesting factoid pops up. 

Adding together all modes, the year over year increase in ridership at the Port Authority is the biggest such increase over the last decade with the exception of one period: the year over year increase between September 2007 and September 2008.  My memory can't recall what might have been causing a pop in ridership back then, but maybe it was all the volunteers in town for the presidential campaigns?  That is less than a guess even, just the only thing that came to mind.

Anyway, it still is a pretty negative trend in the long run, but this is what it looks like plotting out the year over year changes for every month. I didnt appreciate how well they were doing ridership-wise between 2004 and 2006, a period when Allegheny County was clearly losing population at a pretty steady clip. 

USAirways and the 'so what' question

What is really fascinating is that a potential new major reorganization at USAirways just barely makes it into the news cycle here any longer.  Maybe that makes sense given the number of flights left here, but I bet there would be ramifications no matter. It is also a real change from the past when, as with US Steel before it, every little machination at USAirways would make news all around here.  As for the future???  Charlotte is still one of the top destinations of passengers departing PIT and I have to believe that a lot of that is related to the USAirways hub they have retained for now. 

Via my Pittsburgh Airport Data link on the right is this data on flights at PIT by carrier:

As with the Irish who came before them

If you are a political junkie and are following political infighting in the Raja/Mustio Republican primary race for PA state senate, it really is history repeating itself.

As I read it, the debate is over whether the Mustio adds are anti-Indian. I suppose it should be no surprise that it has all come down to this.  The immigration stats I put up last week which showed a rapid increase in permanent (and by very definition legal since that is what those stats are for...) residents coming from Asia.  Those Asian immigration numbers are indeed being driven primarily by new immigrants coming to Pittsburgh from India.  It is not a coincidence that population growth for the region is turning around right as those immigrant flows are increasing.

update: It just occurred to me how sad this whole little tempest is.  The race here is for Pennsylvania's 37th Senate District which is represented by John Pippy...   who only incidental to his whole CV happens to be Asian American, which has to be a rare thing in the Pennsylvania legislature.  Could we be becoming less tolerant?

It really is an issue far beyond this one race.  So even in a region which ranks about as low as you can get, you can still find angst over the most legal immigration flows that exist.  I will admit getting annoyed at people who say they are all for 'legal' immigration, but are just opposed to 'illegal' immigration.  Yet when push comes to shove their rhetoric against legal immigration is unabated.

As low as international immigration is into Pittsburgh, it still is a big part of the turnaround observed in net migration into the Pittsburgh region.  American demographics are pretty simple in a sense these days.  Growth is really only coming from immigration.  If you don't want immigration, that is your perogative, but you should plan on decline.

It really is time for Pittsburgh to stop being afraid of the future.  It is either that or we start to plan on not having a future at all.

Halt the electrons

So a letter from the USAirways CEO to employees and filed with the SEC today:

****

Dear Fellow Employees –

Today, we filed a statement (a form called an 8-K) with the Securities and Exchange Commission disclosing that we have signed agreements with the three unions that represent nearly 55,000 American Airlines employees. These unions are the Allied Pilots Association (APA), the Association of Professional Flight Attendants (APFA) and the Transport Workers Union (TWU), which represents all of American Airlines’ mechanics and fleet service employees. Shortly after our disclosure, these three unions issued a public statement announcing their support of a US Airways-American Airlines merger and that they have agreed to terms that would govern collective bargaining agreements for their members at the merged airline. I want to explain to you why we have done this and what it means.

First of all, today’s news does not mean we have agreed to merge with American Airlines. It only means we have reached agreements with these three unions on what their collective bargaining agreements would look like after a merger, and that they would like to work with us to make a merger a reality. To get to an actual merger, many more things must happen including gaining the support of AMR’s creditors, its management team and its Board of Directors. But this is obviously an important first step along that path and we are hopeful we can all work together to make this happen.

All of you have heard me talk about the benefits consolidation has created for US Airways and our industry. You have also heard me say that US Airways does not need to merge with anyone, as evidenced by our team’s outstanding results. That is still the case, but after studying American Airlines’ current state and their future plans, we have concluded that a merger with American, while they are undergoing their bankruptcy restructuring, represents a unique opportunity that we should not ignore. These beliefs are shared by the three American labor unions and we are delighted to have their support. Like us, they recognize the potential of a merger to improve the current and future careers of both airlines’ employees.

Combining American Airlines and US Airways would create a preeminent airline with the enhanced scale and breadth required to compete more effectively and profitably. Our intention would be to put our two complementary networks together, maintaining both airlines’ existing hubs and aircraft, and create an airline that could compete successfully with United, Delta and other carriers within our industry. A merged airline would provide competitive, industry-standard compensation and benefits, as well as improved job security and advancement opportunities for all employees of the combined airline. Most importantly, in American’s standalone strategy, over 13,000 employees at American will lose their jobs. Our merger contemplates saving at least 6,200 of these positions. For the US Airways team, the agreements we have reached with the unions representing employees at American would also provide enhancements to the compensation and benefits currently in place here.

Today is one step in what will be a much longer process. For now, it remains business as usual. We must continue to provide the outstanding service that customers have come to expect from US Airways.

In the meantime, if you have any questions, please stay connected via Wings (www.wings.usairways.com) and we will continue to provide updates on our progress. Thanks for all that you continue to do to take care of our customers. Together, whether a merger is our future or not, we will continue to run a great airline and have a bright future ahead of us.

Sincerely,

/s/ Doug

Doug

See what that National Geographic article wrought?

So not so much new in the latest data dump on jobs for the region.  Job count is up year over year again, and about average what you would expect month over month between Feb and March.  I had thought the mild weather would have pushed up some of the mid-winter employment which could have made the seasonal increases at the end of winter appear smaller.  So not yet, but maybe that will show up next month. Total jobs are the 2nd highest for a March other than the peak period in early 2001 discussed previously.  So I will go on a limb and say that July 2012 will be the all-time peak in the job counts for the Pittsburgh region.  You can hold me to that when we get that data.

So what might be interesting?  Again looking at sequential March data only, some solid jumps in the employment in local "Leisure and Hospitality industries".  Looks like this.. again just plotting March of each year:

So the local hotels are happy I am sure.  It is interesting in that in the past you would sometimes see this factoid of high 'tourism' related employment in the region.  It was true, but it was also reflecting the impact of the USAirways hub across a number of industries which would typically be thrown into that metric.  So it was not quite the same 'tourism' impact in that it was not  necessarily folks coming to visit Pittsburgh itself.   Yet now the hub is kaput and the 'travel and leisure' job counts are pretty solidly going up.  So there you go.

New Pittsburghers

Just reading about the region's most anticipated new resident...  What is more interesting are some news stories popping up of the folks who were not selected.

Not really connected... but in general where do people moving into Pittsburgh come from?  From something we put out late last year is this map:

Wonk-Burgh

and the full program is online if you are interested.

Drilling Dualities

It still is worth noting the economic dualities of the story today: Downtown Catching Eyes of Energy Firms.  I guess the boycott is off?  Somehow I missed the follow up press release saying shale-related investment within the city limits was ok again.  Then of course channeling my inner James Burke is this:

A bit gratuitous, but watching the news of the final 'flight' of the space shuttle Discovery I wonder why no mention even in passing of the space shuttle's Pittsburgh-connected origins.  I still can't find any online image of the space shuttle mock-up that was in the steel building's lobby for many years. It's like Pittsburgh  has been expunged from the whole Rockwell history ..  and vice versa for that matter.

Housing Riddles

So here is a riddle.  Population in the region is ticking up for the first time in decades.  Net migration is actually net positive for at least 3+ years now which has little precedent here in almost a century.  We know we have one of the oldest housing stocks in the nation and mimimal new construction in recent years.  So where are the new folks living?  If you look at the numbers not only is there no big uptick in housing supply on the horizon, but it looks like the rate of new housing units coming online here is lower than in parts of the 1980s.  So says the data on the number of building permits issued monthly:

The answer in part lies in the more interesting factoid to come out of the recent migration data.  Allegheny County showed net positive migration for the first time in many decades.  It was not a big net migration number, but the point is that it was not a big negative number which had been the pattern going back longer than it matters to count.  Back in the 1980s the region was seeing tens of thousands more leaving than coming each year, yet there was still new construction.  Why? Because there was still a big flow out of the urban core and into suburban municipalities, many of which were building out rapidly despite the overall regional malaise.

So there is a certain Zen to how all the numbers work out (isn't there always?).  Now the population decline is at least temporarily abated, but with Allegheny County holding it's own the big source of housing construction in the suburbs is diminished.  Plenty of places in the region's traditional centers that could accomodate a lot of new residents without a lot of new construction.  Probably a lot of investment needed in existing housing along the way.

Back to 1983

So I came across a political video that leaves me a bit speechless, but I have to say it has a certain mesmerizing effect on me as well. Economics, history, charts (yes, charts. Data. Real charts. Plural) and more in the campaign video of Joe Vodvarka for Senate (below).  US Senate if you are not aware.  In the Democratic primary if you are confused though you have to wonder why he didn't file as an independent or in whatever party Lyndon Larouch currently is affiliated with.  This all probably comes closer to the positions of Ron Paul than any other politician these days. Ron Paul? That would be the R who has not dropped out, but that nobody is talking about no matter.

Joe makes clear that he is a manufacturer of springs.  A vital and large part of industrial tchotchke. How large? You know there is a Spring Manufacturers Institute out there. He has some cool video from his spring making machines, but I hate to say there may be some other reasons there is a growing spring gap. 

Given that the Republican primary for US Senate is so wide open (quick, can you name the 5 candidates running) I really thought this guy would have a decent chance of a plurality if he was running as an R... and I thought that before reading this AP story from yesterday that sure seems to confirm the thought.  For the record I'm not casting any aspersions one way or the other with that.  It's more a comment on how conflicted statewide election returns are in Pennsylvania.  This again being the state that in the same exact election once voted overwhelmingly for Al Gore in one race and Rick Santorum in another.  Its not a comment on whether you supported one of the two, or the other, but to split your vote and vote for both of them must just cause pain to the pollsters. Yet the deciding voters in the state did just that.  So it's not uncommon in Pennsylvania to have candidates confuse party labels and party support. 

Anyway, check out the video. It's so omni-political. You have to watch to the very end.  Trust me.



update.. I worry about how Joe is going to do next week.  If you look at the youtube stats for this video... well, you'll see

Jobs, jobs, jobs

Just reading the Sunday paper(s).........

PG is focusing on veterans in the SW Pennsylvania in a set of articles today: Weak economy, lack of opportunities have returning vets fighting for jobs.  A different angle, but last year some colleagues looked at: The Impact of Veterans Returning to the Pittsburgh Region.  I myself am amazed at how much the world has changed since I wrote this old piece.

Trib is running a WashPo story that looks at demographic issues impacting the labor force nationally: Diminishing work force bad sign for economy.   I just looked at the past, present and future of demographic changes impacting just the Pittsburgh region's labor force in: Projecting the Impact of Demographic Change in Pittsburgh’s Labor Force.

PG looks at what is in a sense a perpetual story: Heard Off the Street: Manufacturing jobs await skilled workers.  Which if you want to dig into more there was an interesting piece on the PBS newshour recently that I was going to post on and then forgot.  The piece was laudably in depth, yet in the end incredibly conflicted piece on the state of the national labor force and this particular theme of how hard it is for manufacturers to find workers. Suffice it to say it's not a simple issue.  The piece is also based in an Ohio town not far away: Galion, Ohio, which is outside the heart of Cleveburgh, but not too too far away.  It gets to this great confusion that is not new in any way.  Jobs out there going unfilled all while lots of folks unable to get to work.   I'll embed the video below. 

Watch Why Job Seekers, Employers Aren't Connecting on PBS. See more from PBS NewsHour.

Permanent Papers for Pittsburghers

Not survey data, not estimates... the latest data just out from the folks at the Office of Immigration Statistics has the actual numbers on new permanent residents residing in Pittsburgh. I wish Clarke T. was still with us to update his book.  I suspect the cover image would have to change. Lots to ponder in the following trends:






PERSONS OBTAINING LEGAL PERMANENT RESIDENT STATUS AND RESIDING IN THE PITTSBURGH MSA BY REGION OF BIRTH: FISCAL YEARS 2006-2011

Year	Total	Europe	Asia and Oceania	Africa	Mexico	Other North America	South America	Unknown
2011	2,732	381	1,826	274	40	118	92	1
2010	2,319	385	1,401	254	47	123	106
2009	2,354	477	1,270	308	26	136	137	-
2008	2,255	562	1,081	247	52	205	105	3
2007	2,115	470	1,114	224	24	163	117	3
2006	2,170	546	1,020	227	44	212	115	6

The incredibly disappearing senate district

So a bit of mapping sleight of hand happened today that may have only been noticed by the political junkies, but will impact a lot of folks. 

Most know the decennial census requires redistricting of political districts across the nation.  The result for the relatively shrinking southwestern Pennsylvania was that one state senate district had to be moved to the faster growing northeastern part of the state. In the first redistricting plan the senate district to be lost locally was senate district 45 which was the district with the least senior member.  Senator Jim Brewster had only taken office in 2010 when the former incubent Sean Logan moved on.

Then the state supreme court came in and ruled that for various cartographic reasons the plan was not allowable.  The nominal reason given by the court was that too many municipalities were broken up between municipalities.  It was a big surprise when the court ruled the way it did and talk is generally that the real reason was that the court system was upset over budget cuts imposed on them.  Hold that thought.

So the state's redistricting commission redid the districts earlier today.  All of a sudden senate district 45 was 'saved' (i.e. kept in SW Pennsylvania and presumebly its current incumbent) and the district to be moved to the other side of the state became senate district 40 whose incumbent Jane Orie is likely about to resign given a criminal conviction that has been in the news.  So clearly the district will soon be represented by the new newest member which will no longer be Jim Brewster.

By the way.. the new plan which completely changed the senate redistricting was introduced by  Republican Stephen J. McEwen Jr., president judge emeritus of the state Superior Court who was appointed to the redistricting commission by the state supreme court in the first place. Got all that? Lesson learned: maybe we should pay attention in these state judicial races that nobody really notices.

How did they pull off the cartography? How do you make a senate district disappear? Senate district 40 pretty much defined the North Hills.  As best I can show it, here is what the changes wrought.

Original Redisticting Plan and Senate District 40

and the revised residistricting plan with the former district 40 highlighted

Getting Younger Every Year

While 'cure' may be overwrought in context, a positive version of some local trends is in the news today.  Trib: Region may have found cure for decades-long 'brain drain'

The story touches on, but may not quite get to some longer term trends that I don't think have been fully appreciated as yet.  Something we put together last year is the chart below which if you were to extrapolate a year or two past the 2010 data you can see the headline waiting to be written.  What is the date today?  Just about two years exactly past the 2010 Census day which was April 1?

WSJ on NatGas prices plunging further

How low is low?

So I typed this up and discovered at the end something else of wonkish note.  Calculating the Pittsburgh region's unemployment rate is a bit less clear than I thought.. and I already thought we overinterpret these monthly data dumps for a host of reasons.  So the state Department of Labor reported that the Pittsburgh region's unemployment rate, when seasonally adjusted, came in at 6.7% for February (and my division of their numbers gets you to the ominous 6.66%)   OK.  That is what we all normally look at and the number the media reports on.  Just recently the US Bureau of Labor Statistics started reporting its own seasonally adjusted unemployment rates for the Pittsburgh region.  In the past BLS reported the unadjusted unemployment rates for most MSAs but only seasonally adjusted rates for a subset of regions which didn't include Pittsburgh in recent years.  Last year they started reporting their own seasonally adjusted rates for most MSAs. The BLS calculation of the seasonally adjusted unemployment rate for Pittsburgh in February is 6.8%

Which to use?  For the comparison across MSAs I'll stick with the BLS calculation for the moment.

So how (relatively) low is the region's unemployment rate?  The top 40 labor markets are in the graph below.  The 5 places with lower unemployment rates include 2 regions with sizable presence of government jobs (Washington and Virginia Beach)...  government jobs which Pittsburgh lacks.. and two regions which may top us in the proportion of higher education related employment (Boston and Austin). Leaves only Minneapolis.   Their low unemployment rate must be because of all the bikes.

Yes, of course... the 'relative' unemployment rate is not really relevant to anyone individually.  In reality unemployment is either zero or 100% depending on your personal circumstances.  Still, how high is the region's unemployment rate?  Since 1970, the region's average unemployment rate works out to be a bit over 6.6%.  The nation's average unemployment rate works out to 6.4%.  So we have a bit to go to reach those levels... but at (6.7 or 6.8) it is not a big jump.

Jobs, and jobs again

Not anything in the news today that I see, but in general I have to admit I get confused when I read most opining on the source of job growth in the region's economy.  So below is just a straight up look at where recent job gains are coming from in the Pittsburgh region.   It's the job gains that are most likely fueling the migration gains of late which then has a big impact on local real estate markets. The big decline in 'government' jobs is of note.  Of the 3,300 government sector job loss over the year, just about half (1,600) are losses in state government jobs.  600 jobs were lost in the Federal government, 500 in local school districts and 600 in local government other than the school districts.   

The state government job losses are interesting.  I should know, but am not sure what caused the drop.  In the region state government jobs were very stable over the last decade at between 16,300 and 16,800 jobs measured in respective February period, but saw a drop to 15,200 just this year.  Did we close a bunch of state stores?

Source

The Triumph of Pittsburgh

Harvard and Manhattan Institute scholar Ed Glaeser is going to be in town today (looks like it has been cancelled for today) speaking at Pitt.  Professor Glaeser is one of a very few wont to quote the late Ben Chinitz who was at chairman of the Economics Department here in the 1970s I believe.  Chinitz along with Edgar Hoover were pretty much the folks behind the 4 volume Economic Study of the Pittsburgh region that was completed in the early 1960's and remains a personal Rosetta Stone for much of my work.

Glaeser's latest book The Triumph of the City has been in the news. On the book the Trib quoted him in an article lastyear.. the whole story is worth reading, but note this one quote: 

"(T)he reason why ... I would argue that Pittsburgh is successful is that it has smart people. ... (A) third of Pittsburgh residents above the age of 25 have a bachelor's degree, as opposed to 27.5 percent for the U.S. average -- that's very different than Detroit. Detroit's at 11 percent. ... That's absolutely crucial to Pittsburgh's success."

Sort of connects everything in the news of late doesn't it?  If anything Professor Glaeser understates the emergent Pittsburgh exceptionalism (as contrasts to past Pittsburgh exceptionalisms).  Note again that when you benchmark educational attainment for the entire population 25 and over you kind of are missing the Pittsburgh story.  As we all know we have a skewed older demographic and the older generations did not go to school as much as younger generations do today.  So when you look at specific age cohorts, and specificically younger working age cohorts the educational attainment of Pittsburgh jumps off the chart.    Then consider that younger college educated workers are the most mobile parts of the population you will see why migration has turned positive of late for Pittsburgh more than for any other reason.  It really does all tie together as much as many try to deny it.

Is being sent to Pennsylvania as bad as an assignment on a North Sea oil rig?

Why do I have to read in the Ohio media the clearest explanation of how the Marcellus workforce in Western Pennsylvania operates?  Likely the paradigm for all of Pennsylvania I would guess. In the Akron Beacon Journal today: Ohio can learn from Texas’ experience with fracking industry, is this sentence:                  

Every two weeks, driller Sean Nagel Mueller, his brother, Warren, and about a dozen others board a flight for Dallas-Fort Worth or Pittsburgh. Nagel Mueller works a two-week hitch of 12-hour days on a rig in Washington County in southwest Pennsylvania.

It turns out that the two week cycle is exactly the same as what is typical for workers sent to rigs in the North Sea.  The North Sea mind you is one of the worst places to work in the world.  The thing that gets me is that Washington County is pretty nice, full of people, lot of history in oil and gas develooment, and not a remote place.  If the industry can't find resident workers there, then what is it like across most of Pennsylvania.  Maybe they just don't want to despite the rhetoric.  Actually the sentence just before quote above is even more telling:

“If I can keep my headquarters, my people and my infrastructure here in Fort Worth and put three guys on an airplane every week to go hit the Marcellus, to fly up and go stay in a hotel in Youngstown … that’s pretty efficient versus picking up half my company and moving it up there.”

So it is all efficient.

Those quotes also explain what is behind some passenger trends at the airport of course. We won't even get into the bigger labor force issues that are embedded in them.  What I really want to know is why Ohio is not learning from Pennsylvania? (vice Texas)

"an economic awakening that's been at least three years in the making"

Mark my words, the energy story of 2012 will be the 2nd order effects of a natural gas glut that will peak as they run out of storage to even keep the natgas being produced.  What then? Good for some manufacturers for sure, but not for others. 
Take for example the opening paragraph in this story today from Calgary: Gas supply glut curbs pipeline spending

The dampening of support for two proposed northern frontier natural gas pipelines to Alberta by their backers indicates an economic awakening that's been at least three years in the making

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As much as I know the Keystone Pipeline, and all the invesment and jobs it could potentially induce, is at the center of national politics... the invesment being turned off elsewhere will be a bigger deal.  The pipeline just in the news above is a $16 billion dollar project.  That is a lot of pipe that is not going to be bought.

You would think low prices and potential that the nation will run out of storage capacity for natural gas prices would slow production, you would not know from looking at Ohio. There will be books written on all of this someday. 

and while we are all still absorbing the news of a potential ethylene cracker going into Beaver County, just note that Shell is also making noise about an even bigger Natural Gas to Diesel project that may go to Louisiana.

The bigger Pennsylvania story is going to be the  royalty payments many households have already been spening.  There just have to be a lot of folks spending their initial royalty checks without much consideration of how long they will last.  With natural gas prices dropping there is going to be an impact for sure and it may be bigger than some expect..  Pennsylvania court rulings have meant that state landowners only get royalities on the makret price net of production costs which are reported to be just under 90 cents/mcf for Marcellus gas.   So at current prices the royality base ($2 minus 90 cents)  is down conceivably 90% from mid 2008 (when prices were over ~$10/mcf).  It is not inconceivable royalty payments will virtually disappear if gas prices continue to drop.  I have seen no stories on this across Pennsylvania which makes me wonder what the delay is between production and royalty payment calculation.  If that delay is long, it means most just have not seen the bulk of the impact yet in their checks.  Since I hear stories of people paying cash for a lot of the noveau riche mega purchases... maybe the consequences won't be so dire, but hopefully there are not credit purchases that will come back to bite folks.

Finally if you are all doom and gloom on the price of oil and gasoline, some useful perspective in USNews: Be Wary of the Gloom and Doom Predicted by Energy 'Models'. 

Truly Something

Didn't get to this with the population/migration data released yesterday, but clearly related to those trends.  New data from Trulia on regional real estate markets has some ever more remarkable numbers for Pittsburgh and a reported 9+% annual increase in the asking prices of real estate here.  Not the highest in the nation, but close. I'm not so clear on how much research has been done on real estate asking prices vs. actual sales prices, but they are claiming asking prices are a leading indicator of real estate markets.  Whether that bears out  or not it still is a curious time for local real estate.  In real (i.e. inflation adjusted) prices, there just has not been a period of such rapid real estate appreciation here in a very very long time.  Certainly elsewhere there have been periods when real estate jumped like this, but just not here in any relevant recent history.  If you really want to quibble, it all seems to be supported by what the local real estate folks are saying (via the West Penn Multi-list folks) about the current state of the Pittsburgh real estate market.

Speaking of real estate in general.. PG is catching up to the story that US Steel may move out of the US Steel Building..  Still some remarkable images from US Steel's history here that I posted last month. It's not like US Steel has not threatened to leave in the past. That ad I had there was a full page in both the PG and the Pittsburgh Press at the time.  Ironic as well that US Steel might be moving out of the city just as Gulf might be moving back in.

oh.. and the number of real estate assessment appeals are in, and the headline is the number is way way down from previous experiences.  Imagine how many fewer appeals there might have been if say the public discourse over it all had not been so bombastic.  Note also that the ratio of appeals heard to the number cancelled due to lack of someone showing up is nearly equal. Makes me infer that the number of truly serious appeals is a lot lower than the number of appeals filed. 

BTW.. some Pittsburgh love from KeystoneEdge on Adaptive reuse of real estate here. Still a big part of our story since Pittsburgh will long have one of the oldest real estate stocks in the nation. That won't change overnight, or for a long time really. 


Back to the Trulia data.....  You can see how  much we stand out in their national map. If you want to compare us to parts of Florida which appear to be appreciating like we are, you really have to consider than in their case it is barely beginning to recoup what they lost in recent years.  Florida real estate markets have plummeted from previous bubble levels, whereas our gains our on top of pretty stable prices over the same period.  Just means I don't think the trends in the two regions are all that comparable in their 'green-ness' in this map. 

But is a bit more remarkable when you look at the just the greater Cleveburgh area.  Sort of what we saw with the pattern of foreclosures.  It's like poles on a magnet (to connect it all to the migration data of yesterday):

So much to parse, so little time

Below is just another way to look at some of the data just out.  I'll just point out there was a time we were not only last in a benchmarking like this, but last by a very large measure.  Literally off this scale of chart if I were to go try to recreate a version for say the  1982 to 1983 period. 

Actually. Let's think about that. If you want to benchmark it, net domestic migration likely peaked for the region around -50,000 at that time.  With a regional populationthen of ~2.6 million the net migration per 10K number works out to a -190 give or take.  Now go look at that graphic again. 

Post-Soylent Pittsburgh

So yes, go read the headline that there is another year of net migration into the Pittsburgh region: Region's population turnaround has lasted and grown.  and no, for the record, the Fish did not save Pittsburgh.

The regional number was not unexpected at all given the labor force trends of late, but there is a surprise, almost a mystery, in that Allegheny County recorded positive net migration since ????.  Be you a booster or not, it is a pretty signficant and surprising number that all of a sudden Allegheny County is showing up with net migration of over 3K (domestic + international). It is a development that needs a lot more parsing to make sense of.  The notional facts at the moment that Allegheny County is attracting or retaining more folks than the suburban counties it long trailed I honestly don't have a quick explanation for.   Think about the potential, if superficial, consequences:  All the development of shale gas concentrated in the suburban counties vice Allegheny yet the residential trends have moved sharply in Allegheny County's favor?  Curious.  How about assessments.  As the assessment process moved closer to reality people became more willing to buy homes here?  I remind folks that we gave a Nobel Prize in economics to Professor Lucas much for the theory of rational expectations, so you really do have to believe those folks really factored in the impending reassessment into their plans.  Ponder that some.

Before you get too too excited...  might be worth noting that Philadelphia grew by over 10K folks in this same data. But of note is that their growth was all natural population increase (more births than deaths) and their net migration was close to a wash.  One quick conclusion others are having on this is encapulated by the USAToday which also has a nice national graphic of the latest numbers in: America's romance with sprawl may be over. Yes, I'd love to have time or resources to do local versions of that graphic... alas.

So note that as I type the census folks have not put online their dataset on this as yet. So I am working off the news reports which was embargoed the data.  I will really will need to get other data later in the year which will allow parsing of the inter-county migration flows to really begin to make sense of this.  What I want to look at is what I will put out whenever I update my report on migration trends in Pittsburgh. 

But for Allegheny County's apparent positive migration flow here is some real perspective. I should note first that if you include international migration I think it was a positive flow for the county a couple years ago...but other than that parsing how long has it been since there was net positive domestic migration flow into Allegheny County?   Put another way, how far back do you have to go that Allegheny County was not a net loser of population to the suburbs?

I am pretty sure there was no year since the 1960's forward where that has been the case.  We could dig into that if you really want, but Allegheny County's population was hit by the compounded issues of regional decline and suburbanization over all those years. So how much further back do you have to go?  Here is a quick scan of a table from Ira Lowry's Portrait of  Region, Volume I of the Economic Study of the Pittsburgh Region. 1963. See if you can read what it is saying about Allegheny County's migration trends.  This was also the basis for one part of my quote in the paper today.

Yinz and Yang of Casino Finance

Compare and contrast the two recent news items that don't seem to intersect much if you just read them separately:

• Casino wants lower assessment: Casino makes high-stakes appeal of assessment
• Yet it is making more money than ever before:  Business news briefs: Pa. casinos hit jackpot with revenue in March

Only in Pennsylvania is the argument that an $800 million dollar investment is worth less than 10 cents on the dollar for tax purposes.

Well, I guess it isn't novel for some business to make the claim, but only here is it even conceivable to be taken seriously.  In fact the casino wants its assessment lowered well below what it was set at BEFORE it was allowed table games. Go figure that. Is it arguing table games hurt their bottom line?  Realize the casino property is likely valued on the basis of what potential income it can generate, so all of this is relevant.  

Actually, that $800 million number was the reference number early on. I forget what the Lehman line of credit was just in itself that Don Barden had lined up (and which did him in when it unraveled).  Since then there has been investment in the table games and I think some reconfiguation of the structure itself to accomodate them.  That plus adjusting for inflation makes me wonder if the casino represents a $billion dollar invesment in current dollars.  Just don't dare tax them at even $100 million!!

Funny looking at old news related to this. Check out the line from 2007  'a report by Lehman Brothers, calling Majestic Star the "best long-term buy in the gaming universe.'   Some corollary of  'even paranoids have enemies' in that Lehman may have gotten that right.  Of course that was self serving since I think Lehman was backing the enterprise at that point. (and full disclosure I once was a minion on the derivatives trading floor at Lehman).
Then there is the rosetta stone question.   Did the North Shore Connector raise or lower the value of real eastate on the Near North Shore to include the casino property?  Someone might want to point out that the casino has voted with its checkbook by underwriting the fares between downtown and the stop closest to the casino.  They are not doing that out of altruisim one can presume, so there must be value there for them. 


Yeah, I know I stopped updating my "Casino Watch" there on the right.  No time to do such things. 

For the record, I do know that the casino represents one of the biggest tax payers in the city (see the old graphic I once made up below which I believe was from 2010) which may irk them.  But it is also true that the casino in itself represents one of the biggest real estate investments in the city in the last decade so it all makes a certain perverse sense.  Put another way, the $$ spent on the casino could have literally bought all the real estate in a dozen or so city neighborhoods. Probably more now with the new reassessment lowering values in a lot of neighborhoods.

Effective Property Tax by City of Pittburgh Neighborhood (with Rivers Casino identified on its own)

Pittsburgh Peak Labor

Just one way to look at the monthly dump of labor force data for the Pittsburgh MSA. The headline is that the region's unemployment rate dropped 2/10ths of a percent to 6.7%, but that just isn't the story.  I will point out though that to overparse the rate dropped to just under 6.66%.  If the unemployment count had dropped just a couple hundred more it would have been a 3/10's of a percent drop over the month. That rarely happens. 

Anyways... here is a far more interesting trend with the latest data appended. 

February 2012 labor force = 1,235,200.  It was a bit higher in October of last year, but it is the highest ever for a February. The year over year jump being reported of +16K is pretty meaningful even if not really commented on anywhere.  There is a subtle transition going on in the regional economy you can start to see with this months data.  The absolute labor force peak for the region was a single month spike showing up in October 2008. That one month came in at 1,238,500, not all that much higher than the number just reported and I will stretch to say October this coming fall will really be a peak.  These are the seasonally adjusted numbers which should smooth variations within the year, but I don't think the adjustment really captures the scale of seasonal employment shifts here in Pittsburgh.  So October is typically not smoothed over and can be a spike because it captures both the back to school employment which is big here, while a lot of summer construction is continuing.  

The shift is that when you go back and look at October 2008 it was right in the middle of the AP-dubbed 'Great Recession'.  So lots of anomalous things going on in a lot of regional labor markets that were probably inhibiting normal migration flows across the nation.  Economic worries in a lot of places that were hit harder than Pittsburgh probably were not 'pulling' people from Pittsburgh at normal rates.  People staying in place here, while others coming here from regions that were already seeing rapid job losses probably played into the labor force surge here at the time. 'Surge' relative to what Pittsburgh has normally experienced in recent years. 

Now however, there has been a significant drop in the national unemployment rate and national job growth over the last year.  In a lot of regions Pittsburgh normally 'competes' with for people and jobs the rebound has been significant.  So the 'pull' of people and jobs elsewhere has probably started to return to normal levels.  Yet there is no sign of a turnarourd in the upward labor force trend here. That really marks a different dynamic if these trends sustain themselves. 

If recent labor force trends showing Pittsburgh comparing well to the nation were really mostly an artifact of the recession, then when the recession ended. you might expect things to revert for Pittsburgh. I was not expecting it because Pittsburgh's divergence from national trends began well before the recession even appeared, but it was something to watch for. For the moment the evidence is that Pittsburgh's trends were not a corollary of the recession. If the relative differences in unemployment rates (Pgh vs. US) continue, it bodes well for migration trends as reinforced by the labor force numbers.  Little secret, but labor force participation rates do not jump around anywhere near as much as people think they do.  Near term trends in labor force at a regional level is more impacted by workforce migration.

THE Cleveburgh Airport

So just as Pittsburgh potentially loses ever more flights we learn via the Cleveland Plain Dealer: Southwest Airlines to fly from Akron-Canton to Chicago.  Made me wonder what the trends have been at the three major Cleveburgh airports and I am not sure if the picture I come up with below surprises me or not.  The thing that struck me is that Akron is not all that much smaller than Pittsburgh when it comes to the number of flights. I really thought it was much smaller relative to PIT.  Anyway....  maybe it is too early to judge, but we will track this to see how much impact the airport's advertising in Ohio is having. 

Sid was out at the plate

First off... Sid spells the name wrong.  Second: he was out at the plate. And three:  Bream is a fish by the way..  Probably a pretty slow fish.  Still a classic photo being used by the PG in The Slide: The moment that begat a legacy of losing for the Pirates.  Why the attribution is Agence France-Presse is curious.

Anyway..  I guess I will need to reset this.   But the graphic version of what the 'slide' wrought:

Maglev not dead yet

No... that's not an April Fool's gag...  


Technically at least. 


So I say to myself, it's April Fools Day.. what is there to post?  I think the cupcake meme is overwrought forever.  I still occassionally get emails from people who really thought my news about the Balcony in Shadyside reopening was the truth. (really. thanks Google I guess).  I wondered whether anyone would believe it if I posted that Maglev had again been pulled back from the brink.  The brain conjured up a not entirely implausible scenario where say Ross Perot parachuted in to save the rump of Maglev Inc, even after it had its liquidation auction less than a month ago.  So I start typing.

Hmm... the brain wanders..  what did the Maglev patents fetch at auction?  That could be a detail to include.  Let's go check I say.

and in the file of truth is stranger than fiction what do I come up with?   Not only is the Maglev history not complete yet... but there appears to have been an emergency hearing on Friday.   Why?  Why do I even ask is the real question..   but skip that. It seems that when the creditors showed up at Maglev's office a week ago to collect the remaining assets the principals at the firm were copying their server backups onto external hard drives.  The creditors claimed that any such data is their property, but the hard drives were not turned over. The disagreement seems to have caused a flurry of filings and an emergency order filed just Friday afternoon. 

I say give it up. .   and I could not find anywhere in the filings what the patents fetched.  All those millions invested, you think someone might be interested if there was any actual value created.  Even if it is just an intellectual question at this point, it matters.

No I am not naive.. I get it.  Best to pretend it all never happened. Better for all involved.  Maglev will be excised from the economic history of the region no matter how much money was spent.  There may someday be a history that duly records that much more was spent on Maglev than on many of the initiatives we like to say were catalytic for the region's transformation.  Makes for a better story if we leave out the less successful parts and the opportunity costs incurred.

 I really should have put in a bid for those computers at ULS...