PREMIER ECONOMICS ADVISING

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The Coca Cola Inflation Gauge

In July 2024, a ten pack of these mini cola cans was $5.50 at Target in Madison. This August 2025, the same ten pack was now listed at $6.00. Coca Cola inflation appears to be 9%.

August 2025

New Glarus Wis. BP Station

Gasoline Price Watch

ECONWERKS has unique data series going back 20 years of the price of gasoline in Madison from the same station at the same point in time, right before the Fourth of July.

~3%

Who Really Wins PowerBall?

Recently, this multi-state lottery game reached a winning jackpot of over $1 billion. Oh yes, there was a person who won the big payout, and is now deemed the winner. But the REAL WINNER is the government. It wins big time!

Here is how: To get to the $1 billion payout means that around $2 billion had to have been wagered by the public given a PowerBall payout ratio around 50 percent. So, of the $2 billion, the government collects the first $1 billion.

But, the government takes again. The winner of the game must pay state and federal income taxes. And when you win big, you head straight for the top tax rate brackets. The IRS nabs you at 37 percent rate, and your average state will grab around 6 percent. So, the $1 billion jackpot gets eaten up by 43 percent in income taxes, leaving the winning person taking home only $570 million. That is still a healthy bit of cash. But, the state governments pocketed the first $1 billion, and the US and states also grab $430 million off the winner. That turns into government pocketing $1.43 billion of the $2 billion, a total takeaway of nearly 72 percent. The lotto can make regular folks millionaires, but the government takes in the billions.

Do you still really want to play?

Play to Win, Play Only What You Can Lose, & Expect to Lose.

CBS News says your odds are 1 in 292 million. Wow.

April 2024

Is ESG Investing a Smart Move?

About four years ago, this financial movement really sprang to life: Invest in stocks or bonds from companies with an environmental conscience, social justice aim, and proper diverse corporate governance. All these goals are worthy and have solid merit. But, does it work for the bottom line of investment purposes for your financial portfolio? The jury is still out on long-term prospects, but two perspectives weigh caution. First, managed portfolios per the research literature rarely outperform index-based investing. Second, investing in any narrow sector violates the financial tenet of appropriate risk management via diversification. And recently, Kiplinger Personal Finance magazine in November 2023 did not portray the best picture for ESG investing. The magazine showed that since the inception of the movement, ESG indices are underperforming broader stock market indices. Admittendly, this is short term result as there is only several years of data, but it is a forewarning. Finally, some ESG investing has been very successful because such investment has taken the form of betting on the technology sector, which has been booming, but again betting on one sector goes against financial wisdom. So be careful out there!

December 2023

Which Wins: Politics, Physics or Pricing?

The PPP-Pyramid Examined

In the short run, political authorities can decree whatever Policy they want, so Politics wins and is at the top of the PPP-Pyramid. There are also market dynamics at play around every policy action. Pricing follows economic conventions; if the policy does not have economic merit, the policy will ultimately lead to failure. But, the ultimate winner is Physics. Laws of Physics trump policy making and even economic pricing in the PPP-Pyramid. Proper physics is the true foundation in the PPP-pyramid. The best outcome of course is one that aligns with Physics, Pricing, and Policy making; but, human institutions are imperfect, and that alignment is more often a coincidence than a certainty.

May 2023

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