The internet has destroyed many business models. Just look at Circuit City, Borders, and travel agents. But one area where we haven’t seen much impact is with real estate agents. Sure, you’ll look online for hours on end for different houses and whatnot, but when it comes time to start looking at them in the real world, or make a purchase, we all go with a real estate agent. Why has this business model not been destroyed yet?

BusinessWeek looks into this with the story of three major players in online real estate. Two you probably know: Zillow and Trulia. The other, Redfin, predates them both. Redfin has tried to turn the real estate game on its head but so far hasn’t gotten significant traction. Whereas Trulia and Zillow have instead partnered with the existing real estate industry and seen far greater success.

The article does a pretty good job explaining the economics of the industry as it stands now, and it kind of feels like a racket.

Make sure you read the rest here: Why Redfin, Zillow, and Trulia Haven’t Killed Off Real Estate Brokers (BusinessWeek)

We can always debate how useful economists might be, or how legitimate their field of study is. But it should be obvious to you by now there is significant value in understanding things such as GDP, employment, government stimulus, and interest rates. This kind of knowledge influences everything from how you save to who you’re voting for.

Many of us expected that the people alive during this recession might fundamentally change their own financial habits. The generation that grew up in the Great Depression was notoriously frugal. We know that in the wake of this recession people have saved more and are definitely paying down debt. But how do we know the recession will fundamentally change the habits of a generation?

We probably won’t know for another generation. If you got into couponing, will you keep it up in five years? Ten? It will certainly be interesting to see. Now that we are at least a few years removed from the official recession, we can start to see if there was any effect; and if there was, start tracking it to see how lasting that effect will be.

This is already starting to pop up in a few areas. There are lots of organizations out there that can check out these things without the use of official government data. One of them, the Council for Economic Education, has a survey where they look at how well people are saving. As it turns out, Millennials are better savers today than Generation X. This is a bit surprising since Gen X probably got hit hard in the recession. They would have been the ones buying and borrowing perhaps the most, while Millennials were still in the early part of their careers or in school. It could be that they watched their parents go through this pain and are learning from them.

Millennials are apparently conservative investors too. Opting to take on less risky options than other generations. This poses its own potential problems down the road, since Millennials will have even less Social Security than their older generations.

To really know if we’ve learned any lessons though we need to test the knowledge of the people. The Department of Education tests high school students every year on their economic knowledge; things like the GDP, interest rates, and opportunity costs. And while these high schoolers may actually be talking about economics more, they have no greater understanding of economics than high schoolers did before the financial crisis.

So the lasting effects of the recession so far are mixed. It’s disappointing that high schoolers aren’t learning more about economics, but a new generation of workers are saving more than we probably would have expected before the recession began. Keep watching for signs of whether we have a generation of well-informed penny pinchers or a new crop of people destined to repeat the mistakes of old.

Image: velkr0

In the continuing fallout from the Reinhart-Rogoff scandal on debt-to-GDP levels, people continue to weigh in on the usefulness of economists. This time it’s a professor at Harvard asking “What Use Are Economists?”

I don’t quite agree with everything said in this piece, but it’s still a good read and does explain where economics is today as a specialty. Longtime readers will note that I’m still unsure as to whether economics is a science or not. See below:

• Open Letter To The Finite Physicist
• Dear Economists: America Doesn’t Like You
• Is Economics A Science?

That whole concept of “buy now, pay later” never made much sense from a phrasing perspective. If you haven’t paid for it yet, you haven’t bought it. In the strictest sense that’s really just a seller giving you a loan. “Sign and drive”, now that makes more sense. These arrangements aren’t always the best deals for the end customer, but to each their own.

Assuming “buy now, pay later” was something that made sense verbally, how would it sound if we flipped it? Pay now, buy later. In the convoluted phrasing that would mean you pay for something now, but get it later. That sounds pretty dumb.

But we do it all the time. Anything that’s purchased online and shipped to you fits that bill. It’s the opposite of instant gratification. And it turns out, buying this way makes you like your stuff more.

The act of waiting for your products to arrive makes you enjoy them more. This is partly due to anticipation. But another factor is that since the item is already paid for, when it arrives your brain kind of treats it like you got it for free.

From an economic perspective, it shouldn’t matter when you buy the item or when you pay for it. But there’s a reason the field of behavioral economics exists.

Read: Wait to Receive Something You Buy and You’ll Actually Like It More (Lifehacker)

Chances are you didn’t go to college in a big city. Many of us probably went to schools in either smaller towns or at least not bustling metropolises. But if after graduation you didn’t move to a major city to find a job, you probably considered it. Big cities have lots of job opportunities and so that’s perhaps the best place to look. But do the statistics agree with that assumption?

First, let’s look at what the odds are you’ll actually find a job anywhere that requires a college degree, or perhaps even better, requires your major. Most of the time, whether you major in art or zoology, your choice of major probably indicates a desired career path. Take a look at the charts below that show a job match based on having a college degree or college major.

That’s kind of depressing. Only 62% of college graduates are working in jobs that even need a degree. And only about 1/4 people are working in the field they majored in. Now let’s go back to the original question. Does moving to a big city increase your chances of getting a job matching degree or major?

It certainly seems logical. Even from an economic standpoint. Think about how a labor market works. Let’s imagine two towns. One town, Risa, has about 200k people and a diverse and stable economy that at any given time has 2,500 job openings and 15,000 people looking for jobs (employed and unemployed). The other is Vertiform City, a massive center of commerce with 20 million people, 250k job openings, and 1.5 million looking for work. The ratios are the same. But Vertiform City has more job openings than Risa does people. This means there’s a greater diversity of jobs and applicants. If there’s any efficiency in the job market then Vertiform City has to be better at matching job applicants to their skills and education. So let’s see how they stack up.

Okay we’re seeing something here. There is greater chance of finding a job requiring a college degree in a big city. The difference is similar in a match based on major. But the difference isn’t very wide in either scenario. You could move to Vertiform City and have a better chance of getting a job in your field, but when you consider other factors like cost of living the balance of whether it’s worth it may shift.

One thing not accounted for here is the diversity of jobs available to larger populations. If you major in information technology you could easily find a job in Risa doing something related to your major. But it might not be exactly what you want. Vertiform City with its many diverse industries could offer a very specific area of focus related to your major.

In the end, the differences aren’t as wide as you might expect. I would partially blame this on the inefficiency in which the labor market works today. Smaller towns like Risa don’t offer as much in diversity of skillset without searching outside the city limits. But a larger city could really improve things without having to import talent with an efficient labor market.

As technology becomes a bigger part of the job search, I suspect smaller towns could better match degrees and skills since they don’t have the post the job in the local newspaper. Perhaps this gap was wider 20 years ago. It’s also possible the numbers were higher back then too.

Be sure to read the study summary that produced this data. Included is a chart showing the distribution of jobs across many potential populations. You really have to go to the biggest cities to see much benefit at all.

Read: Do Big Cities Help College Graduates Find Better Jobs? (NY Fed)

Thanks to the NY Federal Reserve we get access to all kinds of data about the credit and borrowing situation of ourselves and our fellow citizens. Here’s an update on where we stand.

Total Consumer Debt & Composition

This chart shows what our consumer debt situation actually looks like. Obviously, mortgages make up the most of our consumer debt. But since 2008 we’ve reduced our overall mortgage debt. Interestingly, over the same period of time revolving debt such as credit cards and home equity lines first expanded (as the recession started to be felt) and then contracted. Now, we see a slight pick up in auto lending and the obviously growing amount of student loan debt. However, considering the overall downtrend in borrowing, student loan debt is perhaps not as concerning.

New Installment Loans

Installment loans are loans you repay over a set period of time, such as a mortgage or auto loan. The pace of new auto lending has been relatively flat since 2008. It’s up from the low in 2009 but new volume is still showing what we might consider to be “reasonable” levels of lending. On the other hand, new mortgage loans have shown health growth since early 2011. This would help to explain the recent rise in home prices.

Total Loan Balance By Delinquency

Delinquency is measured in a number of ways. Usually by 30, 60, 90, and more days. Delinquencies got really bad in the wake of the recession which is no surprise. Things have gotten a lot better since then though. Close to 92% of all loans are now current, that’s a huge improvement over about 86% when you think of the trillions we’ve borrowed.

Seriously Delinquent Loans

Here’s a view of just the loans delinquent for 90 days or longer. In 2009 that amounted to about $300 billion. Now it’s almost down to $100 billion. Sure the pace of student loan delinquencies have picked up, but again this is a trade-off that might be worth it.

New Foreclosures & Bankruptcies

Just like delinquencies have improved so have bankruptcies and foreclosures. These are the types of things that can do serious damage to your credit score.

Distribution of Consumer Credit Scores

Thanks to Equifax we have access to the average credit score of pretty much everyone. At first glance the scores look flat since 2003, but upon closer inspection you can see that scores have actually improved over time. We don’t really think about how the average consumer is doing. However nothing perhaps shows the change of our attitude from the bubble years than an average credit score that has moved from close to 680 up to almost 700.

The internet age is filled with all kinds of innovations and world changing technologies. It’s also filled with glorious time wasters that take something like a movie you know and love, and recap it in a 60 second black and white animation with little talking. This is the latter.

We talk a lot about the standard fare of economic data on this site; employment data always steals the show but there are many other data points with great importance. And then there are even more obscure economic reports that provide much more detail than the average user would really care to have. On another day we may find some of the most obscure things available, but for now let’s look at some more mainstream charts that you still probably have seen before.

Ecommerce retail sales

When was the last time someone talked about online sales? Maybe 8 years ago this was something people cared more about. There’s always been this assumption that sales of the internet would take over everything. As you can see back in the early 2000s online sales grew at an insane pace. The growth today at 15% is still fast, but the rate of growth is falling. With so much in sales still done in brick and mortar stores, 15% growth won’t steal a whole lot from that traditional channel.

US imports and exports with China

We often hear a lot of talk about imports from China. They make all our stuff from underwear to iPhones. People often think this means we don’t export anything back to China. But that’s far from the truth. Let’s not kid ourselves of course, we buy more stuff made in China than the other way around. However, since January 2010 imports from China are up 8% while exports to China are up 37%. We may never see parity, but the growth in US exports is not a story we hear about.

GDP in the US and Euro Area

By converting both GDP figures to an index we can compare how they’ve grown from that point in time. As you can see, coming out the financial crisis these two economies went in very different directions. This is partially due to the austerity plans put in place by many European countries. The US pursued more of a stimulus strategy. For now it seems the stimulus has been more effective but it remains to be seen if that is the long term winner.