Wednesday, February 12, 2014

Update: It Never Rains in California

A month ago I mentioned that California is experiencing another drought year. Since California is the largest agricultural state, the ongoing drought could have an impact on food prices - and on the economy.

From the WSJ: Battle Over California Drought Solution
California's drought is becoming a hot issue on Capitol Hill, where bills from Senate Democrats and House Republicans offer rival solutions on how to best aid water-starved farmers.

The Golden State has suffered through a three-year drought that is forcing farmers to leave fallow hundreds of thousands of acres. Other Western states have experienced drought conditions for much of the past decade, prompting water managers across the region to embark on billions of dollars in projects to safeguard and stockpile supplies. Because California boasts a bigger agricultural sector than any other state, the drought could have an outsize economic impact nationally, raising produce prices. A weekend storm dumped rain and snow on Northern California, but officials said that put only a small dent in the drought.
Lawmakers can't make it rain!

Here are a few resources to track the drought. These tables show the snowpack in the North, Central and South Sierra. Currently the snowpack is about 28% of normal for this date.

And here are some plots comparing the current and previous years to the average, a very dry year ('76-'77) and a wet year ('82-'83).

For John Muir Trail hikers, I recommend using the Upper Tyndall Creek sensor to track the snow conditions. This is the third dry year in a row along the JMT.

FNC: Residential Property Values increased 8.7% year-over-year in December

In addition to Case-Shiller, CoreLogic, I'm also watching the FNC, Zillow and several other house price indexes. 

FNC released their December index data today. FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 0.3% from November to December (Composite 100 index, not seasonally adjusted). The other RPIs (10-MSA, 20-MSA, 30-MSA) increased between 0.4% and 0.5% in December. These indexes are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).

Since these indexes are NSA, this is a strong month-to-month increase. 

The year-over-year change continued to increase in December, with the 100-MSA composite up 8.7% compared to December 2012. 

Click on graph for larger image.

This graph shows the year-over-year change based on the FNC index (four composites) through December 2012. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

There is still no clear evidence of a slowdown in price increases yet.

The December Case-Shiller index will be released on Tuesday, February 25th.

FNC: Residential Property Values increased 8.7% year-over-year in December

In addition to Case-Shiller, CoreLogic, I'm also watching the FNC, Zillow and several other house price indexes. 

FNC released their December index data today. FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 0.3% from November to December (Composite 100 index, not seasonally adjusted). The other RPIs (10-MSA, 20-MSA, 30-MSA) increased between 0.4% and 0.5% in December. These indexes are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).

Since these indexes are NSA, this is a strong month-to-month increase. 

The year-over-year change continued to increase in December, with the 100-MSA composite up 8.7% compared to December 2012. 

Click on graph for larger image.

This graph shows the year-over-year change based on the FNC index (four composites) through December 2012. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

There is still no clear evidence of a slowdown in price increases yet.

The December Case-Shiller index will be released on Tuesday, February 25th.

DataQuick on SoCal: January Home Sales down 9.9% Year-over-year, Conventional Sales up Sharply Read more at

Southern California logged its lowest January home sales in three years as buyers continued to wrestle with a tight inventory of homes for sale, a fussy mortgage market and the highest prices in years. ... A total of 14,471 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 21.4 percent from 18,415 in December, and down 9.9 percent from 16,058 sales in January 2013, according to San Diego-based DataQuick.
Last month’s Southland sales were 17.3 percent below the average number of sales – 17,493 – in the month of January since 1988. Sales haven’t been above average for any particular month in more than seven years. January sales have ranged from a low of 9,983 in January 2008 to a high of 26,083 in January 2004.

The economy is growing, but Southland home sales have fallen on a year-over-year basis for four consecutive months now and remain well below average. Why? We’re still putting a lot of the blame on the low inventory. But mortgage availability, the rise in interest rates and higher home prices matter, too,” said John Walsh, DataQuick president.

"Two of the bigger questions hanging over the housing market right now are,‘How much pent-up demand is left out there?’ and, ‘Will inventory skyrocket this year as more owners take advantage of the price run-up?’” Walsh continued. “Unfortunately, we’ll probably have to wait until spring for the answers. When it comes to statistical trends, January and February are atypical months that haven’t proven to be predictive over the years.”

Foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 6.6 percent of the Southland resale market in January. That was up slightly from 5.8 percent the prior month and was down from 17.2 percent a year earlier. In recent months the foreclosure resale rate has been the lowest since early 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 12.2 percent of Southland resales last month. That was down from 13.1 percent the prior month and down from 24.2 percent a year earlier.

Absentee buyers – mostly investors and some second-home purchasers – bought 27.5 percent of the Southland homes sold last month, up slightly from 27.2 percent in December and down from a record 32.4 percent a year earlier.
emphasis added
Generally both distress sales and investor buying is declining - and this is dragging down overall sales (plus inventory is still very low).    However conventional sales are up about 25% year-over-year.

It is important to recognize that declining existing home sales is NOT a negative indicator for the housing recovery.  The reason for the decline in overall existing home sales is fewer distressed sales and less investor buying. Those are positive trends!

Thursday: Yellen, Retail Sales, Unemployment Claims

What a surprise ... Congress will pay the bills! (not a surprise to anyone paying attention). From the WSJ: Senate Approves Suspension of U.S. Debt Ceiling
The bill was sent to the White House, where President Barack Obama was expected to sign it, after the Senate voted 55-43 along party lines to approve a suspension of the federal debt limit through March 2015.
And another non-surprise ... from Reuters: U.S. budget deficit smaller than expected in January 
The United States posted a smaller budget deficit than expected in January, a sign that a stronger economy is helping government coffers through a rise in tax receipts.
I think the deficit will be smaller than the CBO expects this year.

• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 330 thousand from 331 thousand.

• Also at 8:30 AM, Retail sales for January will be released. The consensus is for retail sales to decrease 0.1% in December, and to increase 0.1% ex-autos.

• At 10:00 AM, the Manufacturing and Trade: Inventories and Sales (business inventories) report for December. The consensus is for a 0.4% increase in inventories.

• Also at 10:00 AM, Testimony, Fed Chair Janet L. Yellen, Semiannual Monetary Policy Report to the Congress, Before the Senate Banking, Housing, and Urban Affairs Committee, Washington, D.C.






I had forgotten about this. It made me laugh at the time. It makes me laugh now:
Well, again I think the problem is a very simplistic and monocultural perspective on communication and meaning. I would think that editors would want articles with a communicational genre that relates to their purpose and audience. The style and organization would vary accordingly. Anything on the forefront of a particular area, particularly social theory would confront what Michael Shapiro calls the "dilemma of intelligibility". That is, at stake in the writing process is the confrontation of creativity with intelligibility. To communicate "effectively" is to sacrifice creative distance in order to produce understandable frames of reference. Communication operates within cultural bounds working constantly to restrict meaning in order to increase circulation.

Of course, a major concern is the generation of a communication setting with sufficient mutual intelligibility to allow for practical or political engagement with what are recognized as problems in the predominant public discourse. This concern is what probably provokes reactionary statements like the one below. However, producing communicative signs may prove a hindrance in the creation or recognition of new solutions or viewpoints with sufficient distance from the normally prescribed. The other part of the intelligibility dilemma is the need to distance oneself sufficiently from common views to allow for a new frame of reference that can disclose unrecognized commitments and forms of subservience to aspects of power embedded within the communicational genre of intelligibility.
Reading a TCI cable bill or instructions to operate your VCR might call for an information design which allows for simple reasoning or the coordination of motor movements but complex social analysis deserves a more fluid taxonomy for stretching the language and then hopefully provide for new ways of understanding. The strength of poststructural movement in postmodernism is that it was significantly more self-conscious of this process and looked to recognize the scripts embedded in what passes as common language and to provoke people to recognize the strong ideological positions masked in the communicational genre.My Comment:
It is possible to express profound and difficult ideas in demanding and technical language. It is possible to try to express profound and difficult ideas in simple and everyday language (and to lose much of the content in the dumbing-down). It is possible to express simple and straightforward (but quite possibly very important and interesting) ideas in simple and everyday language. And it is possible to express simple and straightforward ideas in demanding and technical language.
Professor XXXXXXX has kindly provided us with a very highly developed example of the fourth category: simple ideas expressed in demanding and technical language.
Would anything be lost if we replaced his four paragraphs with, say, the following:
The more you dumb down the language that you use, the less you can convey to those who have seen the terms and ideas before, and already understand them. If we use only commonplace terms and cliches, we will soon find that everything we say is a commonplace or a cliche. On the other hand, too many technical terms and too much sloppy, convoluted, unedited prose may make it hard for anyone outside a narrow, insular group to understand what is being said--and runs the risk that authors will so entangle themselves in their prose that nothing will be said at all.
Unclear language is a hazard when you actually want the reader to do something, like verify that their cable bill is correct or turn on their VCR. But unclear language is an asset in sociology: it allows you to say something without necessarily knowing what you mean--thus escaping the boundaries that our everyday language places around our thoughts, and creating the chance of saying something profound and new. Poststructural postmodernism's key strength is that it makes us recognize that what we know depends on how we talk: strong conclusions that we may, upon reflection, wish to reject can arise from ideas about how the world works that hide inside our everyday language.
I don't think anything would be lost.
I don't think Professor XXXX's 400-plus words have any advantages at all over my 200 or so.
I think that my 200 convey all the ideas of Professor XXXX's in half the space, and about a quarter of the reader's time.
I think that the ability of a reader can understand my words relatively quickly is an important and powerful asset: it allows readers to start figuring out whether they agree that the production of "communicative signs may prove a hindrance in the creation or recognition of new solutions or viewpoints with sufficient distance from the normally prescribed."


What We Do This Week:
Begin Problem Set 2... Read Essentials, chapter 9 "Externalities and PubliC Goods"




via :


It seems to me that it would be a good idea if I signed on to this Washington Center for Equitable Growth, and tried to drive the conversation to what is important.
Let us try to focus our conversation on what is truly important, for all of our sakes:

Let me try to bring four things together...
  1. The coming of the internet has created at least the potential for a much better public-sphere conversation on economic policy than we had a generation ago. Go back to William Greider's The Education of David Stockman, and reflect that the ignorance about budgetary issues in which they maneuver and about which they lament would not be possible in the internet age of today.
  2. We, as of yet, do not have such a public-sphere conversation. At best, the conversation resembles a soccer game of seven-year-olds--twenty people in a huddle kicking the ball in random directions, with few people playing their positions and focusing on what is truly important.
  3. Over the past generation our politics and policy making has arguably degenerated. It is now clearly inadequate. We no longer (if we ever did) have a bipartisan technocratic center with serious votes committed to economic growth, equal opportunity, and an efficient well-functioning government that can tack left or right as necessary to assemble legislative coalitions to support good governance.
  4. Where the conversation has been guided, it has been directed in directions that I, at least, think are unhelpful. We are moving forward into a world in which a longer-living population and technological advances create opportunities to promote the general welfare via larger expenditures on pensions and health care. But Peter Peterson and company have driven the budgetary conversation to focus on entitlement cuts rather than entitlement right-sizing, right-funding, and right-managing. Similarly, the John M. Olin Foundation--with really very little money--has driven the legal conversation to focus on restoring a classical-liberal order that, in my view at least, never really existed in the first place and that could not have functioned past 1870 if it had.
My promise to you: If you share our interest in public policy that leads to growth-with-equity—and would like to see a 21st century that is an American Century in a these-are-people-to-emulate rather than we-fear-their-drones-and-their-blackmail sense—then:
  1. We are going to be disciplined: we will not publish so much under this heading that you either drown or fob us off to an aggregator.
  2. Everything we publish will be important for you to read if you are interested in equitable growth (and you really should be).
  3. We won't try to get you to read what we write when somebody else has written it better—we will link instead.
  4. We will try to make sure that we always do our homework.
  5. We will try to bring to your attention people who think differently than we do and who have done their homework, are not engaged in intellectual three-card-monte, and are being smart.
  6. via:

Why There’s No Outcry

People ask me all the time why we don’t have a revolution in America, or at least a major wave of reform similar to that of the Progressive Era or the New Deal or the Great Society.

Middle incomes are sinking, the ranks of the poor are swelling, almost all the economic gains are going to the top, and big money is corrupting our democracy. So why isn’t there more of a ruckus?

The answer is complex, but three reasons stand out.

First, the working class is paralyzed with fear it will lose the jobs and wages it already has.

In earlier decades, the working class fomented reform. The labor movement led the charge for a minimum wage, 40-hour workweek, unemployment insurance, and Social Security.

No longer. Working people don’t dare. The share of working-age Americans holding jobs is now lower than at any time in the last three decades and 76 percent of them are living paycheck to paycheck.

No one has any job security. The last thing they want to do is make a fuss and risk losing the little they have.

Besides, their major means of organizing and protecting themselves — labor unions — have been decimated. Four decades ago more than a third of private-sector workers were unionized. Now, fewer than 7 percent belong to a union.

Second, students don’t dare rock the boat.

In prior decades students were a major force for social change. They played an active role in the Civil Rights movement, the Free Speech movement, and against the Vietnam War.

But today’s students don’t want to make a ruckus. They’re laden with debt. Since 1999, student debt has increased more than 500 percent, yet the average starting salary for graduates has dropped 10 percent, adjusted for inflation. Student debts can’t be cancelled in bankruptcy. A default brings penalties and ruins a credit rating.

To make matters worse, the job market for new graduates remains lousy. Which is why record numbers are still living at home.

Reformers and revolutionaries don’t look forward to living with mom and dad or worrying about credit ratings and job recommendations.

Third and finally, the American public has become so cynical about government that many no longer think reform is possible.

When asked if they believe government will do the right thing most of the time, fewer than 20 percent of Americans agree. Fifty years ago, when that question was first asked on standard surveys, more than 75 percent agreed.

It’s hard to get people worked up to change society or even to change a few laws when they don’t believe government can possibly work.

You’d have to posit a giant conspiracy in order to believe all this was the doing of the forces in America most resistant to positive social change.
It’s possible. of course, that rightwing Republicans, corporate executives, and Wall Street moguls intentionally cut jobs and wages in order to cow average workers, buried students under so much debt they’d never take to the streets, and made most Americans so cynical about government they wouldn’t even try for change. 
But it’s more likely they merely allowed all this to unfold, like a giant wet blanket over the outrage and indignation most Americans feel but don’t express. 
Change is coming anyway. We cannot abide an ever-greater share of the nation’s income and wealth going to the top while median household incomes continue too drop, one out of five of our children living in dire poverty, and big money taking over our democracy.

At some point, working people, students, and the broad public will have had enough. They will reclaim our economy and our democracy. This has been the central lesson of American history.

Reform is less risky than revolution, but the longer we wait the more likely it will be the latter.

Why Widening Inequality is Hobbling Equal Opportunity

Is it to be inequality or equal opportunity? 
Under a headline “Obama Moves to the Right in a Partisan War of Words,” The New York Times’ Jackie Calmes notes Democratic operatives have been hitting back hard against the President or any other Democratic politician talking about income inequality, preferring that the Democrats talk about equality of opportunity instead.
"However salient reducing inequality may be," writesDemocratic pollster Mark Mellman, “it is demonstrably less important to voters than any other number of priorities, incudlng reducing poverty.”
The President may be listening. Wags noticed that in his State of the Union, Obama spoke ten times of increasing “opportunity” and only twice of income inequality, while in a December speech he spoke of income inequality two dozen times. 

But the President and other Democrats — and even Republicans, for that matter — should focus on the facts, not the polls, and not try to dress up what’s been happening with more soothing words and phrases. 
In fact, America’s savage inequality is the main reason equal opportunity is fading and poverty is growing. Since the “recovery” began, 95% of the gains have gone to the top 1 percent, and median incomes have dropped. This is a continuation of the trend we’ve seen for decades. As a result:
(1) The sinking middle class no longer has enough purchasing power to keep the economy growing and creating sufficient jobs. The share of working-age Americans still in the labor force is the lowest in more than thirty years. 
(2) The shrinking middle isn’t generating enough tax revenue for adequate education, training, safety nets, and family services. And when they’re barely holding on, they can’t afford to — and don’t want to — pay more.
(3) Meanwhile, America’s rich are accumulating not just more of the country’s total income and wealth, but also the political power that accompanies money. And they’re using that power to reduce their own taxes, and get corporate welfare (subsidies, bailouts, tax cuts) for their businesses.
All this means less equality of opportunity in America.

Obama was correct in December when he called widening inequality “the defining challenge of our time.” He mustn’t back down now even if Democratic pollsters tell him to. If we’re ever to reverse this noxious trend, Americans have to hear the truth. 


Most Americans are on a downward escalator. Median household pay is dropping, adjusted for inflation. A smaller share of working-age Americans are in jobs than at any time in the last three decades.
Only 113,000 jobs were added to the U.S. economy in January, on top of a paltry 75,000 in December.
We need a new WPA to rebuild the nation’s crumbling infrastructure, a higher minimum wage, strong unions, investments in education, and extended unemployment benefits for those who still can’t find a job. When 95% of the economic gains go to the top 1%, the middle class and poor don’t have the purchasing power to keep it going.
Yet too many still believe in trickle-down economics — that the wealthy are the job creators, and tax cuts for big corporations and the rich will boost the economy. The real job creators are the vast middle class and the poor — when they have enough money in their pockets. That’s the only way out of the vicious cycle we’re now in.

Why the Lousy Jobs Report Boosted Wall Street

The stock market surged yesterday after the lousy jobs report. The Dow soared 160 points Friday, while the S&P 500, and Nasdaq also rose.
How can bad news on Main Street (only 113,000 jobs were created in January, on top of a meager 74,000 in December) cause good news on Wall Street?
Because investors assume:
(1) The Fed will now continue to keep interest rates low. Yes, it has announced its intention of tapering off its so-called “quantitative easing” by buying fewer long-term bonds in the months ahead. But it will likely slow down the tapering. Instead of going down to $55 billion a month of bond-buying by April, it will stay at around $60 billion to $70 billion.
(2) The slowdown in the Fed’s tapering will continue to make buying shares of stock a better deal than buying bonds – thereby pushing investors toward the stock market.
(3) Continued low interest rates will also continue to make it profitable for big investors (including corporations) to borrow money to buy back their own shares of stock, thereby pushing up their values. Apple and other companies that used to spend their spare cash and whatever they could borrow on new inventions are now focusing on short-term stock performance.
(4) With the job situation so poor, most workers will be so desperate to keep their jobs, or land one, that they will work for even less. This will keep profits high, make balance sheets look good, fuel higher stock prices.
But what’s bad for Main Street and good for Wall Street in the short term is bad for both in the long term. The American economy is at a crawl. Median household incomes are dropping. The American middle class doesn’t have the purchasing power to keep the economy going. And as companies focus ever more on short-term share prices at the expense of long-term growth, we’re in for years of sluggish performance.
When, if ever, will Wall Street learn?

Why The Three Biggest Economic Lessons Were Forgotten

Why has America forgotten the three most important economic lessons we learned in the thirty years following World War II?

Before I answer that question, let me remind you what those lessons were:

First, America’s real job creators are consumers, whose rising wages generate jobs and growth. If average people don’t have decent wages there can be no real recovery and no sustained growth.

In those years, business boomed because American workers were getting raises, and had enough purchasing power to buy what expanding businesses had to offer. Strong labor unions ensured American workers got a fair share of the economy’s gains. It was a virtuous cycle.

Second, the rich do better with a smaller share of a rapidly-growing economy than they do with a large share of an economy that’s barely growing at all.

Between 1946 and 1974, the economy grew faster than it’s grown since, on average, because the nation was creating the largest middle class in history. The overall size of the economy doubled, as did the earnings of almost everyone. CEOs rarely took home more than forty times the average worker’s wage, yet were riding high.

Third, higher taxes on the wealthy to finance public investments — better roads, bridges, public transportation, basic research, world-class K-12 education, and affordable higher education – improve the future productivity of America. All of us gain from these investments, including the wealthy.

In those years, the top marginal tax rate on America’s highest earners never fell below 70 percent. Under Republican President Dwight Eisenhower the tax rate was 91 percent. Combined with tax revenues from a growing middle class, these were enough to build the Interstate Highway system, dramatically expand public higher education, and make American public education the envy of the world.

We learned, in other words, that broadly-shared prosperity isn’t just compatible with a healthy economy that benefits everyone — it’s essential to it.

But then we forgot these lessons. For the last three decades the American economy has continued to grow but most peoples’ earnings have gone nowhere. Since the start of the recovery in 2009, 95 percent of the gains have gone to the top 1 percent.
What happened?

For starters, too many of us bought the snake oil of “supply-side” economics, which said big corporations and the wealthy are the job creators – and if we cut their taxes the benefits will trickle down to everyone else. Of course, nothing trickled down.

Meanwhile, big corporations were allowed to bust labor unions, whose membership dropped from over a third of all private-sector workers in the 1950s to under 7 percent today.

Our roads, bridges, and public-transit systems were allowed to crumble under the weight of deferred maintenance. Our public schools deteriorated. And public higher education became so starved for funds that tuition rose to make up for shortfalls, making college unaffordable to many working families.

And Wall Street was deregulated — creating a casino capitalism that caused a near meltdown of the economy six years ago and continues to burden millions of homeowners. CEOs began taking home 300 times the earnings of the average worker.

Part of the reason for this extraordinary U-turn had to do with politics. As income and wealth concentrated at the top, so did political power. The captains of industry and of Wall Street knew what was happening, and some played leading roles in this transformation.

But why didn’t they remember the lessons learned in the thirty years after World War II – that widely-shared prosperity is good for everyone, including them?

Perhaps because they didn’t care to remember. They discovered that wealth is also relative: How rich they feel depends not just on how much money they have, but also how they live in comparison to most other people.

As the gap between America’s wealthy and the middle has widened, those at the top have felt even richer by comparison. Although a rising tide would lift all boats, many of America’s richest prefer a lower tide and bigger yachts.

Stress, Poverty, and the Childhood Reading Gap

Most Americans think education is the key to upward mobility, that all we need to do to break the cycle is to help the next generation do well in school and rise into the middle class. A growing body of research, however, is showing that poverty and hunger can harm children’s cognitive development. The challenges of poverty, and the often-violent neighborhoods poor children live in, are impeding their progress in school.
Late last month, the Annie E. Casey Foundation, a Baltimore-based nonprofit that works to improve outcomes for disadvantaged children in the United States,released a report that added evidence to that idea. It showed only a fifth of low-income fourth-graders were reading at a proficient level, compared to more than half of high-income children. What’s alarming for researchers is the fact that every subject in every class after third grade requires a textbook and critical-reading skills for full engagement in the classroom. Children already need to be able to read well in order to learn. That’s especially true as most high schools move to a college readiness curriculum, and post-high-school education becomes increasingly important for the job market. The Prospect spoke with Ralph Smith, a senior vice president of the Annie E. Casey Foundation, about the research.
How long have we had this kind of data?
The data on non-completion have been available for a long time. What’s changed is the economy and the realization that a high school diploma is the passport to career success, to college completion or to getting a post-secondary credential.  With low-skill and even middle-skill jobs disappearing, there is broad and deep bi-partisan consensus around the importance of high school graduation. And what the KIDS COUNT Data Snapshot says is “if you care about high school graduation, then you have to care about third grade reading.” Because the research confirms that reading at grade level by the end of third grade is one the best predictors of whether kids will graduate from high school on time.
When does the gap begin?
The Data Snapshot refers to a recent report by the Annie E. Casey Foundation—“The First Eight Years: Giving Kids a Foundation for Lifetime Success”—that shows how, for many low-income children, the gap starts early because of health problems at birth that slow cognitive, social, and emotional development. The gap can widen when kids don’t have access to book or language-rich homes or high-quality learning experiences. And it can widen even more for kids growing up poor: Recent research on brain development indicates that the stress caused by poverty can impair children’s cognitive development.
Should we expect schools to make more of a difference?
As the report said, we have to be resolute about holding schools accountable for doing better with the kids they have and not the kids they wished they had. We have to support result-driven solutions to transforming low-performing schools into places where kids are really learning.  But the data also makes clear an inconvenient truth: There are some children who will not succeed even in good schools because they start off so far behind due to undetected health impairments, developmental delays, and social and emotional challenges.
Are there other ways kids fall behind?
According to Attendance Works, one of the Campaign’s technical assistance partners, one in 10 kindergartners and first graders are chronically absent—they miss up to 10 percent of the school year. Chronic absence has a much bigger impact on lower income kids. Research by the Teacher’s College at Columbia University shows that missing 10 or more days of school in the early grades has a significant effect on development of literacy skills, and the negative effect on kids from low-income families was up to 75 percent greater than it was for kids from average-income families.  And many of the kids who start off behind and miss too much school also lose ground during the summer months. A few years ago, Time magazine ran a cover story that said the “summer slide” is one reason why the achievement gap has been so hard to close. They cited two decades of research showing that low-income kids lose as much as three months of reading comprehension skills over the summer. That is why the Campaign is working with the National Summer Learning Association to help communities make summer a time of rich learning opportunities.
What are the policy approaches we should think about?
The Alliance for Early Success’s Birth Through Age 8 State Policy Framework is a good place to start. We need policies that focus on the whole child and promote healthy development, quality early learning and family support. The magic is in the mix—it’s a matter of better alignment, better linkages, and better integration of services and supports during the early years and the early grades. We need more seamless systems with fewer gaps and cracks through which families can fall. Bringing those systems on board and funding those systems are policy issues as well. But in addition, there’s the challenge of building a culture that is committed less to finding the perfect program and more to helping parents succeed to help produce good outcomes for their kids.
Like the wraparound services Head Start provides?
It’s more than the wraparound services—it’s a wraparound community where the pathways to good outcomes are clear because there are a set of norms and a culture that promotes children’s success. It is about putting into a place a coherent system of early care and education that is aligned, integrated, and coordinated with what kids need from birth through the end of third grade.
How do we do that?
Supporting successful parenting is part of the answer. In the early years, parents are the first, most significant and most enduring influence in giving their children the right start and putting them on a path for success. What we’re learning about how children’s brains develop in the first years of life means we have to appreciate even more how parents are their children’s principal brain developer. If we want to close the readiness gap, we have to invest in learning early, to ensure high quality learning experiences begin at birth. That means making sure parents, guardians, extended family members, and caregivers get from their communities the information and tools they need to nurture children’s full and healthy development. And, as the Data Snapshot notes, we also have to support parent’s economic stability and emotional health if we want them to be fully engaged in their children’s learning every day. 
You mentioned earlier that the stress of living in poverty can affect a child’s brain development. Can you elaborate?
Dr. Jack Shonkoff, who is the director of the Center on the Developing Child at Harvard University, says that brain development is not so much genetically hardwired as it is influenced by life experiences. And poverty is a life experience that causes the kind of stress that interferes with how parents and children interact with each other—parents can’t be as responsive as they want to be to their children, and that undermines their efforts to create the kind of positive learning environment that all parents want to create for their kids. Dr. Perri Klass, who is a pediatrician and a writer, did an article last May for the New York Times in which she called poverty a childhood disease, because the toxic stress of poverty can, in her words, “actually re-set the neurological and hormonal systems, permanently affecting children’s brains and even, as we are learning, their genes.” The good news is that Dr. Klass and others are raising awareness among pediatricians to address childhood poverty as they would any other serious health threat. That approach has merit for the public, private and social sectors as well.