Tag Archive: Labor Market

The Economy Likes Its IP Less Lumpy

Industrial Production rose 3.4% year-over-year in November 2017, the highest growth rate in exactly three years. The increase was boosted by the aftermath of Harvey and Irma, leaving more doubt than optimism for where US industry is in 2017. For one thing, of that 3.4% growth rate, more than two-thirds was attributable to just two months.

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China Exports and Industrial Production: Revisiting Once More The True Worst Case

As weird as it may seem at first, the primary economic problem right now is that the global economy looks like it is growing again. There is no doubt that it continues on an upturn, but the mere fact that whatever economic statistic has a positive sign in front of it ends up being classified as some variant of strong. That’s how this works in mainstream analysis, this absence of any sort of gradation where if it’s negative it’s bad (though in 2015...

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Defining The Economy Through Payrolls

The year 2000 was a transition year in a lot of ways. Though Y2K amounted to mild mass hysteria, people did have to get used to writing the date with 20 in front of the year rather than 19. It was a new millennium (depending on your view of Year 0) that seemed to have started off under the best possible terms. Not only were stocks on fire at the outset, the economy was, too.

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Consumer Credit Both Accelerating and Decelerating Toward The Same Thing

Federal Reserve revisions to the Consumer Credit series have created some discontinuities in the data. Changes were applied cumulatively to December 2015 alone, rather than revising downward the whole data series prior to that month. The Fed therefore estimates $3.531 trillion in outstanding consumer credit (seasonally-adjusted) in November 2015, and then just $3.417 trillion the following month.

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Aligning Politics To economics

There is no argument that the New Deal of the 1930’s completely changed the political situation in America, including the fundamental relationship of the government to its people. The way it came about was entirely familiar, a sense from among a large (enough) portion of the general population that the paradigm of the time no longer worked. It was only for whichever political party that spoke honestly to that predicament to obtain long-term...

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Four Point One

The payroll report for October 2017 was still affected by the summer storms in Texas and Florida. That was expected. The Establishment Survey estimates for August and September were revised higher, the latter from a -33k to +18k. Most economists were expecting a huge gain in October to snapback from that hurricane number, but the latest headline was just +261k.

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The (Economic) Difference Between Stocks and Bonds

Real Personal Consumption Expenditures (PCE) rose 0.6% in September 2017 above August. That was the largest monthly increase (SAAR) in almost three years. Given that Real PCE declined month-over-month in August, it is reasonable to assume hurricane effects for both. Across the two months, Real PCE rose by a far more modest 0.5% total, or an annual rate of just 3.4%, only slightly greater the prevailing average.

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Japan Is Booming, Except It’s Not

Japan is hot, really hot. Stocks are up to level not seen since 1996 (Nikkei 225). Prime Minister Shinzo Abe called snap elections in Parliament to secure a supermajority and it worked. Things seem to be sparkling all over the place, with the arrow pointing up: “Hopes for a global economic recovery and US shares’ strength are making fund managers generous on Japanese stocks,” said Chihiro Ohta, general manager of investment research at SMBC Nikko...

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Housing Isn’t Just About Real Estate

The National Association of Realtors (NAR) reported today that sales of existing homes (resales) were up slightly in September 2017 on a monthly basis. At a seasonally-adjusted annual rate of 5.39 million last month, that was practically unchanged from the 5.35 million estimate for August that was the lowest in a year.

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The Damage Started Months Before Harvey And Irma

Ahead of tomorrow’s payroll report the narrative is being set that it will be weak because of Harvey and Irma. Historically, major storms have had a negative effect on the labor market. Just as auto sales were up sharply in September very likely because of the hurricane(s) and could remain that way for several months, payrolls could be weak for the same reasons and the same timeframe.

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The Real Estate View For A Second Lost Decade

The National Association of Realtor (NAR) reports today that sales of existing homes in the US were down 1.7% in August 2017 from July. At a seasonally-adjusted annual rate of 5.35 million, that’s the lowest pace for resales since July 2016. It is yet another data point reflecting the almost certain end of “reflation” in the economic sense.

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2017 Is Two-Thirds Done And Still No Payroll Pickup

The payroll report for August 2017 thoroughly disappointed. The monthly change for the headline Establishment Survey was just +156k. The BLS also revised lower the headline estimate in each of the previous two months, estimating for July a gain of only +189k. The 6-month average, which matters more given the noisiness of the statistic, is just +160k or about the same as when the Federal Reserve contemplated starting a third round of QE back in 2012.

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Proving Q2 GDP The Anomaly, Incomes Yet Again Fail To Accelerate

One day after reporting a slightly better number for Q2 GDP, the BEA reports today that there is little reason to suspect it was anything more or lasting. The data for Personal Income and Spending shows that the dominant condition since 2012 remains in effect – “good” quarters, or whatever passes for one these days, are the anomaly. There still is no meaningful rebound in income.

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Cool Video: Bloomberg Discussion of Opioid Epidemic and US Labor

I had the distinct of honor of being on Bloomberg television today with David Gura and Francine Lacqua. Dino Kos, formerly of the NY Fed and now at CLS, joined this segment as well. The broad topic was the Jackson Hole Symposium, and the challenge is fostering more dynamic growth.

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Forced Finally To A Binary Labor Interpretation

JOLTS figures for the month of April 2017, released today, highlight what is in the end likely to be a more positive outcome for them. It has very little to do with the economy itself, as what we are witnessing is the culmination of extreme positions that have been made and estimated going all the way back to 2014.

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The Anti-Perfect Jobs Condition

The irony of the unemployment rate for the Federal Reserve is that the lower it gets now the bigger the problem it is for officials. It has been up to this year their sole source of economic comfort. Throughout 2015, the Establishment Survey improperly contributed much the same sympathy, but even it no longer resides on the plus side of the official ledger.

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Auto Pressure Ramps Up

The Los Angeles Times today asked the question only the mainstream would ask. “Wages are growing and surveys show consumer confidence is high. So why are motor vehicle sales taking a hit?” Indeed, the results reported earlier by the auto sector were the kind of sobering figures that might make any optimist wonder.

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Defining Labor Economics

Economics is a pretty simple framework of understanding, at least in the small “e” sense. The big problem with Economics, capital “E”, is that the study is dedicated to other things beyond the economy. In the 21st century, it has become almost exclusive to those extraneous errands. It has morphed into a discipline dedicated to statistical regression of what relates to what, and the mathematical equations assigned to give those relationships some...

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It Was And Still Is The Wrong Horse To Bet

The payroll report disappointed again, though it was deficient in ways other than are commonly described. The monthly change is never a solid indication, good or bad, as the BLS’ statistical processes can only get it down to a 90% confidence interval, and a wide one at that. It means that any particular month by itself specifies very little, except under certain circumstances.

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Short Note on US Employment Report

The US jobs data is notoriously difficult to accurately forecast consistently.  I do not claim to do so now.  My intent is more modest.  It is simply to point out why I there is risk that the jobs data is disappointing, especially after the stronger than expected ADP estimate. 

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