This post was published at The Real News Network
Tag: Unemployment
What “Off The Grid” Indicators Reveal About The True State Of The US Economy
It’s that time of quarter again; today we review our ‘Off the Grid’ economic indicators. And they all look pretty good in terms of launching the American economy into 2018. Pickup truck sales and used car prices remain robust, and there’s some actual inflation in our Bacon Cheeseburger Index. One warning: ‘Bitcoin’ is among the top Google search autofills for the phrase ‘I want to buy…
We started our ‘Off the Grid’ economic indicators in the aftermath of the Financial Crisis as a way to dig deeper into the longer-lasting effects of that event on the American consumer. It seemed to us that standard economic measures like unemployment or CPI inflation missed a lot about the state of the country. So we started gathering up a list of intuitive metrics that could fill those gaps.
A few examples from these datasets over the years:
This post was published at Zero Hedge on Fri, 12/29/2017 –.
Do The Double-up! As Rents Rise, More Renters Turn to Doubling Up (L.A. The Worst!)
This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
Zillow has a fascinating, yet troubling study. It says that rent consumes a growing share of household income in many cities, some people must relocate or find ways to offset rising prices. An increasingly popular way to cut costs is by adding a roommate. Nationally, 30 percent of working-age adults – aged 23 to 65 – live in doubled-up households, up from a low of 21 percent in 2005 and 23 percent in 1990.
Doubing up is a close relative of young adults continuing to live with their parents. Even though U-6 unemployment is at 8%, wage growth continues to be considerably lower than before the financial crisis. This offers a partial explanation for the doubling-up phenomenon.
Of course, doubling-up is typical is high cost of living areas like Los Angeles, San Francisco, New York City, Chicago and Washington DC. Not surprising is the doubling-up trend in Mexican border cities like El Centro California, Tucson and Yuma Arizona and El Paso and Laredo Texas.
This post was published at Wall Street Examiner by Anthony B Sanders ‘ December 27, 2017.
From ‘Definitely Transitory’ to ‘Imperfect Understanding’ In One Press Conference
This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
When Janet Yellen spoke at her regular press conference following the FOMC decision in September 2017 to begin reducing the Fed’s balance sheet, the Chairman was forced to acknowledge that while the unemployment rate was well below what the central bank’s models view as inflationary it hadn’t yet shown up in the PCE Deflator. Of course, this was nothing new since policymakers had been expecting accelerating inflation since 2014. In the interim, they have tried very hard to stretch the meaning of the word ‘transitory’ into utter meaninglessness; as in supposedly non-economic factors are to blame for this consumer price disparity, but once they naturally dissipate all will be as predicted according to their mandate.
That is, actually, exactly what Ms. Yellen said in September, unusually coloring her assessment some details as to those ‘transitory’ issues:
For quite some time, inflation has been running below the Committee’s 2 percent longer-run objective. However, we believe this year’s shortfall in inflation primarily reflects developments that are largely unrelated to broader economic conditions. For example, one-off reductions earlier this year in certain categories of prices, such as wireless telephone services, are currently holding down inflation, but these effects should be transitory. Such developments are not uncommon and, as long as inflation expectations remain reasonably well anchored, are not of great concern from a policy perspective because their effects fade away.
Appealing to Verizon’s reluctant embrace of unlimited data plans for cellphone service was more than a little desperate on her part. Even if that was the primary reason for the PCE Deflator’s continued miss, it still didn’t and doesn’t necessarily mean what telecoms were up to was some non-economic trivia.
This post was published at Wall Street Examiner on December 26, 2017.
Doug Noland: Epic Stimulus Overload
This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
Ten-year Treasury yields jumped 13 bps this week to 2.48%, the high going back to March. German bund yields rose 12 bps to 0.42%. U. S. equities have been reveling in tax reform exuberance. Bonds not so much. With unemployment at an almost 17-year low 4.1%, bond investors have so far retained incredible faith in global central bankers and the disinflation thesis.
Between tax legislation and cryptocurrencies, there’s been little interest in much else. As for tax cuts, it’s an inopportune juncture in the cycle for aggressive fiscal stimulus. And for major corporate tax reduction more specifically, with boom-time earnings and the loosest Credit conditions imaginable, it’s Epic Stimulus Overload. History will look back at this week – ebullient Republicans sharing the podium and cryptocurrency/blockchain trading madness – and ponder how things got so crazy.
From my analytical vantage point, the nation’s housing markets have been about the only thing holding the U. S. economy back from full-fledged overheated status. Sales have been solid and price inflation steady. While construction has recovered significantly from the 2009/2010 trough, housing starts remain at about 60% of 2004-2005 period peak levels. It takes some time for residential construction to attain take-off momentum. Well, liftoff may have finally arrived. As long as mortgage rates remain so low, we should expect ongoing housing upside surprises. An already strong inflationary bias is starting to Bubble. Is the Fed paying attention?
This post was published at Wall Street Examiner on December 23, 2017.
Taking Turns With The B(L)S
This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
The worst aspect of this economy is by far the real effects pressed upon especially American workers. Of that there is no doubt, including young adults who would be working rather than ‘studying’ if the economy was at all like it has been described. The second worst part is watching politicians trade their descriptions for whomever occupies the White House. It does nothing to advance the cause of the American worker (or the global economy for that matter).
In early 2015, within the recent shadows of the BEA’s Q4 2014 GDP report that estimated growth that quarter of better than 5%, Republicans were more and more criticized for their economic criticism. The left-leaning Washington Post in February 2015 wrote:
A robust economy marked by a boom in jobs and a plunge in gas prices is threatening the longtime Republican strategy of criticizing President Obama for holding back growth and hiring, forcing the GOP to overhaul its messaging at the beginnings of a presidential campaign…
The improvement may mark a turning point in the nation’s seven-year-long debate over the state of the economy. Obama came to office amid a financial crisis, promising to turn the economy around. Republicans repeatedly – and, in the 2014 midterm campaign, successfully – argued that he had fallen short, with an economy suffering slow growth and unnecessarily high unemployment.
This post was published at Wall Street Examiner on December 21, 2017.
Don’t Just Do Something, Sit There!
Have you heard of the depression of 1920-21?
Unless you’re a pretty hard-core economics geek, you probably haven’t.
The most striking aspect of this depression was its duration. It lasted just 18 months. And how did the US get itself out of this sharp economic downturn?
By essentially doing nothing.
A collapse in GDP and production led to a sharp spike in unemployment to double-digit numbers. Modern policymakers would immediately launch economic stimulus. Consider the 2008 crash. On top of government programs such as the $700 billion TARP and $800 billion in fiscal stimulus, the Federal Reserve pumped $4 trillion in new money into the system. For 165 out of 180 months, the Fed pushed interest rates down or held them at rock-bottom levels.
The result? A tepid recovery at best with 2 million fewer ‘breadwinner’ jobs than during the 1990s. Oh. And a whole slew of bubbles waiting to pop.
Lew Rockwell compares this to the how things played out in 1920.
This post was published at Schiffgold on DECEMBER 20, 2017.
Bi-Weekly Economic Review: Animal Spirits Haunt The Market
This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
The economic data over the last two weeks continued the better than expected trend. Some of the data was quite good and makes one wonder if maybe, just maybe, we are finally ready to break out of the economic doldrums. Is it possible that all that new normal, secular stagnation stuff was just a lack of animal spirits? Is it possible that the mere anticipation of tax cuts was sufficient to break us out of the 2% growth paradigm? Or are there other factors that have us on the precipice of a third consecutive quarter of 3%+ growth?
It is easy to find the positives in the economic data these days. Retail sales surged last month and are now up nearly 6% year over year. Wholesale sales are up over 8% and inventories are improving relative to sales. Imports and exports are up 7% and 5.6% respectively. Factory orders are rising at about a 4% clip. Productivity was up 3% last quarter. The Fed’s worries about inflation also seem reasonable considering CPI and PPI well above the Fed’s target rate of inflation. Import and export prices are both up over 3% year over year. With the unemployment rate down to 4.1% you can understand why the Philips Curve disciples are getting antsy.
This post was published at Wall Street Examiner on December 19, 2017.
Un-Merry Christmas: The Perverse Incentives to Over-Consume and Over-Spend
Isn’t it obvious that if we set out to design the most perverse, toxic and doomed system possible, we’d end up with the Keynesian Cargo Cult’s insane permanent growth/Landfill Economy?
Few topics are off-limits nowadays: the personal and private are now splashed everywhere for all to see. One topic is still taboo: the holiday’s perverse incentives to over-consume and over-spend, lest our economy implode. This topic is taboo because it strikes at the very heart of our socio-economic system, which is fundamentally based on permanent growth, the faster the better, as if unlimited expansion on a finite planet is not just possible, but desirable. In the current Mode of Production, the solution to every social and economic ill is to “grow our way out of it.” The solution to unemployment: jump-start growth by expanding consumption, spending and borrowing. The solution to stagnant wages: jump-start growth. The solution to declining profits: jump-start growth. The solution to government deficit spending: jump-start growth.
This post was published at Charles Hugh Smith on TUESDAY, DECEMBER 19, 2017.
Confidence, and What Comes With It
There is a strong positive feedback mechanism involving consumer sentiment and the economy. As conditions get better, people get more confident, which causes them to spend more, so companies hire more, which makes people more confident….
That all works until it doesn’t, and then the positive feedback goes the other way, making people get less confident as they see the economy slowing, making them spend less money, which causes layoffs, which makes people less confident….
The University of Michigan’ Survey of Consumers Index of Consumer Sentiment hit 100.7 in October 2017, its highest reading since January 2004. It has backed off just a little bit since that October reading, but is still at a very high level, showing that consumers are feeling pretty confident.
This week’s chart shows the relationship of that University of Michigan number and the U-3 unemployment rate. There is an interesting lag in the unemployment numbers, and that is highlighted with the 10-month time offset employed in the chart above. I want to emphasize that the consumer sentiment data plot is inverted in that chart so that we can better see the correlation to unemployment.
This post was published at FinancialSense on 12/15/2017.
FOMC Hikes Rates As Expected: Expects 3 Hikes, Faster Growth As Two Dissent
With a 98.3% probability heading in, there was really no doubt the most-telegraphed rate-hike ever would occur, but all eyes are on the dots (rate trajectory shows 3 hikes in 2018), inflation outlook (unchanged), and growth outlook (faster growth in 2018), and lowered unemployment outlook to below 4%. The Fed also plans to increase its balance sheet run off to $20 billion in January.
*FED RAISES RATES BY QUARTER POINT, STILL SEES THREE 2018 HIKES *FED SEES FASTER 2018 GROWTH, LABOR MARKET STAYING `STRONG’ *FED: MONTHLY B/SHEET RUNOFF TO RISE TO $20B IN JAN. AS PLANNED The dissents by Evans and Kashkari are significant as they send the signal that there is a significant fraction of the FOMC that would like to put off additional rate hikes until inflation is moving back closer to 2%. You could expect additional dissents in March if the FOMC goes ahead with a hike then, unless inflation rebounds by then.
On the other hand, the median target “dot” for 2020 rose to 3.063% vs 2.875% in September; suggesting even further tightening in store.
The Fed’s forecasts improved for growth and unemployment, while keeping inflation unchanged:
This post was published at Zero Hedge on Dec 13, 2017.
Is A Recession Looming? Low Unemployment And Declining Treasury Curve Occur Just Before Recessions (And Lousy Wage Growth)
US Real GDP is growing at 2.3% YoY. What’s not to like?
How about the lowest unemployment rate since 2000 and the worst wage ‘recovery’ in modern times? AND a flattening Treasury yield curve?
Yes, we are once more staring into the abyss of a recession where unemployment rates are low (as they seemingly always are just prior to the end of a business cycle). Throw in a skidding Treasury curve and … this is it?
This post was published at Wall Street Examiner on December 11, 2017.
US Futures Hit New All Time High Following Asian Shares Higher; European Stocks, Dollar Mixed
U. S. equity index futures pointed to early gains and fresh record highs, following Asian markets higher, as European shares were mixed and oil was little changed, although it is unclear if anyone noticed with bitcoin stealing the spotlight, after futures of the cryptocurrency began trading on Cboe Global Markets.
In early trading, European stocks struggled for traction, failing to capitalize on gains for their Asian counterparts after another record close in the U. S. on Friday. On Friday, the S&P 500 index gained 0.6% to a new record after the U. S. added more jobs than forecast in November and the unemployment rate held at an almost 17-year low. In Asia, the Nikkei 225 reclaimed a 26-year high as stocks in Tokyo closed higher although amid tepid volumes. Equities also gained in Hong Kong and China. Most European bonds rose and the euro climbed. Sterling slipped as some of the promises made to clinch a breakthrough Brexit deal last week started to fray.
‘Strong jobs U. S. data is giving investors reason to buy equities,’ said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. ‘The better-than-expected jobs number supports the outlook that there is a synchronized global economic upturn led by the U. S.”
The dollar drifted and Treasuries steadied as investor focus turned from US jobs to this week’s central bank meetings. Europe’s Stoxx 600 Index pared early gains as losses for telecom and utilities shares offset gains for miners and banks. Tech stocks were again pressured, with Dialog Semiconductor -4.1%, AMS -1.9%, and Temenos -1.7% all sliding. Volume on the Stoxx 600 was about 17% lower than 30-day average at this time of day, with trading especially thin in Germany and France.
The dollar dipped 0.1 percent to 93.801 against a basket of major currencies, pulling away from a two-week high hit on Friday.
This post was published at Zero Hedge on Dec 11, 2017.
Bank of America: “We’ve Seen This Movie Before: It Ends With A Recession”
In a merciful transition from Wall Street’s endless daily discussions and more often than not- monologues – of why vol is record low, and why a financial cataclysm will ensue once vol finally surges, lately the main topic preoccupying financial strategists has been the yield curve’s ongoing collapse – with the 2s10s sliding and trading at levels last seen in April 2015, and with curve inversion predicted by BMO to take place as soon as March 2018. And, according to at least one other metric, the yield curve should already be some -25bps inverted. This is shown in the following chart from Bank of America which lays out the correlation between the US unemployment rate and the 2s10s curve, and which suggests that the latter should be 80 bps lower, or some 25 basis points in negative territory.
Here is some additional context from BofA’s head of securitization Chris Flanagan, who views “the recent sharp flattening of the yield curve, which has seen the 2y10y spread go from 80 bps to almost 50 bps since late October, as the natural course of events at this stage of the economic cycle. Unemployment is low, and probably headed lower, and the Fed is intent on raising rates to stave off future inflation; we’ve seen this movie before and it typically ends with a flat or inverted yield curve. Based on history (and gravity), we think the most likely path forward is that the 2y10y spread reaches zero or inverts sometime over the next year or so and that recession of some kind follows in 2020 or 2021. (Given that the curve has flattened 30 bps in just over a month, projecting an additional 50 bps flattening over the next year is not really too bold.) Of course, much can happen along the way to change that outcome, but for now that seems to us to be the most likely course of events to us.”
Here Flanagan openly disagrees with the BofA’s “house call” of a steepening yield curve, and explains why:
This post was published at Zero Hedge on Dec 10, 2017.
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