Tag Archives: employment

A graph showing the end of America as we know it.

Summary: This is third in a series showing that we’re losing America. This post examines rising inequality of income, one of the major forces reshaping our society and politics. It’s not a class war if we don’t fight back.  {2nd of 2 posts today.}

The one graph that ties together the strands making a New America.
Click to enlarge.

The Great Decoupoling

Andrew McAfee, 12 Dec 2012 — Click to enlarge.

This one powerful but dense graph shows the transformation of what we know of as America — born in the fires of the New Deal, WWII, and the civil rights revolution — into the America of the Gilded Age. The top 2 lines (blue and grey) show America’s increasing economic strength: rising labor productivity and GDP. The bottom two show what we get from that (private sector jobs and median household income).

Here you see the slowly widening break in the early 1980s — the Reagan years, an inflection in so many American political and economic trends — as the 1% siphoned off an increasing fraction of America’s income. That growing gap gives them ever more power, allowing them to restructure America’s institutions to better serve them.

Labor unions were crushed. Workers increasingly became contingent, disposable — either “independent contractors” (often de facto employees without the protections of formal employment), or temps, or just pawns to be fired as needed to boost profits. Open borders brought in more workers to drive down wages (e.g., H-1B visas for skilled workers). Enforcement of labor regulations were gutted, allowing growing exploitation of workers, such as illegally treated cheerleaders in professional sports, plus dubiously legal “managers” (no overtime), unpaid interns, and not-independent independent contractors.

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The jobs report shows the beating heart of the economy. See the good news, & the bad.

Summary: Today we examine the very beating heart of the US economy, where all the arteries converge — the jobs report. The picture it shows is clear, although most commentary obscures this beneath analysts’ hopes and fears. Also, the data warns that the US economy has changed in an important but ominous way.

“Unless you expect the unexpected you will never find truth, for it is hard to discover and hard to attain.”
— Heraclitus, the pre-Socratic “Weeping Philosopher” of Ionia

The bottom line

Here’s one version of the bottom line (at the end is a more accurate version) of the numbers in the January employment report: job growth continues at the same rate as during the past ten months. Not slowing, as some feared. No breakout, as some hoped.

Employment-January

The following graphs show the numbers on on a Year-over-Year basis, smoothing the lines but losing resolution of recent change. The numbers are too noisy and too revised to see the pattern otherwise.

Is this rate fast or slow? The monthly numbers don’t say, especially since population growth means that the same number of new jobs represents slower growth over time. Let’s look at job growth as a percent change. We see a slow — very slow — acceleration, perhaps even the start of a break-out: 2.3% YoY  (2.1% YoY using the Household survey data, a second survey confirming the results). That’s fast, the fastest since May 2000 — at the peak of the tech bubble.

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Uber gives Americans a float to hold in the rapids of the New American economy

This post has been moved to Wolf Street: Howling about Business and Finance.

See the Billionaire’s Dream: Uber’s New American Economy.  Who gets the crumbs in the ironically named “Sharing Economy”?

If you have never visited Wolf Street, it’s worth a look.

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The hidden message in the jobs report: rising inequality now a structural feature of America.

Summary: Journalists often report news as a horse race. For example, did a Dem or GOP win the election?  This obscures important trends showing the changing nature of America. So it is with the December jobs report. Looking below the headlines shows that years of conservatives’ work has produced a new America, one with increasing and structural inequality. Unlike the post-WWII era, economic growth does not decrease income inequality (although it increases during recessions). Read the numbers and weep, or do something about it.

Economy

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The December jobs report show that years of well-funded, carefully planned effort by the 1% have produced a rich harvest for the 1%. Public policy has shifted from fostering growth to re-distribution — from the bottom 80% to the top 1%.  A few pictures tell the story, showing how economic growth no longer provides much benefit to workers. We get more jobs, often at low wages with few or no benefits — but little or no growth after inflation.  First, let’s look at the top line: job growth has increased slightly during the past few quarters.

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BLS: monthly job growth

Here’s another perspective, showing the growth rate. Since the population grows, the same number of new jobs is slowing percentage growth. The growth rate has accelerated, but only slightly.

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For Japan there is no road but to an economic recovery

Summary: the most contrarian thing you’ll read today.

Japan was a big story in 2014. The hopes for its rise — quickly crushed — created ripples around the world. Today’s post features an article by an expert asking if a new phase in its recovery story will unfold in 2015. A recovery in Japan would give the world economy another locomotive. The data looks provocative and the reasoning seems profound. (This is the 2nd of today’s two posts.)

“If something cannot go on forever, it will stop.”
— Herbert Stein’s Law (US economist, 1916-1999)

Japan: setting sun

A setting or rising sun?

Keiki Kaifuku, Kono Michi Shika Nai
“Economic Recovery,
There Is No Road But This”
—  LDP Campaign Slogan, December 2014

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By Peter Karmin of Fort Sheridan Advisors

From the Drobny Global Monitor, 11 December 2014

Posted with the generous permission of the author and Drobny Global Advisors.

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For years – if not decades – Japan’s shrinking demographics have been a primary cause for that country’s lackluster economic growth. However, Japan is now reaching a point in its cycle where the population shortage — combined with a scarcity in natural resources and the effects of “Abenomics” – will cause stagflation rather than deflation. This is a structural rather than cyclical change resulting from a shortage in labor and natural resources. The former is a result of declining population/workforce along with stringent immigration laws and the latter is a result of the closing of nuclear power plants following the 2011 Tohoku earthquake and tsunami.

During the past few years, Japan’s unemployment rate has gradually dropped and is now at 3.5% which is the lowest since 1997.

Japan's unemployment rate

Drobny Global Advisors, 11 December 2014

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Additional signs of improvement within the labor sector are seen in other surveys. For example, the “Jobs-To-Applicants Ratio” is now at a level (1.1 job openings/applicants) not seen since June 1992 when 10-year Japanese Government Bonds (JGBs) yielded 5% (we have only had to move the decimal over to the left one place during the past 22 years):

Japan: job to applicants ratio

Drobny Global Advisors, 11 December 2014

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Recent Bank of Japan Tankan Surveys show that both the manufacturing and non-manufacturing sectors are finding a shortage of available workers {DI: diffusion index}:

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Here’s help to see the truth through the narratives in the news: looking at the jobs numbers

Summary: We’re flooded with news from the gross over-capacity of that industry, so finding a full balanced story has become difficult. This post takes something that should be simple — the monthly jobs report — and shows how it’s spun to gibberish by Left and Right, and one way to find its core meaning.

“Unless you expect the unexpected you will never find truth, for it is hard to discover and hard to attain.”
— Heraclitus, the pre-Socratic “Weeping Philosopher” of Ionia

Magnify to see

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The news consists largely of narratives dressed up with tidbits from the endless stream of data washing over us. Among its many functions is to assure us that this data has meaning (beyond itself) and can be understood.

Unfortunately, American information sources often divide us into tribes by carefully selecting what to show members, and spinning what they show. So even intelligent well-informed Americans often display amazing ignorance about basic aspects of politicized issues (e.g., that skeptics deny the existence of climate change, or that Obama is not an American citizen). These trends combine to blind us to the complexity and changing nature of our world. Two politicized topics show this clearly: climate change and economics. For a change, let’s look at the latter. Conservatives seek to convince us that the economy remains stagnant, liberals (and Wall Street) that it’s begun to boom. Both have little interest in the boring reality of slow stable growth since the crash.

The first principle of stockbroker economics is that all news is good. … The second principle is that the stock market is always cheap.
— Andrew Smithers, Financial Times, 4 January 2006

The Right points to the weak numbers in the Household report.  Zero Hedge trumpets “Full-Time Jobs Down 150K“!  True, and nice clickbait. But the highly volatile household data tells us little in this form.
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FRED: full-time jobs
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Instead let’s look at it as percent change (which adjusts for the growing population) on a Year-over-Year basis (smoothing the line, but losing resolution of recent change). We see steady but slow growth (but at 119,482,00 still under the Nov 2007 peak of 121,875,000):

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November brought us good news about jobs and wages. Here are the details.

Summary: It’s the big day for economic stat junkies. Has the economy ended its long flirtation with recession, limping along near the 2% stall speed — supported by years of fiscal and monetary stimulus (now fading)? The last few quarters of GDP numbers suggest yes, but the job numbers have refused to cooperate. Here we look at the November report. It looks good.  This is the first of two posts today.

Economy

Contents

  1. The big lesson from this report
  2. The big picture of the economy
  3. Household survey
  4. Establishment survey
  5. Unemployment
  6. The hot sectors for jobs!
  7. For more information about

(1) The big lesson from this report

What can we learn from the November employment report? First, that one minute spent reading or watching economists predict economic numbers is a minute wasted forever. Most of the numbers are noise (changes withing the error bars; watch the trend instead) — and the forecasts are wild guesses. Life is short; spend it wisely. Here the forecasts of the best for the November gain in non-farm employment from the Establishment survey (CES). They guess because we want guesses. Guessing

  • JP Morgan 200K
  • Goldman Sachs 220K
  • Citigroup 225K
  • HSBC 230K
  • UBS 230K
  • Credit Suisse 235K
  • Morgan Stanley 235K
  • Deutsche Bank 250K

The actual was 321,000 (+2.8% SAAR), plus another 44,000 from revisions to September and October.

(2)  The big picture of the economy

This report supported the hopes of those hoping the US economy has returned to “normal” growth. But one swallow does not a summer make. Even with a good November, the YoY NSA growth in jobs is 2.0% by the Household Survey (CPS) and 2.0% by the Establishment Survey (CES) — two methods, same result.

The Bureau of Labor Statistics conducts two surveys: one of households, one of businesses. They are not directly comparable, each giving different perspectives on the US economy. The Current Population survey looks at households. Compared to the survey of businesses it has large error bars; there are no revisions. It’s the basis for the headline unemployment rate, and gives useful data not in the more-accurate business (establishment) survey. Also, some research suggests that the household report shows inflection points before the establishment survey.

Both give identical pictures for the past year (YoY NSA): people employed (CPS) +2.0%, non-farm jobs (CES) +2.0%.  They’re also similar for the past two months (SA): +2.3% and +2.5%.

(3) The Household survey (CPS)

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