The Center of the Universe

St Croix, United States Virgin Islands

MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Archive for the 'Employment' Category

NY Fed analysts discuss expiring benefits and jobs dynamics

Posted by WARREN MOSLER on 30th September 2014

So now it’s just me and a few members of the NY Fed surmising the 1.2 million who lost benefits at year end supported employment gains earlier this year:

Do Unemployment Benefits Expirations Help Explain the Surge in Job Openings?

By Fatih Karahan, Samuel Kapon, and Kaivan K. Sattar

Posted in Employment, Fed | No Comments »

Preview of Friday’s employment report

Posted by WARREN MOSLER on 30th September 2014

The household survey has been in decline for several months, with lower highs and lower lows:

Same with the non farm payroll report:

Analysts are counting on Friday’s report showing August being revised up substantially and September payrolls to be up over 200,000.

Anything could happen, of course, but something less than that would be in line with the narrative about the 1.2 million who lost benefits at year end taking menial jobs best they could earlier this year, causing those prints to be higher than otherwise, etc.

Posted in Employment | No Comments »

Fed preview

Posted by WARREN MOSLER on 22nd September 2014

The Fed’s mandates are full employment, price stability, and low long term rates. And along with who knows what, he has to be seeing these charts:

New jobs down for the winter, up some, then back down for several months:

Not forget purchase mortgage applications are down 12% vs last year, and now cash purchases are down as well, as housing contributes less than half of what’s it’s contributed in prior cycles.

And the rest of the world economy is decelerating as well.

Posted in Credit, Employment, Fed | No Comments »

Fed’s consumer survey, employment slips as suspected

Posted by WARREN MOSLER on 5th September 2014

This implies we need a larger deficit than otherwise to close the output gap/sustain full employment, has higher income earners tend to generate more unspent income/more savings than lower income earners.

Looks to me like the “1.2 million who lost benefits at year and took menial jobs” narrative has run its course, and consequently H2 employment gains will be that much weaker than H1, as suggested earlier…

Posted in Employment | No Comments »

Charts on labor force participation rates- not good!

Posted by WARREN MOSLER on 23rd August 2014

Hard to believe there isn’t a lot of slack indicated here.

Note that it’s always gone up during an expansion, until now:

Full size image

And isolating the ‘prime working age’ removes the ‘aging factor’

Full size image

Full size image

In fact, the chart for ‘over 55′ shows the overall drop in participation didn’t come from this group, and, seems, their participation would have gone up in a ‘normal’ recovery:

Full size image

And who would have thought a weak demand would hurt these groups first/hardest…
Certainly not in America…

Full size image

And, while down dramatically, look how high this has been and still is:

Full size image

Full size image

But maybe the clue to why the subject is getting all the attention this time around lies here?

Just saying…

Full size image

For all men the rate’s been falling for a long time, with the recent drop less noticeable.

And it used to be over 85%!

Full size image

Add this and you have the appearance that (lower cost?) women have been replacing (higher cost?) men for a long time now?

Full size image

Enough to make the point.

Unlike all prior recoveries, this recovery continues to fail to keep up with population and productivity growth

Which is the evidence that the federal budget deficit is far to low for current financial condition.

That is, the output gap remains extreme and, if anything, is growing, as out government continues to fail its electorate.

Posted in Employment | No Comments »

US jobs rose since ’08 crisis, but pay is 23% less

Posted by WARREN MOSLER on 21st August 2014

US jobs rose since ’08 crisis, but pay is 23% less: report

Aug 11 (Reuters) — Jobs growth in the U.S. since the 2008 recession has been undermined by lower wages, with workers earning an average 23 percent less than earnings from jobs which were lost, a report by an organization representing U.S. cities said on Monday.

The average annual salary in sectors where jobs were lost – particularly manufacturing and construction – during the 2008-9 financial crisis was $61,637, according to the report by the United States Conference of Mayors (USCM), which represents cities with populations of more than 30,000.

Job gains through the second quarter of 2014 in comparative sectors showed average wages of $47,171, implying $93 billion in lower wage income, the report said.

The report also showed that the majority of metro areas – 73 percent – had households earning salaries of less than $35,000 a year.

The latest monthly employment data from the Labor Department showed that more than 200,000 jobs were created for the sixth straight month in July, but that wages were about flat in the private sector.

American workers, on average, earned $24.45 an hour in July, up only a penny from June. Over the last year, wages have grown just 2 percent, in keeping with where they have been stuck since late 2009.

Posted in Employment | No Comments »

Kudlow on year end benefit expiration driving H1 employment gains

Posted by WARREN MOSLER on 11th August 2014

The question is whether this front loaded 2014 hiring.

If it did, H2 employment gains could be materially lower.

Kudlow: Jobs are the best kind of welfare

“To be sure, there are signs that employment in the country is rising more rapidly these days. The February to July period was the first six-month stretch of consistent employment gains above 200,000 since 1997. And that came without any new programs from the federal government to “create jobs.” Even more surprising, those gains overlapped a quarter in which GDP actually contracted.

So what drove the increase? University of Chicago professor Casey Mulligan put his finger on it: “Major subsidies and regulations intended to help the poor and unemployed . . . reduce incentives for people to work and for businesses to hire.” And guess what happened when federal emergency job assistance ended? Job increases were the best in 17 years.”

Posted in Employment | No Comments »

Recent charts

Posted by WARREN MOSLER on 4th August 2014

If you haven’t donated to the PMC yet you can do so here.

I just finished the 2 day ride. :)

100% of all donations go to Dana Farber in Boston, THE premier cancer research center.

And I’m in the process of narrowing this mailing list to those who donate.


Notice that the govt deficit and savings rate more pretty much together?

Car sales off of last months pace, but forecasts for this year are for a slower rate of growth than last year:

Full size image

No sign of ‘consumer acceleration’ here?

Full size image

Manufacturing continues chugging along at it’s usual 4% rate of growth:

PMI Manufacturing Index:

Full size image

And Consumer Sentiment continues to bob around at levels that were the pretty much the lows of prior cycles:

Full size image

Slipping a bit after the year end surge to beat expiring tax credits?

Bank lending flattening some after growing to fund unsold Q2 inventories?

Q2 could be revised to anything over the next couple of months, seems, as was Q1.

But at least for now the chart is what it is:

The second quarter rebounded more than expected from the adverse weather impacted first quarter. While there were a number of strong components, the rebound was led by inventory growth.

Posted in Credit, Employment, GDP, Housing | No Comments »

Microsoft to cut 18,000 jobs

Posted by WARREN MOSLER on 17th July 2014

So do you think most of these people will find higher or lower paying jobs?…

Microsoft plans to slash up to 18,000 jobs

Posted in Employment | No Comments »

Jobs releases

Posted by WARREN MOSLER on 3rd July 2014

Looking strong and inline with ADP and surveys.
All good news today!
Happy 4th!

Employment Situation

Average hourly earnings Y/Y:

Full size image

Full size image

International Trade

Jobless Claims

Just for fun:

Full size image

Posted in Employment | No Comments »

North Carolina payroll employment

Posted by WARREN MOSLER on 3rd July 2014

Looks to have spiked after benefits were cut midyear, then corrected. Might have been a prelude to the federal elimination of benefits for 1.2 million people at year end? If so, there is a sharp ‘correction’ in payroll employment heading our way:

North Carolina employment level:

Full size image
North Carolina change in employment:

Full size image

Posted in Employment | No Comments »

German unemployment at 6.7%

Posted by WARREN MOSLER on 1st July 2014

Shows how far economic expectations have deteriorated when this kind of a whopping output gap is considered to be an unquestioned success and the envy of the euro zone, as well as most of the world.

Taxation creates unemployment (people seeking paid work), by design, as a simple point of logic.

So what sense does it make for a government to create more unemployed than it wants to hire to provision itself, and then let all those people remain unemployed?

Seems they would either hire the rest of the unemployed their tax created, or lower the tax. But that’s just me…

German Unemployment Unexpectedly Rises for Second Month

By Stefan Riecher and Alessandro Speciale

July 1 (Bloomberg) — German unemployment unexpectedly increased for a second month amid signs of a slowdown in Europe’s largest economy.

The number of people out of work rose a seasonally adjusted 9,000 to 2.916 million in June, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 10,000, according to the median of 24 estimates in a Bloomberg News survey. The adjusted jobless rate was unchanged at 6.7 percent, the lowest level in more than two decades.

Posted in Employment, Germany, Government Spending | No Comments »

charts and comments GDP, durables, mtg apps, etc.

Posted by WARREN MOSLER on 25th June 2014

>   On Wed, Jun 25, 2014 at 8:52 AM, Sheraz wrote:
>   Very weak US numbers

And not one ‘nice call’ email!!!

And yesterday’s stock market action suggests a possible data leak???

US 1Q GDP has been revised lower by far than expected. After having initially been reported as a 0.1% rise, then a 1% contraction, the third release shows that GDP growth is now reported as -2.9 QoQ% annualised, which leaves annual growth at just 1.5%YoY.

The consensus expectation was for a -1.8% reading. The damage was largely done through the private consumption component, which is now reported as rising just 1% versus 3.1% previously.

Also ‘smoothing’ from numbers that looked high to me in H2 and an adjustment to ACA related healthcare expenses previously booked as PCE:

Full size image

Gross private investment remained an 11.7% contraction

Maybe after a Q4 surge due to expiring tax credits?

Full size image

Full size image

while government consumption was left at -0.8%. However, exports were revised down and imports revised up meaning that the contribution from net trade is to subtract 1.5% from GDP growth rather than 0.95% as previously announced.

Reversing a similar, prior blip up, as previously discussed:

Full size image

Nonetheless, reaction should be fairly muted given widespread expectations of a sharp bounceback in 2Q14 and the fact that the weather had such a damaging impact on 1Q activity. Indeed, we suspect that we could see GDP rise by more than 5% annualised in 2Q.

And if so, H1 would be +1% :(

High frequency numbers for the quarter have looked good while inventories should also make a significantly positive contribution after having been run down sharply.

After having been run up in H2. We’ll see where they go from here.

And, as previously discussed after the jump up in Q3, inventory accumulation seldom leads a boom:

Full size image

Mortgage purchase apps still dismal:

According to the MBA, the unadjusted purchase index is down about 18% from a year ago.

Full size image

And May durables not so good either:

Durables orders were much weaker than expected for May. Durables orders fell 1.0 percent in May after rising 0.8 percent in April. Analysts forecast 0.4 percent. Excluding transportation, orders slipped 0.1 percent, following a 0.4 percent gain in April. Market expectations were for 0.3 percent.

Transportation fell 3.0 percent after a 1.7 percent rise in April. The latest dip was from weakness in nondefense aircraft. Motor vehicles and defense aircraft orders rose.

Outside of transportation, gains were seen in primary metals, fabricated metals, and “other.” Declines were posted for machinery, computers & electronics, and electrical equipment.

On a positive note, there was improvement in equipment investment. Nondefense capital goods orders excluding aircraft rebounded 0.7 percent in May after decreasing 1.1 percent the month before. Shipments of this series rebounded 0.4 percent after a 0.4 percent dip in April.

The good news is this series is muddling along ok:

Full size image

The latest durables report is in contrast to recently positive regional manufacturing surveys and also the sharp jump in manufacturing production worker hours of 0.8 percent for May. But durables data are very volatile and we likely need a couple of more months of data before taking a negative tone on this sector.

The next leg to fall may be employment, as the 1.2 million people who lost long term benefits at year end may have been taking menial jobs at the rate of maybe 75,000/month or more for 6 months or so, which may have front loaded the monthly jobs numbers. If so, monthly job gains may fall into the 100,000 range soon.

So in general it was down for the winter, back up some, and we’ll see what happens next.

The ‘survey’ numbers and professional forecasts look promising, however it still looks to me like we are under the macro constraint of a too low govt deficit that’s struggling to keep up with the unspent income/demand leakages, with scant evidence of help from growth in private credit expansion.

And I tend to agree with Fed Chair Yellen here, which would tend to keep rates lower/longer if she gets her way. However I don’t agree that low rates somehow support aggregate demand, so I don’t see the likelihood of any call from the Fed or other forecasters for the fiscal relaxation I’ve been proposing.

Yellen may be poised to rewrite Fed’s rule book on wages, inflation

June 25 (Reuters) — “My own expectation is that, as the labor market begins to tighten, we will see wage growth pick up some to the point where … nominal wages are rising more rapidly than inflation, so households are getting a real increase in their take home pay,” Federal Reserve Chair Janet Yellen said last week, adding: “If we were to fail to see that, frankly, I would worry about downside risk to consumer spending.” Over the last year Fed staff changed their main model for forecasting wage and price inflation to reflect evidence that companies were adjusting prices more slowly than in prior years.

My immediate proposals remain 1) A full FICA suspension, which raises take home pay by 7.6%, and, for businesses that are competitive, lowers prices as well, restoring sales/output/employment in short order 2) A $10/hr federally funded transition job for anyone willing and able to work to promote the transition from unemployment to private sector employment 3) A permanent 0 rate policy with Tsy issuance limited to 3 mo bills. 4) Unrestricted campaign contributions, however, say, 40% of any contribution goes to the opposition…

Posted in Employment, Fed, GDP, Government Spending, Political | No Comments »

Participation rate

Posted by WARREN MOSLER on 12th June 2014

Posted in Employment | No Comments »

Wage inflation!

Posted by WARREN MOSLER on 9th June 2014

Time to tighten up on account of ‘wage inflation’…

Full size image

Posted in Employment, Inflation | No Comments »

Chart of productivity and real earnings

Posted by WARREN MOSLER on 8th June 2014

Wage spike!
Better tighten up quick!!!

Full size image

Posted in Employment | No Comments »

Public sector payroll jobs

Posted by WARREN MOSLER on 8th June 2014

Full size image

Posted in Economic Releases, Employment | No Comments »


Posted by WARREN MOSLER on 6th June 2014

First, the growth rate is still low and from this chart could be leveling off.
Second, for a 40 hour week the average gross wage is only just over $800/week!
Third, the growth rate is not inflation adjusted!
Fourth, the wage share has been falling for decades as productivity increases have gone elsewhere.

And what makes anyone think any of this is a function of interest rates?
Particularly in the direction assumed?

And why is it assumed that increased wages wouldn’t cut into profit margins?
Is the economy assumed to be ‘competitive’ only when it suites?


Posted in Employment | No Comments »

Review of last weeks data

Posted by WARREN MOSLER on 2nd June 2014

So my narrative is:

The Federal budget deficit is too small to support growth given the current ‘credit environment’- maybe $400b less net spending in 2014. The automatic fiscal stabilizers are ‘aggressive’, as they materially and continually reduce the deficit it all turns south. The demand leakages are relentless, including expanding pension type assets, corporate/insurance accumulations, foreign CB $ accumulation, etc. etc.

The Jan 2013 FICA hike and subsequent sequesters took maybe 2% off of GDP as they flattened the prior growth rates of housing, cars, retail sales, etc. etc. Q3/Q4 GDP was suspect due to inventory building, a net export ‘surge’, and a ‘surge’ in year end construction spending/cap ex etc. I suspected these would ‘revert’ in H1 2014. It was a very cold winter that slowed things down, followed by a ‘make up’ period. The question now is where it all goes from there. For every component growing slower than last year, another has to be growing faster for the total to increase.

The monthly growth rate of durable goods orders fell off during the cold snaps and the worked it’s way back up, though still not all the way back yet, and the ‘ex transportation’ growth rate was bit lower:

And of note:

Investment in equipment eased after a robust March. Nondefense capital goods orders excluding aircraft dipped 1.2 percent, following a 4.7 percent jump in March. Shipments for this series slipped 0.4 percent after gaining 2.1 percent the prior month.

In general the manufacturing surveys were firm.

Mortgage purchase applications continued to come in substantially below last year, even with the expanded, more representative survey:

According to the MBA, the unadjusted purchase index is down about 15% from a year ago.

MBA Mortgage Applications

Mortgage applications for home purchases remain flat, down 1.0 percent in the May 23 week to signal weakness for underlying home sales. Refinancing applications, which had been showing life in prior weeks tied to the dip underway in mortgage rates, also slipped 1.0 percent in the week. Mortgage rates continue to edge lower, down 2 basis points for 30-year conforming loans ($417,000 or less) to 4.31 percent and the lowest average since June last year.

And then there was the Q1 revised GDP release:

What drove it negative was a decline in inventories, net exports, and construction/cap ex:

The largest revisions to the headline number were from inventories (revised downward by -1.05%) and imports (down -0.36%), and although exports improved somewhat from the prior report, they still subtracted -0.83% from the headline. Fixed investments in both equipment and residential construction continued to contract.

PCE growth was revised up to +3.1% (adding 2.09% to GDP) but seems over 1% of that came from ACA (Obamacare) related and other non discretionary expenditures like heating expenses, etc. The question then is whether the increases will continue at that rate and whether the increased ACA related expenses will eat into other, discretionary expenditures.

The contribution made by consumer services spending remained essentially the same at 1.93% (up 0.36% from the 1.57% in the prior quarter). As mentioned last month, the increased spending was primarily for non-discretionary healthcare, housing, utilities and financial services – i.e., increased expenses that stress households without providing any perceived improvement to their quality of life.

And seems this Chart is consistent with my narrative:

And not that it matters, but just an interesting observation:

And lastly, for this report the BEA assumed annualized net aggregate inflation of 1.28%. During the first quarter (i.e., from January through March) the growth rate of the seasonally adjusted CPI-U index published by the Bureau of Labor Statistics (BLS) was over a half percent higher at a 1.80% (annualized) rate, and the price index reported by the Billion Prices Project (BPP – which arguably reflected the real experiences of American households while recording sharply increasing consumer prices during the first quarter) was over two and a half percent higher at 3.91%. Under reported inflation will result in overly optimistic growth data, and if the BEA’s numbers were corrected for inflation using the BLS CPI-U the economy would be reported to be contracting at a -1.52% annualized rate. If we were to use the BPP data to adjust for inflation, the first quarter’s contraction rate would have been a staggering -3.64%.

And looks like this will be limiting the next quarter:

Real per-capita annual disposable income grew by $95 during the quarter (a 1.03% annualized rate). But that number is down a material -$227 per year from the fourth quarter of 2012 (before the FICA rates normalized) and it is up only about 1% in total ($359 per year) since the second quarter of 2008 – some 23 quarters ago.

And remember this?

So the question is, how strong will the Q2 recovery be, and where does it go from there?

Again, looks to me like the deficit is having trouble keeping up with the demand leakages, and it keeps getting harder with time?

Jobless claims continue to work their way lower, but they are a bit of a lagging indicator and even with 0 claims there aren’t necessarily any new hires, either, for example.

And there’s another couple of issues at work here.

First, 1.2 million people lost benefits at year end, and it’s expected up to half of them will find ‘menial’ jobs during H1. However, corporations don’t add to head count just because unskilled workers lose benefits, so the employment numbers may thus be ‘front loaded’ with higher numbers of hires in H1, followed by fewer hires in H2.

Second, seems the new jobs don’t pay a whole lot, and a lot of higher paying jobs continue to be lost, so the increased employment isn’t associated with the kind of subsequent growth multipliers of past cycles.

Corporate profits were down over 10% in the Q1 GDP report, and mainly in the smaller companies as the S&P earnings saw a modest increase. Hence the small caps under performing, for example? Not mention earnings also tend to up and down with the Federal deficit:

This year over year pending home sales chart speaks for itself:

Full size image

Another series following the pattern- down for the winter weather, then back up some, and this time then backing off some:

Personal income & spending, up 0.3 percent and down 0.1 percent, fell back in April following especially strong gains in March. Wages & salaries slowed to plus 0.2 percent vs a 0.6 percent surge in March while spending on durables, reflecting a pause in auto sales, fell 0.5 percent vs gains of 3.6 and 1.3 percent in the prior two months. Spending on services, however, also fell, down 0.2 percent on a decline in utilities and healthcare after a 0.5 percent rise in March. In real terms, spending fell 0.3 percent following the prior month’s 0.8 percent surge. Price data remain muted, up 0.2 percent overall and up 0.2 percent ex-food and energy. Year-on-year price rates are at plus 1.6 percent and 1.4 percent for the core.

And again, the ACA and other non discretionaries added about 1% in Q1. So, again, it’s down for the winter, then up and this time back down to begin Q2 (with the growth of healthcare expenses backing off some):

Posted in Deficit, Economic Releases, Employment, GDP, Government Spending, Housing | No Comments »

wage share falls again

Posted by WARREN MOSLER on 5th May 2014

Employee compensation as a share of national income has fallen to its lowest point since 1951, at 66%, while profits rose to a level not seen since around the same time, at about 16%, said Christopher Probyn, chief economist at State Street Global Advisors.

Posted in Employment | No Comments »