Jobs Expand by 151,000, Unemployment Steady at 9.6%; Birth-Death Methodology Changes for the Better; Reflections on the Numbers
by ilene - November 6th, 2010 4:46 pm
Jobs Expand by 151,000, Unemployment Steady at 9.6%; Birth-Death Methodology Changes for the Better; Reflections on the Numbers
Courtesy of Mish
Today the BLS reported jobs expanded by 151,000. This should not be totally unexpected as I noted last night in Gaming the Jobs Report that TrimTabs called for +95,000, ADP +43,000, and Gallup showed a surge in October hiring.
Moreover, recent ISM surveys were stronger than expected. The important question this morning is whether or not this surge is sustainable. I do not think it is, nor does TrimTabs.
Here is the Email alert from TrimTabs once again (sorry, no link).
TrimTabs
Sausalito, CA – November 3, 2010 – TrimTabs Investment Research estimates that the U.S. economy added 95,000 jobs in October, the first monthly increase since May.
“The economy clearly improved in October,” said Madeline Schnapp, Director of Macroeconomic Research at TrimTabs. “Unfortunately, the gains probably aren’t sustainable.”
Multiple indicators suggest the labor market perked up last month. Real-time tax data shows wage and salary growth accelerated, TrimTabs’ proprietary measure of online job postings jumped 5.6%, and initial unemployment claims fell to the lowest level since August 2008.
In a research note, TrimTabs argues that the economy will remain stuck in slow-growth mode. October’s employment increase likely owes to temporary factors such as inventory building. Also, a cheaper dollar boosted exports, and record low mortgage rates spurred refinancing activity.
“Economic growth is likely to stay sluggish because the private sector isn’t able to pick up the slack from waning government stimulus,” Schnapp noted. “State and local government budget crises and the weak housing market will be significant drags on growth for a long time.”
I strongly concur with that last paragraph in red above.
I had a typo in the headline number from TrimTabs yesterday (now corrected). The TrimTabs estimate was +95,000 not +75,000 as I had in the title. No changes were made to the body of my post.
Had I read that properly I would have upped last night’s estimates higher by 20,000. I was very aware today’s report might be on the hot side.
This is what I said …
Anything from +40,000 to +110,000 seems like a reasonable guess. I certainly would not be surprised to see a number in the upper end of that range. Stores are hiring, Black Friday sales are starting 3 weeks early, and ISM reports seemed
…
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REVISITING RICHARD FISHER’S “DARKEST MOMENTS”
by ilene - November 4th, 2010 4:44 pm
REVISITING RICHARD FISHER’S “DARKEST MOMENTS”
Courtesy of The Pragmatic Capitalist
It’s been less than two weeks since I first discussed Richard Fisher’s “darkest moments”, but the markets have made some incredible moves since then so I wanted to revisit the piece. After the FOMC meeting yesterday Ben Bernanke released an op-ed for the Washington Post. His comments were incredibly important. Not only did he say that he was directly attempting to prop up equity markets (that’s right America – we have resorted to officially admitted that our central bank is running a ponzi scheme), but he also admitted that the Fed’s actions are not inflationary. Why you ask? Because, as I’ve emphasized in recent weeks this operation does not add net new financial assets to the private sector. It does not boost lending. It does not create jobs. It does not boost wages. Bernanke essentially admits as much:
“Although asset purchases are relatively unfamiliar as a tool of monetary policy, some concerns about this approach are overstated. Critics have, for example, worried that it will lead to excessive increases in the money supply and ultimately to significant increases in inflation.
Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation. We have made all necessary preparations, and we are confident that we have the tools to unwind these policies at the appropriate time. The Fed is committed to both parts of its dual mandate and will take all measures necessary to keep inflation low and stable.”
He’s hoping to create an equity market “wealth effect” that is unsupported by the underlying fundamentals – Greenspan 101. So, we’re in this situation where end demand remains very weak in the United States. But Mr. Bernanke knows this operation is unlikely to result in any real lasting inflationary impact. But his commentary alone is having an astounding impact on markets. In essence, he is herding investors into equities and commodities as investors believe that the policy is inflationary. Unfortunately, the assets that have rallied the most since August are important inputs in every day products:
- Cotton + 68%
- Sugar +66%
- Soybeans +23%
- Rice +29%
- Coffee +15%
- Oats +31%
- Copper +16%
Some people are…
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ELECTION RESULTS: BIG WIN FOR THE GOP, POTENTIAL BIG LOSS FOR THE ECONOMY
by ilene - November 3rd, 2010 4:31 pm
ELECTION RESULTS: BIG WIN FOR THE GOP, POTENTIAL BIG LOSS FOR THE ECONOMY
Courtesy of The Pragmatic Capitalist
The country has spoken and they are not happy with the Obama economy. And rightfully so. It has been a remarkable disappointment thus far. President Obama’s biggest mistakes were often highlighted by me in real time:
- He should have chosen to bailout Main Street over Wall Street.
- He never should have appointed Geithner or Summers. They were merely attempts to rehash the Clinton economic team and unfortunately, due to his ignorance of the economic environment, President Obama had no idea that these men played a significant role in causing the crisis.
- He absolutely never should have reappointed Ben Bernanke. Mr. Bernanke has rehashed all of Alan Greenspan’s “flawed” policies and has chosen to focus on the banking sector at every twist and turn of this crisis.
- He should have saved his health care plan for term two and focused on helping Americans get the jobs they so badly needed.
- He should have dropped the hammer on Wall Street with harsh regulation. We have become a nation by the banks and for the banks and the de-regulation of the 90′s is largely to blame. We need to end the financialization of this country and get back to 3-6-3 banking as opposed to relying on our bankers to generate economic growth while also mis-allocating resources.
- He has had every opportunity to become the champion of Main Street. Instead, he appears no different than his many predecessors who have been slaves to bank lobbyists.
This election is largely a referendum on the Obama economy. Unfortunately, I am concerned that the change is not necessarily any better. Specifically, I am most concerned about a return to the ways that got us into this mess in the first place:
- I am concerned that we are moving back towards a belief that business is efficient and rational and therefore does not need to be regulated.
- I am concerned that gridlock will lead to severe budget constraints. Like it or not, we are in a balance sheet recession. And when you’re in a balance sheet recession someone must run a surplus or economic growth will decline. That is simply an accounting identity. With the private sector paying down
…
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QEII Announced, Fed Set to Buy $600 Billion in Bonds, Reinvest $250 Billion More; Fed Micromanaged Economy to Oblivion; No Miracles Coming
by ilene - November 3rd, 2010 3:35 pm
QEII Announced, Fed Set to Buy $600 Billion in Bonds, Reinvest $250 Billion More; Fed Micromanaged Economy to Oblivion; No Miracles Coming
As expected, the Fed announced a "modest" $600 billion second round of Quantitative Easing. Estimates rated as high as $2 trillion.
Please consider the Fed’s Statement Regarding Purchases of Treasury Securities
On November 3, 2010, the Federal Open Market Committee (FOMC) decided to expand the Federal Reserve’s holdings of securities in the System Open Market Account (SOMA) to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate. In particular, the FOMC directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to purchase an additional $600 billion of longer-term Treasury securities by the end of the second quarter of 2011.
The FOMC also directed the Desk to continue to reinvest principal payments from agency debt and agency mortgage-backed securities into longer-term Treasury securities. Based on current estimates, the Desk expects to reinvest $250 to $300 billion over the same period, though the realized amount of reinvestment will depend on the evolution of actual principal payments.
Taken together, the Desk anticipates conducting $850 to $900 billion of purchases of longer-term Treasury securities through the end of the second quarter. This would result in an average purchase pace of roughly $110 billion per month, representing about $75 billion per month associated with additional purchases and roughly $35 billion per month associated with reinvestment purchases.
QEII Duration
The Fed is going to be stuck with this garbage on its balance sheet for a long time as the following table shows.
That table explains the Fed’s exit plan: None.
The Fed will hold 29% of the garbage it buys for at least 7 years. The Fed may hold all of it to duration. Don’t worry, the Fed does not have to mark-to-market any of these holdings, regardless of what happens to interest rates.
Doubts Persist
MarketWatch reports Fed to buy $600 billion in bonds
The Federal Reserve pledged on Wednesday to start a controversial new billion bond-buying spree to rescue the economy from its current doldrums.
The Fed said it would buy up to $600 billion in long-term Treasurys until the end of June 2011, about $75 billion this month, in a strategy called quantitative
…
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Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World
by ilene - November 3rd, 2010 3:05 pm
Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World
Courtesy of Michael Snyder at Economic Collapse
Do you want to see something truly frightening? Just check out the 3 charts posted further down in this article. These charts prove that we are now in the biggest debt bubble in the history of the world. As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none.
But that is not even close to accurate. The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world. Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us. So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal.
We have been robbing future generations blind for so long that it doesn’t even seem to bother most people anymore. We have become accustomed to living in debt. We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.
Just check out the chart posted below. It shows the total credit market debt owed in the United States. In other words, it is a measure of what everyone owes (government, businesses and consumers).
30 years ago, total credit market debt owed was less than 5 trillion dollars. Today, it is over 50 trillion dollars. Total credit market debt is now at a level equivalent to about 360 percent of GDP. This is what has been fueling the great era of "economic prosperity" that we have been experiencing….
So what is the answer to this problem?
The truth is that there is not an easy answer under our current system. The only way that the U.S. economy continues to "grow" is if the debt bubble continues to "expand". …
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Is America In Decline? 24 Statistics About The United States Economy That Are Almost Too Embarrassing To Admit
by ilene - October 13th, 2010 8:18 pm
Is America In Decline? 24 Statistics About The United States Economy That Are Almost Too Embarrassing To Admit
Courtesy of Michael Snyder at Economic Collapse (H/tip to Eddy Elfenbein at Crossing Wall Street)
Does anyone really want to hear that America is in decline? For decades, most of us have been raised to believe that the United States is "number one" and that anyone who doubts that fact is a "gloom and doomer" that should just pack up and move to "Russia" or "Iraq" or some other country where things are not nearly as good. But does it do us or future generations any good to ignore the very serious signs of trouble that are erupting all around us?
The truth is that it is about time to wake up and admit how much trouble we are actually in. The U.S. government is absolutely drowning in debt. The entire society is absolutely drowning in debt. We are being slaughtered in the arena of world trade, and every single month tens of billions of dollars (along with large numbers of factories and jobs) leave our shores for good. Our infrastructure is failing, our kids are less educated and our incomes are going down. We have serious, serious problems. At one time, the U.S. economy was so dominant that it was not even worth talking about who was in second place. That is no longer the case in 2010. Our forefathers handed us the greatest economic machine in history and we have allowed it to fall apart right in front of our eyes. A national economic crisis of historic proportions is getting worse with each passing month, and yet most of our leaders seem to be asleep at the switch.
So is American in decline? Well, read the statistics below and decide for yourself. The reality is that when you start connecting the dots it gets really hard to deny what is going on.
Urgent action must be taken if…
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Big Hole
by ilene - October 12th, 2010 6:50 pm
Big Hole
Courtesy of Michael Panzner at Financial Armageddon
People have been throwing around numbers in the millions and billions and trillions since the crisis started. Over time, the data deluge has turned into a flood, and, occasionally, it is even hard for someone like me — who has been tracking and analyzing this stuff for a while — to get a grip on what it all means.
Maybe that’s the strategy: overwhelm the masses with endless zeroes and hope they either zone out or lose sight of the fact that those numbers represent decades of poor decisions, misguided policies, and illegal acts.
That said, sometimes all it takes to get to the bottom of some of those numbers is to recast the data in graphical form — because, like they say, "a picture is worth a thousand words." In "The Jobs Gap," the Washington Independent highlights research from one think tank that does just that, and what it says about the state of the employment market is pretty striking:
In light of last week’s dismal September jobs report, Heidi Shierholz, of the Economic Policy Institute, updates her estimates of how many jobs the United States needs to create to get back to where it was, employment-wise, when the recession started.
The labor market remains an estimated 8.1 million payroll jobs below where it was at the start of the recession in December 2007. This number includes both the 7.8 million jobs lost in the payroll data as currently published plus the announced preliminary benchmark revision of -366,000 jobs to last March’s employment level. And even this number understates the size of the gap in the labor market by failing to take into account the fact that simply to keep up with the growth in the working-age population, the labor market should have added around 3.4 million jobs since December 2007. This means the labor market is now roughly 11.5 million jobs below the level needed to restore the pre-recession unemployment rate (5.0 percent in December 2007).
In graphic terms:
That begs the question: How will the economy get there? And leads to the worrying answer: It won’t, at least not anytime soon. Government spending — the kind that might, say, hire hundreds of thousands of construction workers — is out of the question. And that means private businesses will chip away at unemployment when the economy picks up a bit more, adding workers slowly, very slowly.
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Economic Nonsense from Ezra Klein at the Washington Post
by ilene - October 9th, 2010 12:38 pm
Economic Nonsense from Ezra Klein at the Washington Post
Courtesy of Mish
The only genuinely good news in Friday’s jobs report was the much needed shedding of 159,000 government workers of which only 77,000 were temporary census workers.
Shed another million government workers and you have a small start as to what needs to happen. Some don’t see it that way, including Erza Klein at the Washington Post.
Assuming you are able to stomach still more Keynesian claptrap please consider Welcome to the anti-stimulus
The good news: The private sector gained 64,000 jobs in September. The bad news? The public sector lost 159,000.
The government is now impeding an economic recovery. But it’s not for the reasons you often hear. It’s not because of debt or because of taxes. Nor has it scared the private sector into timidity. It’s because, at the state and local level, it’s firing people. There are more than 14 million Americans looking for work right now — to say nothing of the 9.5 million who have been forced into part-time jobs when they want, and need, full-time work — and the government just added 159,000 more to the pool. Consider this: If we only counted private-sector jobs, we’d have had positive jobs reports for the last nine months. As it is, public-sector losses have wiped out private-sector gains for the past four months.
Because the federal government has decided against backing up state and local governments, the bleeding continues, and that scares businesses away from investing in recovery. We create the stimulus that helped the economy survive 2008 and 2009, and we’ve created the anti-stimulus that’s keeping it from recovering in 2010.
Keynesian Claptrap At Its Finest
Gee, if only the government would hire everyone, there would be no unemployment.
Then again, countless cities, counties, municipalities and states are bankrupt because of absurd levels of spending.
Isn’t that what wrecked Greece?
Non-Solution #1- Raising taxes
Raising taxes burdens ordinary taxpayers for the sole benefit of government bureaucrats who like most of the rest of the population ought to be thankful they have a job at all.
Non-Solution #2 – Printing money and giving it away
Ezra is clearly a fan of printing money and giving it away to government bureaucrats so the unemployment rate does not drop.
However, printing money and giving it away cheapens the US dollar, making goods and services…
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11 Long-Term Trends That Are Absolutely Destroying The U.S. Economy
by ilene - October 7th, 2010 5:52 pm
11 Long-Term Trends That Are Absolutely Destroying The U.S. Economy
Courtesy of Michael Snyder at Economic Collapse
The U.S. economy is being slowly but surely destroyed and many Americans have no idea that it is happening. That is at least partially due to the fact that most financial news is entirely focused on the short-term. Whenever a key economic statistic goes up the financial markets surge and analysts rejoice. Whenever a key economic statistic goes down the financial markets decline and analysts speak of the potential for a "double-dip" recession. You could literally get whiplash as you watch the financial ping pong ball bounce back and forth between good news and bad news. But focusing on short-term statistics is not the correct way to analyze the U.S. economy. It is the long-term trends that reveal the truth. The reality is that there are certain underlying foundational problems that are destroying the U.S. economy a little bit more every single day.
11 of those foundational problems are discussed below. They are undeniable and they are constantly getting worse. If they are not corrected (and there is no indication that they will be) they will destroy not only our economy but also our entire way of life. The sad truth is that it would be hard to understate just how desperate the situation is for the U.S. economy.
Long-Term Trend #1: The Deindustrialization Of America
The United States is being deindustrialized at a pace that is almost impossible to believe. But now that millions upon millions of people have lost their jobs, more Americans than ever are starting to wake up and believe it.
A recent NBC News/Wall Street Journal poll found that 69 percent of Americans now believe that free trade agreements have cost America jobs. Ten years ago the majority of Americans had great faith in the new "global economy" that we were all being merged into, but now the tide has turned.…
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Want a Manufacturing Renaissance? Here’s How
by ilene - October 7th, 2010 4:38 am
Want a Manufacturing Renaissance? Here’s How
Courtesy of Charles Hugh Smith, Of Two Minds
The keys to launching a renaissance in manufacturing and industry in the U.S. are not just financial.
Given the widespread angst over the dwindling role of manufacture and industry in the U.S. economy, you’d think commentators and pundits might actually know something about manufacturing. Remarkably, they don’t.
I see precious little evidence that anyone on either side of the issue--those bemoaning the loss of industry, and those who brush aside the whithering as a positive consequence of globalization, wage arbitrage and free capital flows--has ever worked in a factory or even toured factories in various countries to see for themselves.
The standard-issue pundit/academic may well have glanced through the viewing window at some high-tech factory with robots and workers in clean jumpsuits, and this one slice of manufacturing colored their scanty experience: this must represent all factories nowadays.
Only it isn’t so.
Others (again, with no direct experience with manufacturing) are quick to point out the huge wage differential between Chinese workers (who have received substantial raises in previous years) and U.S. workers and pronounce the eventual death of all U.S.-based manufacturing just on the basis of wage arbitrage.
It isn’t that simple. And what exactly is that wage differential? Few note that the dorms and food services provided to workers at large-scale factories in China are subsidized and thus constitute an additional "wage."
Today we look at issues which rarely if ever see the light of day in the mainstream media.
I happened to see two video clips filmed inside Japanese and German factories on TV recently, on the Japanese English-language channel NHK and on the German English-language channel DW.
As we all know, Japan and Germany are the world’s powerhouse exporters of advanced machine tools and other high-technology equipment and goods.
In the Japanese plastics factory in Nagano Prefecture, neatly uniformed workers were shown cleaning plastic parts by hand.
In the German packaging factory, neatly uniformed workers were shown guiding cardboard boxes onto a conveyor by hand.
To the observer who knows something about either nation, both personally and as a mercantilist culture/economy, there is a wealth of information in these two short videos.
1. A staggering amount of "manufacturing" in advanced mercantilist economies still involves human labor.
2. Factory work is respected and not denigrated culturally.
factory work in the U.S. is widely viewed…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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