Saturday, May 6, 2017

Weekly Indicators for May 1 - 5 at

 - by New Deal democrat

My Weekly Indicators post is up at

Despite some flat or faltering monthly data, we are down to only 3 negative high frequency indicators.

Friday, May 5, 2017

Just How Economically Clueless is Ed Morrissey? Pretty Darn Clueless

     Once again, ol' Ed has written about the jobs report.  And, as usual, he complains about the "status quo" job growth that is unimpressive.  

Overall, this looks like pretty good news, but not spectacular and probably not a sign of a coming boom — yet, anyway. Excluding the big miss in March, it’s the weakest report in 2017 by a slight amount, and not a large amount over the maintenance rate for population growth (~125-150K). It’s certainly better than last month, and better than the last quarter of 2016, but it’s not gangbusters

But that's not what the averages say:

The chart above shows the average 3, 6 and 12 month rate of change in total establishment jobs.  The current pace has gone on longer than the Bush expansion (which I'm sure Ed argued was the greatest thing since sliced bread) while maintaining a similar pace.  The current expansion's levels are slightly below the pace of the previous 2 expansion.   

So, we know  (once again) that Ed really doesn't know much about economics.  But that wont' stop him from writing about. 

Scenes from the employment report

 - by New Deal democrat

As I described in my detailed post on the April jobs report, below, almost everything moved in the right direction, and significantly so.  Let me lay out a few graphs to show the longer-term stronger and weaker points.

In the good news department, the U6 underemployment rate has been falling at a good clip in the last few months, and at 8.6%, is about 0.6% from representing a reasonably "full" employment situation:

Part of the U6 calculation is those employed part time for economic reasons.  This isn't down to normal yet, but continues to make good progress:

What is particularly good news is that both the U3 and U6 un- and under-employment rates are falling, even though people in the prime working age demographic are coming off the sidelines in substantial numbers:

The only other times in the last 30 years there has been a 1%+ increase in prime age labor force participation (red line above) were 1988 and 1995.

This *relatively* stout increase in participation is probably an important reason why nominal YoY wage gains for nonsupervisory workers have stalled:

Finally, we still have about 1 million or more people who aren't even bothering to look for work, but would like a job now:

This equates to roughly 0.7% of the prime age population.

In sum, we still need to move this +0.7% off the sidelines and into actual employment, and also add another +0.6% or so from underemployment to complete employment before we can say that the the economy is operating at "full employment." And we are almost 8 years out from the beginning of this expansion, and probably a lot closer to the beginning of the next downturn.  This is simply not an economy that in secular terms is working for the average American.

April jobs report: a blowout -- except (sigh) for wages

- by New Deal democrat

  • +211,000 jobs added
  • U3 unemployment rate down -0.1% from 4.5% to 4.4%
  • U6 underemployment rate down 0.3% from 8.9% to 8.6%
Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates
  • Not in Labor Force, but Want a Job Now:  down -74,000 from 5.781 million to 5.707 million   
  • Part time for economic reasons: down -281,000 from 5.553 million to 5.272 million
  • Employment/population ratio ages 25-54: up +0.1% from 78.5% to 78.6%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.06 from $21.90 to $21.96,  up +2.3% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
Holding Trump accountable on manufacturing and mining jobs

Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise? 

  • Manufacturing jobs rose by +6,000 vs. the last severn years of Obama's presidency in which an average of 10,300 manufacturing jobs were added each month.   
  • Coal mining jobs rose by +200 vs. the last severn years of Obama's presidency in which an average of -300 jobs were lost each month
  February was revised upward by +13,000. March was revised downward by -19,000, for a net change of -6,000.  

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were positive with one exception.
  • the average manufacturing workweek rose +0.1 from 40.6 hours to 40.7 hours.  This is one of the 10 components of the LEI.
  • construction jobs increased by +5,000. YoY construction jobs are up +173,000.  
  • temporary jobs increased by +5,800.

  • the number of people unemployed for 5 weeks or less increased by +1,000 from 2,334,000 to 2,335,000.  The post-recession low was set nearly 18 months ago at 2,095,000.
Other important coincident indicators help  us paint a more complete picture of the present:
  • Overtime fell -0.1 from 3.3 to 3.2 hours.
  • Professional and business employment (generally higher- paying jobs) increased by +39,000 and is up +612,000 YoY.

  • the index of aggregate hours worked in the economy rose by 0.5 from 106.3 to 106.8 
  •  the index of aggregate payrolls rose by +0.7 from 132.8 to 133.7 . 
Other news included:         
  • the alternate jobs number contained  in the more volatile household survey increased by   +156,000 jobs.  This represents an increase of 2,128,000  jobs YoY vs. 2,237,000 in the establishment survey.    
  • Government jobs rose by +17,00.     
  • the overall employment to population ratio for all ages 16 and up rose +0.1% from  60.1% to 60.2 m/m  and is  up +0.5% Yo Y.     
  • The  labor force participation rate fell -0.1% m/m and is up +0.1% YoY from 62.8% to 62.9%.     

This was an excellent report in almost all respects. Not only were the headlines very positive, but so were most of the internals. Hours rose, aggregate payrolls rose, and the employment to population ratio continue to rise as well. People are coming off the sides maybe not in droves but pretty vigorously -- and they are finding jobs. Involuntary part-time employment is declining sharply.

There were a few pockets of softness, in short-duration employment, which hasn't made a new low in 18 months, and those outside of the labor force but who want a job, which also hasn't made meaningful progress in nearly 4 years (although recently it has declined sharply as well). The labor force participation rate also declined this month.
The other soft spot remains wages, which are only up +2.3% in nominal terms for nonsupervisory workers. This is probably in part due to the YoY increase in prime age participation (up over 1% from ages 25-54 in the last year), which means more competition for available jobs.

So, while this month is very good news, we are still at least 0.5%, and probably more like 1%, from reasonably "full" employment, and wages are still really soft. I will repeat, as I do every month now, that the biggest danger I see in the next downturn, whenever it hits, is that we have the first actual wage deflation since the 1930s.
Postscript: Is this employment report an affirmation of Trump and the GOP? Yes -- if by that you mean that they haven't really done anything to affect the economy as of yet, and so it continues on autopilot.

Thursday, May 4, 2017

Holding Trump to account on manufacturing and mining jobs: setting the benchmarks

 - by New Deal democrat

Tomorrow is the April employment report, and at this point we can begin to hold Trump and the GOP Congress at least somewhat (but not fully for about 3-6 more months) accountable for the trend. For example, by this point 8 years ago, Obama and the Democratic Congress had passed the stimulus program, and the hemorrhaging of jobs, while continuing, gradually lessened before completely turning around 9 months later.

On the campaign trail last year, Trump made some pretty specific promises to bring back both manufacturing and mining jobs. Those promises were a major part of his economic appeal to the working class. So, beginning tomorrow, it's time to start holding him to account.

Today let's set the benchmarks. As noted above, the economy finally started to add jobs at the beginning of 2010. So let's calculate how many jobs were gained or lost in the Obama recovery, as a monthly average, for those 7 years.

Here is the Obama record on manufacturing jobs annually beginning in 2010:

In December 2009, 11.475 million people were employed in manufacturing.  eighty-four months later, in December 2016, 12.343 million people were, for a gain of 868,000, or 10,300 a month.

Now here his the Obama record on coal mining jobs annually beginning in 2010:

In December 2009, 77,700 people were employed in coal mining. After rising to almost 90,000, by December 2016, only 49,700 people were so employed, for a loss of -28,000, or -300 a month.

For Trump to do better than Obama, he needs to add 11,000 manufacturing jobs a month, and simply not lose any jobs in coal mining.

The accounting starts tomorrow.

Wednesday, May 3, 2017

Monthly update on housing and cars

 - by New Deal democrat

First of all, sorry for the lack of posting this week. Occasionally real life intrudes, and so it did for the last few days, demanding my full-time (and more!) attention. Posting should return to nearly normal.

If the consumer economy were really in trouble, the first two places I would expect to see that manifesting is in housing and cars.  Now that the latest monthly results have been reported, we have an updated look.

This post is up at