Saturday, September 2, 2017

August 2017 Jobs Report

SURVEY OF HOUSEHOLDS
August employment drops significantly in this data because of summer layoffs.

Here is the number of jobs lost in August from July of these years:

2017   -894,000   It is easy to see August this year was a lot worse
2016   -633,000
2015   -494,000
2014   -618,000
2013   -604,000
2012   -568,000

Same Data showing how many new jobs there are in August from a year ago:

2017   1,772,000  It is easy to see August this year has slowed down in new jobs created
2016   2,576,000
2015   2,581,000
2014   2,138,000
2013   1,951,000
2012   2,223,000

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CORPORATE REPORTING
Corporate reports do not pick up a lot of those summer jobs.

Here is the number of jobs gained in August from July of these years:

2017   211,000   The corporate job gains are not horrible but is definitely not great
2016   238,000
2015   192,000
2014   380,000
2013   437,000
2012   381,000

Same Data showing how many new jobs there are in August from a year ago:

2017   2,100,000  Again, corporate hiring isn’t horrible but it is clear it has slowed
2016   2,502,000
2015   2,814,000
2014   2,636,000
2013   2,314,000
2012   2,285,000

Conclusion:  The headline jobs report tells us there were 156,000 new jobs created in August from July.  This was considered a bit disappointing.  This figure is an adjusted number.  The actual number from this data was a gain of jobs of 211,000.  This is better.  That is the actual is better than the adjusted number for public consumption.

Better but not good compared to the recovery.  It shows a slow down, as does the year over year job gains.

The non-reported data (which I list first above) from the household survey is a lot worse.  This data captures the people that the corporations are not reporting on.


There is no reason to be concerned other than job growth has to slow down before it slows down more.

Saturday, June 3, 2017

Efficient credit expansion

The charts below have a blue line and a red line.  The red line is the same.  It is Nominal Gross Domestic Product (NGDP).

In each of the charts separately the Blue line represents 1) Business and Household credit expansion as a percent of NGDP, 2) Bank credit expansion as a percent of NGDP, and 3) Federal Government credit expansion as a percent of NGDP.

I characterize 1) Business and Household credit expansion as efficient, and 2) Bank credit expansion as really bad, and 3) Federal government credit expansion as stupid.


Charts 1 & 2: The Blue line going up means that credit expansion is going up faster than NGDP.  Going sideways means the specified credit expansion is going up at the same pace as NGDP.  When the Blue line goes down it means the specified credit expansion is contracting relative to NGDP.

Consider Chart 1, what I call efficient credit expansion.  That is because it is highly correlated to NGDP.  When Business and Household debt expanded at a pace faster than NGDP, NGDP, the Red line, goes down.  When Blue is sideways so is Red.  Note what happened after the Great Recession.  The Blue line went down and NGDP, the Red line, recovered and stabilized along with the Blue line stabilizing.  This is important when we get to the last chart.


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Consider Chart 2, Bank Credit expansion.  This is evil debt.  The banks became all important to the Federal Reserve Bank and economists after the double dip recession and the start of the “Great Moderation” (not).

The Secular trend of financial debt expanding faster than NGDP is correlated and I believe caused the resultant secular decline in NGDP.  Only once the banks got shanked in the Great Financial Crisis and Great Recession, did NGDP stabilized.  See the right side of the chart.


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Now for Chart 3.  Federal Debt expansion.  Keynesian economics says government spending is to increase when private sector aggregate demand is weak.  I don’t really see any correlation here.  So I call it stupid.  Since the Great Recession is seems like a waste; all that massive debt expansion.

Referring back to earlier, I believe the “efficient” expansion of Business and Household credit is what caused the recovery and stabilization of NGDP after the crises.  Not Federal Deficit spending.


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Conclusion.  The role of banks and the federal government must be reduced if there is to be a prosperous economy.

In anticipation of a criticism I prepared another chart.  One could say that using the NGDP Red line could distort the picture I am presenting because the Great Moderation was all about reduced and steady inflation. That isn't all of it but yes.  So here is Business and Household credit expansion divided by NGDP just like before but the Red line is now Real GDP.  And I went one further.  I eliminated the recession bars. The correlation holds, reverse or otherwise. Nicely.


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This explains a lot - checking vs savings

The growing distance between savings and checking deposits.


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