Thursday , November 14 2019
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Hale Stewart: Bonddad Blog

The Bonddad Blog is authored by Hale Stewart, a financial advisor. His blog publishes an invaluable weekly economic review on the Bond Market, International Economics, and Equity and Economics. These links along with his highly detailed review of economic trends makes this one of the top economics blogs

Initial claims continue to show slowdown, but no imminent recession

 - by New Deal democrat I’ve been monitoring initial jobless claims closely for the past several months, to see if there are any signs of a slowdown turning into something worse. Simply put, no recession is going to begin unless and until layoffs increase. My two thresholds are:1. If the four week average on claims is more than 10% above its expansion low.2. If the YoY% change in the monthly average turns higher. As of this week, initial claims continue to be very close to their...

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Real average and aggregate wages declined in October

 - by New Deal democratOctober’s consumer inflation reading came in at a surprisingly high +0.4%, which as shown in red in the graph below, was one of the 3 highest in the past two years. Meanwhile average hourly earnings increased less than +0.2% - the second lowest reading in the past two years, shown in blue: As a result, real average hourly earnings decreased -0.2% last month, the worst reading since late 2017:In a longer term perspective, this means that real wages declined to 97.6% of...

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How economists blew the analysis of the manufacturing jobs shock

 - by New Deal democrat I came across this article yesterday, posted by - to his credit - Brad DeLong, whose argument it eviscerates. Entitled “The Epic MIstake about Manufacturing That’s Cost Americans Millions of Jobs,” it deserves widespread attention. So I am summarizing it here. But by all means go and read the entire piece. Just to give you the frame of reference, here is the historical graph of manufacturing jobs in the US for the past 50 years:    After peaking in 1979, the...

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November leading reports point to slowdown, no recession

 - by New Deal democratThe leading indicators reported so far this month show that, while manufacturing continues flat or even in contraction, there’s no significant indication that it has spread to other important sectors like residential construction or motor vehicle sales. And without the weakness spreading to their sectors, this looks similar to 2016, where there was a slowdown but no recession.This article was posted last week at Seeking Alpha. As usual, clicking over and reading...

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Weekly Indicators for November 4 – 8 at Seeking Alpha

 - by New Deal democrat My Weekly Indicators post is up at Seeking Alpha. The biggest story of the week was the move higher in long term interest rates. This means that the “yield curve inversion” you’ve read so much about in the past year is over. At the same time, long term interest rates (e.g., for mortgages) haven’t moved back high enough to pose a danger to the housing market. In other words, they’re at a “sweet spot.” A note on the political implications: my specialty is...

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Scenes from the October employment report: leading sectors remain poor

 - by New Deal democratYesterday I discussed unemployment and labor force participation from last week’s jobs report, which with the significant exception that better wage growth would probably lead to more people deciding that they’d like a job, remains very positive. Today let’s look at the bad news, which is the same as last month’s: leading indicators for employment are weak to negative.To begin with, in the last 9 months, per the more reliable establishment report, 1,358,000 jobs have...

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Scenes from the October employment report: full employment?

 - by New Deal democrat Last Friday the household jobs report - the one that tells us about unemployment, underemployment, and labor force participation - has been particularly strong in the past three months. This has driven some impressive gains in labor force participation and the unemployment rate. To begin with, gains in employment as measured by the household survey (red in the graphs below), as opposed to the larger (and, yes, more reliable) payrolls survey (blue), have...

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A note about turnout in yesterday’s elections

 - by New Deal democratI haven’t seen any information yet on how turnout in last night’s elections, particularly in Virginia, which was an “off-off year” election, i.e., no statewide races at all, only state legislative and local races. The state of Virginia keeps turnout statistics online back to 1976. The bottom line is, clearly something happened in the late 1990s that drove down turnout, which has been reversed in the last two years. In the 5 “off years” with statewide races...

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September JOLTS report: mixed with “hard” positives and a “soft” negative

 - by New Deal democratThis morning’s JOLTS report for September was mixed, with a decline in job openings and an increase in layoffs, but advances in hiring and voluntary quits. To review, because this series is only 20 years old, we only have one full business cycle to compare. During the 2000s expansion: Hires peaked first, from December 2004 through September 2005 Quits peaked next, in September 2005 Layoffs and Discharges peaked next, from October 2005 through September 2006 Openings...

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Q3 GDP points away from a producer-led recession

 - by New Deal democratIn the past 60 years, most recessions have been consumer-led, and have been preceded by both increases in mortgage rates in excess of 2% and/or increases in the price of gas by 40% or more per year. Usually the Fed has been hiking rates by 2% or more, and the change in YoY inflation has also increased by 2% or more. Housing starts typically went down by 25% or more, and that fed through the rest of the economy over the next 12-24 months. The bottom line is that...

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