My just so story is that the recession oddity is mainly due to inflation and getting goods, both intermediate and finished.
A 5% increase in wages is pretty weak after a year and a half of 8-10% inflation; that looks to me like a 3-5% drop in wages. Inflation, unusually, seems to be both due to massive spending/money printing by government and the huge drop in goods production and disruptions caused by the COVID reactions. Prices are going up because there is more money chasing fewer goods.
On the supply side, there are still big shortages in raw materials, intermediate goods and finished goods, with rationing based on things other than prices that are locked in by contract. My company has some lead times of at least a year, others I have seen up to two years. That is, if you order today you will get it July 2024. That isn't for high end, very complex finished goods either, but intermediates that were pretty standard 6 week lead time items. So we need the staff to run as hard as we can with what we can get, but we are paying out the nose for transport (flying stuff in some cases) and it is hand to mouth up and down the chain. No spare money for growth. If that holds true across manufacturing industries, then lots of zero growth due to just scraping by means there is little countering industries with negative growth. A recession due to not being able to get enough stuff to grow.
My friend runs an import business and he's increased his administrative staff from 5 to 15 people. Not because the business has grown, but because he needs another 10 people to run around trying to solve supply chain issues.
Perhaps a good explanation of employment is that real wages are down so there is a strong bid for this cheaper labor but the labor itself isn't better off.
Many pundits have focused on unemployment as being low and not flashing a recession signal. However, hasn't unemployment generally been a lagging indicator?
We really need a an NGDP futures market that the Fed could be guided by or even intervene is as its main policy instrument. Pending that Treasury should at least create lots more TIPS with intermediate tenors of 1,2,3,7.
Did it? How does this square with a large number of people who have ‘disappeared’ from the workforce, and complaints by businesses that they are struggling to rebuild their workforce to pre-pandemic of government lunacy levels, and some like airlines/airports cancelling services due to lack of staff?
Wouldn't workforce participation rate be a better metric than unemployment? Lots of people not working feels like the number to worry about. Can people eat and are we productive as a society being driven by the number of people working/not working. Unemployment excluding people who aren't looking distorts that number, yes?
I wasn’t aware of that. Isn’t the point still valid that the unemployment rate is just looking for your car keys under the street lamp because the light is better there? More statistically valid and consistent over time are nice attributes for a metric, but measuring a proxy that diverges further and further from the true signal over time doesn’t feel like a good leg to stand on.
A good start point would be why are those people not working or looking for work? They are not getting welfare or they would be in the unemployed data.
‘… are we productive as a society being driven by the number of people working/not working. ‘
Developed Countries have a large section of the workforce being paid to do jobs which produce no profit. Government, Non Governmental Organisations, charities, etc. This non-wealth producing sector is funded by those in productive employment.
If they are not working, the economy won’t miss them.
The BLS did revise down their April estimate numbers by ~15%, however. That's a pretty big swing, and one wonders how much of that swing is "new data" for some reason, and how much is political.
Also, that 372,000 number leaves unemployment at 3.6% still, which is odd... In fact the report suggests that pretty much every number is flat, except that there are 372,000 new jobs. That doesn't make a lot of sense to me, although almost all the jobs are in the service sector, so perhaps a lot of school aged kids who don't really show up anywhere else reliably are getting jobs?
Yes, I am a little leery of the new jobs claims myself. Especially around the issue of people out of the labor market vs. in but unemployed vs. part time workers.
The stats of those living check-to-check is staggering especially those in the higher income brackets. I've also witnessed a much higher percentage of my income properties, mainly with average rents, are also check-to-check.
My just so story is that the recession oddity is mainly due to inflation and getting goods, both intermediate and finished.
A 5% increase in wages is pretty weak after a year and a half of 8-10% inflation; that looks to me like a 3-5% drop in wages. Inflation, unusually, seems to be both due to massive spending/money printing by government and the huge drop in goods production and disruptions caused by the COVID reactions. Prices are going up because there is more money chasing fewer goods.
On the supply side, there are still big shortages in raw materials, intermediate goods and finished goods, with rationing based on things other than prices that are locked in by contract. My company has some lead times of at least a year, others I have seen up to two years. That is, if you order today you will get it July 2024. That isn't for high end, very complex finished goods either, but intermediates that were pretty standard 6 week lead time items. So we need the staff to run as hard as we can with what we can get, but we are paying out the nose for transport (flying stuff in some cases) and it is hand to mouth up and down the chain. No spare money for growth. If that holds true across manufacturing industries, then lots of zero growth due to just scraping by means there is little countering industries with negative growth. A recession due to not being able to get enough stuff to grow.
My friend runs an import business and he's increased his administrative staff from 5 to 15 people. Not because the business has grown, but because he needs another 10 people to run around trying to solve supply chain issues.
Perhaps a good explanation of employment is that real wages are down so there is a strong bid for this cheaper labor but the labor itself isn't better off.
Many pundits have focused on unemployment as being low and not flashing a recession signal. However, hasn't unemployment generally been a lagging indicator?
We really need a an NGDP futures market that the Fed could be guided by or even intervene is as its main policy instrument. Pending that Treasury should at least create lots more TIPS with intermediate tenors of 1,2,3,7.
LOL!
‘… the economy added 372,000 new jobs in June…’
Did it? How does this square with a large number of people who have ‘disappeared’ from the workforce, and complaints by businesses that they are struggling to rebuild their workforce to pre-pandemic of government lunacy levels, and some like airlines/airports cancelling services due to lack of staff?
The payroll employment statistics are probably the most reliable economic indicator we have
Wouldn't workforce participation rate be a better metric than unemployment? Lots of people not working feels like the number to worry about. Can people eat and are we productive as a society being driven by the number of people working/not working. Unemployment excluding people who aren't looking distorts that number, yes?
The survey behind the participation rate is smaller and less reliable than the payroll survey
I wasn’t aware of that. Isn’t the point still valid that the unemployment rate is just looking for your car keys under the street lamp because the light is better there? More statistically valid and consistent over time are nice attributes for a metric, but measuring a proxy that diverges further and further from the true signal over time doesn’t feel like a good leg to stand on.
A good start point would be why are those people not working or looking for work? They are not getting welfare or they would be in the unemployed data.
‘… are we productive as a society being driven by the number of people working/not working. ‘
Developed Countries have a large section of the workforce being paid to do jobs which produce no profit. Government, Non Governmental Organisations, charities, etc. This non-wealth producing sector is funded by those in productive employment.
If they are not working, the economy won’t miss them.
The BLS did revise down their April estimate numbers by ~15%, however. That's a pretty big swing, and one wonders how much of that swing is "new data" for some reason, and how much is political.
Also, that 372,000 number leaves unemployment at 3.6% still, which is odd... In fact the report suggests that pretty much every number is flat, except that there are 372,000 new jobs. That doesn't make a lot of sense to me, although almost all the jobs are in the service sector, so perhaps a lot of school aged kids who don't really show up anywhere else reliably are getting jobs?
That’s a low bar.
Yes, I am a little leery of the new jobs claims myself. Especially around the issue of people out of the labor market vs. in but unemployed vs. part time workers.
The stats of those living check-to-check is staggering especially those in the higher income brackets. I've also witnessed a much higher percentage of my income properties, mainly with average rents, are also check-to-check.
Love the stats!! Please keep them coming.