U.S. employers added 528k jobs in July
washingtonpost.com
washingtonpost.com
Inflation is high, but the USD is crushing every other currency. American businesses are fed up with shutdowns and shipping delays from Asia, and are willing to pay the price premium for domestic goods. And the federal government is doing (I think) a good job at pushing industries to capitalize on the global weakness.
Do you see industrial and manufacturing jobs as a major percentage here?
That is what a strong currency does.
Unless forced to manufacture here (like say defense and space industry), the low salaries elsewhere and already existing vertical and horizontal integration make for an insurmountable advantage forever.
This is exactly what's happening. Companies realize that they don't have any influence or visibility into overseas production in places like China. That labor savings doesn't mean much when you're not allowed to actually make things, or when your goods get stuck in shipping for months on end.
Its still blessed land - wildly fertile and rich with resources. Any real security threat is an ocean away. It doesn’t even need to venture out much now to secure energy.
People talk about moving to New Zealand in an apocalypse, but honestly you’d do very well in the US if the rest of the world was going to hell.
International-Relations-wise the US is positioned to retain her monopolar status and then cement it for the century by 2030. The two greatest competitors to her rule were Russia and China. All other powers are strong allies of the US and have no reason to change that.
As we've seen, McCain's quip turned out to be true, the bear is nothing but a mafia in a run-down gas-station. The only other real competitor is China, and without Taiwan's fabs, China can't compete this century. Whole new fields of industry must be created for the dragon to take a shot for a bipolar world.
That the US managed to convince Taiwan to lessen it's grip on that security guarantee (with the Texas fabs okayed recently) shows how much Taiwan thinks the US can win any conflict with the mainland. They aren't scared in the least.
Russia's ongoing disaster only strengthens that feeling, as any invasion, already an operation on never heard of scale, would involve the actual US military. That Russia somehow allows NATO to fight openly against her with the airgap of a Ukrainian finger on the trigger shows how outmatched the bear is. It's basically a weapons test for NATO at this point, much to Ukraine's detriment. China can only guess at how poorly the invasion would go and how bungled it would be. Combined with crushing blockades and sanctions, and she knows any move would kill her economy for decades. Their clock is not ticking, it ran out. The only question is if Beijing knows it.
So yes, I think it is good to be in the US or allied with her.
Perhaps people at the bottom are positive and people above are net negative, i.e. reduction of income/wealth gap.
Why would this always have to be true? For example, if the supply of labor sellers at the bottom decreases due to decreasing birthrates, immigration, or people who are no longer employable due to drug addiction. It seems conceivable to me that the lowest paying jobs would have to contend with decreasing supply of labor by increasing the pay.
Perhaps the increased pay then causes increased prices for goods/services which then cause sufficient decrease in aggregate demand that demand for the labor then starts decreasing so it pushes wages at the bottom back down , but I do no see why that has to be case.
I mean, this is a question of policy. The US Federal Government mandates that crops be burned as fuel, which hugely pushes up the price of corn and in turn that pushes up the price of other things that could be grown using that land. We don't explicitly buy up and destroy crops anymore, or pay farmers not to grow them, but the food supply is being deliberately contracted as a matter of federal policy to keep farming profits high.
It seems bonkers to say that there's nothing we could do about rising food prices when we're literally paying to (from the perspective of the food supply) destroy food and keep it scarce.
At the same time though long-term commodities inflation is cyclical, while wage inflation tends to be sticky. If wage inflation actually causes raises in wages for working class people and isn't just contained to SWEs then long-term this is likely beneficial and would lower disparity in the long run. But this would take a decade of wage-price inflation. Short term it is a regressive tax.
But the Fed is trying to go back to the conditions of the past 40 years where wage inflation has been capped at around 2% which will just squeeze the lower classes even more.
It is possible the 0% to 20% or even 30% are experiencing gains, while 30% to 60% are not.
It is hard or impossible to find data by income/wealth decile, and the corresponding change in prices (inflation) of that income/wealth decile's basket of goods.'
For example, the people that work in retail/hotel/travel/etc sector that typically employs the lowest paid employees with the worst quality of life at work may very well be experiencing huge gains, although not all captured by wage data, such as better quality of life at work due to not having to work late weeknights or weekends, etc.
It is a difficult thing to capture in numbers.
Perhaps individuals and families are having to do more work to try to climb out of an inflation hole. New jobs are good. 2nd, 3rd and 4th jobs in families to defeat that missing 4% is sub-optimal job growth due to a variety of trade-offs.
More than double, yes.
> It also means that the Fed isn't going to taper off rate hikes anytime soon.
Well, maybe. But there's at least one more jobs report before the late September FOMC meeting, and it could be just as far off expectations in the other direction. Economic indicators have generally been wonky recently.
And jobs aren't the only factor in monetary policy. Strong jobs but monthly inflation tapering faster than expected could still lead to the Fed easing up on the brakes.
That's not the Fed’s goal. Yes, tight monetary policy generally weakens labor leverage, but the target is inflation. If inflation comes down and unionization continues (which is not implausible, if non-labor price drivers like oil keep dropping), the Fed will almost certainly back of the brake lever notwithstanding the continued labor organizing drives.
It would be, but I didn't even approximately do that. In fact, what I said depends on pretty much the opposite, the two being largely independent of each other.
Our immigration system needs to reformed to allow US college educated students the option to stay in the US. Current programs like the H1B are in need of serious reform and are too dominated by large firms gaming the system, rather than on individuals seeking a better life. Talented, young immigrants with ideas are the lifeblood and energy of US entrepreneurship and deserve a seat at the table.
Second, The US needs massive zoning reform. Local politicians representing the private interests of the property and home owner class should not have the power to ban new homes. These bans make it difficult if not impossible for younger people to live near well paying jobs. Zoning also sharply limits economic growth. Enrica Morettj estimated that zoning smothered US growth by 50% over 50 years:
https://www.nytimes.com/2017/09/06/opinion/housing-regulatio...
Household Survey Full Time -71,000 Part Time +384,000 Multiple Jobs +92,000
source: https://twitter.com/RobertLutherFL/status/155555070208416973...
You can nitpick it all you want but it's a consistent datapoint.
Don't you find it curious that the article fails to mention these details? I do.
I'm not a labor economist and know nothing about job reports. A quick read into the technical notes mentions that there are two separate surveys and the 528k number comes from the second establishment numbers (https://www.bls.gov/news.release/empsit.b.htm).
I wonder how many people have decided to permanently leave the workforce - I know a number of families where one parent stopped working during covid and has no plans to return.
Rather than a few years ago when people's decision calculus was "do I want to trade my time for $X/hr to do some work?" it feels like it's become "do I want to trade my time for $X/hr AND risk getting myself or family members seriously sick AND deal with unhinged people at a time of political strife?" And sure, the X in $X/hr has gone up, but apparently not enough to convince as many people to wait tables as in 2019.
But I think controlling for demographic factors would take some work (look at the drop past 2000)
For example, more old people or otherwise disabled people wanting to buy labor relative to people willing and able to supply it, compared to previous decades.
They always had plans to do it but never enough savings to take the leap.
The fact that labor has seemingly collectively walked away from restaurants en masse has been one of the best things about the pandemic. Of course it's complicated (What about the ability for people to source food from restaurants, what about other economic factors that go into it, poor sad owners who invested all their money, went belly up, and now have to act like the labor they abused, "not all restaurants", etc) but the food service industry is one of the most vile, exploitative sectors out there and the schadenfreude over it getting a swift kick in the teeth has been massive.
Out here in the sticks everything is basically back to normal, though one restaurant that was already on the edge appears to be slowly folding.
I don’t know what is like where you are, but I see ads for entry level jobs at $15-$19/hour everywhere around me. That seems very good.
I’ll also note that it seems to me like those jobs aren’t being filled. There still seems to be some power in the worker’s position, though this is all anecdotal.
For reference, you'd earn the same in most of Europe and have far more security nets.
Big Mac adjusted it looks even worse. Meaning, you're not buying stuff either.
At least you probably won't go bankrupt from medical bills, for what that's worth.
Parent says 'very good'. If all you've got going for you as a country is a bit lower house prices / rent while living on virtual poverty, that's not 'very good'. I'm not saying Europe is great, it's comparing a 4 and a 5 on a scale of 10. Both are bad. It's just exemplifying that 'very good' is a gross overstatement, when the US requires far more financial self sufficiency while one is paid the same.
All I know is that minimum wage was $4.25 an hour when I started working and the best I was able to do in a full time job with no experience was $4.60, in the mid 90s. Compare that to today where minimum wage is $7.25 (lower than it should be, I know) but most places are having trouble filling entry-level, unskilled positions for under $13.
Either way, this gives the FED the cover to continue raising rates through next year.
Anyone who thinks the FED will lower rates next year is delusional.
Literally nobody thinks that.
Look at what happened to rates between 16-19. They slowly raised rates in little baby steps, but the moment the 2019 economy started to weeble-wobble, they cut rates almost in half. And when the economy fell over in 2020, they cut rates back down immediately.
It took them 3 years to raise rates from 0.13% to 1.70%, but less than a month to go from 1.60% to 0.05%
https://www.macrotrends.net/2015/fed-funds-rate-historical-c...
Yes, raising rates to control inflation during an expansion and then cutting them when the economy weakens is... pretty exactly the usual simplified distillation of “things are behaving as normal” monetary policy. As is greater caution in raising rates (which fights inflation but slows the economy, with the downside risk of triggering/magnifying recession) vs. cutting rates (which stimulates expansion but risks inflation.)
Not sure why you are pretending this totally conventional wisdom description is some kind of contrarian hot take.
edit: link to data: https://home.treasury.gov/resource-center/data-chart-center/...
edit2: for the visidata users: vd 'https://home.treasury.gov/resource-center/data-chart-center/...'
That's quite a take based on a single lagged data point. Does this NFP number even fully capture the effect of their last 75bps hike?
But the fully-capitalized version does show up a lot.
A recession would certainly give them a “look at that other mess” diversion that all too many loudmouths would gleefully parrot.
I don't think it's any one thing but here are a few ideas I've come up with:
Politics is a big one that can't be ignored. The numbers about the incredibly high levels of political polarization speak for themselves. People have convinced themselves that nothing good can happen when the other party is in power. Post Trump I think that has gotten even worse and people are now openly wishing ill on the whole country so that their party may benefit in the next election.
Related to politics is that a lot of pundits have become very wedded to their positions. Maybe this is just an economics twitter thing but the amount of obsession over what the FED is doing and the dissection of every report isn't healthy. It's hard enough to change your mind (and your trading positions) when things go against you. It's even harder when you are doing it in public and have taken a public position that the sky is always falling.
Moralizing. This is a hard one to describe but basically a lot of the more hard money, milton friedman, perma-bear types, are obsessed with the bill coming due. We sent out a few thousand dollars in stimulus checks to individuals (true), the debt is historically high (true), and now we deserve to have a recession. We deserve the pain, and not only do we deserve it we should welcome it. There is no free lunch!
Finally, though not the last idea but this is already too long... The current situation in the employment market hurts employers the most. The taco bell right down the street from me has had a sign outside for a year advertising starting wages of $17.50 and they still are drive through only because there are not enough employees. The grocery store right across the street from me has been having "on the spot interview" events for more than a year and it is still notably understaffed. The car washing place down the street has had a sign advertising starting wages of $19 an hour for months now. We have had multiple developer and manager positions at my office open for more than a year, but few bites. Employers absolutely hate this and they have a huge pull in the media/government. They would love to undermine worker power in any way.
This has been a thing since Obama was elected. McConnell explicitly stated that the goal was to just block everything and make Obama a one-term president, and that's how they've played policy since then. Even things that would have been completely uncontroversial "routine business" even as recently as the bush years (just a few years prior) suddenly were dragged to a halt. Debt ceiling increases on money that had already been spent by prior bills (again, many passed during the Bush years), for example.
It all goes back to Gingrich and the Contract With America, and things have only gotten more polarized in the years since. They've been playing out the same script ever since. It just gets more and more polarized every time they lose an election... because it keeps working.
This has been happening for a long time. theory seems to be based on recency bias.
It's really a weird time.
There certainly are assets/markets out there that feel/seem over valued. While the globe is still reacting to the pandemic. Stuff was weird after 1918, too. I actually think the changes seen in 1918 were far greater than anything we’ve seen thus far. So maybe the modern economy is a little more stiff with waves (disruptions) taking much longer to cool. Thinking of all the supply chain messiness.
There's no economy when things do not sell, after all. Assets that do not sell or produce have no actual long term value, besides the power play of resource denial.
Conveniently located housing for people would sort of indirectly produce if the economy still was industrial. Or perhaps R&D based. It isn't, therefore it doesn't. So everything freezes and general populace are serfs, bound by unpayable debt instead of location.
Next step is actual serfdom contracts from corporations.
So yes, when capital as the aggregate of whatever asset gets hoarded away by few people there is inefficiency. An efficient market looks like every market participant (supply and demand side) having only that marginal amount of resource needed to make their marginal contribution towards the total output. It’s also in no market participants interest to run advertisements since they will sell all they produce and have enough resources to produce all that they can. Like producing construction nails or any other good or service that’s never graced an ad.
I have data!
So at our institution, for the 2019-2020 academic year (most recent relevant data for comparison due to covid changes/temporary layoffs), 23% of our incoming students indicated working at least 36 hours a week, and an additional 52% indicated working between 5 and 35 hours a week.
For the upcoming semester, 47% indicated they were working at least 36 hours a week, with an additional 30% indicating they worked 5 to 35 hours a week.
It’s seems quite advantageous to suddenly change the definition when it slaps you in the face.
I can only assume you must have responded to the wrong comment.
Maybe our indicator should be median rather than average, if we are really worried about the middle class.
What I mean: if an administration doesn't like a given metric, it should get its replacement metric identified and publicized in advance.
It sure looks a lot like gaslighting when the world has an agreed upon metric and you say "just ignore that; look over here."
That's assuming that they had a previously existing problem with the metric. But why would they, it's always been a fairly reliable rubber stamp. Economic indicators give consistent bad news for an extended period of time, then months later 2 quarters of GDP numbers have been released and the metric says "yep, that was/this is a recession". But the metric now kind of falls on its face in this strange situation of quite a lot of bad economic indicators paired with a strong jobs market.
If we want to rigidly hold to the 2 quarters metric, then we're going to have to accept that "recession" means nothing larger about the economy than "2 consecutive quarters of negative GDP growth". It just becomes a short way of saying simply that.
The US definition of a recession was identified and publicized a very long time ago. The National Bureau of Economic Research has been putting dates on downturns since 1929 before there was such a thing as gross domestic product.
What is happening now looks like a reversal of the trend that saw a growing average GDP per Capita coupled with a shrinking median GDP per Capita. The economy is contacting, but the man on the street is seeing a bigger piece of it. Most would agree that's on balance good thing. But calling it not a recession avoids the awkward conversation of how we hid the opposite trend with an over reliance on GDP size.
I compare to 2019 numbers. Everything else is just noise honestly.