US Payrolls Down

[Finster]

Employment Situation Summary

THE EMPLOYMENT SITUATION: AUGUST 2007

Nonfarm payroll employment was essentially unchanged (-4,000) in August, and the unemployment rate remained at 4.6 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the last 3 months, total pay-roll employment changes have averaged 44,000 per month and private sector employment changes have averaged 72,000 per month (as revised). In August, employment in manufacturing, construction, and local government education declined, while job growth continued in health care and food services...

http://www.bls.gov/news.release/empsit.nr0.htm

[Uncle Jack]

Re: US Payrolls Down

The biggest news was the revisions, a markdown of 81,000 from the previous two months.

[Finster]

Re: US Payrolls Down

The biggest news was the revisions, a markdown of 81,000 from the previous two months.

I posted just a few days ago that the US is probably already in recession. Although many ecopundits treat them as if they're current or even have forecasting value, statistical series like these always merely relate to what has already happened.

[jk]

Re: US Payrolls Down

how many of the -4000 were from the birth death model? i can't find it in the bls release.

[Uncle Jack]

Re: US Payrolls Down

I posted just a few days ago that the US is probably already in recession. Although many ecopundits treat them as if they're current or even have forecasting value, statistical series like these always merely relate to what has already happened.

I'd like to believe that we're already in the soup. Economists and professional pundits were saying in March 2001 that there was no recession on the horizon, yet the average Joe said we were already in one. Average Joe was right.

Similar circumstances this time. average Joe has been saying all year that we're already in one while the pundits and professional pundits have said 50% this, 35% that, blah, blah, no recession.

I think we're already there as you stated.

[Finster]

Re: US Payrolls Down

how many of the -4000 were from the birth death model? i can't find it in the bls release.

To tell you the truth, I don't put much stock in these BLS reports anyway. Their main value seems to stem from the fact that markets pay a lot of attention to them, so I prefer to just go straight to what matters and look at the market. The S&P futures dove several points within seconds of the announcement, so there's no delay incurred in doing so. Meanwhile, you're looking at real-time, real market data that require no statistical parsing.

The overall unemployment level from the household survey, meanwhile, was unchanged at 4.6%. Make of it what you will. Either way, the market reaction suggests it is not employment levels it is concerned with, but confirmation of a change in trend. Expectations of perpetual above-trend corporate profit growth appear to be under reconsideration.

[Finster]

Re: US Payrolls Down

I'd like to believe that we're already in the soup. Economists and professional pundits were saying in March 2001 that there was no recession on the horizon, yet the average Joe said we were already in one. Average Joe was right.

Similar circumstances this time. average Joe has been saying all year that we're already in one while the pundits and professional pundits have said 50% this, 35% that, blah, blah, no recession.

I think we're already there as you stated.

The whole question of "recession" is way too up for interpretation to be of much meaning. Usually economists look at changes in "real GDP". That is highly problematic, though, because "real GDP" is arrived at by taking nominal GDP and factoring out inflation. Hence whatever uncertainty there is as to the level of inflation passes directly through to uncertainty as to "real GDP".

Government statistics notoriously understate inflation. If you use accurate inflation figures with which to adjust nominal GDP, the US hasn't even been out of recession since 2001, let alone being headed back there anew. So here I am referring not so much to whether we are "really" in recession, but whether one will be officially recognized soon. On that score, remember the NBER (the generally recognized authority on the matter) didn't declare the last recession until it was ending.

[Uncle Jack]

Re: US Payrolls Down

Government statistics notoriously understate inflation. If you use accurate inflation figures with which to adjust nominal GDP, the US hasn't even been out of recession since 2001, let alone being headed back there anew. So here I am referring not so much to whether we are "really" in recession, but whether one will be officially recognized soon. On that score, remember the NBER (the generally recognized authority on the matter) didn't declare the last recession until it was ending.

So based on inflation, the real inflation you and I recognize versus what the Fed sees, we've been in an inflationary depression (oxymoron?) since 2001?

That sounds about right. Take away all the activity generated from housing and poof, no recovery, just buying stuff and selling burgers and fries to each other.

[Finster]

Re: US Payrolls Down

So based on inflation, the real inflation you and I recognize versus what the Fed sees, we've been in an inflationary depression (oxymoron?) since 2001?

That sounds about right. Take away all the activity generated from housing and poof, no recovery, just buying stuff and selling burgers and fries to each other.

Whether it's inflationary or deflationary depends on which unit of account you use. If you use hard money (gold), the 1930s, 1970s, and 2000s, have all been deflationary - prices of things in ounces of gold fell each time. Likewise if your definition of deflation is a contraction in the real value of money and credit outstanding. If you use USD, the first one was deflationary and the second two inflationary.

It's all relative ...;)

But you not only avoided oxymoron, but euphemism, too. The term recession just the less-loaded word for the same thing that used to be called depression. Once we had the "great" one in the 1930's, they retired the term and called subsequent depressions "recessions".

[Guest]

Re: US Payrolls Down

If this is a 'depression' it's pretty darn mild here in Southern California.

Yes there is some softness in business sectors, and housing speculators are hung out to dry, and components of finance are plunging, but outside of that to call this a depression seems a bit over the top to me.

Seems overall though that this does not qualify as a depression environment. Look at the vast numbers of people tooling off in their campers on the fourth of July weekend - if that's a symptom of depression in the US then they are certainly enjoying themselves.

Even the hidden inflation is running lower than it was in the seventies, and we've labeled that merely a bad 'inflationary recession' for the last thirty years.

Of course I don't live in Ohio. Maybe it's the rust-belt in such dire straits that's skewing the overal picture for the US?

[EJ]

Re: US Payrolls Down

Whether it's inflationary or deflationary depends on which unit of account you use. If you use hard money (gold), the 1930s, 1970s, and 2000s, have all been deflationary - prices of things in ounces of gold fell each time. Likewise if your definition of deflation is a contraction in the real value of money and credit outstanding. If you use USD, the first one was deflationary and the second two inflationary.

It's all relative ...;)

But you not only avoided oxymoron, but euphemism, too. The term recession just the less-loaded word for the same thing that used to be called depression. Once we had the "great" one in the 1930's, they retired the term and called subsequent depressions "recessions".

ShadowFed Chairman Finster, I see we're scheduled for a board meeting 9/16 - 9/17. Any chance we'll need an emergency meeting before then?

[Finster]

Re: US Payrolls Down

ShadowFed Chairman Finster, I see we're scheduled for a board meeting 9/16 - 9/17. Any chance we'll need an emergency meeting before then?

We just might, EJ ... at least if we didn't there'd be the chance of the one we're trying to shadow beating us to it!

Maybe we could at least get the discussion going ahead of schedule. We will have more to chew on than in the past few meetings ...

[c1ue]

Re: US Payrolls Down

If this is a 'depression' it's pretty darn mild here in Southern California.

Lukester,

It is just too early.

Even if just by credit cards, those in trouble aren't yet at the jumping out of windows stage.

When we have true capitulation in the real estate market, then we'll know if it is to be a depression or just a long period of the financial blahs.

GDII data shows that the true pain does not start until there are clear major reductions in consumer spending on non-durable and food; durable goods are the first to see reductions but are also fairly discretionary.

[Ant]

Re: US Payrolls Down

If this is a 'depression' it's pretty darn mild here in Southern California.

Not uniformly.

I'm based in SoCal too, and while I'll be the first to acknowledge that "the plural of anecdote is not data" the last month has been pretty shocking for my company.

We're software developers with very little direct exposure to the FIRE economy. Most of our clients are technology and manufacturing firms. Nevertheless, we've had one major client go out of business suddenly, and several others tell us that they are suspending discretionary projects temporarily.

I suspect that a lot of this is tied to the credit markets, though I don't have any hard information.

FWIW. Just one worker ant's view from the front.

My personal hope is that, just for once, we as a nation take our medicine and get on with it. Let the market correct, let asset prices find their natural level, let creative destruction run its course and remove the poor stewards of capital from the mix, get it over with as fast as reasonably possible, and move on. Is there any chance at all we'll let that happen?

[jk]

Re: US Payrolls Down

My personal hope is that, just for once, we as a nation take our medicine and get on with it. Let the market correct, let asset prices find their natural level, let creative destruction run its course and remove the poor stewards of capital from the mix, get it over with as fast as reasonably possible, and move on. Is there any chance at all we'll let that happen?

..........no.