An interesting metric to correlate with recessions

[dcarrigg]

WSJ had this chart today. Percentage of unemployed Americans who quit their job is at the highest it has been since March 2001 at the dot com bubble peak.

[thriftyandboringinohio]

Re: An interesting metric to correlate with recessions

Can we view this as a leading indicator of inflation?
People rarely change jobs to lower their own pay, it seems right to assume these people increased their wages. Eventually the employers must offer higher wages for replacement workers to keep them.

[seobook]

Re: An interesting metric to correlate with recessions

Arguably it is a lagging or coincident indicator rather than a leading one.

After the Great Recession there were many forms of stealth inflation across the economy (smaller packaging size, lower quality ingredients, longer waits for service, etc.) which didn't lead to strong rising wages.

After a recession hits people tend to stick in their jobs fearing they might not be able to get another one.

As the economy heats up people become more confident in their ability to land on their feet & test the waters, but there are other cross currents in the above beyond the ordinary economic cycle, including things like the ability to afford healthcare, globalization, how well the stock market is doing, if people believe in a manic bubble somewhere, (actual & perceived) immigration policies, what is going on in the local region (is there a regional commodity boom or some other hot industry), etc.

Part of the issue with the above chart & historical comparisons is there are a lot more people not in the labor force today than in prior cycles. What used to be a 2 to 5 year elevated level of increases in "not in labor force" to clear out a recession lasted at least 7 years after the great recession before there was a significant turn down in 2016.
https://fred.stlouisfed.org/graph/?g=kl9r
With all those people dropping out of the labor force, the remaining labor force is perhaps more sensitive to shifts (in terms of the above chart)...smaller shifts in the remaining number appear bigger because a lot of people have been removed from the computation. There's also a lot more people on disability than there were a decade ago
https://fred.stlouisfed.org/series/LNU05074597

My guess is when the Obamacare penalty goes away next year (a horrible policy that bled poor, young people to transfer funds to wealthier, older people) if we are not yet in a recession a lot of people who worked to pay otherwise unaffordable health insurance will likely opt to try to go without health insurance. Some healthy younger folks who were only moonlighting side gigs to compliment their main jobs may give up their regular jobs to focus on doing their own thing if they aren't obligated to pay for an expensive health insurance policy or fined for not carrying it.

There are a few other quits & job vacancy related charts mentioned here
https://fredblog.stlouisfed.org/2017...et-conditions/

Many middle aged & older people who were crushed by the recession kept working well into retirement
https://fred.stlouisfed.org/series/LNU02375379
in spite of that, the economy has only recovered about half the jobs lost during the recession in terms of civilian employment-population ratio
https://fred.stlouisfed.org/series/EMRATIO

[dcarrigg]

Re: An interesting metric to correlate with recessions

Part of the issue with the above chart & historical comparisons is there are a lot more people not in the labor force today than in prior cycles. What used to be a 2 to 5 year elevated level of increases in "not in labor force" to clear out a recession lasted at least 7 years after the great recession before there was a significant turn down in 2016.
https://fred.stlouisfed.org/graph/?g=kl9r
With all those people dropping out of the labor force, the remaining labor force is perhaps more sensitive to shifts (in terms of the above chart)...smaller shifts in the remaining number appear bigger because a lot of people have been removed from the computation. There's also a lot more people on disability than there were a decade ago
https://fred.stlouisfed.org/series/LNU05074597

My guess is when the Obamacare penalty goes away next year (a horrible policy that bled poor, young people to transfer funds to wealthier, older people) if we are not yet in a recession a lot of people who worked to pay otherwise unaffordable health insurance will likely opt to try to go without health insurance. Some healthy younger folks who were only moonlighting side gigs to compliment their main jobs may give up their regular jobs to focus on doing their own thing if they aren't obligated to pay for an expensive health insurance policy or fined for not carrying it.

There are a few other quits & job vacancy related charts mentioned here
https://fredblog.stlouisfed.org/2017...et-conditions/

Many middle aged & older people who were crushed by the recession kept working well into retirement
https://fred.stlouisfed.org/series/LNU02375379
in spite of that, the economy has only recovered about half the jobs lost during the recession in terms of civilian employment-population ratio
https://fred.stlouisfed.org/series/EMRATIO

Yup, gotta look at employment, not just unemployment. Politicians at every level of government now are touting unemployment numbers, but in many states they're just now getting back to 2006 or 07 employment numbers, only with a significantly bigger population 10 years later.

As for the health insurance bit, I think most people--nearly all, in fact--actually do want some form of coverage. Young and healthy people get into accidents or end up with sudden appendicitis or get sports injuries all the time. And a single appendectomy or injury after a car accident (average medical cost per person last year was $15,833), or broken leg or snake bite out on a hike without health insurance can easily cost a kid more than a college education to get treated in the US. And kids know that. Everyone has a friend or a relative with horror stories. If not, they see it on social media now. People post their bills.

My problem with the mandate was the assumption that kids are just cavalier about it and don't think they need any coverage. I don't think that's true. I think poor people are poor; broke people are broke; and lots of people don't have an extra $4k per year to flush down the toilet in premiums for a shitty health plan with a $12,000 deductible if anything goes wrong. At that point, it's so expensive, they figure they may as well just go bankrupt if they get sick. $20k up front might as well be $20M when you're broke--it's just an impossible sum. You don't even have credit access to borrow it when you're poor. And none of your friends and family have it either.

They set the fees so punitively large and the premiums and deductibles so high that the full-time-working folks earning low-ish money, those who earn above the Medicaid/subsidy threshold (varies by state, but in states that expanded it usually cuts off around $27k), but below $40k per year or so, simply cannot afford to enter the insurance market at any level. And guess who makes up a ton of people earning between about $27k and $40k working full time with no employer benefits? People under 40. They already set the system up such that it often takes half their net pay in rent, and 25% of their net pay in student loans, and they get no other government benefits. They don't have another 15% of their net pay for health insurance premiums and a fat 6 months pay sitting in the checking account just in case a deductible comes due.

So the fine was just a poor bastard tax. A way to punish the punished. It was never any sort of real incentive. I've never met one young person yet (or old person for that matter) who said to me, "I truly don't want any health insurance coverage, but I buy it anyway because of that damned mandate." And if I did, I don't think I'd believe him/her. I know that 30-40 million people go without it, and tens of millions more spend a few months without it every year. But I truly think that's more about poverty an outrageous costs than it is about a lack of desire for coverage...

[seobook]

Re: An interesting metric to correlate with recessions

They set the fees so punitively large and the premiums and deductibles so high that the full-time-working folks earning low-ish money, those who earn above the Medicaid/subsidy threshold (varies by state, but in states that expanded it usually cuts off around $27k), but below $40k per year or so, simply cannot afford to enter the insurance market at any level.

Right. The main point was a junk fee subsidy to the insurance companies rather than anything useful for citizens.

And guess who makes up a ton of people earning between about $27k and $40k working full time with no employer benefits? People under 40. They already set the system up such that it often takes half their net pay in rent, and 25% of their net pay in student loans, and they get no other government benefits. They don't have another 15% of their net pay for health insurance premiums and a fat 6 months pay sitting in the checking account just in case a deductible comes due.

This is where my thesis of "may as well NOT buy health insurance" came from ... if the product/service had literally zero actual value because you would still be bankrupt if anything bad happened, then you may as well not have coverage so that if nothing bad happens you didn't pay a tithing into a scam that will leave you bankrupt if you actually try to use it.

So the fine was just a poor bastard tax. A way to punish the punished. It was never any sort of real incentive. I've never met one young person yet (or old person for that matter) who said to me, "I truly don't want any health insurance coverage, but I buy it anyway because of that damned mandate." And if I did, I don't think I'd believe him/her. I know that 30-40 million people go without it, and tens of millions more spend a few months without it every year. But I truly think that's more about poverty an outrageous costs than it is about a lack of desire for coverage...

My views might be rare/unique, but I think back to when I started working for myself about 15ish years ago. Back then I made little. Had a roommate & lived in a trailer. My first quarter had revenues (not profits) of like $900.

If you lack capital & exist in a platform monopoly styled economy then you need intense focus and lots of time to offset the lack of capital. If your living costs are under $10 a day you can focus most all day of every day on learning. Add in a required $500 or $800 per month junk fee and so much for making that switch over.

A couple other points with health insurance.

I thought I broke a finger and also had another minorish issue. Each time I went to outpatient clinic and paid cash saying I didn't have insurance so I would get the cash price / market-based price of like $100. If I told them I had insurance I would have paid 3x to 10x the price for the same services. And I would have paid all of that additional mark up because it was below the deductible. So literally the insurance had an actual negative net value beyond its cost in those instances.

Any policy that doesn't count on the small stuff & still leaves you screwed on the big stuff really has no actual value.

Before Obamacare a family member was insured on a policy with me costing like a grand a month. They got a strange spider bite one night and the doctor visit that cost like $300. So then that awesome health "insurance" company chose ex-post-facto to remove them from the policy based on a pre-existing condition they already knew about. One of the proclaimed benefits of Obamacare was that you couldn't be arbitrarily dropped. Yet it happened to that same person again!

Add in a few prior experiences with double billing of paid healthcare bills, the laws on drug reimportation, the delta on procedure prices vs other first world countries, etc. and it is hard to pretend any of the financial engineering in the category aims to provide any societal benefit whatsoever.

[jk]

Re: An interesting metric to correlate with recessions

this country does CORPORATE welfare. individual benefits- not so much and less and less.

[dcarrigg]

Re: An interesting metric to correlate with recessions

Right. The main point was a junk fee subsidy to the insurance companies rather than anything useful for citizens.


This is where my thesis of "may as well NOT buy health insurance" came from ... if the product/service had literally zero actual value because you would still be bankrupt if anything bad happened, then you may as well not have coverage so that if nothing bad happens you didn't pay a tithing into a scam that will leave you bankrupt if you actually try to use it.


My views might be rare/unique, but I think back to when I started working for myself about 15ish years ago. Back then I made little. Had a roommate & lived in a trailer. My first quarter had revenues (not profits) of like $900.

If you lack capital & exist in a platform monopoly styled economy then you need intense focus and lots of time to offset the lack of capital. If your living costs are under $10 a day you can focus most all day of every day on learning. Add in a required $500 or $800 per month junk fee and so much for making that switch over.

A couple other points with health insurance.

I thought I broke a finger and also had another minorish issue. Each time I went to outpatient clinic and paid cash saying I didn't have insurance so I would get the cash price / market-based price of like $100. If I told them I had insurance I would have paid 3x to 10x the price for the same services. And I would have paid all of that additional mark up because it was below the deductible. So literally the insurance had an actual negative net value beyond its cost in those instances.

Any policy that doesn't count on the small stuff & still leaves you screwed on the big stuff really has no actual value.

Before Obamacare a family member was insured on a policy with me costing like a grand a month. They got a strange spider bite one night and the doctor visit that cost like $300. So then that awesome health "insurance" company chose ex-post-facto to remove them from the policy based on a pre-existing condition they already knew about. One of the proclaimed benefits of Obamacare was that you couldn't be arbitrarily dropped. Yet it happened to that same person again!

Add in a few prior experiences with double billing of paid healthcare bills, the laws on drug reimportation, the delta on procedure prices vs other first world countries, etc. and it is hard to pretend any of the financial engineering in the category aims to provide any societal benefit whatsoever.

Oh yeah, sorry if any of that came off as hostile. I largely agree with you.

[patrikkorda]

Re: An interesting metric to correlate with recessions

The name of this chart on FRED is "Job Leavers as a Percent of Total Unemployed" and it has been one of my leading indicators for years now. In fact, I wrote an essay about this indicator in grad school. In my opinion, it is obviously a leading indicator as it tends to turn south before a recession. Considering it has no false positives, it is one of a few dozen that I consider reliable.

I believe the relationship is so strong because labor compensation is the largest component of GDP (roughly 60%). As the economy hums along, people feel the wealth effect and some eventually take time off thinking they can get an identical if not a better position once they want to re-enter the labor market. At the margin, this has a negative impact on GDP.

[Thailandnotes]

Re: An interesting metric to correlate with recessions

One thing that hasn't kept up with inflation is the cost of flights to Asia. You can still get to Thailand from the west coast for less than 1,000 dollars and from the east coast for about 1,200.

The cost for a colonoscopy is 1/5 to 1/10. Dental work is definitely 1/10. A knee or hip replacement is about 1/3. Most cancer treatment less than ¼. Drugs range from ½ to 1/10.

For the self insured, get on a plane and spend a month here...in November, December, or January. You can rent a nice apartment for 700 dollars/month and get away from US winters and the insanity of DJT.

[dcarrigg]

Re: An interesting metric to correlate with recessions

One thing that hasn't kept up with inflation is the cost of flights to Asia. You can still get to Thailand from the west coast for less than 1,000 dollars and from the east coast for about 1,200.

The cost for a colonoscopy is 1/5 to 1/10. Dental work is definitely 1/10. A knee or hip replacement is about 1/3. Most cancer treatment less than ¼. Drugs range from ½ to 1/10.

For the self insured, get on a plane and spend a month here...in November, December, or January. You can rent a nice apartment for 700 dollars/month and get away from US winters and the insanity of DJT.

I discovered this a little while back. Prices are about half the cheapest places you can find in New England--where average fee for a crown will run you about $1,400 as opposed to $800 in Iceland. It's not a terrible flight from Boston--about 5 hours. That's shorter than going to Texas. And you can find flights for $250 round trip pretty easily. Spend another $350 on two nights in a hotel room, $50 on ground transport, $150 on food, and you just funded a neat little long-weekend vacation with the savings on getting a single crown.

If you really want to save cash and you have more time, just fly to Prague and get a root canal for 50€, maybe 100€ if you insist on someone who speaks fluent English doing it. You can fly into Munich for $500 round trip and take a train for 30€ to Prague. Longer flight, plus a 4 hour train ride. But you can find $50-$100/night hotels easy and food and entertainment are cheap. You can spend 5 nights, buy the tickets, and get the root canal, live pretty good, and only blow the same money a root canal in Boston would cost.

You pretty much have to be a stone cold sucker to use an American/Canadian dentist/endodontist for anything more than a filling these days. The markup on crowns is over 1,000%. They're charging a labor rate well over $1,000 per hour for the root canal. It's ludicrous.

[touchring]

Re: An interesting metric to correlate with recessions

The markup on crowns is over 1,000%. They're charging a labor rate well over $1,000 per hour for the root canal. It's ludicrous.

I'm just wondering if it will be possible to run a cruise ship or boat with medical facilities on it so you could go from port to port? You could have the Czech dentists and doctors on that cruise ship.

[dcarrigg]

Re: An interesting metric to correlate with recessions

I'm just wondering if it will be possible to run a cruise ship or boat with medical facilities on it so you could go from port to port? You could have the Czech dentists and doctors on that cruise ship.

[jk]

Re: An interesting metric to correlate with recessions

i was ready to believe salvare was real. otoh, a little googling showed that you can get botox from madara spa on some norwegian cruises. otherwise, i think your medical tourism will be land-bound.

[dcarrigg]

Re: An interesting metric to correlate with recessions

i was ready to believe salvare was real. otoh, a little googling showed that you can get botox from madara spa on some norwegian cruises. otherwise, i think your medical tourism will be land-bound.

The funny thing is, I think that video was made to make Americans scared of universal healthcare. But when I heard "maybe you've been turned down for a knee or hip replacement," my mind immediately went to the insurance company turning someone down. Ditto with 'health administration office,' just harkened me back to endless phone calls with faceless insurance bureaucrats trying to figure out who's not paying what and why (an impossible task). Because that's our experience here. The video almost backfired, I think. Either way, as you say, the fact it's so plausible is kind of remarkable too.

[jk]

Re: An interesting metric to correlate with recessions

it didn't even occur to me that it could be about universal healthcare. OF COURSE it was about insurance company utilization review and prior authorization. i deal with that stuff every work day.