Relevant and even prescient commentary on news, politics and the economy.

Jobless claims highest in three months – but seasonality still playing a huge role

Jobless claims highest in three months – but seasonality still playing a huge role

On a unadjusted basis, new jobless claims rose by 231,335 to 1,151,015. Seasonally adjusted claims also rose by 181,000 to 965,000. The 4 week moving average rose by 18,250 to 834,250.

Here is the close up since the end of July (these numbers were in the range of 5 to 7 million at their worst in early April): 

There is now a 2+ month trend of YoY% increases in initial claims. Further, by rising to over 900,000, seasonally adjusted claims hit one of my two markers for a fundamental change of trend. But the 4 week average, which is still under 850,000, did not.

Scenes from the December jobs report

Scenes from the December jobs report

Friday’s December jobs report saw the first decline in employment since the lockdowns of March and April. Let’s take a closer look.
As I pointed out Friday, the losses were concentrated in the food and dining (restaurant) and amusement and recreation sectors, both of which are shown below normalized to 100 as of February:



The two sectors are down 20% and 30% from their February peaks.
By contrast, the leading job sectors of manufacturing, residential and overall construction, and temporary help positions all continued with gains, and are close to if not completely recovered from their pandemic losses. Below I show these YoY in two time periods for easier comparison (note two of the series did not begin until the 1980s).
1955-1982:

FDI and the Pandemic

by Joseph Joyce

FDI and the Pandemic

The fluctuations in portfolio capital flows to emerging markets over the past year have been well documented. But foreign direct investment (FDI) has also plunged in those countries as well as in the advanced economies. Moreover, FDI faces more long-term challenges than other forms of capital flows.

In October the Organization of Economic Cooperation and Development (OECD) reported FDI data for the first half of the year. The OECD found that global FDI flows fell by half in the first six months as compared to the second half of 2019. Inflows to the OECD area countries fell by 74%, driven by lower flows to the U.S. and reverse flows from Switzerland, the Netherlands and the United Kingdom. Outflows fell by 43%. FDI inflows to the non-OECD members of the Group of Twenty (G20) decreased by 30% and outflows decreased by 60%.

These declines followed a period of reduced FDI flows (see here and here). The OECD had reported in April that FDI flows in 2019 were below the levels recorded between 2010 and 2017. U.S.-based firms were reassessing their foreign operations in the wake of changes in the U.S. tax regulations governing the taxation of foreign profits. The tariffs imposed by the Trump administration on Chinese goods affected multinational activities in that country, while Chinese acquisitions of U.S. firms came under much stricter government scrutiny. Similarly, the vote in favor of Brexit forced firms to reconsider supply chains that linked the U.K. with the rest of Europe.

Programming note

by New Deal democrat

Programming note

 

Four year ago I wrote a valedictory piece about the Obama Administration, and separately wrote of my fears of what the Trump Administration would wreak.


Needless to say, especially in light of events of the past week, I intend to do the same retrospective as to Trump and the current state of the GOP and the Republic. Much of what I have to say is in agreement with disparate threads I have read on Twitter, but I want to weave those strands together into one cohesive piece. Hint: I keep thinking about old episodes of Supernanny, where a toddler’s behavior was allowed to get worse and worse without consequence. The longer it went on, the more forceful and resolute the parents’ response ultimately had to be

November JOLTS report shows the renewed impact of the pandemic, partial lockdowns

November JOLTS report shows the renewed impact of the pandemic, partial lockdowns

This morning’s JOLTS report for November (remember – a month in which there were total job gains) showed a jobs market recovery that at least paused due to the increasing effects of the out of control pandemic. Hires were up (good), while quits were unchanged, openings declined (bad) and layoffs and discharges rose (bad).

While the JOLTS data is a deep dive into the dynamics of the labor market, since it only dates from 2001, there are only 2 previous recoveries with which to compare the present. Nevertheless it is worthwhile to make the comparison.

In the two past recoveries:

  • first, layoffs declined
  • second, hiring rose
  • third, job openings rose and voluntary quits increased, close to simultaneously

Let’s examine each of those in turn. In each case, I break out 2001-19 in a first graph and then this year in a second.

December jobs report:

December jobs report: I told you so – jobs actually declined in December, BUT employment primed for takeoff once pandemic abates

Important: There was a huge amount of seasonality in this report. This is common for December, but the issue was greatly exacerbated because of the outsized impact of the pandemic. Take the large changes in some of the data with many grains of salt.


I have been warning for almost 4 weeks that the December employment report might have a negative number. It did. At the same time, the internals are not nearly so bad as the headline.

You’ve Already Seen These Questions

You’ve Already Seen These Questions

  1. Why is it that no existing society, nor society that ever existed, has arrived at universal prosperity, considering that in all times, and in all societies, excepting only the very barbarous, a few years would naturally have led to it?
  2. How is it that notwithstanding the unbounded extent of capital, the progressive improvement and wonderful perfection of machinery, canals, transportation, and all other things that either facilitate labour or increase its produce; that the population instead of having its labours abridged, works more hours per capita than it did years ago?
  3. Why has society never arrived at the enviable situation of universal abundant leisure, although so immediately within its grasp?

An Appointment I Disapprove Of

An Appointment I Disapprove Of

 While many of them could be more progressive, given that Biden himself is largely a moderate making moderate nods to the progressive wing of the Democratic Party in his appointments, I have largely been not too dissatisfied with appointments made so far by President-Elect Biden.  My only surprise is that a bunch of people set their pants on fire over the appointment of Neera Tanden as OMB director while barely a squeak has been heard about the appointment to NEC Chair of total Goldman Sachs flunky, Brian Deese.  Actually, I do not think there even should be an NEC, which essentially replaced the CEA as the policy shop, with it usually being run by Wall Street types who are not even professional economists.

November construction spending confirms building surge

November construction spending confirms building surge

One of my consistent themes in the past few months has been how the housing market is priming the economy for strong growth in 2021 as soon as the pandemic is brought under control. In that vein, November construction spending surged, confirming what we have already been seeing in housing permits and starts.


First of all, here are both total and residential construction spending for the past 15+ years:



Note that in raw, non-inflation-adjusted terms, both are close to their all-time highs, and definitely at 10+ year highs.

The Wealth of a Nation

One of Sandwichman’s good questions prompted my revisiting an earlier writing of mine on wealth (circa 2000?). Extensively revised to the extent that it is hardly recognizable; here is, a, second, best effort.

Herein, the terms wealth and capital are thought of as being interchangeable.

For thousands of years, humans lived off the bounty of nature. Some societies still do, but, today, and for centuries now, most societies have lived off that bounty much abetted by their own endeavors, and the endeavors of others.

A society’s wealth includes all of its resources. Those resources include the individual and collective knowledge, skills, creativity, talents, and energy, of the society’s members; i.e., all aspects of its innovative and productive capacity. Those resources also include the society’s repositories of knowledge, such as: universities, libraries, museums, laboratories, government agencies, cultural centers, commercial entities, and the management of all. These resources also include a society’s infrastructure such as: housing, education facilities, transportation facilities, utilities, production facilities, medical facilities, entertainment facilities, government facilities, commercial facilities, and the management of all. The natural resources: the land, atmosphere, and environment within a society’s domain are, and most importantly so, among a society’s resources. The well-being of a society’s people is, in and of itself, a societal resource.