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

Scenes from the December jobs report: leading jobs sectors and wages

Scenes from the December jobs report: leading jobs sectors and wages

Let’s take a more detailed look at last Friday’s December jobs report.

First, as usual for the past few months, let’s look at the more leading jobs sectors. This month, let’s also take a more detailed look at wage growth and why it may have suddenly decelerated.

As an initial note, revisions going back to late 2017 are going to be available next month, and preliminarily it was already indicated that these will be strongly negative to the tune of several hundreds of thousands overall. In short, as weak as some of the numbers look now, they are likely to be even weaker when we see them next month.

Here is this month’s update to the three leading sectors of employment that I have been tracking: temporary help (blue in the graph below), manufacturing (gold), and residential construction (red). Here’s what they look like compared with 2018, showing the slowdown this year (remember that the GM strike is responsible for the big swings in manufacturing in October and November):

In November, residential construction had looked like it had rebounded from its losses earlier this year, more confirmation of the rebound in the long leading housing sector – but that was revised away this month!

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Scenes from the December jobs report: leading jobs sectors and wages

Scenes from the December jobs report: leading jobs sectors and wages

Let’s take a more detailed look at last Friday’s December jobs report.

First, as usual for the past few months, let’s look at the more leading jobs sectors. This month, let’s also take a more detailed look at wage growth and why it may have suddenly decelerated.

As an initial note, revisions going back to late 2017 are going to be available next month, and preliminarily it was already indicated that these will be strongly negative to the tune of several hundreds of thousands overall. In short, as weak as some of the numbers look now, they are likely to be even weaker when we see them next month.

Here is this month’s update to the three leading sectors of employment that I have been tracking: temporary help (blue in the graph below), manufacturing (gold), and residential construction (red). Here’s what they look like compared with 2018, showing the slowdown this year (remember that the GM strike is responsible for the big swings in manufacturing in October and November):

In November, residential construction had looked like it had rebounded from its losses earlier this year, more confirmation of the rebound in the long leading housing sector – but that was revised away this month!

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Weekly Indicators for January 6 – 10 at Seeking Alpha

 by New Deal democrat

Weekly Indicators for January 6 – 10 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

How week – or not – the next six months are going to be remains the primary issue.

As usual, clicking over and reading should bring you right up to date, as well as rewarding me a little bit for the effort I put in.

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Small Town Support for Trump and “The Working Class”

Small Town Support for Trump and “The Working Class”

Much has been written about voters, sometimes labeled the “white working class”, who live in small towns, have low incomes and supported Trump in 2016.  There are various hypotheses—not, despite the rhetoric, mutually exclusive—that have been proposed to explain this: never-ending latent racism galvanized by the experience of having a black president, a vote of despair in the face of economic decline, paranoia fueled by fictitious narratives of immigrant crowding and crime.  I just finished reading a post-mortem on the recent British election that, by analogy, suggests two more hypotheses about Trumpism:

1) With decades-long declines in deindustrializing areas, there has been a steady outflow of mostly younger residents.  This has a tendency to shift the politics of those who remain to the right based on age considerations alone, but the outflow is likely selective in other respects as well.  Those who light out to the cities are probably better educated and more tuned in to trends in metropolitan culture, taking their blue votes to jurisdictions that already pile up big majorities for Democrats.

2) What do people do when they lose their long-term jobs in manufacturing and the relatively well-paid services that cluster around manufacturing nodes?  If they don’t emigrate, what’s left?  Many look for bits of opportunity where they can find them, combinations of self-employment, gig work, off-the-books service work, etc.  Those who scrounge for income in these ways are the same people as the workers who were laid off during deindustrialization, but their class position has changed.  They no longer look to unions or government regulation to protect their interest against employers, quite the opposite.  Union work now competes with them, and regulation just makes it harder to cut the corners their livelihood depends on cutting.  In other words, their income has gone down but they are less “working class” than before.

Just to be clear, I’m not pushing these explanations.  They are just hypotheses, and it isn’t obvious to me what kind of evidence would adjudicate them.

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Are We Living In The “Capitalocene”?

Are We Living In The “Capitalocene”?

I also attended the last session listed in the program at the ASSA at 2:30 on Sunday, an URPE session on “Ecology, the Environment, and Energy,” chaired by Paul Cooney.  He presented on “Marxism and Ecological Economics: An Assessment of the Past, Present, and Future.” Lynne Chester presented on “Energy and Social Ontology: Can Social Ontology Provide Insight?”  Finally Ann Davis presented on “”‘Home on the Range:’ Integrating the Household and Ecology.”  There were a lot of interesting ideas in these talks, and there was a vigorous discussion about them involving the audience.

What I want to present here is not anything in particular from the talks, but rather a remark from probably the most insightful commenter in the audience.  That was my old friend, David Barkin, who has lived in Mexico for a long time and is at Metropolitan University in Mexico City.  Long an expert on Mexican agriculture, he has in more recent years written a lot on ecological economics from a radical perspective.

Near the end of the session as the discussion was going on about all the papers, he brought up an idea I was unaware of previously, although it has been around for awhile.  It is due to the late German Marxist political scientist, Elmar Altvater, who first became known for writing on environmental problems in the Soviet Union.

So the concept he introduced is that rather than the world being in the “Anthropocene,” we are in the “Capitalocen.e.”  We may have been the former since humanity first emerged as a species and began heavily impacting the environment, including through bringing about species extinctions.  But in the last several hundred years we have moved into this much more damaging system of the Capitalocene.

This is a serious and challenging idea.

Barkley Rosser

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January’s reports start out with a decidedly mixed picture for 2020

January’s reports start out with a decidedly mixed picture for 2020

We have our first bits of forward-looking data for the year: November residential construction, December ISM manufacturing, and December light vehicle sales. They paint a decidedly mixed picture. Let’s take a look in order.

Residential construction spending improved by a strong 1.9% in November. Further, October, which had originally been reported as a decline, was revised to a 0.7% increase:

Housing is recovering from its early 2019 slump thanks to the decline in interest rates. This is a tailwind for the economy as we get into the second half of this year.

 

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Might We Be On The Verge Of An “Upswing”?

Might We Be On The Verge Of An “Upswing”?

One of the more dramatic sessions at the just-completed ASSA meetings in San Diego was an AEA panel on “Deaths from Despair and the Future of Capitalism” on Saturday at 2:30.  Chaired by Angus Deaton, it focused on the book by him and his wife/coauthor Anne Case with the same title as the panel session.  Case spoke on their book.  This was followed by Robert Putnam, who spoke on his forthcoming (in about six months) new book, The Upswing, which this post will focus on. This was followed by Raghuram Rajan, who spoke about his recently published book, The Third Pillar: The Community. Finally Ken Rogoff commented on the Case/Deaton book, although he has no new book of his own.

So all of these focused on the declining life expectancy in the US, along with the associated broader breakdown of community and equality and so on.  Putnam presented a series of figures showing the long term trends on various variables from equality to memberships in organization to degrees of political polarization to the relative use of the words “we” and “I” in books published from the 1880s to the present.  He showed a trend where basically there was improvement from around 1900 to the 1960s (1970s in the case of equality)   All of these have since gone down basically steadily to the point that we are now “in about the same condition as we last were in the gilded age.”

This leads to Putnam posing a possible optimism the possibility of the “Upswing” in the title of his forthcoming book. He argued at the end of his talk that we should consider what happened back then: the emergence of the Progressive movement that started that upward trajectory of social capital.  He argues that since we did this back then, it can happen again, the Upswing. Can it?  I do not know, but maybe he is right to push for such an outcome, although it may take getting rid of our current president.

Barkley Rosser

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Weekly Indicators for December 30 – January 3 at Seeking Alpha

by New Deal democrat

Weekly Indicators for December 30 – January 3 at Seeking Alpha

 My Weekly Indicators post is up at Seeking Alpha.

There were marginal moves to the downside on both the producer and consumer sides of the ledger this past week.

As usual, clicking over and reading rewards me with just a little bit of $$$ for my efforts.

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Long Bond Yields vs The Long Wave

Different  bloggers  have been posting their favorite charts of 2019 this January.  So I decided to post my favorite chart of the past 20, or more, “years of the long bond yield versus the long run trend.”  Bond yields are now below their long run trend and may be at or near a secular bottom.  Of course no one rings a bell at the turning point so we probably will only identify the bottom long  after it actually occurs.

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Is The Chinese Economic System the “Mandarin Growth Model” or the “Chinese-Style Keiretsu System”?

Is The Chinese Economic System the “Mandarin Growth Model” or the “Chinese-Style Keiretsu System”?

The first term in this choice was the title of a paper presented this morning (1/4/20) at the ACES/ASSA session at 8 AM in San Diego by Wei Xiong of Princeton University.  It was a highly mathematical model I shall describe shortly, but which drew heavily on the paper presented before it by Chenggan Xu of Cheng Kong Graduate School of Business in Beijing, the alma mater of Jack Ma who founded Alibaba and the founder of Sinopec and the richest woman in China, etc. His paper was titled “Institutional Genes of China’s Socio-Economic Development,” with it discussed by the current ACES (Association of Comparative Economics) president, Scott Rozelle of Stanford.

The simplistic version of the “Mandarin model of growth” according to Wei Xiong is “political centralization with fiscal decentralization.”  He then presented a math model of incentives for regional governors in a growth tournament being judged by the central government.  These governments face a choice of long term growth-enhancing infrastructure investment versus short-term consumption spending.  He argues this leads to a “rat race of shadow banking borrowing” that is putting the Chinese system into peril as the debt-GDP ratio has been sharply rising, with much of this in the shadow banking sector. This was what I heard about personally on my last trip to China a few years ago, a lot of concern about the growth of the shadow banking sector, driven by local governments.

The historical underpinning of this Mandarin growth model was laid out in the paper by Xu who presented a tripartite system: The ruling bureaucracy, the system of deciding who was in that ruling bureaucracy, and the system and reality of land ownership.  In the imperial system the bureaucracy was the Mandarin elite who were in the  earlier and less-corrupt stages of dynasties selected according to the Confucianist Mandarin exam system originated in the Han dynasty.  This was separated from land ownership at that stage, but at later stages of a dynasty the  sign of rising corruption was the breakdown of the exam system as land-owning Mandarins got their incompetent sons appointed to the bureaucracy.

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