One of the more astonishing things I’ve come across recently was an utterly disingenuous article in Sunday’s Times: Navigating the Fog in Jobs Data.

The article is a discussion with (former Prudential) Strategist Dr. Ed Yardeni. It seems that he has been consistently over-estimating the BLS new job creation each month. As a group, Economists have been consistently over-estimating job creation this entire post-recession cycle; taking the "Under" on NFP has been the winning bet over the past few years. But the conclusion Yardeni reaches — which is not only repeated by the paper, but practically endorsed — is that since this cannot possibly be the case, something must therefore be wrong with the BLS Data.

I practically choked when I read the short column. The author opens with:

"When the numbers stop making sense, maybe it is time to stop believing them.

The Bureau of Labor Statistics reported far fewer net new jobs in May and June than Wall Street expected. If it happens again when July data are issued on Friday, Edward E. Yardeni, chief investment strategist at Oak Associates, will assume that there is something wrong with the report, not the economy. (emphasis added)

That’s denial, plain and simple. Let’s continue:

A Bloomberg News poll of economists estimates that 145,000 jobs were added in July. Mr. Yardeni, who said that he had overestimated the figures announced in the two previous reports, is aiming high again.

“I’m going to take a chance on making a third mistake and go with 180,000 to 200,000,” he said.

Most evidence aside from the government report suggests that jobs are plentiful, Mr. Yardeni said in explaining his prediction. If fewer people are getting hired than economists expect, he is inclined to attribute it to too few prospective workers, not too little work. (emphasis added)

Its not my job to factcheck/proofread the NYT business section — but isn’t somebody‘s
job? There’s so many things wrong with that statement I do not know where to begin. And as a pundit, I’m as wrong as anyone, so I prefer to point out flawed methodologies and/or statistical errors; I really don’t like to point
fingers and say "Hey! This guy/gal is wrong."  People who live in glass houses,
and all that.

Nfp_729But in this case, I am going to have to make an exception:  What the hell is Yardeni smoking?

Let’s review:  Why might we think these numbers make so little sense to begin with? We know (at least those of us who have been paying attention) that the economy has been unusually Real Estate dependent this cycle. We have seen a vastly disproportionate amount of new job creation come from the Real Estate complex (including agentsm, mortgage brokers, etc.)  We also know that the Housing market has cooled dramatically — those of us paying attention also saw the beginnings of this as long ago as August 2005.

Further, we know that by just about every historical measure, this has been the weakest job creating recovery cycle in the post WWII era. We have previously noted that the unemployment rate is down due to NiLFs: Not In Labor Force.  Barron’s described it as "the incredibly
shrinking labor force, a phenomenon that’s largely responsible for the
deceptively modest unemployment rate.
"  The labor participation rate touched is near 15-year lows.

Using other measures that include these slackers, unemployment is actually much higher than the reported 4.6%: The well respected Liscio report noted the actual number could be much higher  of a jobless rate. If one includes the so-called
marginally attached workers and part-timers who really want to be
working full time, the unemployment rate weighs in at a formidable 9.4%.

Jobs that we are creating by and large have been paying less and offering weaker benefits than the jobs they have replaced. (This is a factor in the negative savings rate, but let’s save that discussion for another time). One  notable exception to the weaker pay has been the home construction industry. These jobs have been relatively high paying. The sector has been a major source of new job creation, from real estate agents to mortgage brokers to Loews and Home Depot.

It should come as no surprise that as the entire sector has cooled, so too has the jobs creation associated with it. We now have the biggest inventory of new and existing homes for sale we have seen in nearly a decade. Realtors have said that home sales are now a ‘buyer’s market’. New home builders are witnessing the rise of a Ghost Housing Market, where specualtors walk away from their down payments, rather than close on a property which has declined significantly in price.   

Let’s look at what Mr. Market is saying about the sector: In the face of slowing sales and building inventory, the homebuilders have gotten shellacked. The chart shows they gave up nearly 50% of their value over the past year:

>
ISE Homebuilder Index, May 2005 – July 2006

Ise_homebuilders

Source: StockCharts

>

The strongest engine of Job creation (Housing) was created by ultra low interest
rates; As mortgage rates have risen back towards their historical
average, that engine has gone into an expected cyclical decline. The market correctly anticipated this, as the chart above reveals.

Although the numbers disagree with Yardeni’s forecasts, the conclusion may not be that the numbers make no sense; perhaps it simply means that Yardeni’s forecast — like those of so many other economists — is failing to comport with economic reality:

“If I’m wrong, I’m going to start to wonder if we’ve run out of able-bodied people to hire rather than worry about whether the economy is slowing,” he said. “In this economy, we need more skilled workers and knowledge workers, and they’re getting harder to find.” This is true “even in China and India,” he added. “It’s not just a U.S. phenomenon.”

This confuses two different issues: The lack of highly qualified technical workers with the low new job creation.  I assume no one is suggesting that we are short 9.3 million qualified technical workers — thats the shortfall Liscio report noted.

Lets continue:

Mr. Yardeni supported his case with several pieces of evidence, including the unemployment rate, which has remained at 4.6 percent despite the tepid announced job creation, and responses to confidence surveys indicating that consumers consider jobs to be plentiful.

A weaker-than-expected number of new jobs on Friday may stir concern about economic sluggishness and provide a lift for defensive sectors of the stock market such as health care, utilities, financial services and consumer staples, Mr. Yardeni said. Shares in industries where earnings are tied more closely to economic swings may rise if the job creation figure is surprisingly high.

Either way, he encouraged investors not to read too much into the jobs report, which has often required subsequent revision. Whatever it says on Friday may not be the last word.

“If the number is weaker than expected, pay no attention to it,” he said. “It’s probably wrong and likely to be revised up. Revisions tend to rise in an economic expansion.”

This is more than cognitive bias — this is denial, plain and simple.

I have been a critic of various data assembly methods, hedonics, birth
death adjustments, and many other numerical sleights of hand. I have
rationally explained the differences between the Household and
Establishment surveys. All it takes is a little elbow grease and cognitive functions.

I suggest others do the same.

>

NOTE: For a markedly different approach, compare the above story with a column in the Times a few months ago by Dan Gross: When Sweet Statistics Clash With a Sour Mood. Instead of rationalizing, there is a genuine attempt to make sense of the statistics in context of what we know — rather than merely hope –  to be true.

>

Source:
Navigating the Fog in Jobs Data
Market Week
CONRAD DE AENLLE
NYTimes, July 30, 2006
http://www.nytimes.com/2006/07/30/business/yourmoney/30mark.html

Category: Economy, Employment, Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

69 Responses to “The Cognitive Bias of Ed Yardeni”

  1. Harvey Bergholz says:

    All one needs to know about Yardeni is his 180-degree wrong call from ’96 through ’99 re: “Y2K.” It’s remarkable how short the Public’s memory really is. Yardeni spent four years pointing to the sky that would certainly fall throughout the systems world, and not a single elevator shut down anywhere. This is “expertise”? Waste no more space on him would be my advice.

  2. BDG123 says:

    Sounds like Ed got his training in the Bush administration. Ed Yardeni is a perma-bull and that is pretty much what he’d tell you. You had a link to an article on here a long time ago about a debate he had in San Fran as I recall. Yardeni said he is bullish at heart because of his positive childhood upbringing. Actually I’d put it more like he’s paddling a boat up Denial, that river in Egypt.

    Yardeni was pretty adamant post 2000 that the stock market would be fine allllllllllllllllllllllllllllllllllllllllllllllllllllll the way down. Anyone who was bullish in late 2000 is on my permanent shit list. If they couldn’t spot the biggest mania in our life time, they aren’t going to be able to keep me out of any relatively “normal” rough patches. Although, this rough patch is not normal either. He’s a great numbers guy and has alot of pretty charts. That’s his calling in life. He makes us pretty charts. Then it is our responsibility to interpret them.

  3. babycondor says:

    “…a genuine attempt to make sense of the statistics in context of what we know — rather than merely hope — to be true. ”

    “There are three kinds of lies: lies, damned lies, and statistics.” – Mark Twain

    What do we Know to be true and how do we know it?

  4. JoshK says:

    IMHO, I think he has a point. We have lots of open job reqs here and can’t fill them.

    I don’t know why people choose not to participate in the labor market. You may try to make the argument that these jobs don’t pay “enough”, but they are not paying less than they used to, and we used to be able to fill them.

  5. RN says:

    Yardeni made a courageous call on Y2K, and there was a lot of evidence with him. He was betting uncertainty would not be our friend. Wrong, but certainly as reasonable a bet as any at the time.

    Ever since then, he’s been nothing but permabull, having learned to serve his masters or be unemployed (that’s the back room buzz anyway).

    So he’ll be playing Mozart on an underwater Titanic when the Kudlows of this world are at least swimming for the surface.

  6. andiron says:

    yardeni’s call surprised me too, who i thought was more “rational” as well as bear and is often quoted by Mark Faber..What gives?

  7. Chief Tomahawk says:

    “The strongest engine of Job creation was created by ultra low interest rates; As mortgage rates have risen back towards their historical average, that engine has gone into an expected cyclical decline.”

    C’mon, BR! It’s all been due to W’s tax cuts!!! We still have those while Fed rates have risen, so everything should be fine!

    Seriously though, I believe you could become the first Pulitzer winner for a blog posting if you separate the impacts of tax cuts versus fed rate cuts and prove the Fed’s impact dwarfs that of income tax cuts. To date these income tax cuts have piggybacked the heavy lifting done by the Fed’s rate cuts. Though the Republican party may never forgive you for exposing the truth.

  8. Actually Barry, We Think It Might Be Your Job To Proofread the NYT Business Section

    We’ve said it before and we don’t mind repeating ourselves. Barry Ritholtz takes down financial writers like it’s his job. This time he’s taking on an article from Sunday’s New York Times in which Ed Yardeni tells us to ignore…

  9. Bob A says:

    Yardeni’s angle is Just more lala land root for the administration BS ala Donald Rumsfeld’s “oh I don’t know if there’s a civil war in Iraq” and Mary Matlin’s “everyone who doesn’t see it our way is just living in a parallel universe”. “You can fool too many of the people too much of the time”-James Thurber

  10. Mano says:

    U.K. Mortgage Approvals Accelerated in June, BOE Says (Update3)
    July 31 (Bloomberg) — U.K. mortgage approvals rose in June at the fastest pace in five months, a sign the revival in Britain’s $6.2 trillion property market may last through the rest of the year.

    Lenders approved 120,000 home loans, up from 117,000 in May, the Bank of England said in London today. The figure, which is adjusted for seasonal swings, exceeded the median estimate of 115,000 in a Bloomberg News survey of 20 economists.

    The central bank rekindled the housing market a year ago this week by cutting its key interest rate to 4.5 percent. Higher mortgage lending, an indicator of demand six months later, suggests that residential property values may continue to support consumer spending and economic growth this year. Housing represents 59 percent of U.K. wealth. . . . . . . . . . .

  11. me says:

    “We have lots of open job reqs here and can’t fill them.

    I don’t know why people choose not to participate in the labor market. You may try to make the argument that these jobs don’t pay “enough”, but they are not paying less than they used to, and we used to be able to fill them.”

    I suggest you read the Boston Fed study Mark Thoma posted.

    http://www.bos.frb.org/economic/conf/conf51/papers/freeman.pdf

    I will post this from Richard B. Freeman’s study:

    “In this paper I assess the two competing visions and the demographic and economic projections on which they are based. I reject the notion that the retirement of baby boomers and slow growth of the US work force will create a future labor shortage in favor of the argument that the increased supplies of skilled labor in low-wage countries will squeeze highly skilled as well as less skilled US workers.”

    So what shortage are you talking about joshk?

    And what jobs pay the same? When I was outsourced from AT&T to IBM that was a $9000 pay CUT. When IBM offshored my job to India that was a total loss of income. The very few jobs I have been offered in the last 4 years pay about $15 an hour with no benefits. I made more than that as a graduate school intern.

    If there is such a shortage, just hire back the half a million of us that have been fired from IBM, HP, Intel, Sun, Oracle in the last 5 years.

  12. cm says:

    JoshK: What kind of jobs are those you cannot fill? As you seem to be agreeing with the author, I presume you have a lack of applicants.

    Have you considered that your methods of advertising the jobs are inadequate, or in case you get resumes/leads from job boards, that you may have set your filtering bar too high?

    The latter has been happening at my employer, staffing reps are instructed to do tight searches, for a combination of attitude (“we are looking for exceptional people” — being that we do the most advanced rocket science here) and hiring managers being too busy or otherwise uninclined to do a lot of thankless phone screens.

    As a result, “we cannot find local talent” and have to hire in “low cost geographies” instead. Right. In fact, that may just be the subtext of “we look for exceptional people (here)”.

    I recently participated in interviewing two quite competent but not stellar candidates for my group, one of whom got rejected by others in part because there were doubts about his degree of “passion” and “career commitment”.

    In the round table it again came up that we need people who can hit the ground running. I pointed out that when it is so tough to find people, we should consider making compromises, look for “generic” talent, and be prepared to build industry specific know-how inhouse.

    Finally, perhaps people have choices, or at least hope so, and just don’t want to work in my company/industry. Not sure about yours.

  13. cm says:

    me: One thing I don’t know, and quite likely never will, is whether HR actively age discriminates when filtering resumes. A possible indicator is that I heard rhetoric of looking for people with around N years of “experience”.

    In part this is because (R&D) managers don’t want to hire “overly experienced” people for rather mundane jobs for fear they will be bored and resign or lose motivation (perhaps also won’t take micro-management). Also “experienced” people tend to have a more realistic assessment of career prospects and are generally less motivated by promises of promotion, career path, etc. We are a product group, and while we do some “technology”, much of the work is rather routine, this being a “mature” industry. Management appears to seek people who are “excited” in face of this, which invariably means younger workers with a drive to prove themselves. They don’t seem to get the concept of doing solid and professional work just for a paycheck, which “experienced” people are often perfectly willing to do, as the other side of the “realistic assessment” medal.

    But I’m repeating myself, having said this often enough before.

  14. BDG123 says:

    cm,
    You bring up a good point. I find one of the biggest mistakes I’ve seen is looking for people who fit the “requirements”. Many times the best candidates are rejected out of hand because their resume doesn’t fit the HR posting and HR in its wonderfully bureacratic way gets involved in something they really know nothing about. Or, the pressures of the business require immediate contribution and the training requirements are overestimated.

    In the long run, if one is hiring and building for strategic advantage it is far and away better to find the best generic talent. The Southwest Airlines model. Obviously, if you are looking to hire someone to be a research chemist, basic talents apply. But, most jobs are not as research chemists and many jobs can be done quite ably by a tremendously talented individual with a generic background.

  15. KirkH says:

    Does anybody here have a take on Rifkin’s “The End of Work”? Not his solutions but the statistics. If he’s right the effect of a shrinking job market on the housing correction could be pretty big.

  16. me says:

    “You bring up a good point. I find one of the biggest mistakes I’ve seen is looking for people who fit the “requirements”.”

    One of my favorites was an ad wanting 8 years of java experience; and at the time, java had only been around 5 years.

    Yep they could find any qualified people.

    cm

    You are right about the motivation. After companies eliminate your pension and charge you more for less health care every year, empty promises fail to motivate.

  17. The Cognitive Bias of Ed Yardeni Critics

    I admire Barry Ritholtz’s enthusiasm for analyzing Street Research — not peer reviewed and often methodologically flawed. His critcism of Dr. Ed Yardeni’s New York Times comments, however, is both incorrect and more than a little unfair. I’ll cite spe…

  18. angryinch says:

    Like so many other permabull straterigists who rose to prominence in the 1990s, Yardeni is just riding on the fumes of his prior (lucky) successes.

    He makes the same call, quarter after quarter, year after year: the U.S. is the world’s growth and innovation engine and the stock market will continue to work ever higher and higher.

    He was right from 1987-2000. Not so much for the past six years.

    I agree with the previous poster that anyone, like Yardeni, who didn’t see the train wreck coming following 1999-2000, isn’t worth a tinker’s damn.

    Even when he’s ever-so-slightly-defensive about stocks, like in early 2002 when he said the SPX was still a tad overvalued, his calls still look absurd in retrospect.

    In early 2002, when the Dow was trading at 10,500, he said that the Dow had “risk down to 10,000″ by year end, though he said he could also see it rise to 11,500.

    The Dow dropped to 7,200.

    Stocks rise and fall based on liquidity and investor preference. The fact that Yardeni could only imagine a worst-case scenario of a 5% decline, after the biggest stock bubble since the 1920s, shows you just how delusional he it.

  19. Matt says:

    We DO NOT have a problem with hiring skilled workers in America. Instead, we HAVE problem with companies being unwilling to train their employees to become skilled workers.

    Stop whining about a lack of skilled candidates to fill open positions, and start re-allocating budget $$ from your stock buybacks to training your people instead. Sheesh.

  20. Alaskan Pete says:

    What is with these people who are so intellectually bankrupt? Unfortunately it’s not uncommon. Reminds me of all the harping about owners’ equiv rent aspect of CPI. They touted it when it helped their case, and dismiss it as problem riddled, unreliable when it undermines their argument. Same thing with unemployment and the household survey vs. employer survey. This is exactly why I hold them in such contempt and have a generally cynical view of the press, analysts, etc. They truely are clowns and shills, except clowns are sometimes entertaining (or terrifying, depending on your psychological makeup)…these people…not entertaining, just irrelevant.

    Got back into my coal position this a.m. on a textbook oversold + pos divergence + downtrend line breakout, and the whole sector took off like a scalded dog. So I started channeling some Howard Dean and stood on my desk and let out a 98dB “YEARRRRGHHHH!!!”

    Just kidding (about the yelling).

  21. Alaskan Pete says:

    Just had to add…

    It looks like the turing test (sp?) is now giving investment tips. The one for my last post said “get yen”

    Wish I’d been paying attention when it said “sell GM”

  22. ss says:

    “He was right from 1987-2000. Not so much for the past six years.

    I agree with the previous poster that anyone, like Yardeni, who didn’t see the train wreck coming following 1999-2000, isn’t worth a tinker’s damn.”

    Interesting comment…and certainly true. I might point out that (one of) the most bearish managers/writers in ’99-’00 was Don Hays (Hays Advisors). He caught a lot of flack then, and was obviously correct. He is currently UBBER bullish, and looking for a market double in the next 2-3 years.
    I suggest that you find some of recent writings. He, btw, agrees with Yardeni, as do I. Flame away.

  23. ~ Nona says:

    bdg123, you bring up a really interesting point about “requirements”. Many years ago when I was a kid, I was hired by a major bank via a temp agency to go through resumes received by a major international bank for a significant, important job.

    In short, me, a kid, with a liberal arts degree and no banking background whatsoever, was hired from a temp agency to do the first cut on a fairly substantial pile of resumes.

    But why not hire a kid?

    Any kid who could read could have performed flawlessly by following the instructions, which were: Make two piles. In the first pile put all the people who met every one of the listed requirements; in the second, put those who don’t. It was clear that the second group would receive a PBO (polite brush-off) letter.

    I couldn’t help myself: I created a third pile. I explained to my boss-for-the-day that it held the resumes of people who, while lacking one or another of the sought requirements, were such strong candidates overall — in some cases much stronger than those boasting all the requirements — that it might be worthwhile considering their resumes.

    I’ve always wondered what happened to that third pile. I suspect it was added to the PBO pile. After all, my boss-for-the-day was an HR bureaucrat.

    About two years after that temp experience, when I had a real job, I brought in an ex-con (drug dealing), college drop-out for consideration. For a lot of reasons (not worth detailing here), I thought he was worth hiring.

    Good hiring demands imagination, a measure of creativity — and the willingness to take risk. It’s NOT a job for bureaucrats. The company owner, who had imagination, creativity and was willing to take risks, hired him.

    Jim was one of the best we hires ever made. What’s more, my boss’s willingness to give him the job transformed a young ex-con’s life. A few years later the young man sought — and won — an even better job. By then, his background was irrelevant to a company seeking a reliable, utterly competent, highly intelligent professional for a position with a posted requirement of a college degree. And no criminal background preferred!

  24. knzn says:

    Don’t forget help wanted advertising, which has been very weak throughout this recovery and recently took a nosedive. (I’ve tried to account for online advertising as well, using the Monster Employment Index in conjunction with the Conference Board Help Wanted Index. Online had about 20% market share in 2003, when the Monster index begins. That index has gone up since then, but the Conference Board’s index has gone down. When I take a weighted sum, it’s pretty much flat for the recovery so far.)

  25. me says:

    ” He is currently UBBER bullish, and looking for a market double in the next 2-3 years.
    I suggest that you find some of recent writings. He, btw, agrees with Yardeni, as do I.”

    That is what makes markets but are you related to Glassman? DOW 36,000 redux.

  26. GRL says:

    Here is an article I ran across in this morning’s New York Times, which addresses this issue from a slightly different perspective, and portrays what I call the “new male stereotype”:

    http://www.nytimes.com/2006/07/31/business/31men.html?hp&ex=1154404800&en=f82d5d3f9f822e4f&ei=5094&partner=homepage

    Now that women are going to college and graduating in greater numbers, starting to make money, and move up in the world, I think we are going to see more and more of these kinds of articles, about how men are lazy, don’t want to work at “just any job,” don’t work as hard as women for what they get, etc., etc. It’s the 21st century equivalent of the woman in the ’50′s and ’60′s, who supposedly just went to college “to get her Mrs. Degree.”

  27. fred hooper says:

    “I don’t know why people choose not to participate in the labor market.”

    Maybe they’ve been living off their HELOC’s, a flip here and there, or they’re on a first name basis with a personal injury attorney?

  28. BDG123 says:

    Nona, that is a great story. Unfortunately, not a common story.

    I’m not a squawking perma bear on America as nearly every fringe element on this board is but pulling through this without even a ten percent correction is statistically improbable. Now I like Don Hays but he’s not exactly Judas Priest. Don has been pissing around with semiconductors and other lunacies this cycle while crowing about why no one should be in oil. That’s about the dumbest investment advice anyone could give in hindsight.

    In addition, Don has picked the bottom here three times and stated he was fully invested on the first call. Each time he’s been wrong. He may believe this bottom is “the bottom” as his web site stated in his writings of “Third time is a charm” but he’s lost credibility in the short term by being the boy who cried wolf one too often. Don uses extremely crude methods of picking bottoms and his work shows no respect for cycles or any sophistication beyond the obvious. Would you rather listen to Jim Stack or Don Hays? Would you rather listen to bond market or the manipulated stock market?

    Unless Don gets the bulls to change their behavior, this is not a bottom worth playing and nothing similar to the bottoms in 2004 and 2005.

    If you think a PE of 38 on the R2K is cheap and liquidity will keep driving the current themes, they’ll end up being a bigger bubble than the large cap techs in 2000. Do you want to pay for earnings 38 years out and no dividend to own an asset class? Shit, I’d rather own Phelps Dodge and I think copper is a bubble. At least I know the need for copper will be here in 38 years unlike many of the R2K companies. As it is, the R2K has reached the same level of stupidity in comparative valuation terms as the S&P in 2000. Of course, getting the RIGHT PE on the R2K is nearly impossible since we now have to wade through pro-forma earnings, earnings of companies only reporting positive earnings and all of the other horseshit gaming.

    Hey, Dow 36,000 here we come!

  29. Vele says:

    I read your blog all the time, but it’s a pain to go through extra clicks! Why don’t you put the whole article/post in the RSS feed and not just the teazer first few lines. I use Bloglines and this is becoming very annoying. Please help!
    Thanks and keep up the work.

  30. ss says:

    “Don uses extremely crude methods of picking bottoms and his work shows no respect for cycles or any sophistication beyond the obvious. ”

    His track record speaks for itself…despite being early this time. Your “opinion” above is good comedy. Cycles are a joke. Precter has called 50 of the last 2 crashes.

    Why hasn’t anyone quoted the Prudent Bear today? ;)

  31. Gunther says:

    “I don’t know why people choose not to participate in the labor market.”
    Two pieces of anecdotal evidence:
    A while ago I was working close to Detroit. Half of the candidates for blue-collar-jobs in that company were rejected because they failed a drug test. How often will the ones who failed the drug test try again?
    Most students who finished their master in social work in Detroit this spring have difficulties to find a job.

  32. BDG123 says:

    If you believe cycles are EWT, you don’t have a clue what you are talking about.

    What is his track record? Being wrong three times in a row on this bottom? Or maybe being astute enough to see a PE of 100 on the Naz 100 was unsustainable in 2000? Or maybe you mean him being in love with TI this cycle, which is up about 70% since 2003 and telling you not to invest in Valero which is up 1,200%.

    His record does speak for itself.

  33. kckid816 says:

    Once again, the employment topic comes up.

    I just want to remind some people that it’s tough out here for the rookies. That being said I have a BBA in Finance from a good private university. I currently work for one of the discount brokers in a position in which I’m grossly overqualified and underpaid. I have been looking for an analyst or even a/r or a/p position for over six months, and I can’t even get a call back for an interview. I interview extremely well and have a very extensive knowledge base. So if I could get an interview, and then get turned down I wouldn’t mind. But I have a feeling that my last name, and the fact that I don’t 5 years experience have something to do with it (FYI I graduated in 2004, so it would be impossible for me to have 5 years exp).

  34. bob says:

    There are over 500,000 real-estate agents in the state of California (just google for links). So there is less than one house sold per agent per year.

    But they are techically employed, poor bastards.

  35. JoshK says:

    The article Barry posted above is pretty good. I’ve always thought that SSI is a giant scam. Whenever I have a day off I am amazed by how many people walk around the UWS during the day carrying their canes…

    A few people asked if we are doing a good job marketing our help wanted reqs. I don’t know about that, but I think we are pretty flexible. Although, we have some bizzare things like not letting consultants stay on more than 2 years (I know, IRS rules, yada yada).

    But none of this is new. I don’t think we changed any of our HR stupidity in the last few years. With the college interns, we used to have a lot of top-tier people competing for jobs on the desk. There still are some, but it’s not where as intense a competition as it used to be. (On the positive side, I no longer have to hear as much “I’ve always wanted to work here!” kind of comments).

    Could we be more creative in terms of finding people? Sure. We wated millions on stupid acquisitions too, but that’s not the point. The point is that we are seeing tightness *COMPARED* to how it used to be.

    Also, I have been involved in some residential construction work in Atlanta, and it’s not easy getting people to do that either. The going rate that I’ve found is $9 an hr for anyone from the worker pick-up point and a$12-$15 and up for someone reliable.

  36. 1. I used to read Don Hays all the time — sometime post 9/11 he morphed fromt he former NASA rocket scientist he was, with heavy quant leanings, to a political animal.

    I found his judgement wanting on many things since, and it has unfortunately impacted his analysis. He was wrong about Iraq, deficits, and rates — and i cant help but think its politically related. I’m an independent, and I have lots of friends who are Republicans — none them drank the kool aid, while Hays seems to be drowning in it.

    2. As to Jim Stack, if you are a long term investor — not a trader — and only subscribe to one newsletter, Stack’s would be my recommendation.

  37. ss says:

    “He was wrong about Iraq, deficits, and rates ”

    He was not alone on Iraq. (lame comment)

    Deficits are coming down….as are rates, as he predicted. As far a being a political “animal”…what does THAT have to do with his work?…NOTHING.

    Keep it real Barry…please.

  38. Blissex says:

    «Yardeni is his 180-degree wrong call from ’96 through ’99 re: “Y2K.” It’s remarkable how short the Public’s memory really is. Yardeni spent four years pointing to the sky that would certainly fall throughout the systems world»

    This is a case of mistaken identity: the Y2K guru was Yourdon, and he really believed that:

    http://archive.salon.com/21st/books/1998/03/cov_02books.html

    Probably we should be thankful to him for avoiding some major trouble, rather than viceversa. The Y2K probably was fairly real, and Yourdon’s most wrong call was his pessimism about fixing the issue, which instead, surprisingly, went fairly well, due to very large amounts of money thrown at it.

    As to Yardeni, he seems to be just sticking to the big-business inspired ”talking points”, one of which is ”skill shortage”.

    Talking about a mythical ”skill shortage” is doubly rewarding for certain interests:

    * It makes the economy look better than it is.
    * It makes the unemployed look deserving of their destiny.

  39. Cherry says:

    Mortgage applications are “indications” of Britians Real Estate revival? Uh, no its not. Britians Real Estate industry is DOA and the stagflation they legitly have(much worse than the US) is very 70ish. That country has worse problems than the US.

  40. RN says:

    ss wrote:

    “Deficits are coming down”

    Wow man, where can I get some of what YOU’re smoking…?

    :)

  41. Lord says:

    IMHO, I think he has a point. We have lots of open job reqs here and can’t fill them.

    We do have lots of jobs. All those illegals aren’t crossing the border for a vacation. There is a large mismatch in jobs and workers though. If you can’t fill the jobs, either you 1) aren’t trying, or 2) aren’t paying enough. The first happens a lot. The line manager wants someone but the higher ups don’t want to fill it to maintain profits. If your job req has been open for more than a month, it isn’t really open. It is merely an accounting entry to indicate how much work they are doing and how well the company is doing. The second is common in specialty areas. “They pay what they always have” is a sign of this. Requirements have burgeoned so that almost no one is qualified yet the pay has not increased. If your reqs aren’t ever filled, it is because no one is trying, and people may no longer be applying because they realize the company is merely filing resumes and trying to justify work visas.

  42. BDG123 says:

    Didn’t you know? Kudlowites, Republicans, Yardeniites, Haysites and the religious right love ganja. It’s the Wisdom Weed smoked by all enlightened Bible characters. How do you ever achieve enlightenment without a bong and some raggae music?

    Heck, just as George Bush. He’s smoked more if it than all of the posters on this board put together.

    http://www.gotvape.com/medical_marijuana/ganja.html

  43. me says:

    “Could we be more creative in terms of finding people?”

    Since you mentioned Atlanta, maybe you are one of the unrealistic employers I have dealt with?

    Are you Federated? every 3 months like clockwork they advertise for an instructional designer. I never even receive a BPO form them yet I headed a department of 8 instructional designers at AT&T and have an MS. Guess I am not qualified.

    Maybe you are the client of a headhunter that calls every 4 months about an information architect position. Why are people leaving I ask? Well, the client is demanding and makes a lot of changes. Am I qualified after the same conversation? Of course not, I have a break in my resume. I could be a stay at home Mom home schooling my children but, ho the break in the resume – disqualified.

    Or maybe you work for Cingular. They also need and instructional designer, and get this, they need it for data center training because they are taking over training for AT&T. Am I qualified? Just because I have the instructional design and experience, and I have done the design for the AT&T network, and the IBM data center. No way man.

    So to you and all the others that say there are no qualified people I say you are full of it and the positions do not exist, there is not shortage – period.

    So if you can’t find qualified people it is you, not the candidates. Do you think I apply to Federated anymore? Do you think I call back the headhunter for the “hot” information architect position. do you think I apply to Cingular? No, I don’t and neither do others. that is why there is a “shortage”.

    And one last thing I forgot to mentions. I applied as one of the designers at AT&T training after I got offshored from IBM. You know what. I couldn’t even get a job in the department I headed up just a couple years earlier as a contractor. The AT&T people were gone and IBM ran a group of 50 instead of 250 but , I wasn’t qualified. Bullshit.

  44. MLong says:

    Job Market:
    1st and foremost, it’s ludicrous to say jobs are plentiful, except in terms of lower wage & benefit jobs. Wages would be increasing dramatically, not slowly or at all, if that was the case, due to supply and demand.

    2nd, we have a much higher percentage of college graduates at the undergraduate level and graduate level than ever before from many more fields than ever before. It makes me sick to hear people in academia or otherwise say we just need to retrain our workers with schooling. They’re already trained through schooling; they just need a job in their field.

    3rd, there is no shortage of labor as evidenced by companies’ want ads; the job descriptions are ridiculous at times for the amount of pay. They don’t portray companies that are desperate for help. They portray companies that want cheap labor with higher level degrees and many years of job experience in the exact same job as they need. Used to be, if you had a higher level degree, companies considered you a viable candidate for cross training in a comparable field, but no more.

  45. Blissex says:

    «1st and foremost, it’s ludicrous to say jobs are plentiful, except in terms of lower wage & benefit jobs. Wages would be increasing dramatically, not slowly or at all, if that was the case, due to supply and demand.»

    Well, high end jobs for ”perfect” candidates show impressive signs of salary increases: people from of Yale, CMU or Stanford or MIT are being courted and snapped up by many hungry employers.

    As to low end jobs, the static or decreasing compensation on offer means that such jobs are scarce (at least relative to the number of people trying to get one), not plentiful.

  46. Lord says:

    too few prospective workers

    That is why real compensation is going up NOT.

  47. whipsaw says:

    One of the great rules of life is that nobody is in a hurry unless you owe them money and I think that may account for a lot of the labor market dropouts (other rules are that it costs twice as much to get out of something as it did to get in, there is no bottom, every good deed is punished, I could go on). I haven’t been in the job market since 2000, but can recall how frustrating the entire process is altho it did not compare to my transition from practicing law to playing with computer stuff in 1993. Anyway, there are a lot of very capable people out there who are not in the hunt officially just because they got too beaten down to bother. As “me” outlined (not literally me, but the poster here), you can have excellent experience and a will to work, but never even get an interview.

    On the other side, my company hires in 10 people a week to what are good paying jobs ($40-60k) in Atlanta. That isn’t necessarily because things are so great, it’s because so many employees with 4/6/8+ years of experience have gotten disgusted and moved on during the past year. I don’t have any idea of what the competition for the openings is like, but would assume that it is furious. The longer term outlook is not clear considering that it will take most of these people 2 years to even understand what they are doing (tech consulting implementation type stuff) and management is mainly interested in the company being acquired.

    For the past 5 years, I’ve wondered why all of these people are scrambling to get MBA’s when they will never get a job that they couldn’t get with an undergraduate degree (or at least at that pay level)?

    To close, if “me” wants to email me, I will be glad to tell her where she might get a job in Atlanta doing training as opposed to instructional design, but it will involve a lot of travel.

  48. whipsaw says:

    per Blissex:
    “Well, high end jobs for ”perfect” candidates show impressive signs of salary increases: people from of Yale, CMU or Stanford or MIT are being courted and snapped up by many hungry employers.”

    I am not even sure what CMU is (Carnegie-Mellon?), but your comment seems entirely irrelevant to me. Nobody cares about employment rates from the Circle Jerk League, those guys got jobs even during the Depression because of the power of influence. If you look at people coming out of state universities that offer an equal or better education and who are the ones who will actually do the work, I doubt if you will be quite so confident about their employment prospects.

  49. Leisa says:

    Per KCKID816: “I currently work for one of the discount brokers in a position in which I’m grossly overqualified and underpaid. ” It’s called paying dues.

    And you’ll forgive me for saying that with a 2004 graduation date, it would be hard to convince some old battle ax like me that you have an extensive knowledge base.

    My point is not to be unkind, but rather to suggest that you realign your view. We all went through that phase where we asked ourselves “I graduated from college to do this” (my venue was public accounting). But you learn how to deal with success, failure, being a team member, being a client resource. It’s your proving ground, and that ground can be damn hard (and filled with lots of manure!). Build your foundation, earn your stripes. Most of all, find a mentor. He/she will be invaluable to you. Also, think about volunteering on a not for profit board–but your experience to work. Boards are a terrific way to build a network. Good luck

  50. mlong says:

    <>

    You make my point! Good jobs are still scarce.

    But, the plentiful “low end jobs” I was referring to are waiting tables, burger flipping, etc. Jobs which generally do not require a degree.

  51. cm says:

    Blissex, whipsaw: I have seen some “top school” graduates in action. As the saying in my native language goes, they are cooking just with water there as well. By appearances.

  52. ss says:

    Barry, RN and BDG:

    July 9, 2006
    Surprising Jump in Tax Revenues Is Curbing Deficit

    By EDMUND L. ANDREWS, New York Times

    WASHINGTON, July 8 — An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief….
    (cont)

    http://tinyurl.com/rw279

    I await your pithy retort!

    Posted by: ss at Aug 1, 2006

  53. Cherry says:

    Retort? This is old news, half baked outlooks and 1 year tax moves during(what was?) the height of the cycle.

    Pathetic, you try and spin it. Those numbers may not hold.

  54. ss says:

    LOL…spin?…NYTimes?
    Old news?….try , 3 weeks

    Stay the course Cherry…and good luck. :)

  55. Craig says:

    Hmmm.
    If SS believes those tax revenue numbers, then there is no helping our Bullish=Republican=Dumb observation.

    As long as statements like this are made, we won’t have much choice other than to assume dumbness.

    The labels are clearly self-inflicted.

  56. BDG123 says:

    SS,
    First off, don’t label me with those who have a few screws loose on here. There are alot. There are some very smart people on this board but the Apocalypse crowd roosts here as well. I am expecting a serious slow down but not the demise of western culture, mankind and McDonald’s. And, not because we have massive debt, fiscal irresponsibility and the sort. I am expecting it for real reasons. lol.

    I have just one thing so say, then it is time to move on. Do you know what the tax takes and unemployment were in 1929? Do you drive your car with your seat rotated so you look out your back window?

  57. ss says:

    “If SS believes those tax revenue numbers, then there is no helping our Bullish=Republican=Dumb observation.”

    Not MY comments…from the NYTimes — such a conservative source of information! :))

  58. Craig says:

    Another question…..

    Do you look at your finances as a single slice of time or does the past and future have a place in this view?

    If I am a gazillion dollars in debt to the point I have trouble with principal payments, but work a couple hours overtime, do I get to crow about “rising revenues”?

    Doesn’t the debt have ANY bearing on my economic outlook, or do I blissfully live only in the present and forget my future pain?

    If you take only the news of currently rising revenues, and fail to apply our DEBT, then you are dumb.

    If you are Republican or bullish that’s up to you.

    Give me a break.

  59. JoshK says:

    I think my point is misunderstood. I’m not saying that our recruiting is perfect. What I am saying is that it has been consistent, and it used to get us a lot more resumes. Pay has risen here – but maybe not enough.

    But again, if you are saying that you need to pay more, that implies that the equilibrium has shifted up.

    My experiences could be a bit too annecdotal – but we are drawing on the same pool of people that everyone else is.

    I think it’s difficult for people to sometimes get past the fact that wages and the compensation for various skills changes. Who would have thought 20 years ago that a research analyst could make so much money 10 years later? They were just a bunch of accountants.

  60. cm says:

    JoshK: It’s a two-way street. You may look from the perpective of what employees you want or don’t want to hire, and they are looking at where they would like to work, or where not. The latter part is often forgotten, and word also gets around, in line with what ‘me’ commented on. People are actively trading job experiences, names of “difficult” managers/groups/companies, and when looking at a position try to solicit opinions from their network.

    There may be other, demographic, reasons. I don’t know what time frame you are referring to, but people today are generally 5 years older and with 5 years more “experience” than 5 years ago. If there are few new entrants into your market, you may have to “compromise” and hire from the “scrap heap”.

  61. cm says:

    In other words, more likely than not there is no shortage of people who can do the job, but a shortage of who employers would like to hire, and who would agree to their terms.

    “We cannot find people” is always implicitly qualified by “on these terms and at these parameters”.

  62. Lord says:

    How many resumes do you get per position? How many do you need? Pay declines for those areas not in demand and rises for those in demand. This does not mean there has been an overall shift. If like most other companies you want areas in demand you need to pay for it or be more flexible in your demands.

    How closely does your workforce mirror that of the population? If you insist on a 25 year old with 3 years of experience, you should have to pay more. If you are willing to accept what is available, you can get by with less than you would normally have to pay someone with that much experience, but you would still have to pay more because of it.

  63. rockprotect says:

    ss,

    >> WASHINGTON, July 8 — An unexpectedly steep rise in tax revenues from corporations and the wealthy

    Inflation increases tax revenue, too!

    >> is driving down the projected budget deficit this year

    The NYT sees causality. I see politicized coincidence. Remember Barry’s post about the NYT being “punked”?

    – Not MY comments…from the NYTimes — such a conservative source of information! :))

    I’m a liberal/libertarian and don’t rely on the NYT. They channelled Cheney as a “anonymous source” during the runup to Iraq and have generally been pretty mainstream. The NYT is liberal? You can have them. And, regardless of politics, any newspaper reporter can get the facts — and especially the explanations — wrong.

    - rock protect

  64. rockprotect says:

    Folks,

    I can say ditto to 95% of the posts about the job market. On the same day you read about some company “insourcing” “up to” — I love that phrase — 300 jobs on http://www.yahoo.com, you can find articles on in.yahoo.com talking about an outsourcing firm hiring 3,000. So, invest your sheckels wisely! You’re going to need them.

    Until an absurd currency revaluation, the only jobs staying in this country are ones that are nailed to the ground: government jobs (big employment gains in the last “recovery”) and housing (can’t offshore that).

    - rock protect

  65. Craig says:

    I’ll bet the Chinese can build unit panels for the mobile homes most Americans will live in, in a few years.

    Ship them flat and assemble here with cheap imported illegal labor.

    Only a portion of the housing gig is nailed down.

    Remember, the boomers are getting older, have little to no savings, and will need to scale down….some more than planned….to a nice “manufactured” home.

    You will be able to buy those like cardboard boxes at Walmart. “Made in China”.

  66. JoshK says:

    cm,

    Again, I’m only saying is that we are seing *relative* tightness. There’s no question that we will have to adjust and either pay more or be less selective.

    But that’s the point. If the job market was weak, then we could pay less and get better people.

    As far as reputation, I don’t think we have seen a big shift in any direction. In my area, I work for quant trading, and I think that is now considered “hot” and people have more interest in that than IB and capital markets. But then again, I could be wrong about that part.

  67. cm says:

    JoshK: What about “demographic” effects. When you look at the Census population graphs, the boomer “hump” is of scary proportions. There may be other local effects in your area, like housing/commute affordability. I admit that’s difficult to judge. If you are targeting the wrong “age bracket” (perhaps not directly but by the proxies of “experience” or graduation date), you may indeed see a “shortage”. Or perhaps the (nominal, as opposed to actual) skills asked/needed are not that widely available.

    Having said that, well, be less selective, hire those that are actually applying, stop lowballing or try to accomodate asked pay, and be willing to invest in your hires (whichever applicable). That always used to be the standard response to worker shortages.

    If it should turn out that you “cannot” pay as much as people ask, or as much as used to be the standard 5 years ago plus COLA, I suggest your venture may be “unprofitable”.

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