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US food stamps set ever-higher record-32.8 million

A record 38.2 million Americans were enrolled in the food stamp program at latest count, up 246,000 from the previous month and the latest in record-high monthly tallies that began in December 2008. Food stamps are the primary federal anti-hunger program, helping poor people buy groceries. The Agriculture Department updated enrollment data on Friday with a preliminary figure for November. USDA estimates up to $58 billion will be spent on food stamps this fiscal year, which ends Sept 30, with average enrollment of 40.5 million people. Food stamps were renamed the Supplemental Nutritional Assistance Program in 2008. Participation has surged since the financial-market turmoil of late 2008 and has set records each month since December 2008, when it reached 31.78 million. Enrollment is highest during times of economic distress.

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<Click on chart for larger image>

<Click on chart for larger image>

Last week, FT Alphaville noted that PIIGS was becoming an “unkosher” acronym at Barclays Capital.

The oft amusing Jim Bianco suggests that instead of using the phrases PIIGS, we give these acronyms a try:

* DEBT – Dubai EU Brazil Turkey
* SICK – Spain Iceland Columbia Kazakhstan
* DUMP – Dubai Ukraine Mexico Portugal
* PUKE – Portugal UK EU
* STUPID – Spain Turkey UK Portugal Italy Dubai

The Superbowl As An Economic Indicator

Today’s NFP data was surprising — both to the upside and the downside. 20,000 jobs were lost in January, below the consensus. But everywhere else, there were surprising improvements.

Is it possible that those people expecting a mediocre recovery and weak employment picture — including me — might be pleasantly surprised? A closer look suggests that many people may be underestimating the recovery.

Consider the cyclical progress that occurs as a recovery takes hold: Revenues improve, followed eventually by greater Profits. Companies have been doing capital expenditure spending first . . . and only hiring when they have to. Greater hiring leads to greater spending.

So far, we have seen the revenue improvements, and the beginnings of better profits. Various tech firms (Cisco in particular) are seeing improving CapEx orders. Temp Help has improved, and some firms are actually hiring.

Ask yourself what outcome would surprise the most people — the economy sliding in a double dip recession – or a stronger than anticipated recovery?

Here are some other data points beneath the headlines:

Positives

1. BLS reported that in January, persons unemployed “due to job loss” decreased by 378,000 to 9.3 million. That is a decent number.  And, “nearly all of this decline” came from the “permanent job losers.” (See table A-11.)

2. The Underemployed – Persons who want full time jobs but working part time instead — fell from 9.2 to 8.3 million in January. That is an enormous improvement. (See table A-8.)

3. Temporary help services added 52,000 jobs — that is a leading indicator of future hiring. (See table B-1.) Since the temp help lows in September 2009, temporary help services employment has risen by 247,000.

4. The Household survey showed growth of 541,000 workers. In a recovery, this tends to pick up new employees (especially at smaller firms) faster than other measures. The Household Survey isn’t “large firm ” biased the way the Establishment Survey is.

5. After experiencing steep job losses earlier in the recession, job losses in manufacturing has moderated considerably.

6. Retail trade employment rose by 42,000 in January, after showing little
change in the prior 2 months.

Negatives

1. 2009 benchmark revision reveal employment in 2009 was far worse than originally believed — revised data showed nearly 600,000 more jobs lost than previously reported.

2. The number of long-term unemployed — jobless for 27 weeks or longer — is still rising. Since the December 2007 start of the recession, long-term unemployed has risen by 5.0 million. (See table A-12.)

3. NiLFS — Not in Labor Force — rose 409,000 to ~2.5 million persons. They are also called “marginally attached to the labor force” — not in the labor force, want and available for work, and had looked for a job sometime in the prior 12 months.  (See table A-16.)

4. The average workweek for all employees on private nonfarm payrolls are still near record lows — 33.9 hours in January.5.  1.1 million discouraged workers in January is a huge increase of 734,000 from a year earlier. (Discouraged workers are not currently looking for work because they believe no jobs are available for them)

6. Revisions continue to be negative. December 2009 was revised downwards to 150k loss from 85k.

As the countdown to Friday’s jobs number begins, it might be instructive to get yet another perspective on the amount of slack in the labor market and its effect on wages.

Here’s a chart built at the St. Louis Fed website that clearly drives home the point — it perfectly captures the inverse relationship between the Unemployment Rate and Average Hourly Earnings:

Unemployment and Average Hourly Wages: Mind the Gap
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I’d postulate that only when this gap starts to close meaningfully will we have to consider the possibility that the Fed will tighten and/or that inflation might be somewhere out there on the horizon.  Until then, it’s very hard to envision they’ll consider moving off their ZIRP.

Additionally, there was much fanfare when ISM printed at an above-consensus 58.4.  And certainly it’s good to have expansion in the manufacturing sector, to be sure.  But we’re starting to get data points (like ISM) that are really more late-cycle than they are early-cycle. And the jobs market — admittedly a lagging indicator — is simply taking too long to play catch up.  Here’s the ISM (Index, LHS) and Nonfarm Payrolls (YoY Pct. Change, RHS).  I’ve adjusted payrolls by three months to clearly show the correlation and account for the lag.  Is it too late to see a jobs recovery that’s going to even put a dent in the damage that’s been done over the past 25 months?  That is the question.

ISM: How much better will it get?

The FDIC ate six banks Friday night, and 15 for the month of January, exceeding by nine the six it ate in January 2009.

Jake send us these two beauties:

Real vs Nominal

Contributions to GDP Change

All charts courtesy Econompic

We moved last night to new offices upstairs (I am thrilled with our new space). But I have no idea if internet or phones will be up and running today.

On the likelihood they won’t be by 8:30am, please update the GDP data in comments.

BEA: Most current data

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Wow — 5.7% — thats a huge number

I need to dissect that a bit, but since I was getting coffee at SBUX, I had to mention this.
• Bloomberg
• WSJ
• NYT

While everyone awaits GDP data this morning, why don’t we look at the best economic gauge you have never heard of:

It doesn’t appear on any economic calendars that I’m aware of. It flies under just about everyone’s radar.  Technically, it’s not a data point itself but a weighted amalgam of 85 other distinct economic data points, an all-in-one look at the United States economy.

And it does an excellent job of tracking the economy’s health.

It’s the Chicago Fed’s National Activity Index (CFNAI), and it just printed for December.

Say the folks in Chicago:

The CFNAI is a weighted average of 85 existing monthly indicators(pdf) of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

The 85 economic indicators that are included in the CFNAI are drawn from four broad categories of data: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. Each of these data series measures some aspect of overall macroeconomic activity. The derived index provides a single, summary measure of a factor common to these national economic data.

Additionally, they advise us to focus on the three month moving average:

Month-to-month movements can be volatile, so the index’s three-month moving average, the CFNAI-MA3, provides a more consistent picture of national economic growth.

When the CFNAI-MA3 value moves below –0.70 following a period of economic expansion, there is an increasing likelihood that a recession has begun.

When the CFNAI-MA3 value moves above +0.70 more than two years into an economic expansion, there is an increasing likelihood that a period of sustained increasing inflation has begun.

That said, here’s the chart:

Source: Chicago Fed

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The MA3 has stalled since hitting -0.54 in September, recording -0.76, -0.68, and now -0.61 since then.  We’ve gotten the bungee bounce off the economic and market lows of almost one year ago. The question now — as I’ve been opining for quite some time — is to sustainability. We’re clearly faltering, with nary a green shoot in sight (witness the just-released Durable Goods orders and weekly Unemployment Claims, which were both weaker than expected). Lots of interesting numbers coming out over the next week, culminating with Friday’s jobs report. The stock market is, perhaps, starting to recognize the loss of momentum.

Interesting times . . .

World economy likely to crash and burn if it keeps gorging on debt, Kenneth Rogoff, professor of economics at Harvard University, told CNBC in Davos Thursday. Tom Glocer, CEO of Thomson-Reuters added that some of the weakness from last year still has to be worked through.