Posts filed under “Employment”
In yesterday’s RM column, I referenced a chart from the Sunday NYT (below).
click for larger graphic
Courtesy of the New York Times
Since the theme of the column was "Ignore Statistical Oddities at Your Peril," here is one to mull over: How much of an economic aberration is a large middle class?
For most of history, there has been landed gentry and working knaves. The middle was relatively narrow slice — larger in numbers than the wealthy, but obviously less numerous than the poor.
During the Roman Empire, the merchant class fully developed, including soldiers, traders, and all manner of craftsmen. The Middle Ages saw the rise of Guilds, as Coopers, Smiths, Innkeepers all rose above the indentured servants and free field hands. Perhaps some of our more knowledgable readers with a better grasp of histpory than I can address this in comments.
Following WWII, the United States saw an explosion in the number of people moving into the Middle Class. Those numbers may now be slowly reversing.
The funny thing to me is how your perspective can get easily skewed by your surroundings. To be in the top 1% of earners in the U.S., you need an annual wages/income of $237,000. Here in NYC, where there is an enormous concentration of wealth, you are (barely) upper middle income at that salary level — certianly not wealthy. And on Wall Street, half the people I personally know earn at least that much — and complain about it.
How this wealth distribution plays out may have significant repercussions on a variety of sectors — especially the balance between luxury and discount goods.
It is definitely worth keeping an eye on this in the near future . . .
Economic View: Income Inequality, and Its Cost
NYTimes, June 25, 2006
Today’s NFP number stunk the joint up: 75,000. That’s half of the monthly population growth, meaning the percentage of people working (relative to pop) actually went down, if we are to believe this data.
Astonishingly, some people STILL do not understand the data or the context of the weak job growth within this recovery. To wit, my friend Cody Willard – a telecom strategist – writes:
"Surely, Barry, you’re not seriously trying to rekindle your argument about "job creation is not what it is typically at this phase of a recovery."
That statement has been a cornerstone of your bearish rants for the last couple years. Yes, I know you’ve been a "trading bull" and what not, and rightly so, but this economic argument of yours has been, in my view at least, wrong for the last few years and now that job creation is finally starting to slow — years after your repeated flagging of how this "recovery" (You still call this a "recovery" btw?)"
Ahhh, poor Cody. He is lost in a sea of data, unable to see the truth. He believes the spin.
Rekindle? Just because you close your eyes, the boogie man doesn’t disappear.
Hey Cody, please cite me some data revealing this to be an above-average private sector jobs creation recovery. Hell, I’ll take average.
You won’t, because you cannot.
Cody is engaging in several analytical foibles, but the best way to describe it is "ignore reality." But his subjective error does not change the objective reality for the rest of us: By any honest measure – e.g., NY Federal Reserve or Cleveland Federal Reserve research — this has been the worst modern jobs recovery on record.
This is not a meme I am pushing or a Bear story I fabricated.
It just “is.”
This doesn’t mean you run out and short everything; as I wrote last December, one should Never Confuse Economic Analysis With Trading.
But comprehending the reality of the economic situation is important. Why does this matter? What Cody fails to consider is the importance of understanding the specifics of how a recovery comes about, and how it compares to prior recoveries. What it means as the massive government stimulus that goosed the economy begins to fade. What happens when the Pig is finally thought the Python?
I expect that as we begin to slow, there ain’t a whole lot of fat to get sliced. As unemployment starts ticking up, it will not be pretty. It suggests the next recession will be more severe than the last one.
UPDATE: June 2, 2006: 12: 47pm
Cody and I finish the debate below