Posts filed under “Employment”
Let’s have a go at some historical charts that might be influencing the FOMC today.
Everyone is pretty much expecting a "No change in Interest Rates (let’s parse the statement for minor grammatical changes)" type of day — to be followed by a series of market moves up and down commencing at 2:15pm. More than a minor deviation from that scenario would be a major surprise.
As we await the inevitable, have a look at these rather informative charts, via economagic:
Payroll Employment 1960-2006
Black line is total NFP; Red lines are year over year change
Note the cyclical tendencies of the Business Cycle: During expansions, hiring ramps up rapidly, then plateaus. It begins to fall soon thereafter.
Advocates of the "Soft Landing" should note that in 1966 and 1995, after strong moves up, there was a peak, a move down (year-over-year changes), which quickly stopped and reversed back up.
Also worth noting: in non soft landing years –1969, ’73, ’79, ’89, ’99 — there was a major plateau in hiring on a year over year basis, which then led to a long slide downwards in hiring. This was followed by a recession. (Need I point out the plateau in 2006?)
Here’s a chart going back to 1960 that covers the Fed Funds rate as well as Prime rate (defined as the interest rate charged by banks to their most creditworthy customers). What is particularly noteworthy is that the relative interest rate could be high or low and lead to a subsequent recession. (Changes in Rates relative to Real after inflation rates matter more).
If I get some time this week, I’ll do the same thing for wages (which are a bit more challenging to graph).
Charts via Economagic
This is another of our new features: Blogger’s Take. It is inspired by — a nice word for stolen — the WSJ’s Economist’s Take, which they post after major economic data releases.
We wanted to do something a bit more informal: Looking at different subjects a bit more in depth, and take in some perspectives from a broad variety of bloggers (as opposed to a narrow slice of Wall Street Dismal Scientists.
Here are our first half dozen responses to the question: "What Up With Employment?"
"A striking characteristic of the US non-farms job data since the trough of 2002 is that recovery growth is the weakest since records began in 1939 (uncertain BLS September revision notwithstanding). Even the brief and frail recovery between the 1980 and 1981 recessions was stronger. It may be that growth has not yet peaked – but that would make this jobs recovery the slowest to pan out on record.
Moreover, the latest non-farm payrolls data paints a picture of deterioration, particularly in construction and related industries. Whilst both the unemployment rate and hourly earnings data stuck out as good news, the fact is they are lagging indicators. The Fed has ammo to hold on this data; but should coming months show job losses (not outlandish) they might still choose to wait on clearer inflation (and BLS) data before contemplating the wisdom of cuts."
- Rawdon, Capital Chronicle