Posts filed under “Think Tank”

Jobless Claims

Initial Jobless Claims totaled 614k, 1k less than expected but the prior month was revised up by 3k to 630k. Continuing Claims fell by 53k from last week and was 38k less than expected. There has been a big discussion of late over the expiration of unemployment insurance and how the recent drop in Continuing Claims is due to people losing it rather than finding a new job. While there is no question benefits are expiring without one finding a job, as evidenced by the rising exhaustion rate, many losing those benefits now started getting them when initial claims were running in the 400k range last summer. Now its running above 600k, so there are still more people filing initial claims than getting removed from the continuing claims data, thus continuing claims still should trend higher assuming no sudden change in hiring trends.

Category: MacroNotes

ECB President Trichet

Lost in the payroll news was the ECB press conference where ECB Pres Trichet hinted that interest rates should remain at the 1% level. He is definitely not in the deflation camp when he says that negative inflation will be short lived and is due more to temporary factors (aka falling food and energy prices…Read More

Category: MacroNotes

Quick summary of Payrolls

Payrolls fell 467k, 100k more than expected and vs the drop of 322k in May (net revisions were up 8k). The unemployment rate rose to 9.5% but was .1% less than forecasted but at the highest level since 1983 as the household survey fell by 374k and the labor force fell by 155k. The U6…Read More

Category: MacroNotes

morning note/Payroll time

June Payrolls are expected to fall by 365k after a drop of 345k in May (which was well above estimates of a drop of 520k). With ADP reporting job losses of more than 450k in the past two months, I believe the odds are against another big upside surprise and the only question will be…Read More

Category: MacroNotes

Q3 Starts With Both a Bang and a Whimper

Good Evening: Better than expected manufacturing data points both here an in China catapulted U.S. stocks higher this morning, but the gains faded as the day wore on. Some other economic releases that weren’t quite as friendly may have caused the first day of the third quarter to end with a whimper after starting with…Read More

Category: Markets, Think Tank

Fed Pres Evans chiming in on exit strategies

Following the speech by Fed Pres Bullard Tuesday on the Fed’s ‘exit strategies’ where the discussion was more on how they will unwind their different programs rather than when, Fed Pres Evans is adding his thoughts to the debate. I want to first say that setting a time period is of course difficult due to…Read More

Category: MacroNotes

Wage Deflation in Our Midst

I am especially pleased to introduce today’s Think Tank guest, Economist David Rosenberg of Canada’s Gluskin Sheff.  For most of you, however, David needs no introduction: A 20 year veteran of the Street, David most recently was Merrill Lynch’s chief North American Economist, where he correctly warned about the Housing and Credit Collapse and Recession in advance.

With Non-Farm Payroll scheduled to be released tomorrow, the timing is perfect to hear some thoughts from David about Employment . . .




A survey conducted by YouGov for the Economist magazine found that 5% of respondents had taken a furlough this year and 15% had accepted a pay cut (see The Recession and Pay: The Quiet Americans on page 33 of this week’s edition).

As wages deflate, workers are looking for ways to supplement their shrinking income base, for example, by moonlighting. Indeed, a poll undertaken by and cited in the USA Today found that one in every ten Americans took on an extra job over the last year; another one in five said they intend to do so in the coming year. These numbers are double for the 45 to 54 year olds who now see early retirement, once around the corner, as an elusive concept.

Most pundits who crow about green shoots and about an inventory restocking in the third quarter giving way towards some sustainable economic expansion live in the old paradigm. They don’t realize, for whatever reason, that the deflationary aftershocks that follow a post-bubble credit collapse typically last for 5 to 10 years. Businesses understand better than the typical Wall Street or Bay Street economist and strategist that everything from order books, to output, to staffing have to now be restructured to adequately reflect a permanently lower level of leverage in the economy.

Indeed, by our estimates, there is up to another $5 trillion of household debt that has to be eliminated in coming years and that process is going to require that consumers go on a semi-permanent spending diet. Companies see this, which is why they are not just downsizing their payroll, but have also cut the workweek to a record low of 33.1 hours. Fewer people are working and those that are still working have seen their hours dramatically cut this cycle.

Companies are finding other ways to save on the aggregate labour cost bill as well, which may be a factor reinforcing the uptrend in the personal savings rate (see more below). For example, a rapidly growing number of employers are now suspending contributions to worker 401(k) plans. According to a joint survey by CFO Research Services and Charles Schwab, nearly 25% of U.S. companies have either suspended their plans or are planning to do so (this is up from 2% at the turn of the year). Again, how we end up squeezing inflation out of the system when the labour market is clearly deflating wages and benefits for the 70% of the economy called the consumer is going to be interesting to watch.

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Category: Employment, Think Tank, Wages & Income


May Pending Home Sales rose .1% m/o/m, about in line with expectations of flat and April was revised higher to a gain of 7.1% from 6.7%. The y/o/y gain was 4.6%. The Northeast and West saw gains while the Midwest and South fell. The $10,000 California tax credit would not be reflected in this data…Read More

Category: MacroNotes

ADP jobs #

ADP reports that the private sector shed 473k jobs in June, below expectations of a drop of 394k but is in line with the revised decline of 485k in May (from 532k). Small and medium sized businesses continue to lose the most amount of workers relative to large companies in both goods producing and service…Read More

Category: MacroNotes

China, China, China AGAIN

Both state owned and private sector weighted manufacturing indexes in China showed another month of expansion as both rose a touch from May and it helped to send the Shanghai index to another one year high. Japan’s Tankan report rose 10 points from the previous quarter (which was a record low dating back to 1974)…Read More

Category: MacroNotes