Posts filed under “Wages & Income”

How Many Hours of Work Are Required to Purchase S&P?

Are stocks cheap or expensive? Are wages up or down?

The answer to the  above question is obviously a a function of both hourly wages and S&P prices.

Note that in the early 1980s, you could by the SPX with under 20 hours of labor — Stocks were cheap then. In the late 1990s, it took more than 100 hours of labor to buy the SPX — Stocks were expensive then.

Now, it requires 54.72 hours of work — somewhere in the middle.

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Hours of Labor Required to Purchase S&P500

9-4-09 Hours to buy S&P

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Thanks to Ron Griess of The Chart Store for another fascinating chart.

Category: Markets, Valuation, Wages & Income

Personal Savings Rate

Improved savings rate? Not exactly. Mark Warywoda of Addenda-Capital.com up in Canada offers up some thoughts on why we should not read too much into the recent improvement in Savings Rates: “So far, all we have had is a two-quarter bump up in personal savings rates — that is trivial related to the outstanding debt…Read More

Category: Consumer Spending, Wages & Income

Weak Consumers, Creditless Firms Impacts Recovery

Two interesting front page articles this morning expand on several of our favorite themes. The first, the NYT’s A Reluctance to Spend May Be a Legacy of the Recession, treads over some well worn ground with anecdotes and data.  The anecdotal stuff is the usual mix of sad tales, and psychology, some signs of improvement…Read More

Category: Economy, Employment, Wages & Income

Securtizing Goldman’s Bonuses

Zero Hedge has this hilarious offering memorandum of GS’ bonus pool this year: > click for larger, readable version

Category: Bailouts, Humor, Wages & Income

Income Falls 1.3%, But . . .

Don’t get too bent out of shape over the bigger than expected drop in income in June.

It was the biggest drop in 4 years, but it came on top of the big May stimulus, which helped income surge 1.3%.

Back out govvie largesse, and the 2 months net out to more or less flat  . . .

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NOTE:  Market Talk adds that personal income is down $453B since June 2008.

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Category: Data Analysis, Wages & Income

Record Bonuses At Bailed-Out Banks

Category: Bailouts, Video, Wages & Income

Regulation & Finance Sector Pay

Nice couple of charts that show correlation between what occurred when financial markets were deregulated and the outsized compensation packages that subsequently followed. The book does a nice job showing how one led to the other — that there was both Correlation and Causation. > chart via NYU ~~~ Here is a similar chart, with…Read More

Category: Bailout Nation, Bailouts, Regulation, Wages & Income

NFP Data Dissection

Source: BLS > So much for the green shoots: Let’s take a closer look at the 467,000 job losses in June: • Recession Job Losses = 6.5 million since December 2007; • Total number of unemployed persons (14.7 million); from the start of the recession, the number of unemployed persons has increased by 7.2 million;…Read More

Category: Data Analysis, Employment, Wages & Income

Explaining Non Farm Payroll & Analysis

Its tine for everyone’s favorite monthly data point, Non-Farm Payrolls. For those of you who are relatively new to the site, here is a brief description of how our analysis has evolved over time. • Weak Jobs Recovery: Following the 2001 Recession, the economic recovery, from a jobs perspective, was rather weak. Indeed, from 2002-07,…Read More

Category: Data Analysis, Employment, Wages & Income

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 . . .

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breakfast-with-dave

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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 CareerBuilder.com 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