Posts filed under “Wages & Income”
A few things worth mulling over while we await that data point:
• Trend: The overall trend for the past 3 years has been decellerating job creation, and increasing unemployment. Of the two, job creation is the data series that has gotten appreciable worse the fastest;
• Birth/Death adjustment typically swings from a big negative in January to a big positive in February. This may skew today’s results upwards.
• ADP data was a big downside surprise;
• Unemployment rates have only begun to move up, 0.50% off of the lows
to ~4.9%. Initial and continuing claims for jobless benefits have been rising steadily. The risk is if and when this series begins to accelerate upwards.
• Today’s consensus number is for 25,000 new jobs, from a range of -50,000 to +50,000;
• For unemployment, the consensus is a 5.0%, with a range from 4.9% to 5.1%. No one thing UR is getting any better, but few think its is getting much worse too quickly.
Rex Nutting points out two additional factoids: 1) The number of consumers who say jobs are hard to get increased sharply in the Conference Board survey in February; and, 2) Employment subindexes have fallen in the Institute for Supply Management and other similar business surveys. Neither of these are positives leading into today’s NFP.
Remember, any single data point in a volatile series is relatively meaningless; Its the overall trend that matters.
Note: I am out of pocket for the next few hours, ending up at Bloomberg TV, and won’t be able to follow up for some time . . .
Job growth has slowed to a crawl, economists say
MarketWatch, 7:39 p.m. EST March 6, 2008
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
One of the things that really perturbs me are disingenuous, intellectually indefensible commentary consisting of willfully misleading tripe. Up until recently, that territory has been owned by the WSJ OPED pages. This past weekend, the NYT was seen elbowing its way into the same space.
I call this approach to economic analysis Hackonomics.
An OpEd in the Sunday Times is classic Hackonomics. Unfortunately, it takes little craft to slip junk past the editors at the Times OpEd section. Impressive-looking academic or government credentials seems to be all that is required. (Its a shame they don’t have, say, a professor from the Princeton Economics department on staff).
Perhaps there is a fear of looking silly or economically ignorant, rather than asking anyone else about any of these “analyses.” What we get instead are pieces like You Are What You Spend. The authors are Michael Cox, and Richard Alm, chief economist and senior economics writer at the Federal Reserve Bank of Dallas. As my British colleagues would delightfully articulate, “their work is shite.”
To wit: These two gentlemen press forward the idea that the proper manner to review economic inequality should involve looking not at income differentials. Rather, this Fed duo favors a more direct measure of economic status: household consumption. They claim “the gap between rich and poor is far less than most assume, and that the abstract,
income-based way in which we measure the so-called poverty rate no longer applies to our society.”
Their analysis is so problematic and their theory so full of holes, that, if time permitted, we could identify errors in nearly every paragraph. That sort of critique is best reserved for serious intellectual analysis of major importance. For Hackonomics, we will simply identify 3 major flaws, and then get on to more pressing and important work.
Let’s take a closer look at their arguments:
1. Income Disparity: Abstract? There is nothing “abstract” about income-based measures of poverty or wealth inequality. Merely calling income comparisons “abstract” does not make it so, nor does it make their position any less absurd. Instead, it reads as a
transparent attempt by the authors to avoid any income discussion.
Why not discuss income? Perhaps the data is the reason: The share of national income of the wealthiest 1% rose from 14.6% five years ago (2003) to 17.4% in 2005 (Emmanuel Saez, University of California-Berkeley). And since 2005, the wealth disparity has grown even further.
Indeed, as several commentators have already pointed out, these same authors previously tried to make an income based argument that “the gap between rich and poor is far less than most assume” – and crashed and burned.
Next attempt, please.