Monday, January 3, 2011

A Very Clever Indicator Employment is Improving

As I have been pointing out, the Bernanke money printing is going to surprise most economists as to its strong positive impact on the economy, including unemployment, which will drop significantly, certainly below 9%.

Bernard Baumohl, of the Economic Outlook Group, is one of the few that is expecting the same strong improvement in unemployment. He told CNN:
We're looking at some leading indicators on employment, and they're all flashing green lights.
What I really like is this clever indicator that he follows. CNN again:
Baumohl says another non-traditional employment indicator, the number of day-care workers, has been edging up for four months and is now about 2% higher than a year ago. "People need more day care when they've got jobs to go to," he said
I'm not sure how Baumohl is reaching his conclusion, overall. It doesn't appear that he is relying on business cycle theory. He may just be a damn good data watcher.

Keep in mind though, this is a Bernanke manipulated recovery that will also surprise most economists as to the force of price inflation that will likely hit by the second half of 2011.


  1. I'm not so sure. 80% of the private sector hires were temporary. People are getting part time jobs, but not full time ones. Perhaps they see day care as an investment in themselves to keep or get skills that will hopefully get them a full time job. Overall employment is still terrible.

  2. Not to mention the fact that as people (particularly women/moms) lose their job, they think they can go ahead and open a day care service. Here in Maryland, I've seen it with my own eyes. The daycare I send my 3 year old to has mentioned many times that they are seeing increased competition from all these start-up day cares. Mom's figure "hey, i can do that" and they have day care out of their own home.


  3. Is it not true, however, that if Meredith Whitney is only half correct in her predications about muni bonds, then Baunohl's (and other's) sunny forecasts fall apart?

  4. Bob,

    What exactly do you look to when you promote the theory that price inflation is likely in the second half of 2011? I'm not doubting you, just curious. I feel as though anytime someone makes such a prediction, the money printing always surprises in the end as to the duration of it's short-term effectiveness. Undoubtedly, price inflation will come, but it's always been something that's been difficult to pinpoint. You may have covered your reasons as to why in the past, I probably missed it somewhere. Is it merely Bernanke's inability to control prices? Or is there a specific money supply indicator that you look to?

    You'll be the smartest person in the world if it comes to light. If price inflation does in fact hit us in the second half at what rate do you see it? Slow and steady? or rapid?

  5. @Chris

    The real key is that the desire to hold cash balances is very clearly dwindling. This is the catalyst that will result in Bernanke's money printing impacting much sooner than most expect.

  6. I see. So basically banks will find better options to invest reserves?

    Do you think that Geithner and Co. can persuade banks to hold off? Or will the market inevitably overpower their influence.

  7. No I'm not talking about excess reserves held by banks, but rather cash balances held by individuals.