Friday, July 8, 2011

The Employment Situation, Charted

The Cleveland Fed is out with a graphic showing the current data, which has talking heads proclaiming a potential double dip.


I repeat from my earlier post. Unemployment is a lagging indicator. The current numbers show only dramatic weakness in the government sector. There was a small slowdown in money supply growth earlier this year, which can explain the jobs dip. And finally, the money growth dip is over, as a lagging indicator, I expect the jobs number to improve dramatically in coming months.

Those who simply look at raw data, without a theory behind the numbers, simply extrapolate a current number as though it will continue forever. That's not economics, that's line drawing with a straight edge ruler.

10 comments:

  1. Bob, you are one helluva awesome guy!! Really! Good job explaining everything and being out there researching it all.

    Thanks man!

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  2. Again, in the full current economic context, we should be seeing massive strength in employment; i.e., 400K + monthly payroll gains. And we should have been seeing them for at least 8-9 months now, if the business cycle turned up nearly two years ago. 12-15 months is a pretty substantial lag time.

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  3. Or more dastardly, the gov. economists know this as well and are trying to create a false nadir and show Obama on the ropes (i.e. setting employment expectations at disaster levels), so that when employment does come back some it'll look like Obama's fine interventionist economic policies are finally working.

    I can see Obama with his arrogant swagger now: "You didn't have faith in me back in the summer of 2011. I told you we'd start coming through this. We'd just need a little patience" These new jobs are a result of my investment in America's future. But let's not get complacent. Our work is not done. We need four more years to see these policies to fruition."

    Yuck! I'm getting sick to my stomach just thinking about it.

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  4. Bob, where are you getting your data for money supply growth?

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  5. MF google H.6 money supply data

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  6. Which money supply aggregate do you look at? Do you complie your own aggregate?

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  7. It's the second list. The 13 week avg is listed for the seasonally adjusted numbers but you have to do the calculations yourself for the 13 week not seasonally adjusted

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  8. I also highly recommend signing up for the EPJ Daily Alert. RW will do all the leg work for you and you can be a step ahead of the mad helicopter Ben with regards to investing your rapidly declining dollars.

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  9. Everyone has been saying that unemployment is a lagging indicator...

    Problem is they've been saying that for 2 and a half years now... and at some point its no longer a lagging indicator, its simply busted.

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  10. I don't think you are understanding what RW is saying. He is basing his call for unemployment falling on the uptick in money supply growth. He hasn't been making this call for 2 and a half years. Money supply started to climb at the end of the 2010 and RW predicted unemployment would start to fall and inflation would pick up. Both started to happen but around Febuary money supply growth dipped. In the daily report he started to warn us that this dip in money supply would result in mixed economic data but inflation would continue to climb because enough money had already entered the economy to keep inflation strong. He warned that if the slowdown in money supply continued that we were likely headed for stagflation and if it ticked back up we would see the manipulated boom resume and price inflation would become more severe by the end of the year. Well, money supply has resumed it's upward climb recently and thus the call by RW for unemployment to improve, manipulated boom to return, and more severe inflation by the end of the year.

    Bernanke playing red light, green light with the economy makes it very difficult to track the economy which is why getting the EPJ Daily Alert is so valuable. RW has been as spot on with his predictions of anyone I've seen reporting on it today.

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