Thursday, May 14, 2015

An Examination of Full-Time Employees

I have received a number of emails suggesting that my view that we are in the boom phase of the business cycle is incorrect becasue there was a decline of 252,000 in the number of full time employees in the data released by the Bureau of Labor Statistics last Friday.

It is very dangerous to look at one specific months data. There can be noise in data on a month to month basis for a variety of reasons, including problems with seasonal adjustment factors. It is much more meaningful to look at trends over time.

If we look at data, since the end of the Great Recession, there has been a steady upward climb in the number of full time workers, with occasional blips downward, but the trend appears clear to me, and, as I say, dovetails well with the fact that money supply, as I calculate it, is climbing at an annualized rate of 7.7%.

The Federal Reserve creates a boom AND bust cycle. We happen to be in a boom phase. Here is what has been going on with full time employees. The bust phase and Great Recession can clearly be seen as well as the new boom phase. April's dip is barely noticeable and smaller than other dips over the generally trending up phase.

This will not end well, but we are not in the bear phase of the Fed created business cycle. 

That's why the S&P 500 Index hit a record high today.

This is not what the bust phase looks like.



  1. I think you'd also agree that Fed-generated bubbles don't "raise all boats", and the boats it does raise do not all rise equally. Even if the employment numbers are not noise, it doesn't mean we're not in a bubble.

  2. "...That's why the S&P 500 Index hit a record high today..."

    Banks just settled, for billions of dollars, for rigging LIBOR. The London Fix for silver and gold was shut down last year, due to rigging allegations. We know a 'PPT' exists. We know the Japanese Central Bank and Swiss National Bank own equities. Ben Bernanke said The Fed could buy any assets it wants at any time in any amount. We know that individual investors have been running from the stock market for years. We know that the majority of the trading volume in equities is between HFT algorithms.

    That the stock market is at an all-time high means nothing in terms of the real economy, is my read. That the stock market is at an all-time high means that the Fed/Treasury/TBTF Banks have a 'put' underneath the market in order to try to create a 'wealth effect,' is my read.

    Reasonable folks can reach different conclusions with a given set of facts.

    Me, I think we have a grand crash of this financial system, possibly this summer or fall. This time, I think there will be no rescue, unlike 2008. That is why I have my assets outside of the financial system, except for a small amount of working capital to pay living expenses. I think the mess of sorting through competing claims on financial assets via DTCC is going to be terminal. When one major derivatives counterparty fails, the party will be over, I think.

    There are unusual anti-Cabal moves going on, which we get peeks of here and there. Me, I think we will be getting a reboot of the financial system, along with the other, more important systems -- economic, political, scientific, spiritual, etc. -- and it will all be for the better.

  3. The Federal Reserve has a darker motivation for lying now more than at any point in it's entire history, so why should we trust anything that is released by them to the public at large? Who is going to call them on the carpet for having lied repeatedly, the congress?

    The current obsession over cash is a dark warning to pay close attention to the Federal Reserve, and Washington's darker intentions. Cyprus was the test of a much larger attack that will be launched on the American public. The FDIC as much as admitted that they will be unable to play an effective roll in the next event. From this point forward consider anything that comes out of Washington concerning the economy to be nothing more than cut, and paste propaganda worthy of North Korea's state agencies.

  4. What is scary is that this mild economy is the boom phase when rates are already at near zero. What does that indicate about the depths of the coming bust phase????

  5. you sure?

    The Economy Hit A Wall This Spring

    This first graph shows wholesaler sales to retailers. You can see there was literal cliff dive in demand from retailers starting in late 2014. This is about the time that both John Embry and I independently felt like something was collapsing behind “the scenes.” It’s also when the financial media seriously ramped up its anti-gold disinformation campaign.

    If consumers aren’t buying non-discretionary items and are cutting back on necessities, you get a chart that looks like the top graph.

    The second graph shows the ratio of wholesale inventories to sales. It can spike up due to overproduction, declining demand or both. Either way, it means that orders from wholesalers to manufacturers are going to do a cliff-dive and it means factory production and manufacturing are going to grind to a halt.

    Then yesterday Kansas City Southern released a quarterly earnings report in which it essentially said – in so many words – that it’s business activity slowed significantly in Q1 – LINK. The Company pulled its forward guidance on sales, net income and volume for the rest of 2015. This just in: I don’t think I’ve ever seen a company completely pull its guidance – i.e. they always put some spin on their forecast even if its a reduction in guidance.

    Combine this with a haunting article by Wolf Richter: Why The Heck Is The Trucking Business Slowing Down?

    The ground transportation business activity level functions as an accurate barometer of domestic economic activity much in the same way that the Baltic Dry Index functions as a barometer of international economic activity. Both indicators are telling us that there is a very serious economic contraction taking place right now, globally AND IN THE U.S.

    This morning we just found out that industrial production declined for the 5th month in a row – LINK – and the Empire State manufacturing index missed its Wall St forecast for the 4th month in a row, tech spending (capex) plunged and the index for future business conditions fell off a cliff – LINK.
    The economy is starting to collapse. QE4 is not a question of “if” but of “how soon?”

  6. During the last bubble the S&P 500 was at record highs in October 2007 (@ approx 1550), and then the recession officially began in December 2007. I don't think we should be using the S&P index as indicator that the economy is booming. The overwhelming majority of the economic data over the last several months has been negative. Really the only 'positive' data (based on the headline number) have been the GDP and government jobs numbers. But both of those numbers I feel are highly manipulated/faulty (GDP: counting govt spending, inventory builds, now counting R&D spending as 'investment,' etc... & jobs: birth/death estimates, part-time jobs skewing the data, etc...). But now even those numbers are starting to rollover. Q1 GDP is likely to be negative upon the next revision. If Q2 comes in negative too, which is very possible... a recession would be official.

    P.S. - Of course, inflation is much higher than the official 1.7% already, so if inflation was accurately measured (~5%), we would have officially already been in a recession the last 6-7 years.