Friday, June 3, 2011

The Inconceivable Employment Report


Click to enlarge.

Note that the last two data points sit right on the trend line.



Source Data:
St. Louis Fed: Civilian Employment

23 comments:

MaxedOutMama said...

Nice one, Mark.

Have you ever run into anyone who passionately hates math and statistics? I have, and in my experience, it is usually because the person does not like the truths they bring forth.

Word verification "tualmut".

Stagflationary Mark said...

MaxedOutMama,

Have I ever run into anyone who passionately hates math and statistics? Contrary to popular opinion, my "bunker" still does have a door! Hahaha!

August 17, 2005
Americans Love to Hate Math, Poll Shows

"It was cold and calculating," she said. "There was no gray, it was black and white."

Perhaps we should just throw in the towel and teach subjective math.

1. Please write an essay explaining what you feel 2 + 2 might equal. Alternatively, you may discuss the importance of the number 2 throughout human history.

Your word verification has inspired a name for this new math. Let's call it...

Tau-Smut

Stagflationary Mark said...

This actually reminds me of a story.

My best friend in college liked math as much as I do.

One day he told me that he did not believe in astronomy. I could not believe my ears!

I exclaimed, "You DON'T believe in astronomy?!!!!"

He replied, "Did I say astronomy? I meant astrology."

My world briefly shattered for a few moments, lol.

Picosec said...

From a hopefully relevant comment I made earlier today on HCN:
I'm likely to be oversimplistic here, but looking at today's BLS release and examining the YOY NSA changes between May '10 and May '11, it looks like:
There are 531,000 more people employed and 440,000 more people who currently want a job.
That means that about 45% of people who entered the job market in the last year didn't get a job.
And this is during the "recovery."

getyourselfconnected said...

I fiing HATE math and flunked calculus 1 the first time. I love truth, but why have robots and computers if I have to do math? Yes, in molecular biology the math is usually dilutions, easy, just powers of 10. I rely on Mark for the math stuff.

Mark, did you see that new game LA Noire, my man has it covered:
http://davidjbatista.blogspot.com/2011/05/different-type-of-game.html

Stagflationary Mark said...

Picosec,

Those are indeed stark statistics.

GYSC,

From your link...

So, no. This is not yet another Game of Thrones blog entry....

We are VERY addicted to the show Game of Thrones!

Game of Thrones

Sean Bean plays Eddard Stark.

Stark, stark, stark, stark, stark. Livin' the dream.

MaxedOutMama said...

Picosec - you don't hate math in the sense I mean if indeed you are relying on Mark for the math.

You hate DOING math, but you are quite happy with the results. That's akin to liking to have your lawn groomed, but hating to work on it so hiring a lawn service. (In this case, Mark is an awesomely cheap service.)

The people who hate math actually DISLIKE math - they don't want to read about it, they don't want to deal with any mathematical reasoning, they don't want to be chained to its rigor. It's not just that they don't want to do it - they don't want to have it in their environment.

MaxedOutMama said...

Mark - if we take one look at your graph, and then climb out of the reality bunker and read the chain of "unexpectedly" commentary emanating from WS and WH economists, I think we can safely conclude that economics today is largely a function of highly postmodern, structure-the-narrative math.

Because you're dead on with the graph. The trend is the trend, and economists have not caught on to that basic concept yet.

MaxedOutMama said...

PS: Post-modern economics appears to me to be chemically akin to Cesium-137.

Stagflationary Mark said...

MaxedOutMama,

I think you meant to aim your math comment at GYSC. This economy doesn't pay all that well for my math services. I represent the deflationary forces inherent in the system!

Meanwhile, people pay $1 or more for just 10 digits worth of professional math services. I'm speaking specifically about "free" web based 411 phone number lookups.

And lastly, Mark Zandi was full of "structure-the-narrative math" heading into today's employment report on CNBC. He was way off. Rick Santelli nailed it though. Rick predicted 55,000 jobs and a 9.1% unemployment rate just seconds before it was announced. I therefore suspect bond guys, in general, like math. Go figure.

Stagflationary Mark said...

Here's a link to what I saw this morning.

Stagflationary Mark said...

It just dawned on me that technically speaking, I am a bond guy now. That wasn't always the case.

Nearly my entire net worth sits in TIPS and I-Bonds. It isn't because I think inflation will become a huge problem (it might), but mainly because I don't think this is a very good era to be taking serious risks. I cannot afford to be wrong about inflation over the long-term.

All I care about now is the cumulative effect of real interest rates (on long-term inflation adjusted bonds) and their ability to maintain my purchasing power (potentially) if held until maturity.

Since I do not intend to find a greater fool to buy them from me, it is very important that I understand what my future returns will be. Most of it is pure math based on potential rates of inflation and tax rates. The rest is a subjective opinion that the government will not default through a mechanism other than inflation, since in Bernanke's own words it can print dollars at essentially no cost.

Meanwhile, stock market investors look at forward P/E estimates from biased financial analysts and think they have that same level of clarity. Good luck on that one!

But what really gets me, and I mean really, really gets me, is that housing prices have started to fall again and few seem to care. I am not even remotely that desensitized. Even though my home is paid off, I care just as much now as I did heading into the original housing crisis.

Falling Home Prices = BAD

dearieme said...

Headline on the first leader in this morning's FT:

"Dealing with the evils of stagflation".

Teri said...

I hope I never, ever have to take another math class in my life. I'm not good at it and don't enjoy it. I thought statistics was interesting (although I squeaked through my last class) and I enjoy economics. Just don't ask me to try and sort that stuff out on my own.

Joe Dominguez (Your Money or Your Life) recommended that folks put money into bonds and he had been a stock trader at one time. If you are advocating that people live off their investments, which would need to be secure, then bonds are the best option.

Stagflationary Mark said...

dearieme,

Dealing with the evils of stagflation

The west’s inflation problem stems from the voracious demand from Asia’s new industrial powerhouses. This must give hope that a mild dose of stagflation is simply the temporary symptom of an inevitable economic shift. Squeezing domestic inflation to offset it would be counter-productive.

In other words, since Asia's voracious demand doesn't apply to the west's industrial goods, we simply need to be patient as we watch our trade deficit expand? That kind of hope? Sigh.

Stagflationary Mark said...

Teri,

That's pretty much how I see bonds (especially ones linked to the CPI).

By owning TIPS and I-Bonds, I'm giving up much potential to do better but also giving up much potential to do worse. I value that security.

Are bonds a bargain at these prices? They aren't cheap. Nothing is cheap now though so it is all relative. In my opinion, there's too much money chasing too few good investment ideas. That leads to lower real yields all around and stagflation potential.

Troy said...

>there's too much money chasing too few good investment ideas.

yup. I think I invented a slightly more technical term for "J6P" -- the "paycheck economy".

So many rents have been sucked out of the paycheck economy -- ~80% of every tank of gas, ~40% of everything we buy from China,

But I wonder what that "trend" would be without the gummint deficit spending $1.5T a year . . .

Debt to the penny:

06/02/2011 9,735,616,790,661.91
12/02/2009 7,706,913,511,693.73

Two Trillion dollars in 18 months . . .

Now, call me dumb, but why isn't that $2T paying for around 26M jobs @ $50k per?

Troy said...

uh, where I was going with that was that the paycheck economy may suck but the rentier economy is doing gangbusters.

The apartment complex I'm currently in was sold for $100M earlier this year.

The property ownership is Boston. Wouldn't surprise me if it was Chinese money -- their $3T is a pretty big checkbook, and there are better returns that 3% 10 years.

MaxedOutMama said...

Mark, you are right and I apologize to Picosec. My defense is that I was still laughing pretty hard at the juxtaposition in your post. It's weak, but then I was weak from laughter.

Troy - flooding the market with dollars inserted at high levels does raise asset prices, but as the Fed is discovering, it also raise commodity prices and thus food and fuel, thus cutting real incomes. That change bends the future asset appreciation curve down.

So basically the more games we play, the more future suffering.

Stagflationary Mark said...

Troy,

Now, call me dumb, but why isn't that $2T paying for around 26M jobs @ $50k per?

This requires a tongue-in-cheek answer.

Offer 26 million jobs with just 16 million unemployed (at the peak of the crisis)? What are you trying to do? Create a panic?

If the unemployment rate could go negative, that could have brought it down to -7%! Chaos! Anarchy!

getyourselfconnected said...

Epic thread! You all crack me up.

Stagflationary Mark said...

MaxedOutMama & GYSC,

I think I found out why people generally hate calculus.

It is all just a horrible misunderstanding!

By the way, don't click on that link if you are planning to eat within the next few days. Looking at the image within is actually an effective alternative weight loss system.

getyourselfconnected said...

GROSSSSSSSSSSSSSSS!!!!!!!!!!

Does remind me of calculus though..