Thursday, July 11, 2013

A JOLT to the System

The following chart shows nonfarm job openings per capita growth (year over year). I have added two linear trend lines for your consideration.


Click to enlarge.

July 9, 2013
Job openings, hiring rise slightly in May

WASHINGTON (AP) — U.S. employers advertised slightly more jobs in May and total hiring increased, further signs of steady improvement in the job market.

As seen in the chart above, the red trend line shows almost the exact same "steady improvement" we saw in the blue trend line from July 2004 to December 2007.

This goes to show that one person's steady improvement is just another person's steady decline.

Got optimism? Sigh.

Source Data:
St. Louis Fed: Custom Chart

19 comments:

Stagflationary Mark said...

Behold the power of an ankle injury to increase my posting activity! Hurray! ;)

Anonymous said...

Hey - you don't want us to start wishing you sprain your other ankle!

Another very interesting chart. Looks like the "taper" will never begin.

Fred

Who Struck John said...

In other news, business cycle has not been eliminated. :D

Stagflationary Mark said...

Fred,

Hey - you don't want us to start wishing you sprain your other ankle!

You can. Just don't be greedy. I will not post twice as much with an additional ankle injury. For the love of all that is holy, please wait at least until the first ankle recovers fully. ;)

Looks like the "taper" will never begin.

I can't speak for others, but I can honestly say that I enjoy perpetual "taper" talk. First, it tends to give me better rates on long-term TIPS. True story! Second, all this talk never seems to get old to me. Third, I love sarcasm! ;)

November 18, 2009
Fed official: Rates could stay put until 2012

August 17, 2011
Plosser Says Federal Reserve May Have to Increase Rates Before Mid-2013

January 25, 2012
Fed: Benchmark Rate Will Stay Low Until ’14

December 12, 2012
Fed Officials Forecast Main Rate to Stay Near Zero Until 2015

And now...

July 10, 2013
Bernanke stresses rates to stay low for long time

WASHINGTON (MarketWatch) — The Federal Reserve will not be in a hurry to raise short-term interest rates, even after the unemployment rate comes down markedly, Chairman Ben Bernanke said Wednesday.

Brace for the sarcasm. Here it comes.

Big shocker.

Stagflationary Mark said...

Who Struck John,

In other news, business cycle has not been eliminated. :D

And talk is cheap when the story is good and the tales grow taller on down the line. ;)

Seriously, although there have been 19 recessions in the last 100 years, this new Fed has finally figured out a viable long-term solution. Just keep interest rates at 0% forever and hope nobody notices how Japan's economy has done since ZIRP was first implemented there.

Genius! Genius I tell you! ;)

March 8, 1990
The New York Times: Basic Shift In Japan Over Rates

While the Government has intervened heavily in the last two weeks to stabilize the tumbling stock market and bolster the yen, economists and business leaders here say these short-term tactics cannot alter the fundamental economic shift behind the turmoil: the era of extraordinarily low Japanese interest rates is ending.

LOL.

But as economists, bankers and other experts here see it, the sharp rise in interest rates will merely give the Japanese economy another chance to demonstrate its resilience.

ROFLMAO.

Troy said...

http://research.stlouisfed.org/fred2/graph/?g=kv9

is a curious chart . . .

blue is YOY job gain

red is population age 25-54 (right axis)

back in the day we could get +4M jobs a year even though the population was HALF what it is now.

The 1970s are maligned as a wasted decade but in reality we gained 20M jobs that decade (another 20M were gained both in the 80s and 90s).

http://research.stlouisfed.org/fred2/graph/?g=kvb

from that we can see we're on pace to gain 20M jobs this decade, assuming we can avoid a slowdown/bust between now and 2020.

Baby boom is aged 50-68 now and they will be turning 65 at a ~4M per year rate RSN.

Adding a green line:

http://research.stlouisfed.org/fred2/graph/?g=kvc

is the Big Problem, real per-capita (age 16+) systemic debt (right axis).

Maybe in the 1970s we were under-levered.

And in the 1980s we borrowed what we could.

And maybe in the 2000s we got over-levered and haven't looked back.

Taxes need to double around here, but it's never going to happen.

I don't know what is, alas.

Stagflationary Mark said...

Troy,

from that we can see we're on pace to gain 20M jobs this decade, assuming we can avoid a slowdown/bust between now and 2020.

That's a very tough assumption for me as you can probably guess. I wouldn't be so bold as to say it is impossible, but if I was a gambler I'd definitely bet against it.

And maybe in the 2000s we got over-levered and haven't looked back.

Sometimes I think we're fixated on the rear view mirror and rose-colored glasses have been stapled to our faces, lol. That said, I definitely get your point. Sigh.

Stagflationary Mark said...

Eerie Quote Flashback

"It may simply reflect our overleveraged society and the fact that people are carrying more debt on everything and it doesn't take a lot to affect a small percentage of them in terms of moving them from homeownership to not," Curran said.

Troy said...

the sharp rise in interest rates will merely give the Japanese economy another chance to demonstrate its resilience

well, they owe that money to themselves so higher interest rates will be stimulative (except for the problem of falling bond prices!).

As of 2010, both Japan and the US had a consumer debt leverage ratio of ~120% to AGI.

Top 5 are:

Denmark 309.5%
Netherlands 277.3%
Ireland 217.8%
Norway 196.3%
Sweden 168.4%

(it troubles me that the eurosocialist "success" stories have allowed themselves to run up their housing sector debt so much . . . makes sense though, since the wealthier we get the more we bid up housing).

Government debt leverage (to GDP):

Japan 228.0%
Greece 179.5%
Italy 119.9%
Canada 106.3%
United States 105.1%
United Kingdom 104.5%

http://business.financialpost.com/2013/06/10/canadian-debt-levels-arent-as-they-appear/

Graph comparing Japan and the US:

http://research.stlouisfed.org/fred2/graph/?g=kvd

'course, Ben's buying $10B/week now:

http://research.stlouisfed.org/fred2/graph/?g=kve so maybe we'll hit a regime where taxes remain low and the Fed spots us the difference.

That might actually work. $2T or $10T on the Fed's balance sheet, what's the diff.

Stagflationary Mark said...

Troy,

well, they owe that money to themselves so higher interest rates will be stimulative (except for the problem of falling bond prices!).

I was heckling the timing of Japan's rising interest rate theory. Note that it was a prediction from 1990, lol.

Stagflationary Mark said...

As seen in the 1990 link above...

the era of extraordinarily low Japanese interest rates is ending

20+ years of hindsight was not exactly kind to that prediction!

Troy said...

The late 1980s featured the BOJ cushioning the yen shock (it going from ~250 to ~150) with easy money.

http://www.caseyresearch.com/images/BC_JapansCentralBankRateIsLowestSince1880.gif

shows removing the medicine in 1990 killed the patient.

The dual speculative boom in real estate and stocks,

http://static.seekingalpha.com/uploads/2009/3/16/saupload_japan.jpg

with people borrowing money from one sector to push into the other (LTVs of many multiples of 100% were not uncommon), resulted in widespread piss-poor investment that was difficult to purge, since the money put into the market wasn't investment capital per se but everyone's savings deposits as all the banks made really crappy (if not crooked )loans.

Real estate bubbles are a real whammy, since when you buy land value you're not buying anything tangible, but an expectation, and when that feeling dies, so does the value you bought.

Interest rates have to be low to keep their real estate market from collapsing further. As it stands, housing in Japan is not cheap at all, even with the yen at 100 again.

"The Toyota Motor Corporation is often referred to as Toyota Bank, because it has amassed more than $20 billion in cash"

Little ol' Apple now has $50B literally in cash and another $100B socked away in bonds. Strange how a 3.5" piece of glass changed everything for the company.

Stagflationary Mark said...

Troy,

Interest rates have to be low to keep their real estate market from collapsing further.

Truer words have rarely been said, and yet even that might not be enough if the job market eventually turns down again. Sigh.

Troy said...

yeah, vacancy kills real estate valuation, and Japan is going to be evacuated this century, big time.

The population age 30-49 rose from 40M in 1960 to peak at ~43.5M in 1980, fall to 35.1M in 2001, peak again at 36.2M 2007-2010 (as the baby boom echo arrived), and will now fall to 32M by 2020, 26M by 2030, and 23.2M by 2040.

10% decline in population pressure this decade, 20% the next. Tokyo real estate will import young people and not collapse like those numbers imply, but such centripetalism will only accelerate the demographic collapse of the outlying, marginal areas.

That being said, I like Japan's demography more than ours.

Mo' people mo' problems AFAICT.

Speaking of people here, doing research on debt I figured out why Mexicans are so poor . . . they're not allowed to borrow money!

The gov't debt is 40% of GDP, and their household debt is off the scale (on the low end):

http://i.imgur.com/VwACL0v.png

Stagflationary Mark said...

Troy,

Mo' people mo' problems AFAICT.

For what it is worth, I expect "mo' problems" in China when most factories become fully automated.

Put another way, I had and have absolutely no desire to move to China.

Troy said...

I liked Tokyo, but China, Korea, Taiwan, Singapore -- no thanks.

Truth be told I'd be happiest in a place with a lot of trees, maybe a lake, and a Trader Joes close enough to get to every other week.

That's a lot of the West Coast, from Chula Vista to Bellingham, at least. I don't think we're going to crack up like the preppers are expecting, but the downside of the life of solitude is the solitude, LOL.

I was young and happy in Tokyo and if you're going to be around a lot of people, that was a great place to be.

Macro-economically, it is Japan with the trillions of NIIP, and the US with the corresponding red ink. Maybe this will go on for decades, maybe there will be a nasty adjustment, maybe the trillion of USTs we owe them will be rolled over into worthless paper.

The best compromise for me might be to find that lakeside house in Japan, LOL. Fly back every 6 months and load up a 20' of provisions mebbe.

More time efficient than spending 3 hours shopping every two weeks . . .

Stagflationary Mark said...

Troy,

I don't think we're going to crack up like the preppers are expecting...

One of the hosts on CNBC said recently that if the S&P 500 is trading at current levels in 20 years then we'll all be living in caves. He seemed dead serious.

Based on Japan's stock market performance over the last 20 years, I can therefore only assume that Japan's population is all living in caves! ;)

In all seriousness, some people just seem to live for the drama. I prepared an "apocalypse pantry" simply because I thought locking in toilet paper prices seemed like a better alternative than burying cash. It was not because I was planning for a complete meltdown of civilization. It could happen I suppose, but I'm certainly not betting on it.

Jazzbumpa said...

Mark -

Is it OK if I borrow your chart for an Angry Bear post?

Cheers!
JzB

Stagflationary Mark said...

Jazzbumpa,

Absolutely (assuming you credit me :)).