Saturday, November 30, 2013

When Can We Expect a Return to Normal Interest Rates?

Click to enlarge.

Last month? We have returned to the long-term trend line in blue. What more do you want?

I guess it was sort of a trick question. This chart shows how tiny small time deposits (under $100,000) are compared to how much debt the consumer has racked up (bottom scale). The ratio hit a new low in September and I don't really expect November to buck the trend. It also shows what that tiny ratio might mean to 10-year treasury yields (left scale).

Perhaps you are interested in large time deposits instead? Good luck finding a trend there. I'm not sure the one percent buy enough canned goods to matter (probably close to 1% at best). I'm also guessing that they don't generally rent tires. Just a hunch.

Deep sigh.

Source Data:
St. Louis Fed: Custom Chart

Channeling the Teenagers of Christmas Past

In my last post, I presented the following chart that showed the fraction of the civilian noninstitutional population aged 16 to 19 who are employed.

Click to enlarge.

It is disturbing to me that we can't and quite possibly won't ever get back to the trend channel. I therefore propose a desperate solution. If the teenagers can't come to the mountain, then let's bring the mountain to the teenagers! All we need to do is come up with an alternate trend channel. Right?

Click to enlarge.

Still not back to the trend channel? What a bummer! Have no fear though. We are guaranteed to get back to this one at some point. Just need to be patient. At the very least, the percentage of those aged 16 to 19 with a job will hit the hard floor of 0% and fall no further (which is in sharp contrast to the long-term trend itself). Call me a mathematical optimist!

As a side note, do all teenagers now live in Detroit? Seriously. Other than potentially obvious long-term structural employment issues, what's up with that long-term parabolic trend failure? Sigh.

Source Data:
St. Louis Fed: Custom Chart

The Teenagers Can No Longer "Stuff the Channel"

The following chart shows the fraction of the civilian noninstitutional population aged 16 to 19 who are employed. It's basically a brutal combination of an extremely high unemployment rate and a very poor labor force participation rate among those aged 16 to 19.

Click to enlarge.

Teenagers can't stuff the channel if they are no longer in the channel! As seen in the chart, they are a long, long ways from being in the channel again (if ever).

Channel Stuffing

Channel stuffing is the business practice where a company, or a sales force within a company, inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling to the world at large.

For what it is worth and in the spirit of shady business practices, I think many teenagers are being stuffed. I'm not just talking Thanksgiving Day leftovers either.

November 25, 2013
USA Today: Government books $41.3 billion in student loan profits

The $41.3 billion profit for the 2013 fiscal year is down $3.6 billion from the previous year but it's a higher profit level than all but two companies in the world: Exxon Mobil cleared $44.9 billion in 2012, and Apple cleared $41.7 billion.

"It's actually neither accurate nor fair to characterize the student loan program as making a profit," Education Secretary Arne Duncan said during a July conference call with reporters after the Free Press and other news media reported on profits from student loans.

I wouldn't characterize it as making a profit. I'd suggest that the main purpose is to stuff the typical teenager with excessive "lifeblood". Perhaps that's just me though.

Source Data:
St. Louis Fed: Custom Chart

Thursday, November 28, 2013

Gambling on Dividend Growth

The following chart shows real corporate dividends per capita quarterly growth.

Click to enlarge.

The next chart shows the data as standard deviations from the relatively stable 1952:Q2 to 1999:Q4 period.

Click to enlarge.

And lastly, let's zoom in and add some commentary.

Click to enlarge.

The two largest deviations over the past 60 years were in the past two quarters. Both of them! That's a positive 15-sigma event followed by a negative 8-sigma event. Nice. Nothing builds long-term confidence like predictable dividends, lol. Sigh.

Corporate America sure likes swinging for the fences these days! What could possibly go wrong?

Also sometimes used in completely unrelated attempts at doing difficult or near-impossible things.

So we got that goin' for us, which is nice.

Source Data:
St. Louis Fed: Custom Chart

Happy Thanksgiving!

November 21, 2007
Happy Thanksgiving!

Three More Years of Goldilocks? - Larry Kudlow, November 21, 2007

Six years and counting!

Oh, sure. There were a few bumps along the way but nothing that ZIRP couldn't pretend to paper over.

Call me an optimist. I see the turkey as half full!

In all seriousness, hope you all have/had a wonderful Thanksgiving. :)

Nonfinancial Corporate Debt Securities vs. Wages (Musical Tribute)

Click to enlarge.

Source Data:
St. Louis Fed: Custom Chart

Tuesday, November 26, 2013

The Fed's Wealth Effect Redux!

The following chart shows the producer price index for intermediate foods and feeds divided by the index of the average hourly earnings of private production and nonsupervisory employees. The low point was achieved in May of 2002 (represented as 1.0 on the chart).

Click to enlarge.

Stick a fork in it. The old trend's over. Welcome to the new trend. Who doesn't like higher asset prices?

Not all of these price increases are making it down to the consumer of course. Value is "added" by heavily processing the food, placing it in cheap boxes and cans, slapping a well known brand name in colorful print on the outside, and then marking up the price. We may not have infinite global food supplies well into the distant future, but at least we have an ample supply of presentation!

September 20, 2013
Our Chat With Jeremy Grantham

Now, however, the outspoken Yorkshireman, who is chief investment strategist at GMO, is making headlines with a new prediction: Dire, Malthusian warnings about environmental catastrophe. To hear him tell it, the world is running out of food. Resources will only keep getting more expensive.

November 13, 2013
Experts: world's soil is at risk

“Recent satellite surveys have shown a one per cent decline in the world’s farmed and grazed area every year over the past quarter of a century, due to a combination of land degradation and urban sprawl,” says soils expert Professor Roger Swift of the ASC and University of Queensland.

What would Carl Spackler say though?

And I say, "Hey, Lama, hey, how about a little something, you know, for the effort, you know." And he says, "Oh, uh, there won't be any money, but when you die, on your deathbed, you will receive total consciousness." So I got that goin' for me, which is nice.

Not everything is inflating of course. Take Redux for example. Some miracle drugs are not all they are cracked up to be apparently.

Redux: The Miracle Weight-Loss Drug

Mass Market Paperback from $0.01

I'm not trying to imply that the Fed's miracle drug won't work over the long run. No, sir. ZIRP is all but guaranteed to restore all lost prosperity and then some! Common knowledge! Everyone knows it! Trapped in ZIRP like the Japanese isn't a long-term curse, it's a long-term blessing! Genius!

See Also:
The Fed's Wealth Effect (Musical Tributes)

Source Data:
St. Louis Fed: Custom Chart

Monday, November 25, 2013

The Fed's Wealth Effect (Musical Tributes)

The following scatter chart compares the real annual change in corporate profits (bottom scale) to the annual change in nonfarm payrolls (left scale).

Click to enlarge.

The Fed apparently believes that increasing corporate profits is the key to job creation. In sharp contrast, I happen to think the key is severely mangled and the lock is rusted over. But hey, maybe that's just me.

Although there appears to be zero correlation between real annual corporate profit growth and annual job creation (as seen in the trend line in blue), the data points in black do point to one trend though. If you stare at them long enough, you should see one of the flying saucers from Godzilla vs. Monster Zero.

King Ghidorah (Monster Zero)

The creature is capable of tremendous destruction due to its size...

Speaking of Japan's Monster Zero, the following chart shows the spread between USA's discount rate and Japan's discount rate.

Monster Zero Interest Rate Policy (MZIRP)! Our monster is now nearly every bit as powerful as theirs! Only one thing can stop us now!

November 5, 2013
Zillow Revenue Up Despite Weak Consumer Housing Appetite

Real-estate marketplace Zillow reported better-than-expected third quarter earnings Tuesday afternoon, a feat considering the rising interest rates that weakened consumer appetites for housing over the summer and into early fall.

Oh God, Zillow. Bernanke should have never said the word taper. Three-headed, two-tailed, armless flying beasts can sense fear.

Godzilla vs. Monster Zero: Quote

Glenn: Mutual trust is a beautiful thing.
Astronaut K. Fuji: That won't buy groceries.

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Scatter Chart
St. Louis Fed: Discount Rate Spread: USA vs. Japan

Saturday, November 23, 2013

The Sarcasm Report v.181

November 19, 2013
MSN Money: How to rescue your retirement at 55

Since this is a mainstream article one can probably assume that there are a lot of people interested in rescuing their retirement at age 55 or at the very least there are a great many people interested in how the retirement rescue advice might apply to them.

I have rearranged the order of the advice to maximize the dramatic effect.

1. Reduce your consumption

This works for everyone. If everyone does it, then we can expect the economy to crash again.

2. Don't plan for retirement; plan to keep working

This works for everyone. If everyone does it, then we can expect many of the younger among us to be stuck in low paying jobs and/or the unemployment lines. As an added bonus, since many are already straddled with student debt they won't be able to afford new homes. And without the ability to afford new homes, we can expect another housing crash.

3. Tap your house as an asset sooner rather than later

This works for everyone. If everyone does it, then we'd expect to see another housing crash. Selling your house and moving into a smaller less expensive one is net selling on average (by dollar amount). A crash is especially likely if everyone is consuming less and delaying retirement. See steps #1 and #2.

4. Stay in equities longer than you may think 'safe

You can increase the chance that you'll earn a higher return by staying in equities for longer and in a greater proportion.

Desperate people feel the need to do unsafe things. Increasing the chance implies that there is still a chance you could earn a lower return by staying in equities for longer and in greater proportion. This would make sense since stocks are considered "risk assets" and each one of the previous 3 steps in could be considered crash worthy on their own. Further, the wicked combination of all three steps at the same time could prove to be very crash worthy indeed.

In the post–World War II era, when interest rates rose after a long period of artificially low rates, bondholders lost money.

This is opposed to the pre-World War II era, when interest rates did not rise after a long period of artificially low rates. That era was in the aftermath of the Great Depression. Some sort of housing bust was eventually followed by a world war but let's not go into that now. Desperate people should not be reminded of Great Depressions and world wars, especially world wars removing global industrial capacity to the USA's manufacturing and industrial benefit. That could be greatly depressing, especially if we have no intention of successfully removing excess global industrial capacity any time soon.

Since you will probably live to about 85, do not go into bonds until you are about 70, and then only gradually," said Charley Ellis, a consultant to governments and large institutions and a former board member of Malvern, Pa.–based Vanguard Group.

Wait until the last possible moment on the off chance that the long-term trend actually reverses and that very few will be buying bonds when you are age 70. How many other 55 year-olds are desperately attempting to rescue their retirement? Do what they do! Postpone and pray! It's not like we could be stuck with ZIRP for 20+ years like the Japanese were after their housing bust in the 1990s! Right? Stick with stocks like the Japanese did if you want to have a sporting chance!

October 24, 2013
BBC Sport: Gambling footballers take out payday loans - Sporting Chance

"I was going to the dogs more regularly and that's when it became a problem. I started going to the bookies during the day. It just snowballed to a point where I was frequently spending a month's wages and then borrowing money off loan sharks.

"Towards the end it got very, very bad. There was a point where I was clearing 30 to 40 grand a month and within a week or two that was gone.

"When there was no money left there, I was getting it from elsewhere to fund my habit."

This is not gambling advice. You know this to be true because if it was gambling advice then I'd be mentioning record margin debt and I have no intention of bringing that up in polite conversation.

QE vs. Deflation

November 21, 2013
Deflation Is Crushing QE Right Now

Less attention is being paid to the biggest source of risk at present: deflation in the developed world. All of the past week’s data point to heightened deflationary risks. Paltry U.S. consumer price index (CPI) figures, German producer prices undershooting and another bout of weakness in commodity prices, particularly oil, suggest deflation is winning the battle over central bank stimulus. Which is something that Asia Confidential has been forecasting for some time.

The following chart shows the average annual growth in the CPI over the previous 5 years.

Click to enlarge.

1.5% is definitely below the Fed's target rate. The Fed has thrown pretty much everything at it too, including the kitchen sink. Too bad there are so many used kitchen sinks for sale. It hampers their progress.

Short-term market action is always difficult to call though. Long-term trends are easier to distinguish. And on this front, little has changed. You have an ongoing battle between deflation and central bank government efforts to prevent it via QE. Deflation is winning right now, which is why you should expect more QE, not less, going forward.

If that’s right, stimulus and low interest rates could be with us for some time yet. Asset prices may be bid up further. And the market bears may have to wait before a more serious correction happens. The catalyst for that is likely to be a loss of faith in central bank stimulus.

I'm a believer in the loss of faith theory, for what that's worth. Over the long-term, I never had it to begin with. I haven't been buying long-term bonds because of the Fed. I have been buying in spite of them.

It's funny that so much time is spent warning us about a treasury bubble when individually purchased treasury bonds make up such a tiny amount of our personal assets (less than 2%). In my experience, very few people even know how to buy them directly from the government. I'm not judging. I've seen many hours of financial TV in my life and I've never seen anyone offer advice on how to buy a treasury bond. I don't recall the term I-Bond ever coming up either. It's almost like there's no money in it for them if bonds are purchased directly from the government.

This is not investment advice.

Source Data:
St. Louis Fed: CPI

Wednesday, November 20, 2013

The Path to Free Toys!

Click to enlarge.

I wonder if the financial experts telling us all to invest in China were factoring in the price of toys.

November 20, 2013
Walmart's Black Friday, Thanksgiving Plans Try to Control Crowds: Will They Work?

Over 100 toys will be a part of the pre-Black Friday deals that begin on Friday. Among the deals are Hot Wheels cars, which are Walmart's biggest unit mover in its toy department, on sale for 60 cents from 97 cents. A game of Monopoly will be available for $5, down from its usual price of $11.77.

For what it is worth, I remember paying $1 per Hot Wheels car in the 1970s.

Source Data:
BLS: Inflation & Prices

Tuesday, November 19, 2013

Employment Cost Index vs. Holiday Sales Prediction (Musical Tribute)

Click to enlarge.

November 19, 2013
Exurban Nation: Dismal Xmas Season

U.S. consumers will spend 11 percent more this holiday season, starting with a jump in shoppers on the day after Thanksgiving, while looking for discounts in stores and online, according to a study by consulting firm Accenture Plc.

Warning: The following video is not safe for work.

Source Data:
St. Louis Fed: Employment Cost Index: Total Compensation: All Civilian

Monday, November 18, 2013

The $98 32-Inch Flat-Screen TV

November 18, 2013
Wal-Mart Touts $98 TV as Holiday Seen Weakest Since 2009: Retail

Wal-Mart Stores Inc. (WMT) is dangling a 32-inch flat-screen TV for $98, down from $148 last year.

When can we expect the Fed to lower interest rates to help spur the economy again?

Still Stuck in ZIRP?

Click to enlarge.

Still stuck in ZIRP.

Big shocker. Where does the time go?

The good news is that we're making good progress on getting back to the trend line and that the Japanese have been studying this monetary problem for more than two decades (ever since their epic housing bust).

The bad news is that the trend line continues to come down to meet us, the Japanese are still stuck, and we are too more than likely. Even if we were to miraculously temporarily extract ourselves, then we'd probably just get stuck even more severely in the aftermath of the next recession.

Many talk about how Janet Yellen will offer easy money in an attempt to solve our long-term structural problems. They aren't factoring in the difficulty of the job though. We need someone who can wake up with a positive attitude each and every morning and exclaim with the utmost confidence, "Let's keep interest rates at zero and see what happens next!"

Nothing but good things from here! I assure you!

Source Data:
St. Louis Fed: Effective Federal Funds Rate

Everyone Needs a Place to Sleep

The first chart shows furniture and home furnishings store sales divided by wages.

Click to enlarge.

The next chart shows the consumer price index for furniture and bedding.

Click to enlarge.

As seen in the second chart, the first cracks in the furniture dam began to form just about the time that the long-term exponential trend for job growth began to fail. In my opinion, this is not a coincidence. This is not a short-term cyclical problem. This is a long-term structural problem. The housing bust combined with rapidly rising oil prices just added insult to injury.

Weak job growth. Weak demand. Weak pricing. Weak recovery.

February 26, 2009
He Is Living in a Cardboard Box

I’ve been living in these things for 15 years,” he said. “I get the materials from the hardware store and fix them right up.” He had a blue plastic tarp underneath in addition to the clear plastic on the top to keep out the rain.

“I saw them delivering refrigerators down on 14th Street and just leaving the boxes,” he said. “If you’re living on the street, that’s a home. So I picked up four of them and flattened them out and brought them up here. So I’m set for a while.”

Source Data:
BLS: CPI Database
St. Louis Fed: Custom Chart

The Sarcasm Report v.180

November 16, 2013
Backlash over changes in flood insurance

A complex new federal insurance law is having so many unintended consequences that some of its original sponsors and backers are now trying to delay it.

It's not the Affordable Care Act.

The Hunt for Red October (film)

Ambassador Andrei Lysenko: There is another matter... one I'm reluctant to...

Dr. Jeffrey Pelt: Please.

Ambassador Andrei Lysenko: One of our submarines, an Alfa, was last reported in the area of the Grand Banks. We have not heard from her for some time.

Dr. Jeffrey Pelt: Andrei... you've lost another submarine?

Sunday, November 17, 2013

Industrial Production: Mining

Click to enlarge.

1. Totally sustainable!
2. No malinvestment here!
3. Hyperinflation soon to follow!

It's a sarcastic triple play!


Austrian economists such as Nobel laureate F. A. Hayek advocate the idea that malinvestment occurs due to the combination of fractional reserve banking and artificially low interest rates misleading relative price signals which eventually necessitate a corrective contraction—a boom followed by a bust.

September 23, 2007
Productivity Miracle

If I'm wrong to be a stagflationist, this is the sort of thing that would do me in. It is also something one needs to factor in when hoarding hard assets in general.

Topic: Large mining equipment

I find it all quite humbling. Don't you?

See Also:
Hyperinflation Theories Poned Again

Source Data:
St. Louis Fed: Industrial Production: Mining

Employment Gone Wild v.2

The following chart shows the year over year employment growth as seen in the average of the government's establishment and household surveys.

Click to enlarge.

I have added two 2nd order polynomial trend lines for your consideration. Both use data points that start from the trough to the point that the growth first turns negative. Note that both polynomials currently have the same 0.93 correlation.

Although history cannot often accurately predict the future, I do think those who argue that employment growth is about to pick up might not be wrong. I think downward is the most likely direction though, for what that's worth.

Just opinions. This is not investment advice.

See Also:
Employment Gone Wild

Source Data:
St. Louis Fed: Custom Chart

Employment Gone Wild

Click to enlarge.

The line in black shows that 2.3 million jobs were added over the past year. This data comes from the government's establishment survey that uses a birth-death model. This model has been shown to be wildly inaccurate during recessions.

The line in red shows that there are 0.2 million more people employed over the past year. This data comes from the government's household survey that does not use a birth-death model. Although this data can be noisy, no additional inaccuracies should be present during recessions due to a faulty assumption model.

As seen in the chart, these two surveys have been wildly diverging over the past year. The former says we're doing okay and the latter says we're doing terrible. What could account for all this bewilderment? Let us hope it isn't because we're entering another recession just in time for the holiday season. Seriously.

Keep in mind that you cannot see some of the past wild divergences in the chart all that clearly. Using the power of hindsight, the government revised them away! It didn't exactly help high margin debt stock market investors who were staring at the payroll data at the time though. It might not help them now either. Just a thought!

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

Friday, November 15, 2013

The Rising Interest Rate Environment

The following chart shows the inverse of the 5 year moving average of the 3-month treasury bill yield.

Click to enlarge.

Note that since the Great Recession about the only thing that seems to rise is the yield's inverse. Go figure.

If history is a guide, we just need five things to make short-term interest rates actually rise.

1. Pearl Harbor.
2. Patience.
3. Real economic growth.
4. A hawkish Fed.
5. Sarcasm.

In all seriousness, the 3-month treasury yield didn't hit 1% until 1948. That was nearly two decades after the stock market crash of 1929. In hindsight, savers couldn't even count on World War II to get yields higher. So why is there so much hope now?

I'm clearly not an optimist. Other than the long-term death of real yields, there's very little I count on. It's been a central theme of mine since turning permabearish in 2004. I'm not saying that the "death" is guaranteed to continue, but I would be among the last to bet that savers will soon be handsomely rewarded on their $7 trillion in savings deposits. That's six times what it was in 1995.

In fact, I'd probably be fighting the Japanese over that last bet opportunity!

Long-term TIPS bonds are/were the bubble? Seriously? At least long-term TIPS bonds are still paying a positive real yield, unlike the 0.51% nominal yield on the typical 5-year CD. And with $7 trillion in savings deposits, is that low rate really all that shocking? Banks should just put out a sign.

Why the @#$% do you think we want you to deposit even more of your @#$%ing money? We're in the @#$%ing lending business for @#$%'s sake!

This is not investment advice.

Source Data:
St. Louis Fed: 3-Month Treasury Bill: Secondary Market Rate

Our "Durable" Economy (Musical Tribute)

Click to enlarge.

Source Data:
St. Louis Fed: Custom Chart

Thursday, November 14, 2013

The $420 Question

The following chart shows real monthly exports per capita (September 2013 dollars).

Click to enlarge.

Got fork?

Source Data:
St. Louis Fed: Custom Chart

Wednesday, November 13, 2013

Misinformation Services

The following chart shows the 5 year moving average of the percentage of employees in information services who are not production and nonsupervisory employees. In other words, it basically shows how many supervisors there are.

Click to enlarge.

1. How are we going to get accurate propaganda in this environment? Anarchy!!

2. The higher paid propaganda jobs are vanishing before our very eyes! Why don't we hear more about this? What does this mean for college students expecting to get these jobs?

3. There's a black helicopter circling overhead. I don't think I'll be able to...

4. Please make a comment on our blog and include your full name and address. We are still who you think we are. Nothing to worry about. We are most certainly not highly compensated employees of the National Security Agency. Let us assure you of that. We just need to know where you live so we can deliver fresh tasty pizzas to you and your loved ones. We have so many fresh tasty pizzas. Oh, they smell so fresh and tasty. There are more than enough for everyone but we cannot guarantee their freshness if you do not respond immediately. It is just a small token of our appreciation for showing interest in the Illusion of Prosperity blog.

Source Data:
St. Louis Fed: Custom Chart

Tuesday, November 12, 2013

The Long-Term Inactivity Index

Click to enlarge.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

Source Data:
St. Louis Fed: Chicago Fed National Activity Index

Sunday, November 10, 2013

Moving Towards a Smarter Unemployment Force

The following chart shows the two year moving average of the percentage of the unemployed (25+ years of age) who have bachelor's degrees and higher.

Click to enlarge.

May 23, 2012
The Globalist: Moving Toward a Smarter World

I am optimistic — not because I expect human nature to change, but because we now have at our disposal an enormous new natural resource: the gusher of data that enables us to literally see and understand our world as never before.

The data certainly gushes. I'll give him that.

Source Data:
St. Louis Fed: Custom Chart

The Hollowing Out of America's Middle Class

Click to enlarge.

As seen in the chart above, retail trade, leisure, and hospitality production and nonsupervisory employment has been growing faster than employment overall. This is clearly not a recent development.

Click to enlarge.

Not only do these jobs not pay well, but in inflation adjusted terms they pay roughly one-third less than they did in the early 1970s.

The future's so bright I gotta wear lampshades.

Source Data:
BLS: Employment
St. Louis Fed: CPI

Saturday, November 9, 2013

The Jobs of the Future

Click to enlarge.

September 3, 2013
After a Recent Upswing, College Enrollment Declines, Census Bureau Reports

In 2012, there were 19.9 million college students, including 5.8 million enrolled in two-year colleges, 10.3 million in four-year colleges and 3.8 million in graduate school.

The math suggests that we are going to have some seriously well educated retail, leisure, and hospitality workers in the future.

Some people probably wonder why I'm still a permabear. Go figure.

Source Data:
St. Louis Fed: Custom Chart

Friday, November 8, 2013

College Graduate Unemployment

Click to enlarge.

You can disregard the blue point due to the government shutdown if you like. As for the trend in red, a good pair of rose-colored glasses will make it virtually invisible!

Source Data:
St. Louis Fed: Custom Chart

Employment Mass Extinction Events

Those not in the labor force have grown nearly 3.2 million over the past year, with nearly 1 million in just the past month.

Click to enlarge.

There was a major long-term trend shift starting in 2000. The Fed didn't like the old normal in red so it offered us up a housing bubble and in its aftermath a new normal in blue. It's a bit hard to tell the two normals apart in the chart. Well, you kind of can. The new normal is a bit steeper. It's probably trying to make up for lost can kicking ground. Oh the futility! Unintended consequences for the win!

Click to enlarge.

Note that the Great Recession also created a major long-term trend shift in those dropping out of the labor force permanently more than likely. One wonders if there will be more employment mass extinction events in the not too distant future. One especially wonders that if all this current can kicking is no more permanent than the last time.

Source Data:
St. Louis Fed: Not in Labor Force per Capita
St. Louis Fed: Real Social Security Benefits per Capita

Thursday, November 7, 2013

Hugging the Bottom Hair of the Dog That Bit Us

The following chart shows motor vehicle loans as a percentage of annual wage and salary accruals.

Click to enlarge.

How much debt is too much? We'll find out someday if we keep hugging the bottom of that trend channel.

October 28, 2013
More new-car buyers opt for 7-year loans

More new-car buyers are stretching out their loan payments as long as possible — as many as seven years — and experts wonder if the trend is another financial time bomb.

Source Data:
FRB: Historical Motor Vehicle Loans
St. Louis Fed: Compensation of Employees: Wages & Salary Accruals

Penny Profits

November 7, 2013
J.C. Penney reports first monthly sales increase since 2011

J.C. Penney Co. said Thursday that a 0.9 percent increase in October same-store sales, its first year-over-year monthly increase in almost two years, signals “meaningful progress in its turnaround.”

0.9 percent is almost exactly what apparel inflation has done over the past year. Way to go JC Penney! Very impressive!

The increase in sales wasn’t due to more customers or higher prices; Penney reported that store traffic and per-item prices were still down from a year ago.

Probably best if existing JC Penney employees did not demand a raise at the present time. Just sayin'.

But profitability took a hit from all the clearance merchandise and the chain’s aggressive return to coupons and discounts.

We're certainly getting an early start this year. This economy's poised for clearance! Everything must go!

Speaking of demanding a raise...

November 7, 2013
Washington city votes to raise minimum wage to $15

The SeaTac initiative will raise the minimum wage to $15 an hour for hospitality and transportation workers in and near Seattle-Tacoma International Airport. The current minimum wage in Washington State is $9.19.

This measure was strongly supported by SeaTac's many, many hospitality and transportation workers. Go figure. I'm just a bit surprised that it was only a 63% increase. Surely people willing to vote themselves $15 per hour would also be willing to accept $18.38. Double or nothing next time!

Where is the frickin' Free Maple Donut Fridays ballot measure? Do I have to do everything myself? Surely it would be popular! Who doesn't love free stuff! Every business should be required to provide free maple donuts to anyone who asks, but only on Fridays. No need to be greedy here.

The naysayers may insist that there may be a few unintended consequences. Some may wish to hoard a week's worth of donuts every Friday. Free donuts for life? Others may not trust that the measure would stay in effect forever and hoard even more than a week's worth at a time. Are those really problems though? Think of the increased freezer sales adding to GDP!

And what about the increased energy usage? Not a problem! Free Electricity Mondays! Coming soon to a ballot near you! Exponentially increasing unintended consequences offer exponentially increasing intended solutions! We just need to stay on top of them and manage this economy from crisis to crisis, just like we have been doing!

File:Bacon donut.jpg (Mike McCune)

Are you with me? Hell yes! Let us eat maple donuts!

Monday, November 4, 2013

Barking Up the Wrong Tree

The following chart shows annual production and nonsupervisory logging employee hours worked.

Click to enlarge.

That dog don't hunt.

Unless the long-term trend changes, it would seem that about the only logging we'll be doing in the distant future will require a username and password.

October 9, 2013
Here’s the Report That May Have Prompted The Lumber Liquidators Raid

Conservation groups say forests in Russia’s far east are known for large scale illegal cutting operations. Illegal logging brigades comb forests for high-quality varieties like Mongolian oak and Korean pine, cutting down trees in the middle of the night and passing them along to illegal saw mills. From there, traders mix the illegal wood with legal wood and Chinese manufacturers use fake documentation to smuggle so-called black wood out of Russia to sell to Western retailers.

Source Data:
BLS: Employment

The Economy Is Accelerating

The following chart shows real manufacturers' nondefense capital goods (excluding aircraft) new orders per capita (September 2013 dollars).

Click to enlarge.

It is accelerating almost exactly like a baseball would after it has been hit up into the air. Pardon my language, but gravity's a bitch.

Source Data:
St. Louis Fed: Custom Chart

The Future of Advertising Is Here (Musical Tribute)

The following was a comment left for me on the last post.

Definitely believe that whih you stated. Your favourite justification seemed to be on the internet the easiest facftor to understand of. I say to you, I certainly get annoyed while other people consider issues that they just don't recognize about. You managed to hit the nail upon the top as smartly as defined out the whole thing without having side effect , other folks can take a signal. Will probably be again to get more.

It included a link to an extended auto warranty website.

Turing Test

The Turing test is a test of a machine's ability to exhibit intelligent behaviour equivalent to, or indistinguishable from, that of a human. In the original illustrative example, a human judge engages in natural language conversations with a human and a machine designed to generate performance indistinguishable from that of a human being. All participants are separated from one another. If the judge cannot reliably tell the machine from the human, the machine is said to have passed the test.

Human? Machine? You make the call.

Better to remain silent and be thought a fool than to speak out and remove all doubt. - Abraham Lincoln

The Future's So Bright I Gotta Rent Tires

June 08, 2013
High prices are driving more motorists to rent tires

Eric Malone, who owns eight RimTyme stores in North Carolina, Virginia and Georgia, was drawn to the business by the high profit potential. RimTyme averages more than $1.4 million a year in sales across its 25 locations, nearly double the take at parent company Rent-a-Center's traditional furniture and electronics stores.

His employees make about three repossessions a week....


German submarine U-192

During her maiden voyage in May 1943 she disappeared without a trace, along with her 55 crew.

Why don't you knock it off with them negative waves? Why don't you dig how beautiful it is out here? Why don't you say something righteous and hopeful for a change? - Oddball

October 30, 2013
Passenger traffic fairly flat at Port Columbus last month

There were 501,354 passengers in and out of the local airport, an increase of 192, which is less than one-tenth of 1 percent.

For the year so far, the number of passengers is down 3 percent at Port Columbus, a trend that has been noted at airports across the country.

Shouldn't have gone down the negative waves path. Should have said something righteous and hopeful for a change. Perhaps it is not too late.

These 192 extra people will no doubt lead to all sorts of exciting extra retail sales and employment opportunities for the one person with a well positioned food truck! So what if the trend is down at airports across the country! Gotta keep the faith!

Sunday, November 3, 2013

Christmas 2013: Hobby, Toy, and Game Stores

The following chart shows the year over year percent change in aggregate hours worked by production and nonsupervisory employees at hobby, toy, and game stores.

Click to enlarge.

We're certainly heading into the Christmas season with plenty of momentum. I'll give the optimists that. Some might argue that the momentum is in the wrong direction though.

Source Data:
BLS: Employment

Saturday, November 2, 2013

Yow 10,000

The following chart shows real federal government current receipts per capita (June 2013 dollars).

Click to enlarge.

Worry not about the steepness of the climb. This bad boy's totally sustainable. I can feel it in my bones.

Yow 10,000! Put on the party hats! Just look at all that momentum! This economy is unstoppable again! Now that one of the last bears has finally capitulated, what could possibly go wrong?

October 20, 2013
Top Bear's Bullish Tilt Has Followers Growling

One of Wall Street's leading bears has turned more bullish, riling some longtime clients.

Gotta love his timing. I guess he just needed confirmation that the stock market was a sure thing. It's climbed 160% over the last 4 years or so. Sure thing it is! Can't lose! What more proof do you need? The government will soon be rolling in too much revenue. We'll be too prosperous! That's right. You heard me. I'm capitulating too!

Mr. Rosenberg became more positive on stocks when he determined that chances of another economic downturn had dropped amid the Federal Reserve's aggressive actions.

No more economic downturns! No unintended consequences! Just genius move after genius move by the very same Fed who could not spot a housing bubble as it was peaking. Hurray! I'm talking directly to you Ben "There Is No Housing Bubble to Go Bust" Bernanke. Well played, sir. Well played.

There's gravy and biscuits in it for you, and by that I mean gobs of money. - Claptrap, Borderlands

Disclosure: I'm not really capitulating. I trust this economy long-term about as far as I can throw up. (Over Fed pun intended.)

Source Data:
St. Louis Fed: Custom Chart