Employment Growth Could Look a Lot Slower in January
The employment numbers will be particularly hard to interpret as unusually heavy retail hiring (to support longer store hours) and large jump in the number of package delivery people boosted December results. So if the normal trend line is for 160,000 or so new jobs, I suspect that December's number of 200,000 was inflated by 40,000 or so, and that January should be the same 40,000 below trend, or about 120,000 jobs. That 120,000 number also happens to be the consensus estimate. Then, all things equal, February should look closer to the 160,000 trend-line number. Besides retail and couriers, my guess is finance also will look weaker, as will industries that depend on snow and cold weather, but manufacturing and construction will look a little better.
Job growth of 120,000 is still consistent with year-over-year employment growth of 1.77%, slightly ahead of December's 1.75% rate. In fact, job growth could come in well under 100,000 and still improve on December's rate. So don't let those headlines trumpeting, "Job Growth Almost Cut in Half," scare you.
Sunday, January 29, 2012
Wednesday, January 25, 2012
Isn't this just putting lip stick on the PIIGS?
In late 2011, the U.S. agreed to lend dollars for euros , and the ECB agreed to lend money to troubled European banks . The positive outcome was the stabilization of the Spanish and Italian bonds. The world has collectively exhaled from the event and is breathing normally again. Before that moment the Italian and Spanish bonds were escalating to epic rates that could have led to a series of defaulting European banks and then who knows what would have happened next?
With the stabilization of the European sovereign debt, the U.S. stock market has turned from red to green. The VIX is down and the positive growth indices are up such as the Dow, S&P, and GLD. Everything looks pretty rosy now, but has anything really changed? Haven’t we just put lip stick on this pig?
The PIIGS are still structurally a mess, and only through recent monetary policy, bureaucrats have been able to successfully calm the markets. The ECB said they were not going to bail out the PIIGS, but doesn’t their most recent policy do so indirectly?
If it looks like a duck and quacks like a duck isn’t it a duck? The ECB is not directly lending money to the PIIGS, but the ECB is lending money to European banks at 1% interest for three years. And in only one month, the Euro banks have borrowed close to 500 billion dollars, which happens to be the size of the Greek debt . Eventually, the European banks will use that money to buy up the PIIGS sovereign debt. This is the short run solution to the PIIGS and Euro crisis. The problem of GDP growth and the lack of incentives to work haven’t changed, but the lip stick sure looks good.
With the stabilization of the European sovereign debt, the U.S. stock market has turned from red to green. The VIX is down and the positive growth indices are up such as the Dow, S&P, and GLD. Everything looks pretty rosy now, but has anything really changed? Haven’t we just put lip stick on this pig?
The PIIGS are still structurally a mess, and only through recent monetary policy, bureaucrats have been able to successfully calm the markets. The ECB said they were not going to bail out the PIIGS, but doesn’t their most recent policy do so indirectly?
If it looks like a duck and quacks like a duck isn’t it a duck? The ECB is not directly lending money to the PIIGS, but the ECB is lending money to European banks at 1% interest for three years. And in only one month, the Euro banks have borrowed close to 500 billion dollars, which happens to be the size of the Greek debt . Eventually, the European banks will use that money to buy up the PIIGS sovereign debt. This is the short run solution to the PIIGS and Euro crisis. The problem of GDP growth and the lack of incentives to work haven’t changed, but the lip stick sure looks good.
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