Economics

Discussion in 'Money & Finances' started by Harry Havens, Jun 29, 2017.

  1. Harry Havens

    Harry Havens Very Well-Known Member
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    There is an old saying "if it is too good to be true... it probably isn't". I think we have this so deeply embedded in our conscious that we seek out any news of impending doom. This morning's jobs report might be one such example. It started with gloom and doom about how the numbers failed to meet expectations and wage growth had softened. I read one report that claimed we must have 150,000 jobs per month to grow our economy. The sky seemed to be literally falling, not unlike the inverted yield curve of treasuries a few months back. BTW... calmer voices are now weighing in on the numbers.

    For the record... employment is not an accurate predictor of recession, imo. Most recessions in the past 80 years have shown negative wage growth in the 6 months prior to a recession. BUT... not always. The 11-73~3-75 recession did not show a negative wage growth until August of 1974 and continued a couple of months after the March 1975 official end. The great recession did have negative wage growth a couple of months into the lead up to its official start in 12-2007, but after the official end in 6-2009, seven of the following twelve months had negative growth. In fact it took until February, 2011 to get back to those June, 2009 employment numbers.

    Now to today's report in my little chart form...
    upload_2020-1-10_13-8-51.png
    The reds are negative numbers, both for the month and annual. Goods producing and Manufacturing have been slowing slightly, but a massive number of positions remain unfilled. Massive in this case is 400,000+. Many of these manufacturing environments were growing due to expectations of pre tariff movement of goods and services. Such as Large Truck and R.R. container manufactures, which have now cut back sharply. Tranportation and Warehousing follows along that same line of thought. Expectations going forward are a slight rebound. To some extent, mining is in that mix.

    I labeled wholesale and retail trade as whatever color that is, as it would be expected these numbers would fall after the holidays. Construction is doing quite well and most of the larger companies I had dealt with in the past are struggling to keep up and even to find travelers. They're pushing some hefty bonuses.

    The overall employment number seems a bit tepid, but given the calendar, so what. BTW, the 145,000 is midpoint of the BLS range. That range is from 37,600~252,400. The BLS has never pretended that their empoyment release was 100% accurate, but only a rough estimate that improves as time goes by... hence revisions and sometimes big, although the past revisions with this report were downward.

    As to wage growth, the year ending 2018, saw 1.2% real wage growth (nominal growth minus inflation) and so far in 2019, as been at 1.1% real growth.

    If you think the sky is falling over these employment numbers... get an umbrella, it's probably just rain. In fact keep the umbrella with you, even when you think the sun is shining... as you are likely a bit too sensitive.

    The consumer's decide when and if there is a recession and can change their confidence on a dime. And it does not take all of them to panic, but a mere 5%~10% to go over the edge or possibly even less.
     
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  2. Harry Havens

    Harry Havens Very Well-Known Member
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    Time for another monthly CPI report from the BLS.

    Note: Before seasonal adjustments in November and December were actually down 0.1% each month. The annual increase before seasonal adjustments was 2.278% before rounding.
    upload_2020-1-14_12-8-1.png

    My actual increase over the past 12 months has been 3.15% vs the CPI-U of 2.3%, as well as the CPI-W at 2.3%. The C-CPI-U was up 2.1% over the same period.

    The following chart lists some items of possible interest. Note; 1st column lists item of interest, 2nd column is percent of household expenditures from detailed consumer diaries and questionaires, etc. and 3rd column lists percent change over 12 months.
    upload_2020-1-14_12-14-3.png
    Insurance is approximately 16% of Medical Care services and increased 20% over last year. Food at home would have likely been down, except for increases in Meat, Whole Poultry and Milk.

    2020 CPI percentages of expenditures will be adjusted based on latest data on spending patterns. Example: the 2018 Shelter index made up 33.078% of expenses, but as those expenses outpaced inflation, was raised to 2019 rate of 33.489%. Conversely, Gasoline made up 4.060% in 2018 and with the expenditures falling thoughout 2018, the percent of total expenditures fell to 3.931%.

    As I mentioned earlier, my rate of inflation exceeds, due to my percent of Medical Care Services being north of 7.141% (16.337%). This is somewhat offset, as my gasoline consumption is 1.41% vs the 3.931% stated above. Shelter would also come in far below the average 33.489% state above. Less than 6%.

    That should wrap this one up.
     
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  3. Harry Havens

    Harry Havens Very Well-Known Member
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    As I have oft stated, politics is important to economics, although it depends on the mood of the public and not necessarily anything the President does or doesn’t do... short of starting a war. Which has somehow become a good thing economically. Go figure.

    Thus, my current status of the Presidential race is forthcoming. First or rather again, we all know pollsters really blew it in 2016. I am second guessing that to a degree. Looking and analyzing state by state polling just prior to the election and then the election results did produce some peculiarities.
    Trump outperformed the margin of error in 30 states. Clinton in 7 states. Clinton underperformed in 3 states, while Trump was at “0”. 18 of the states that Trump outperformed are traditionally considered republican safe states. Trump polled 60% in West Virginia and finished with 67.8%. 7 were in traditionally blue states. Don’t worry or get excited, as they were deeply blue, such as Maryland, with polled Trump having 27%, but he ended up with 34%.

    That leaves 5... Iowa, Ohio, Michigan, Wisconsin and Pennsylvania. Of course, the latter 3 proved to be where the focus of terrible polling fell. Interestingly, Clinton’s results fell within her polling numbers and margin of error, while Trump’s exceeded. Take that anyone you want.
    That last bit of thinking led me to consider an adjustment on top of current polling methods in fabricating the following chart. Additionally, as most polling addresses generic democrat v Trump, I am focusing on polls that list Trump vs each candidate. Just as national polls are misleading when considering an electoral college method, so does statewide polls with Trump v generic democrat. A lot depends on which Democrat the respondent is currently thinking about.

    Also, this chart includes states that normally might not be considered “toss-up”. If interested I can tell why.

    So enough... here goes:
    upload_2020-1-16_17-22-27.png
     
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  4. Harry Havens

    Harry Havens Very Well-Known Member
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    Ooops!! Forgot to add an important point. Leans and slight leans are included in the above chart. Therefore, some wild swings might be expected. As to what I meant by that... is left (or right) to the imagination. :rolleyes:
     
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  5. Harry Havens

    Harry Havens Very Well-Known Member
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    Wasted a day looking at data, expecting to find some juicy nuggets. Cold front preceded with high wind and rain moving in, made inside preferrable.

    I collected data on 3rd party voting in as a percent in Presidential elections over the past 100 years. 2016 showed a bump up in such voting and was the 6th highest during that period.

    upload_2020-1-18_22-13-34.png

    The 1924 election seemed to have been a product of the 1920/21 depression, as it was still lingering in the minds of many. It was sharp and severe, only being overshadowed by what happened a scant decade later. Wisconsin went progressive in electoral votes.

    I omitted 1948, as it would have been 7th on the list. Strom Thurmond's States Rights party took 39 electoral votes. 1960 did not have a very significant vote outside the main parties, but did have a melt down of 15 electoral votes that refused Nixon or Kennedy. 1972 saw 1 elector revolt and cast with Libertarian John Hospers. I throw them out there as we sometimes think the 2016 electoral revolt of 7 was something unheard of.

    The 1968 was George Wallace and the south, as he grabbed 46 electoral votes in Arkansas, Louisiana, Alabama and Georgia.

    1980... Anderson, but was a non factor, imo.

    1992/1996 The Ross Perot candidacy seemed to tap the angst of the American people, but he managed to shoot himself in the foot. IMO, he did effectively sabotage Bush the elder in 1992. Everything that followed stems from that, imo.

    2016, did have a hard bump in 3rd party voting, but is difficult to determine which was harmed or given benefit. Wisconsin tabulated 92,284 less votes in 2016 than 2012. Trump's vote total (1,405,284) was comparable with Romney's (1,407,966) in 2012. The Clinton 2016 was down 238,499 from Obama's 2012. 3rd party voting increased from 2012 (39,483) to 2016 (188,330). Clinton lost by 22K. There is a similar pattern in PA and Michigan as well as others.

    This is not a straightup indication of anything, although my imagination does tend to lead me astray. It is oft said that Clinton did not campaign in these states and therefore lost the election. It could also be said that if she had campaigned... it could have been worse.

    Whatever the blip in 2016 that created interest in 3rd parties is not presenting itself at this point. Gary Johnson quadrupled from 2012 to 2016 and Jill Stein tripled over same period. Both have declined running in 2020 and frankly, looking at the field does not have anyone leaping out... in a good way.

    Oh well, better luck next time... maybe.
     
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  6. Harry Havens

    Harry Havens Very Well-Known Member
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    Oh my, the coronavirus has struck the stock market. It could harm global trade, etc. yada yada, et al! That seemed to be the headlines in U.S. business papers. My gosh it pushed that other thing down the page. It almost seems they are predicting thousands of Americans will die of the flu. I don't necessarily mean to downplay this virus, but a few things I gleaned... (1) It will likely be more wide spread than SARS. (2) It is not as deadly as SARS. (3) according to WHO, 8,094 persons worldwide had SARS and 774 died.

    To put that in perspective... an average of 37,463 Americans died each of the past 9 years.
    From the CDC (2018-2019)..
    upload_2020-1-24_15-18-56.png
    I have read reports that the coronavirus has been traced to a place name Wuhan and at a fish market, which happens to be just a couple of miles away from a Chinese scientific lab that was built to learn about various flu viruses. (Ooops!)

    Naturally the concern of coronavirus is the effect it would have on global trade as SARS did.

    US GDP since 2001... (DATA from BEA.gov)
    upload_2020-1-24_15-23-48.png
    Really not seeing the impact in those numbers. Maybe the opposite. BTW... added (consensus) 2.2% for 2009 4th Qtr, although not officially released.

    Maybe the 2014~2015 above average 51,376, or the 2017~2018 figure of 61,099 caused a slight dip.

    I have observed the foreign media (Non U.S.) has but the coronavirus above all else, whereas the U.S. Media has it in 2nd place to that other thing.

    Somehow I expect that to change quite rapidly. Within a few hours after a certain group of somebodies finish up whatever they are doing, would be my guess.

    Why does this matter... the U.S. economy is consumer driven and is therefore driven by consumer sentiment. Can they overcome the fearmongering about to be thrown at them? That is what has the market truly concerned and caused today's kneejerk reaction... not the actual coronavirus, imo.

    Edited (3:49pm) to make next to last paragraph more vague and hopefully humorous.
     
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