Monday, January 19, 2015

Let’s Hear it for the Dollar Store

The other day I bought some picture frames as part of an on-going picture-hanging exercise caused by a move that, while it seems to have taken place just yesterday, actually already goes back almost seven months. The cost of frames astonished me. I began looking at arts and crafts stores like Michaels and Jo-Ann Fabrics; then, needing smaller frames, I thought I’d find them at CVS. Find them I did, but the cost of these frames was not noticeably lower at the drug store than at the art stores. Then an inspiration came. One of my routes to one of the Krogers we now frequent takes me by a Dollar Store—or, more formally, a Dollar Tree. There I went.

There I went but—that having been a rather grey sort of day—I was quite convinced that Dollar wouldn’t have any frames. Imagine my surprise when I found a whole rack of them. Moreover, there was actually a yellow sign above them with the word Frames on it. I walked out of there a short while later with ten frames of various sizes. These frames, by the way, were of the same quality, decorative variety, and technical features as those in other stores where, typically, they were priced at multiples of six to twelve of the price I paid here.

I noticed while in there that the clientele had a large admixture of foreigners, immigrants, and other newcomers to the Land of Plenty. One of them was a big man in middle years who had no English at all. I saw him questioning another man about the whereabouts of—well, he was making shaving motions with his hands. The man he was consulting didn’t know how to deal with the problem and told him to go up front to ask, which that man did not exactly understand. The foreigner, incidentally, had been at the entrance to the store when I went in, hesitating there. Was he building up the courage to enter and encounter American Consumerism for the first time ever? Anyway, I resolved to help the gentleman as soon as I’d picked my last frame. As I headed out, one of the store clerks was coming down the aisle. I asked here where shaving gear was stowed. “You too?” she asked. Evidently she had been told about the problem by someone else and was coming to help my foreign gentleman. All was well. He’d have his razor and his razor blades in just a minute for a mere $1.

Friday, January 16, 2015

Family Analogy

Herewith something I'd published on Ghulf Genes yesterday. It fits this blog too...

The sophisticated sector of our society, e.g., the media, don’t much like simplistic analogies. Like, for instance, the notion that our smallest collective, the family, may be like our greatest, the nation. Yet this morning such an analogy arose in my mind. The occasion was a headline in the Wall Street Journal: “Gas Savings Not Spent Yet.” The essence here is that despite good numbers on December retail spending from private associations, national numbers from the Commerce Department indicate 0.9 percent decline in retail and food services spending as compared to November spending. And this despite a huge drop in gasoline costs?

The key word in the headline is that word Yet. The sophisticated understanding of people is based on an artificial notion of pure economic rationality. When people have extra money, they will spend it. If they don’t now, soon they will. Nothing else matters except having money or not having it. There is no future or social dimension present at all.

But if we use a “simplistic analogy,” our economic life today is comparable to the life of a family where mom and dad are at each others’ throats and hellzapoppin. A sign of that is a story on the next page: “House Votes to Block Immigration Policy,” just a day after a frosty meeting between the President and the Congressional leadership to discuss cooperation.

In a family in uproar, the children won’t be jolly. Consumer confidence is based on many things, not least the bigger atmosphere of the social whole. And there we have Mom determined to undermine Dad and vice versa. It’s barely safe to play, with half a mind, behind the couch, while in the kitchen things are heard to break on the tiled floor.

It Took a While

In the earlier version of LaMarotte I’d posted multiple times on my problems with Radio Shack. Unfortunately that earlier version is no longer up. In any case, the slow decline of this once very competent retailer has been taking decades; presumably dissatisfied customers like me have numbered in the multiple hundreds of thousands. What is amazing about current news, stating that Radio Shack is preparing to go into bankruptcy as early as February, is how long it has taken.

Corporate collectives have life times not that much longer than humans. Radio Shack saw its beginnings in 1921, so it is 94 now. It will presumably live on, after bankruptcy, for a while anyway until, probably eaten by another one, it will gradually disappear.

Friday, January 9, 2015

Employment Update: December 2014

Another year has passed and therefore we have complete numbers for 2014 issued today by the Bureau of Labor Statistics (link).

I’ve tracked these data on a monthly basis (with two or three skips only) since February 2010. The series, from March 2011 forward, can be found on this version of LaMarotte. My purpose, when I first began, was to see how long it would take the U.S. economy to recover the total jobs lost in 2008 and 2009, the Great Recession, 8.7 million jobs. Well, it took four full years (2010-2013) and five months to recover the lost jobs. After that, from June through the present, the economy has been recovering the jobs lost due to an absence of actual job growth since 2008, a total of 6.6 million jobs. As of December of 2014, we have recovered 22.1 percent of those jobs as well, suggesting that “normal,” meaning status quo ante, will be reached some time in 2015—unless another recession sets in this year.

Now for the December 2014—and the year 2014—results. In December we gained 252,000 new jobs, a healthy number. November had the largest gain in 2015, 353,000 jobs. For the year as a whole, we gained a total of 2.961 million jobs, the best performance since 2010. Graphics by month and by year follow:

In this report, annual figures all show actual (rather than projected) data. The 2014 total, however, may be (and most likely will be) revised by BLS in February. Given current trends, the revision may very well be upward.

As we wave good-bye to 2014, the U.S. economy is acting robust and the dollar is strong. Gas prices are at their lowest in a very long time. By contrast, a sense of crisis still wafts over Europe. China’s growth has softened. Japan is still in its now decades-long slump—perhaps showing what the future holds for the global economy. We shall see. My own view is that there must surely be a Third Way—something other than frenetic growth on the upside and abysmall slumps on the other. 2015 may show us which way things will be trending.

Saturday, November 15, 2014

Employment Update: October 2014

October jobs report by the Bureau of Labor Statistics (link), called The Employment Situation, issued on November 7, 2014. Last month’s result, a gain of 248,000 jobs, was revised upward to 256,000, a gain of 8,000 jobs. And the October result showed a gain of 214,000 jobs. The updated graphic, which also shows other changes in earlier months, amounting to an additional addition of 31,000 jobs, follows:

The net result is continued growth in jobs. This growth was distributed as follows: Goods Producing sectors: 13.1% of gains, Service Providing: 84.6 %, and Government: 2.3%. Within the Services Providing sectors, temporary employment showed a substantial growth of 7.1% of all new jobs added, which is a sour note here. The only sector showing losses was Information, which includes the media, -4,000 jobs.

Herewith a tabulation of gains by each sector, with numbers representing jobs in thousands:

Total nonfarm
  Total private
    Mining and logging
    Wholesale trade
    Retail trade
    Transportation and warehousing
    Financial activities
    Professional and business services
    Education and health services
    Leisure and hospitality
    Other services

The projection for the year is shown in the next graphic:

In this chart actual data are shown for all years except 2014; results for that year are projected based on 10 months of actual data. In the post-recession period, 2014 is shaping up as the best year yet.

Thursday, October 23, 2014

Employment Update: September 2014

The Bureau of Labor Statistics (link) issued new employment number on October 3. According to the report, the economy added 248,000 jobs in September. BLS also corrected its August figures, upward, by 69,000 jobs. Therefore the net gain, since the last report, has been 317,000.

As a percent of total employment, the Goods-Producing sector represented 13.7 percent of jobs and 11.7 percent of gains since August. The Private Service Producing sector accounted for 70.5 percent of total jobs and 83.5 percent of all gains. Government was 15.1 percent of total jobs and 4.8 percent of gains. So the “action” was all in the Service Producing segment. Within that major category, the top three gainers were Professional and Business Services, Retail Trade, and Leisure and Hospitality; they accounted for 60.2 percent of all gains in September.

The month-by-month chart follows. The orange bar reflects changes made to August numbers in the September report.

Data showing annual results and an annualized projection for 2014 are next:

Last month the 2014 projection was 2.598 million for the year. This month the projection has improve and now stands at 2.732 million.

In May of this year, the economy recovered the loss of 8.663 million jobs lost in the Great Recession. Since then I’ve been tracking recovery of new jobs not created while we were making up losses. To keep up with the growth in the workforce, a number driven by demographics, we need to created 87,300 jobs every month. Once that number is met, anything in excess may be counted against what I’ve labeled the Growth Deficit. That number stood at 6.635 million in April, just before we caught erased the losses created by the Great Recession.

As of July, we had already recovered 7.1 percent of that deficit. The numbers were good enough in September to change that recovery rate to 12.3 percent, as shown in the last graphic:

Employment is headed in the right direction now, but its “quality” is only so-so. The economy is adding service employment, not least temporary positions; those accounted in September for nearly 8 percent of all new jobs created.

Saturday, September 6, 2014

Employment Update: August 2014

Numbers for August, released by the Bureau of Labor Statistics yesterday (link), produced an interesting mix of reaction. Some observers deplored the results, some suggested that BLS hadn’t gotten them right, yet others pointed out that uneven performance of this indicator is a normal phenomenon.

The BLS reported that 142,000 jobs were created in August. Those who expected at least 200,000 were disappointed. At the same time, BLS also revised July results downward from 209,000 to 181,000, a loss of 28,000 jobs. Therefore the net gain in August was just 114,000 jobs.

The Retail sector lost 8,400 jobs—once more underlining that consumer confidence may not be as robust as assumed. The Information sector (read communications media) lost 3,000. Manufacturing employment remained unchanged from July. Mining and Construction both produced fewer jobs than in July. The pattern is familiar by now. The basic industries are still sluggish. All the gains are coming from the Service categories.

Herewith the monthly chart, with July colored tan to indicate that results for the month were revised downward:

Data showing annual results and an annualized projection for 2014 are next:

Last month the 2014 projection was 2.774 million for the year. This month the projection has dropped to 2.598 million because of the July changes and the lackluster August results. The projection for 2014, however, still remains the best since 2007.

In May of this year, the economy recovered the loss of 8.663 million jobs lost in the Great Recession. Since then I’ve been tracking recovery of new jobs not created while we were making up losses. To keep up with the growth in the workforce, a number driven by demographics, we need to create 87,300 jobs every month. Once that number is met, anything in excess may be counted against what I’ve labeled the Growth Deficit. That number stood at 6.635 million in April, just before we erased the losses created by the Great Recession.

As of July, we had already recovered 7.1 percent of that deficit. The numbers were good enough in August to change that recovery rate to 8.9 percent, as shown in the last graphic:

The trend is still positive, but some kind of “new normal” seems to try to deny the eager observers of the economy the triumphant feeling that we’re heading for what we really like: “irrational exuberance.”

Wednesday, September 3, 2014

PCE: The Real Measure of Confidence

We hear it said quite frequently that Personal Consumption Expenditures represent 70 percent of Gross Domestic Product. Such a rough approximation is false, by and large. The last time the PCE was at or above 70 percent was in the 1929-1939 period, thus roughly coinciding with the Great Depression. Thereafter it dropped into the 50s and has been gradually rising in percentage since, as illustrated in the following table:

PCE as % of GDP

What this tabulation teaches is that PCE is, these days, closer to “two thirds of GDP”—and that when consumer confidence really tanks, the numbers start going up and come close to touching 70 percent. Notice also that the lowest number in that table comes in 1942—when GDP had swollen with expenditures on war. But whether we are nearer 60 or closer to 70 percent, the obvious is staring us in the face. It is what ordinary people spend that makes an economy. And these expenditures are driven by personal necessity and—if PCE is growing at rates above population increase—spending is also driven by personal choice. Such is still the case for this period: the U.S. population grew at a rate of 0.9 percent annually (1999-2013) over against PCE growth at 2.2 percent. (All of the numbers shown here, by the way, are based on real, meaning inflation-adjusted, dollars.)

When people spend money, corporations begin to hire and invest. When demand is sluggish, the economy—unless artificially stimulated by government expenditures—will reflect the public’s lack of confidence.

This, of course, suggests that incentivizing corporations—as by keeping interest rates artificially low—only incentivizes speculation, not investment or hiring. Therefore the Fed, and thus monetary policy, is never enough to produce confidence in the real public, which controls two-thirds of the economy, and only stirs up those at the 1 percent level who are into investing and such.

The following chart shows the relationships between PCE and GDP for the recent 2000-2013 period:

In this period, the GDP generally lags PCE, growing at a lower rate (2.0% 1999-2013 versus PCE which grew at 2.2% in the period). The GDP appears to be waiting; and even when growth of the PCE signals rising confidence, the GDP is following it sluggishly at best. In the most recent survey of consumer confidence, conducted by The Conference Board, Consumer Confidence was up 2.1 points but CEO confidence was down by a point. That illustrates my point. The CEOs are still waiting for a more robust sign of growing public confidence. Meanwhile the markets are reaching new highs—which reflects the confidence of the rootless 1 percent that lives in the clouds.

Saturday, August 30, 2014

Growth Tremors in Europe

Once more, in the news this morning, gloom and doom (as if we didn’t have enough of that already). The reason for this is that, in Europe, German (-0.6%), French (-0.1), and Italian (-0.8) Gross Domestic Product numbers came in negative for the second quarter compared with the first. The change in Europe’s total GDP was a positive 0.2 percent, but in our day and age positive growth at such low levels is viewed with alarm.

In our times nobody asks how much growth is necessary in our economies. In other words: What is the underlying measure? The underlying measure, it seems to me, is population growth. Whenever GDP growth exceeds population growth—and the more it does so the more true this is—we are engaged in unnecessary overconsumption.

Just to check this out, I looked to see where European population growth now stands. “Now” in this context is 2012, the last year for which UN statistics are available. That year the growth stood at roughly 0.18 or 0.19 (I’m taking data from a graph). Therefore the Q2 GDP growth in Europe is just a shade higher than actual population growth. The two, in other words, are in equilibrium. I am showing the population graphic below; I found it here; the data for it come from this UN report (link).

Sooner or later, and all over the world, we will have to adjust to GDP growth rates that match population growth rates pretty closely rather than diverging sharply—as in the graphic that I’m reproducing from a previous post:

Why? Because the Age of Oil is drawing to a close and we shall be obliged to adjust to the “new normal” eventually. This reasonable projection is simply never seriously pondered by our media which are still convinced that nothing is changing at the basic levels of the world economy. But things are changing. Europe may be ahead of its time and Angela Merkel wise rather than foolhardy in insisting on austerity.

Thursday, August 28, 2014

Employment Update: July 2014

Since the last Employment Update that I published, for April 2014, three others have been issued by the Bureau of Labor Statistics (BLS), the last one, for July, here. I’ve been diverted from blogging by various changes in our lives, most notable buying and selling houses and, for us, a big move.

In that period, wouldn’t you know it, in May 2014, to be exact, the U.S. Economy finally erased the job losses produced by the Great Recession in 2008 and 2009. That job loss was 8.663 million jobs, measured as follows:

In December 2007, total employment stood at 138.35 million. In December 2009, it had dropped to 129.687 million. The difference between these dates is the loss. In May 2014, employment finally reached 138.497 million, therefore just barely exceeding the previous high at the end of 2007. By July of this year, that last Employment Report from the BLS, total employment was 139.004 million, therefore still growing in the right direction.

An updated chart, showing the economy’s performance since December 2007, follows. Following it is a chart showing total losses and gains, actual for 2007-2013 and an annualized projections for 2014.

Now that we have recovered the jobs lost in the Great Recession, another process is beginning. It is the creation of new jobs necessary to meet the needs of population increase—to accommodate the growth of the labor force. As I have shown before (here), in the 2010-2020 period, we need to add 87,300 jobs every month just to keep up with the population. If we take the period 2008-2013, plus the first four months in 2014 (when we were still just replacing lost jobs), we were building a deficit. The period described is 76 months. The deficit, therefore was 6.635 million jobs as April 2014 ended.

Since April, we have had job gains in excess of 87,300 every month. In May, with job gains of 229,000, 141,700 jobs (229-87.3) could be counted against call it the accumulated Growth Deficit of 6.6 million jobs. The economy is now in sunnier climes. Therefore in just the May to July period we’ve already managed to recover 7.1 percent of that deficit—rather than adding yet another 87,300 jobs to it—as in the last 76 months. A graphic shows this change.

Good news, by and large.

Friday, May 2, 2014

Employment Update: April 2014

The jobs numbers for April, published today by the Bureau of Labor Statistics (link), should cheer people on this rainy, overcast day here in the Detroit region. Job gains in April came in at 288,000. In addition, numbers for March were also revised, upward, by 36,000 jobs.  Here is the picture to date:

We are finally out-pacing job growth in 2013. In that year the economy gained  821,000 jobs January through April. In 2014 the equivalent job gains are 866,000. This in turn lifts the annualized projection for 2014 above any year of the recovery (2010-2014). That chart follows:

The projection for 2014 is made by adding all job gains, dividing the sum by 4 (for four months) and then multiplying that result by 12.

One result of this modest surging in jobs creation is that we have almost recovered all the jobs lost in the 2008-2009 Great Recession. We’ve recovered 98.9 percent; still 1.1 percent to go. The pie that follows shows the situation graphically.

Last, a look at how the sectors participated in this employment gain.

Of fourteen major sectors, two showed loss of employment (Utilities and Information). The last column of the table compares shares, namely share of total employment and share of total gains. Using that technique, we see that eight of fourteen major sectors performed worse, i.e., they gained less than their share of total employment. The worst performer was—again this month—the Government.  The best performers were Professional and Business Services and Construction.  On to next month…

Saturday, April 5, 2014

Employment Update: March 2014

The Bureau of Labor Statistics issued its employment report yesterday (link). BLS reported a gain of 192,000 jobs in March and also revised its February results, lifting February gains from 175,000 to 197,000, an additional gain of 22,000.

The Media reported these gains with an air of great optimism. The numbers were decent in my eyes too, but not enough to become enthusiastic. In effect, after acknowledging the February upward correction, job gains in March fell below February as shown in the month-by-month chart going back to December of 2007:

As of March we had gained 682,000 jobs in 2013 and 542,000 in 2014. So we are lagging 2013. Indeed, if we go back to 2012, we’d gained 829,000 that year. The patterns, therefore, suggest sober reflection more than banging of kettles and hopeful stares at the Dow.

Not surprisingly, translating the current result into the annual projection for 2014, shown in the next graphic, we see that, looking ahead, 2014 looks like it might underperform both 2012 and 2013. I don’t think this gloomy picture will hold. We are improving. Last month the projection was for a total gain of 1.9 million jobs; this month we project 2.2 million. If we have gains like that every month, we’ll be looking fine by December 2014.

Now a look at changes by sector. The following table shows the details:

Of fourteen major sectors, one showed loss of employment (Manufacturing) and one zero growth (Government). The last column of the table compares shares, namely share of total employment and share of total gains. Using that technique, we see that six of fourteen major sectors performed worse, i.e., they gained less than their share of total employment. The worst performer was Government (again).  The best performers were Professional and Business Services and Construction. The Housing sector seems to be recovering—and that is a good sign indeed. Where Housing goes, there the economy tends to follow.

Based on the most recently published and updated BLS statistics, we are still shy of recovering the total of jobs lost in 2008 and 2009. We’ve recovered 95.1 percent of jobs lost but still have 4.9 percent to go. That percentage translates to 422,000 jobs. If we keep growing at 192,000 a month, we’ll have caught up in three months.

Monday, March 17, 2014

Employment Update: February 2012

The employment numbers for February appeared March 7, i.e., as always, on the first Friday of the month, but this time I failed to put them up. The gain in jobs, as reported by the Bureau of Labor Statistics (here), of 175,000 was welcome news after a rather dreary jobs report the month before. Less loudly noted was the fact that the January figure of 113,000 was also revised upward this month by 25,000. Therefore the net gain, since the last report has been 200,000 jobs. The picture looks like this:

The projected jobs performance for the year 2014, presented in the next graphic, is lower than in any earlier year of the recovery with the exception of 2010. The current pattern, based on two months of data, may change if the economy is bursting with hidden energy that a simple run of bad weather has kept indoors for the time being. We shall see. What I keep wondering about, now that we’ve entered the fifth year of recovery and still haven’t caught up with the 2008-2009 job losses (see below), is whether the old days of soaring consumption will return or not. The One Percent, after all, may have all the money, but they cannot carry the economy entirely on their own shoulders. How many $1,200 handbags can you purchase, after all? Eventually it gets a little boring. We shall see, of course, but in my life, anyway, I’ve never before seen such a doldrums as this one. Facebook and Twitter, we pray that you rush to our rescue.

A look at the performance of the economy’s broadest sectors is provided by the following tabulation:

As in much of the period of the recovery so also in February, the Goods-producing sector gained, in proportion of its total share of employment, fewer jobs than the Services-providing sector. And Government has done worse than either of the others. These days that’s par for the course. The current loathing of anything “public” or “public sector” is certainly not helping keep the nation employed.

Last I present the chart showing how many of the total jobs lost in 2008-2009 we have regained in the four-years-and-counting period since the Great Recession, sort of, faded. The total of jobs lost was 8.663 million; jobs recovered to date are 8.012 million. Almost there but not quite yet. We still have a sliver more to go. Then we can start creating the jobs that simple population increase dictates that we should have created in this same recovery period. Clicking on the image will enlarge it.

I posted some estimates in the summer of 2012 (link) on the jobs that need to be added just to keep up with population growth. For the period 2010-2020 that number turned out to be 87,300 per month—lower, thanks to structural changes in the demographics, especially an aging population, than in 1982-1992, when it was 149,200. Applying that number to the 50-month period since the Great Recession, we see that, as of this month, we should have recovered the 8.7 million jobs lost in 2008-2009 plus 4.365 million due to population growth alone. When my pie finally shows us having regained all of the lost jobs, I’ll start a new one to show how long we have yet to go to recover the number that demand for new jobs that has created since.