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.

Friday, February 7, 2014

Employment Update: January 2014

All right, let’s kick off reporting on the employment situation in 2014. We’ve added 113,000 new jobs. At the same time, however, the Bureau of Labor Statistics also published major revisions to its employment series going all the way back to the year 2000. Such changes take place from time to time. The nature of these changes is summarized by BLS thus:

Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2014 reflect updated population estimates.

The consequence of these changes is that all the numbers I use here (going back to November of 2007) also change. Therefore all the charts you see here have been updated to reflect benchmark adjustments and population estimates. The net effect of these changes, as measured from November of 2007, is to add 110,000 jobs to the labor force. According to the changes, the job losses were greater in the 2008-2009 period (worse by 85,000 jobs) but the recovery has been stronger than reported earlier (better by 195,000 jobs). The net effect is that 110,000 gain over previous reports.

Looking at the charts, however, the basic pattern has not changed. But as of January 2014, we have now recovered 90.2 percent of jobs lost in 2008-2009—and have 9.8 percent to go.

The job gains in January, however, are rather anemic at 113,000. If that pattern continues, job gains in 2014 will only be 58 percent of 2013. Such an outcome, however, is highly unlikely. Job gains in January had much to do with wretched weather conditions, a “too much” or “too little” of everything: too many storms, too cold, and too much snow on the one hand and too little water on the other. Everything’s connected—and climate change has its influence on this series too…

Herewith the revised chart showing monthly change since the end of 2007. Comparing this chart with last month’s shows that the pattern has not been changed by the BLS revisions. The BLS press release on which these data are based is here.

As I did last year, so again this year, I am showing, in the following graphic, projected performance in 2014. The projection simply assumes that actual data, as of the time of publication, will be the same for the rest of the year. The formula is total job gains in the year, divided by the number of months covered, times 12. Today’s result is not encouraging but will undoubtedly lift as we plod on.

The unemployment rate remains at 6.6 percent. This is a figure I rarely mention because it is based on estimates of the work-force, those actually working and those actively seeking employment. Those who’ve given up are excluded from the work force although, if jobs were available, they would gladly work.

A positive note for January: employment grew in construction, manufacturing, wholesale trade, and mining. Three of those four growing sectors are basic industry.

Friday, January 24, 2014

Smartphone Sales Declining?

Two side-by-side stories in the Wall Street Journal this morning might be a straw in the wind. In one Nokia’s smartphone sales are showing a down-turn; in the other, similar results are reported for Samsung. Is this market finally maturing? I note that new technologies have their own well-known cyclicality. When they are in their growth phases, they resemble bubbles. When they mature, the media always sound as if some kind of End Time has arrived. See for instance this article in the Wall Street Journal, dated April 11, 2013, “Computer Sales in Free Fall” (link). The chart shown does have an alarming aspect—until you realize that the down-ward trend is that of growth. When a market is mature, growth will tend to match that of an economy, not that of a bubble. And then the great leaders of an industry begin gradually divesting of the product to those who will keep selling them for many, many, many years to come. At a profit—but not at the kind of profit that lifts stocks. A recent example is IBM selling its network server unit to Lenovo of China (link).

Friday, January 10, 2014

Employment Update: December 2013

Well, employment data for 2013 are now all in, and the results bring echoes of that well-known saying: “Not with a bang but a whimper.” The economy gained 74,000 jobs in December. Revised November estimates added an extra 38,000 to the total jobs gained. Those two figures added produce a gain of 112,000. As a consequence of this, the economy’s total performance in 2013 fell 7,000 jobs below the 2012 performance: 2012: 2.193 million; 2013: 2.186 million. These data come from the Bureau of Labor Statistics (the press release is here).

To sum up the annual performance, herewith a graphic showing job growth (or loss) from 2007 through and including 2013.

The monthly performance is shown in the next visual. It looks there as if, in December, the economy sort of gave up—just as the year ended.

Finally, herewith the pie chart showing how much of the 2008-2009 job loss has been recovered so far. The answer is 87.2 percent—after four years of trying.

As 2013 ended, great exuberance filled the business media because the Stock Market had performed well through 2013. Those of us who look at job generation as the real measure of economic recovery are entitled to answer that exuberance by saying: “Hold the Hallelujahs, please!” We’re not there yet. First let us recover all the jobs lost. Then let us reflect, in employment, the actual growth in population. And then, finally, we shall have reached the status quo ante, the 2007 levels.

Saturday, December 7, 2013

Employment Update: November 2013

November’s job gains at 203,000 are slightly lower than they were in October. October’s results, as reported last month, were adjusted upward by 8,000 jobs to result in 212,000 jobs. So, you might say, we are on an even keel approaching the final month of the year. These data were published by the Bureau of Labor Statistics (the press release is here). The new chart graphic the jobs situation follows:

With November’s result reflected in the projections for the year 2013 (based on year-to-date data), 2013 is shown to have performed better than the last three years. The current projection is that the annual growth in jobs will be 2.263 million (last month it was 2.236 million). In 2013, thus far, the economy has created, on average, 5,700 more jobs per month than in 2012. The chart showing the projection comes next.

The data published yesterday also got us closer, in percent measurement, to the recovery of all jobs lost in the disastrous years 2008 and 2009. At present, we have recovered 85.9 percent of lost jobs (last month we’d recovered 83.4%).

Friday, November 29, 2013

Sluggish Retail

Last year, at this time, I published a graphic showing the monthly retail sales of General Merchandise Stores—by way of illustrating the problems faced by retail trade—yes, even in this, the biggest, selling season of the year (link).

I thought that I would show an updated version of that chart. Here it is:

Last year I only had a few early months of 2012 to show. This time I show all of 2012 as well as results for 2013 through September.

Note particularly that these stores did better than in the earlier year in 2010, 2011, and in 2012. But when we look at 2013, the values achieved in that year fall right at, below, or slightly above the sales performance in 2012 all depending on the month. You might say that no real growth is showing at all. This explains the hysteria behind the Black Friday sales campaigns that I noted in the last post.

To illustrate 2012 and 2013 performance more sharply, herewith a bar graph, by month, of sales up to September. I have include two trend lines. The top line represents 2012, the lower line 2013. Note that trends in 2013 are lower—suggesting, if things continue in the same way for the rest of 2013, that this year will come in worse than last. Not the time to be in the retail business nowadays, as I heard a fellow analyst (and family member) say just yesterday. No. And these days the reliable alternative occupation, somewhere in Health Care, also looks rather dicey…

The data used in this analysis come from the U.S. Bureau of the Census, here, showing various sources of retail data.

Thursday, November 28, 2013

Danse Macabre

I had an occasion Thanksgiving last to mark this occasion with an advertisement from Kohl’s. The ad was printed on the plastic sleeve that brought our Thursday edition of the Detroit News. That edition  has been, and remains to this day, by far the thickest, a kind of desperate package of retailer anxiety. Well, it has happened again. Herewith a picture of the 2013 Kohl’s ad:

Nothing like maintaining a tradition, don’t you know. The main difference between the 2012 and the 2013 ad? In 2012 Kohl’s doors opened at midnight on Thanksgiving; this year they will open four hours earlier.

Now I’m only singling out Kohl’s here because of its prominent self-display, for the second Thanksgiving running, looking much the same. But the rest of the paper this year, like last, shows the hysterical anxieties of the retail sector . Paging through the paper today, a single thought, in German at that, rose up in my mind: Totentanz—the Dance of the Dead; the French version produces the nicest headline.

Let us see now. This is the fourth year of our so-called recovery. By recovery our retail sector probably imagines the return of frantic shopping growing at more and more intense rates every year. The public, instead, is holding back. The Spirit of Consumption seems to have fled permanently. To be sure retail sales grew—in 2010, more in 2011, and more again in 2012; the growth, however has been sluggish. The flavor, smell, and rhythm of this growth has not been right, somehow. Is a really big change underway? Is the world recovering from many decades of madness? If so, very major changes in retailing are indeed unfolding in slow motion still and the hysterical danse macabre is thereby explained.

Saturday, November 9, 2013

Employment Update: October 2013

Employment data for October 2013 are somewhat ambiguous. A total of 204,000 jobs had been added to the economy, significantly higher than the 148,000 jobs reported for September 2013 last month. But, as usually, the Bureau of Labor Statistics, which reports these data monthly (the press release is here), revised September numbers upward by 60,000 jobs. September results, therefore, at 208,000, were actually better, by a hair, than October results. And for all we know, October results may also be revised next month. We’ll see. Tracking these numbers requires a certain amount of patience before real trends become believable.

Herewith the updated chart:

This year I have been publishing projections of year-to-date numbers out for the total year. Last month and the month before, the annual projections were under-performing 2012. This month’s data show a positive change. It now looks like 2013 will produce a total gain in jobs of 2.236 million, better than the economy managed to do each year in the 2010-2012 period. The graphic showing annual data and the 2013 projection follows:

At the same time, what with nearly four years of recovery behind us, we’ve only recovered 83.4 percent of the jobs lost in the 2008 and 2009 period. At this month’s rate of adding to jobs, we’ll have to wait almost seven months more before we have achieved the employment level we enjoyed in December 2007.

Friday, October 25, 2013

Twitter's Valuation

Twitter—like all of the social media—is totally dependent on advertising revenues from a purely commercial point of view. Like virtually all other so-called tech companies, it is losing money even as it is preparing to go public with an initial public offering (IPO).

The company values itself at $11.1 billion, which seems from out here, viewed through innocent eyes, as rather a huge number considering that it had revenues of $422.2 million as of September of this year, alongside losses of $133.9. Let’s annualize those figures. Extended to 12 months, revenues will be $562.9 in 2013. That would be equivalent to 1.5 percent of total Internet advertising expenditures of $36.6 billion last year. Twitter’s losses for 2013 project to $178.5 million, meaning that its revenues don’t even cover costs yet—never mind profits.

More to the point, advertising, considered as a function of the total economy, is actually much ado about nothing, as I illustrate in the last post. Total ad revenues, all media, stood at $141.7 billion in 2008—and had dropped to $135.9 billion in 2012. Doesn’t look like a growth industry at present.

The message, of course, is that the Tech Bubble continues still. Come to think of it, “tech” seems to produce them. There was the Railway Mania in Britain in the 1840s—an illuminating bit of history worth revisiting as we see the “social media” and “mobility” soaring. There are such a thing as real utility, real industry, and real technology. But when irrational expectations produce investment hysteria, even real estate can have an unreal bubble—based on “innovation” in financing instruments—another “technology.”

Much Ado About Almost Nothing

This is a repost of an entry from the first LaMarotte originally published on July 27, 2009. I revive it now, with an update of the numbers, to support another posting which follows this one.

The Gross Domestic Product in 2008 was $14,264.6 billion (all right, that’s $14.3 trillion). GDP is the sum total of all economic activities in the United States. In that same year total expenditures on advertising amounted to $141.7 billion. With calculator in hand we can determine that advertising is just a sliver under 1 percent of GDP (0.99%).

[Corresponding values for 2012? Here they are: GDP $16,244.6 billion ($16.2 trillion), Advertising $139.5 billion, and advertising as a percent of GDP still only a hair of the total GDP, less than 1 percent (0.86%).]

I was led to make this calculation because today’s Business Day, the business section of the New York Times, perhaps coincidentally, was crowded with stories about advertising or closely related subjects. Stories dealt with (1) curbing commercials, (2) measuring responses to advertising messages, (3) late night TV programming battles (featuring ratings), (4) a TV morning show, (5) the role of giveaways in marketing, (6) NPR activities on the Internet,  (7) a technology convention being used as an advertising medium, (8) promotion of investing by using cartoons,  (9) a trademark battle between brands, and (10) a user-designed magazine and user-designed ads. Other stories were closely linked to the communications field: (a) iPhone, (b) Amazon and the Kindle, (c) a wireless acquisition, (d) Twitter, (e) the digital divide (African Americans are less represented on the Internet),  and (f) a story about the Gannett news organization. Only a single story, about toxic assets, even hinted at the fact that 99.01 percent of the economy [in 2008] might be doing something other than worrying about advertising or the media. I hasten to add here that the New York Times’ coverage of business is usually more diverse.

Since advertising is intrinsically linked with communications, it is visible because it has to be, intrusive because, well, it has to be, and therefore its presence is artificially exaggerated by its very function. We’re barely aware of the rest of the economy—unless some part of it fails us.

Our ways of perception have evolved so that we notice change above all—any deviation from the normal, ordinary, and habitual. Advertising exploits this aspect of our natural design. Our communications media, similarly, can only prosper when they’re seen. Both commercial and regular media therefore attempt to grasp our attention. The two ways to do so are by tempting or by shocking us. The relentless auction that modern life has become therefore produces a highly distorted sense of reality—sex and violence everywhere. But we see virtually none of that unless we’re in contact with media. Interesting. In the chart I’ve inserted, what we see is “All the Rest.” What we see on the media, writ very large, is the little sliver that I’ve labeled “Advertising.” Inverted impressions.

Wednesday, October 23, 2013

Employment Update: September 2013

Thanks to the government shutdown, this monthly report came yesterday, some 19 days after its regular appearance (first Friday of the month). The results are a gain of 148,000 jobs in September, lower than the number reported for August. These data come from the Bureau of Labor Statistics press release of yesterday (link). The BLS also published revisions for July and for August, netting out to an additional gain of 9,000 jobs. Herewith the graphic:

If we project year-to-date numbers to the entire year 2013, we see that 2013 is likely to turn in a lower gain in total employment than 2012 did. This month, like last, the projection has dropped. Last month in was 2.163 million jobs, this month 2.132 million. That graphic follows:

Despite the theme of the year 2013, which is Sluggish, a positive note is that all but two major sectors show gains. The two posting losses are Finance (down 2,000 jobs) and Leisure and Hospitality, down 13,000. People don’t seem to be in the mood to take a vacation.

It will be interesting to see what impact the October troubles will have had on this all-important indicator of our economic health.

Sunday, September 8, 2013

Flash from a Distant Mirror

[Note: This post first appeared on another and earlier version of LaMarotte on June 8, 2009. I have closed that blog because advertisements began to appear on it. Some of the posts from that version, however, are reprinted here.}

The following quote is taken from a history entitled Caesar and Christ, by Will Durant, Simon and Schuster, 1944, pp. 111-112. It deals with an era known as the Agrarian Revolt in the Roman Republic, extending in time from 145 to 78 BC, thus the period immediately preceding the rise of Julius Caesar, who became the first emperor of Rome and thus closed the republican era of Roman history. Durant is summarizing the causes of the revolt:

The first cause was the influx of slave-grown corn from Sicily, Sardinia, Spain, and Africa, which ruined many Italian farmers by reducing the price of domestic grains below the cost of production and marketing. Second, was the influx of slaves, displacing peasants in the countryside and free workers in towns. Third, was the growth of large farms. A law of 220 forbade senators to take contracts or invest in commerce; flush with the spoils of war, they bought up extensive tracts of agricultural land. Conquered soil was sometimes sold in small plots to colonists, and eased urban strife; more of it was given to capitalists in part payment of their war loans to the state; most of it was bought or leased by senators or businessmen on terms fixed by the Senate. To compete with the latifundia the little man had to borrow money at rates that insured his inability to pay; slowly he sank into poverty or bankruptcy, tenancy or the slums. Finally, the peasant himself, after he had seen and looted the world as a soldier, had no taste or patience for the lonely labor and unadventurous chores of the farm; he preferred to join the turbulent proletariat of the city, watch without cost the exciting games of the amphitheater, receive cheap corn from  the government, sell his vote to the highest bidder or promise, and lose himself in the impoverished and indiscriminate mass.

Roman society, once a community of free farmers, now rested more and more upon external plunder and internal slavery. In the city all domestic service, many handicrafts, most trade, much banking, nearly all factory labor, and labor on public works, were performed by slaves, reducing the wages of free workers to a point where it was almost as profitable to be idle as to toil. On the latifundia slaves were preferred because they were not subject to military service, and their number could be maintained, generation after generation, as a by-product of their only pleasure or their master’s vice. All the Mediterranean region was raided to produce living machines for these industrialized farms; to the war prisoners led in after every victorious campaign were added the victims of pirates who captured slaves or freemen on or near the coasts of Asia, or of Roman officials whose organized man hunts impressed into bondage any provincial whom the local authorities did not dare to protect. Every week slave dealers brought their human prey from Africa, Spain, Gaul, Germany, the Danube, Russia, Asia, and Greece to ports of the Mediterranean and the Black Sea….

There is a great deal more along these lines, providing more detail. Durant was a very popular historian in his day, hence a copy of this book may very well be available in a decent local library. Needless to say I recommend a perusal of some pages of this important chapter. It is a kind of mirror held up to us by the past. To be sure, the economic level of Rome was on a lower stage. It was a time when agriculture was the industry and neither fossil fuels (our energy slaves) nor machines to use them had been invented yet. At the same time the public franchise had been obtained by Roman citizens who owned property; the forms of it were complex and comparable in many ways to ours. This posting will give some context to some of my past and future entries regarding the sensitive subject—sensitive because it violates our faith in the Free Market—of a national industrial policy. In the absence of one—and one based on genuine justice and values—has in the past led to chaos.

The term latifundia, plural of latifundium, was a Roman coinage of the time combining the word latus meaning “spacious” and fundus meaning “farm” or “estate.” The foundation of civilization is the fundus, the agricultural land.