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Goldman Bearish On ADP, Claims And Productivity, Labor Costs Plunge Is "Strongly Disinflationary"
Goldman does not like what it saw in today's labor reports.
ADP and Productivity weaker-than-expected; Claims Mixed
BOTTOM LINE: ADP report weaker-than-expected, showing an increase of 55k in May. Initial claims fall while continuing claims rise from upward revised level. Productivity revised down a bit more than expected, but unit labor costs are still falling.
KEY NUMBERS:
ADP report says private-sector payrolls +55k in May vs median forecast +70k.
- Initial claims -10k to 453k in week ended May 29 vs. median forecast 455k.
- Continuing claims +31k to 4.666 million in week ended May 22 vs. median forecast 4.61 million.
- Nonfarm labor productivity in 2010Q1 +2.8% vs. GS +3.2%, median forecast +3.4%, first release 3.6%.
MAIN POINTS:
1. The ADP report on private-sector payrolls rises by 55k in May, coming in weaker than expected. (The April number was revised up from +32k to +65k.) Employment at all firm sizes rose in May, although medium firms saw much larger increases (+39k) than small (+13k) and large companies (+3k). Employment gains were concentrated in service-providing sectors (+78k), while employment in goods-producing sectors actually fell (-23k). As the ADP count has generally understated the net change in private payrolls, this weaker-than-expected report is suggestive of small downside risk to the private component of nonfarm payrolls.
2. Initial claims fall by 10k to 453k in the week ended May 29. (The previous week was slightly revised up by 3k to 463k.) The 4-week average of initial claims remains elevated at 459k. Continuing claims rise by 31k during the week ended May 22, from an upward-revised level in the previous week (by 28k to 4.635 million). Extended benefits, which are available only through May 15 rise by 56k, having fallen by a cumulative of more than 200k during the previous three weeks.
3. Nonfarm labor productivity grew a downward-revised 2.8% (annualized) in the first quarter, below the first release of 3.6% and a bit less than expected, as output was revised down and hours worked were revised up. However, with compensation per hour also revised down, unit labor costs still fell 1.3%, only a bit less quickly than the first release of 1.6%. On a year-on-year basis, unit labor costs are still down 4.2%, the most rapid pace of decline in the history of the series (since 1947) except for the 2009Q4 drop of 5.1%. Thus, labor cost trends remain a strongly disinflationary force.
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OK, but...double reverse psychology watch!
Thanks! As I posted below, I had lost count.
Is that the ass talking or mouth. I think it's the ass with some dentures crammed in there. Does anyone have a flashlight.
Let's just shove some "A" size batteries in there and see what happens. I think we'll find out very quickly if a eight pack, along with the packaging, is jammed into each of Goldman orifices.
"Eveready" would be just the right amount of Karma in this case, wouldn't you say?
Man, you must be even more ancient than I am. "A" batteries haven't been around for quite a while.
http://en.wikipedia.org/wiki/File:A_battery_(Eveready_-742).jpg
PS please note non-hostile emoticon :-)
I'm so old parts of me are decomposing before I even make it to the grave. :>)
Including the brain. I think I meant to say "C" batteries. But I still want the packaging shoved in there as well. :>)
Hell, it was all just an excuse to post the picture of the pink bunny rabbit with the shades.
Your recent contributions have raised the level of discourse on this site, so apparently the ol' brain is holding up ok.
+1
Thank you.
Chapter 2 will be published tomorrow. Can't wait. It really is exciting to see people talking about things other than the illusion of the Ponzi. While it's important, we all need some positive constructive energy to offset the negative energy of the Ponzi.
....and SNAP (which is what I use to measure those that have exhausted all UE benefits) rose by +480,000 (March is latest numbers) to 40.1 Million.
"Disinflationary"??? Sounds very... Orwellian.
Appears to be another drumbeat in the "inflation is good" mantra.
Disinflationary is a word that you invent when you don't want to say deflationary. Deflation is the Keynesian as fiscal restraint is to Congress.
I would rather go scratch a blackboard with my fingernails than contemplate this irritating term.
Brings to mind the traditional spelling-bee game ender: ANTIDISESTABLISHMENTARIANISM
It's sort of like calling the stock market gaming instead of gambling.
Where are we at with the reverse psychology game with GS....is it reverse reverse or reverse reverse reverse? I just can't keep it straight anymore.
+100 !
And .. the DOW will rise another 250 on this news .. proof of the booming recovery!!
Vrooooom!
Anyone else love these vertical morning out of the gate ramp jobs? If it works it comes out like those L graphs, where it's vertical to open and then the algos trade it back and forth all day long in a horizontal line on 0 volume; it's a thing of beauty. Go Ben go!
But, but, but Leo said it is going to be good...
Yeah, and he said manufacturing would be the catalyst. Lulz.
People steeped in the Keynesian world-view of infinite money through infinite debt, have an existential fear of disinflation. It is the end of the means by which they seek to create money and therefore attain and maintain power over society.
Let me add that Amity Shlaes in her book about the Great Depression, The Forgotten Man, shows that wage controls were one of the key factors that turned a recession into a depression. Simply put, because employers could not reduce wages at a time when pricees for the products being produced was dropping, their only choice was to terminate their workers or shut down entirely. Those who retained their jobs retained their wage levels up until the business went bust.
Anyone smell that? It smells like -150 DOW today at least.
The markets have gone full retard, never go full retard. I don't doubt that TPTB have the capacity to manipulate the markets at will, they've proven that. Reality is going to crash their party from somewhere outside their purview, the proverbial black swan. I don't know what it will be, or when it will come, but when it comes it will make the flash crash seem tame.
The Fed has painted itself into a corner, and there is no way out; bottom line. The options are default/depression, and/or hyper inflation/stagflation. Those eventualities are not mutually exclusive I might add. I'm patient, and no Mr. Bernanke I won't take my eye off the prize. When you come out and say no one could have seen it, that tomato hurtling towards your face will be mine.
This bubble started between 1-2000 on the DOW, and that's where it will go; the only questions are when and how not if.
+1, great comment.
+10,000, no way out for full-retard mode FED/markets/gubmint.... Reminds me of Bart Simpson 'I didnt do it you dont have any proof I wasnt there uh uh wasnt ME'!
I smell -167,3. If I nail it to the point, yo'll invite me for a beer ;=)
Well the DOW is the economy right...I mean when the market goes up everything is OK...as long as the market goes up everything will be OK...as long as the market is up everything will be OK...
We all say so, so it must be true!
Kipling (describing monkeys imitating men)
Also this on JPM http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7800471/...
I am sure with all the hundreds of billions streaming in from the Fed it gets a little bit hard to remember what is who's account!
When all trading is done by computers, only computers will have money.
Is that inflationary, disinflationary, or deflationary?
Please show your work and answer in C++ so they can understand you.
#include <fraud>
#include <waste>
#include <abuse>
#include <cstdlib> // rand()
#include <limits> // epsilon()
static const double SCREW_ = 2.0;
static const double BANKRATE_ = 3.0;
static const double GOVRATE_ = 1.0;
static const int HAMPTON_CHANCE_ = 3;
void churn(void)
{
Money& consumer = GetConsumerMoney();
Money& big_banks = GetWallStreetMoney();
Money& gubbermint = GetGovernmentMoney();
Money adjust;
while(consumer.hasState())
{
adjust = consumer * ((BANKRATE_ + GOVRATE_) * SCREW_ * numeric_limits<double>::epsilon());
consumer -= adjust;
big_banks += (adjust / (BANKRATE_ / (BANKRATE_ + GOVRATE_)));
gubbermint += (adjust / (GOVRATE_ / (BANKRATE_ + GOVRATE_)));
if(!(rand() % HAMPTON_CHANCE_))
{
goToHamptons(big_banks);
}
deficitSpend(gubbermint);
}
doArmageddon();
}
post++
Beautiful. A real clip 'n' save answer.
Be seeing you....in the camps....
while (1==1) {
deepwaterhorizon.leakOil();
}
Beautiful
National productivity is an anachronistic formulation because it measures output relative to the labor cost of manufacture. While that's fine for companies, on a national level it is nonsense because non-worker and non-productive-worker costs are still a labor cost. Add to the cost of labor unemployment benefits, census salaries, etc., and the resultant productivity number will be meaningful.
When the Deflation Bitches show up and they will, Cash will be King.
Sell that ice to them eskimos.
This sort of thing will help in getting the unemployed back to work:
http://www.clickorlando.com/jobs/23752759/detail.html
It does seem that we are facing 20 more years of increasing welfare state and the inability of anyone to find work. Just like Mexico, Americans will be driven to selling trinkets to motorists at traffic lights. That is if anyone can afford to drive without a job.
Can't even say it - have to say "strongly disinflationary".
LOL Goldman.
* Notes from the Carolina Coast*
Anyone who doubts we are in a depression should visit a middle class tourist destination and look around. Anecdotal, but numbers seem down a good 50 percent from a dismal 2009. At this rate, all the seasonals, and mom and pops are toast.
The few jobs around are going to illegals and Russian/Ukranians on work visas. Lots of bitterness among the locals, and rightly so. This is the stuff of rebellions..., but what the hell? Leo says it's all good. Put some umbrellas in those drinks. The damn oil slick ain't here yet.
Couldn't have said it better from Virginia's Eastern Shore. What mom and pops were left after last summer are PISSED. (And toast.)
Its been that way for a few years. In a few of my main mid class tourista areas, biz has been bad for a few years. Most mom and pops are surviving on fumes and savings. Almost all bizzes have "for sale" signs, but they can't get high enough offers to pay off the debt financing. Those that have no debt (CRE loans or leases) have cut back, literally to mom, pop, the kids working, no outside employees. The ones with debt have folded, or will soon. The new owners of these places are finding out they can't pay the debt with the income that is generated in tourista season. Sadly, I have seen people who want to retire and buy/run some small biz, invest their life savings into bizzes they knew nothing about, then lose it all.
Come on down to Charleston...people still seem to be spending money in my area. That said, lots and lots of commercial property sitting vacant. The people apparently don't care, though....just give them sun, beer and beaches and all is well.
Last year's stats show a shift in two of my areas from people staying in hotels/motels to camping and a shift from eating out at restaurants to buying it at the grocery store and cooking themselves. Although people are still visiting, the money is not being spent locally. Same with hunters and fishermen, stocking their RVs with ice, beer, food at home before they come. So you may still see people around, they are spending less.
We were just discussing that phemonenon in my office after Memorial weekend. TONS of people on the island but not a penny spent in local businesses. A waitress friend complained of less than 10% tips from the few who ate out. Man.
Restaurants are especially hard hit. Inflating costs, perishable product, fewer customers. Clue, look at the restaurant supplier companies, the bigger ones, like Sysco or Food Services of America (FSA). Most of them have reduced their delivery truck sizes from semis, to smaller trucks in the remoter tourista areas because of lack of demand. When things get really bad, they tack a fuel charge onto delivery costs. It's pretty grim.
I've noticed the Sysco trucks downsizing!
Where on the coast are you? Northern Banks around Kitty Hawk or Emerald isle-Wrightsville Beach side of things? Things are ok here in the people's republic of Chapel Hill as everyone works for state or local government.
Government fucks are not
the real economy and they are not middle class.
It won't be disinflationary for long... the inflation rate was only like 1.5%.
It will probably turn negative sometime around 1st quarter 2011.. then they can no longer ingnore that the US is deflating.
Somewhere there must be mention of the census worker hiring distorting all the totals.
All this about tens of thousands, where over 500,000 were hired into the census. Is this all about the number of angels dancing on a pinhead?
Manufacturing is laying off more people where I am in the southeast. We're in the medical plastics sector, and orders are really slowing down; lowest in a year.
No green shoots....just the same old grass to mow.
Sounds great, less wages for more hours, plus Ben Bernanke endorsed gas at $3 per gallon in the summer.
If these assholes in the Government and at the Fed even had a clue what they were doing, I'd be shocked.
The American worker feels the elephant on his/her chest bear down once again....
How to spot deflation is coming.
1. Andrew Jackson decends from the sky.
2. The bank dies.
Because historically. When those 2 things didn't happen. Deflation didn't happen. And I'm talking about deflation in aggregate. Not in 2 or 3 categories that only a few thousand people give a crap about.
Until I hear the FED is being disbanded. There is nothing credible historically or logically that deflation is even remotely possible.
Historically; see Fed, 1930!
You don't find things out by asking the FED.
The last duty of any central banker is to tell the truth.
Eggs 64 cents per dozen New Jersey 1946
Dozen Eggs 18 Cents Ohio 1932
Eggs 1 Doz. 47¢ 1920 WI
Eggs 1 doz. 25¢ 1924 WI
Eggs 1 doz. 68¢ 1925
Eggs 1 doz. 55¢ 1925
Eggs 1 doz. 59¢ 1929 New York
Prices were all over the freaking place. Deflation was a BLIP on the radar. It didn't last. It never does.
If you are going to go on an asset buying spree during a deflationary collapse you have about 6months to get what you are after. Because you are going to be pumping prices along with a bunch of other deflationists.
Long term +100 percent deflation only occured in the US after Jackson killed the bank and congress didn't match currency to population growth correctly.
Deflation under the FED is a MYTH.
Ruh Oh someone watch Leo...
The ADP report is 100x more accurate and "important" than the BLS report.
The real/smart money knows this, thus markets are tanking...
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