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NFP – SSA & Ben
After the ADP numbers came out last month but before the release of the NFPs I wrote this:
I look
at the (ss) payroll tax data in the context of the Non Farms Payroll
numbers. Does the data from SSA have any predictive information on this
critical monthly statistic? Not with any precision; has been my
experience (and frustration) to date.
With
that as a caveat, I have looked at this and concluded that the ADP
report this morning suggesting a 300k increase in payrolls is overstating the number. We shall see soon enough.
Turns out the actual numbers were on the soft side of estimates, well
below what the folks at ADP were saying (and charging for).
This Friday we get a look at payrolls for January. Today the Social Security Trust Fund released the Payroll tax information for February:
This is a look at the 2010 full year data including details for Jan. and Feb.:
It is my observation that there is a correlation between the relative
change in tax receipts and changes in general employment. An important
consideration in this is; “Does the forward month of data (February) give information regarding the month(s) preceding (January) changes in payrolls?”
If there is a correlation it is least obvious (to me) when payrolls are
declining. It is somewhat more obvious when the level of employment is
little changed. It appears to be most correlated when payrolls are
expanding. This observation is reasonable as there are many time lags
between someone losing their job and some time later when they get the
last paycheck. On the other extreme the computers at SSA are relatively
quick to recognize new hires as part of their forward month estimates of
receipts.
My look of the numbers is that there is some clear evidence of continued job growth. My own way of calculating the January NFP comes up with an estimate of 310,000. This will not be the headline number for January. The headline number (according to my formula) will be 210,000. There will be a 100k prior revision (60k Dec., 40k Nov.)
I wouldn’t bet on my own numbers. Not yet at least. Should these numbers be what we get (more or less) it will come as a surprise. Last I saw the estimate was for +140k.
We have been in a rocky trading range for the long bond for six weeks.
We’re pretty much at the bottom end at the moment. A hot NFP number
could bring a downside break in the range. If we break towards 4.7% we could move quickly to a five handle.
Should we see evidence this Friday that payrolls are in fact improving it will be great news for Ben Bernanke. Or will it?
An "above expectation" number on Friday will bring WTI to $100 in a
week. The rest of the commodities group will move with it.
At some point someone of importance is going to tell Ben to get
his foot off the pedal. That his policies are no longer necessary and
have crossed over to being a destabilizing global force. It’s going to
be very hard for him to say “no” when gas is $4, food is up 15% and payrolls are rising at 200k a month. That debate could well start this Friday.
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But Ben will keep QE'ing it because what happens to the yield curve if he raises rates? Shifts higher of course. How will we be able to afford such high yields with the enormous debt levels?
We are cornered, game over for the US economy of course.
Agreed. Lots of shit comes unglued above 5% 10y.
Exactly, QE has nothing to do with growing the economy, and everything to do with monetizing the debt. With QE, debt service costs are essentially zero - Treasury pays interest to the Fed, Fed returns said interest to Treasury as a "profit".
We can't afford to pay interest on the debt today, forget about a 5% 10 year.
QE4EVA
"QE has nothing to do with growing the economy, and everything to do with monetizing the debt"
yes correct but its also also about inflating away the debt, especially the debt still sitting with Ben's masters, the WS banks. Its another one of many lifelines to the banks. If you cant pay your debts you either need to default or need your central banker to inflate them away or at least make them manageable.
Shouldn't that read "debt created in the housing bubble and largely paid out to US citizens in the boom and consumed"? It went out via wages, via construction activites and via investment income related to selling homes at inflated prices. It was spent via over-consumption.
Sure the private banks got their share (and the private mortgage industry was driving both the subprime and the prime lending bubble) but blaming them alone is simplistic, isn't it?
In what way are they destabilizing? Can anyone cite hard data that shows a link from QE/dollar-weakness (of about 5%) to an inflation in global food prices for non-US countries (of about 30%)?
All the data I've seen so far shows old-fashioned global supply & demand pressures driving up prices - not QE dollar weakness ...
Even at 0.2M jobs/month that's only 2M jobs per year. Almost 5 million jobs were lost, so it would take 2.5 more years of this maximum-rate job growth to return to the early 2008 levels of employment.
If it's only 100K per month then it will take 5 years to get out of the slump ...
Just enough for the Palin administration to claim success, so I'm sure the GOP will try to slow job creation as much as it can :-)
:-(