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Why Incomes Are So Much More Important Than Jobs
After today's NFP number, even the most rosy-eyed optimists know that the jobs situation in the US is if not openly reverting into a double dip yet, then certainly scraping the bottom. What many are confused about is just why Obama and Biden were touting today's NFP so aggressively: the massive disappointment in the market post the announcement leaves only two possible explanations: 1) the president's advisors are all truly incompetent and have no idea what the market perceives as good or bad news, or 2) this was a calculated move to send markets lower, which in turn would hit the euro. If the latter is indeed the case, the question remains whether this is a benevolent (assist European exporters) or malevolent (throw Europe into unfixable turmoil) move. The response should be made clear long before the mid-term elections. Yet even with all these open items, the bottom line is that today's BLS report was very much irrelevant. As David Rosenberg highlights, it is not the actual employment, it's the income that this employment generates, that is important. And as he observes: "real organic income is still not growing and down nearly $500 billion from pre-recession levels."
More from Rosie on the topic:
IT’S INCOME THAT COUNTS
It was fascinating to see that in April, we supposedly created 290k net new jobs and yet consumer spending stagnated in the U.S. And, in May, apparently the government numbers show a further 431k in net new job creation, and the retailers missed their sales target. According to the ADP, this is an extremely weak recovery in private payroll growth, especially in the context of the savage declines during the recession. In addition, real organic income is still not growing and down nearly $500 billion from pre-recession levels.
Let’s even assume for a moment that the government statistics on employment are accurate — wage and salary growth is slowing down nonetheless. Half of U.S. employers froze pay for at least part of their workforce in the past year and 13% made actual salary cuts (as per a WorldatWork survey cited in the Baltimore Sun). What a recovery! And, 1 in 3 of the companies that did freeze pay have no intention of departing from that strategy in the coming year.
In any event, it is really disconcerting to be seeing the flow of weekly jobless claims continue to come in north of 450,000 — as was the case yet again for the May 29th week. The four-week moving average of 459k is actually consistent with net job declines 75% of the time in the past. If we don’t see an improvement really
Rosie follows up with two anecdotes on the actual labor situation which provide a far more precise glimpse of what is happening in the country than the administration's daily show:
We got this very short email yesterday that just about sums it up.
“The Census taker that stopped by our house had a Mercedes SLK convertible.”
And this one was from James from Atlanta — also a gem“Dave, Great insights in your letter as always...a comment on the elimination of minimum wages — this has in a way already effectively been done for manual labor. Drive by any Home Depot/Lowes in cities where there is an immigrant population and you will find an assortment of carpenters, drywallers, lawn care and "honey do-list" specialists, and movers willing to work "off the books". I have used these folks for a variety of small labor intensive projects around the house as do other colleagues of mine. Know of many licensed contractors that will use a laborer for a day or two of work on a job thus avoiding the payroll taxes and insurance that would normally be paid to the state/fed gov't. Just thought you should know what’s going on.”
Lastly, and off topic, here is some interesting insight from David on gold supply:
Bill, a reader of our research, sent us this thoughtful response yesterday on the supply outlook:
“Dear Dave:
Thanks so much for your daily commentary, which I follow with devotion.
Regarding gold supply from mines, here is a frequently overlooked point: because the ore deposits at any given mine are typically a limited quantity, prudent mine managers typically seek to mine the lowest grade ore available in their mine that will pay their costs at the current price, in order to extend the life of the mine as much as possible. In other words, as prices rise, they mine lower grade ore, which at a given level of throughput, results in lower total gold output.Of course the situation varies at every mine. Some mines have a lot of low grade ore; others little flexibility to adjust. But the point holds.
Thus rising prices can result in an extended period of reduced production, until new mines come on line. However, new mine development is a process that takes years, and remember, investors need to be quite confident as to the permanence of a price level sufficient to make the mine economic over time.”
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Might want to edit that last quote block.
As my Trusted, Honorable, Elected Public Servant (Really introduces himself that way. Um hummh, really.) would say in private; "Mah Income is distinctly moah himpot-ant thain yoah Jowb."
Don't let those day laborers at HD fool you. Here's the real story.
http://www.youtube.com/watch?v=3XGJq8wrw5I
funny, sad.-
FAS
What's better - saying you closed the deal with 10 fat chicks in a month or one hot one in the same time period? Why folks don't understand this concept when it comes to jobs is beyond me.
Then again, if you're married, the better question is: Did the wife put out 10 quickies in a month, or one long session to the point your Viagra wore off?
or wacking off 10 times vs a little precum whilst flipping through Target junkmail
That is NOT a good visual. Ugh. Esp. over a Playstation 3 ad..
Oh and backdooring fatchicks while they raid your fridge is pleasing?
ROFL
(Must remember that quote for future use)
You are saying that from a 3rd person point of view. I can't see what they're doing on the frontdoor side. Ignorance might be bliss in this case..
Would you like to explain this lowlife filth comment to someone that you respect? Can we maintain some decorum in the race to the bottom?
homersimpson
I hear Fat Chicks are more giving, less about them and more about you.
So then the Fat Chicks win.
But if they give more than you expected wouldn't that result in serious bodily harm or death?
You don't have to mention they were fat. Just like Leo, you just have to say that you nailed 10 hot chicks and post fake pics of them (a la SI girls). Btw, speaking of fat chicks, Walmart is hiring. So many fish (read: whales) so little time!
Marvelously constructed.
No president would make a fool of himself intentionally. That's what Joe Biden is for.
Well, you know, per Biden: "we have to spend money to keep from going bankrupt".
Bush Sr. had Quayle... I think it is the comparison tactic of influence:
Submerge your hand first in a bucket of cold water and then put it in a bucket of room-temperature water. The room-temperature water feels hot even though it really isn't.
The smart girls know to stand next to the fat ugly chick, not the hot one.
Might be a good foil for some segments of the potential assassin space. And then Pelosi is currently 3rd in line. They should both travel separately through January at least, or whenever the new Congress comes in.
Holy Shit! A Universal Truth!
Bush 2 Darth Vader
Clinton Gore (Uh....Inventor Deluxe)
Reagan Bush 1 (Lip Reader)
Ford None (for a while....LOL)
Carter Mondale (Bzzzzt. Lights flickering)
Nixon Agnew (Oh, my.)
Truman Alben Barkley (Really)
Go figure.
What a great fuckin' country.
I vote incompetent, retarded, and clueless. Doubt if any of them know what EUR stands for.
Never ascribe ulterior motives to morons.
It's the Peter Principle on the national stage.
Never ascribe to malice, that which can be explained by incompetence. - Napoleon Bonaparte
Napoleon Bonaparte is a malicious liar. Attributing it to incompetence is a malicous lying act.
I'm going with incompetent. The first clue was picking Joe B for VP, the second was allowing him to get in front of a microphone.
Drive by any Home Depot/Lowes in cities where there is an immigrant population and you will find an assortment of carpenters, drywallers, lawn care and "honey do-list" specialists, and movers willing to work "off the books".
Lots of people working "off the books"... Welcome to one more brazilian reality...
Here, people working "off the books" accounts for 45% of the workforce. You will see something like this in the US soon...
Carbon tax will solve that
Carbon Tax you say.
http://fffffffffffffffffffffffuuuuuuuuuuuuuuuuuuuuuu.com/big.jpg?im=0187...
Here's another wage example: a relative of mine works in a shop where staff has been cut back so it is physically impossible for the remaining workers to get everything done in a 40 hour week. Management has announced that no more overtime will be paid under any circumstances. They also let it be known that if full production is not maintained the owners will be forced to shut down the shop. All these things were presented as simple facts; it was left up to the employees to decide what to do. Nobody was told to work for less or perform free overtime, but I wonder what they will decide in the end?
Perhaps your relative should buy the shop, give everybody 30 hour work weeks with early retirement, and make millions of dollars for himself. Easy to be the entrepreneur, right?
Sure, maybe his employer is an evil person who wants to get free work out of his employees while enjoying the fruits of their labor. If that's the case, your relative should definitely quit. But maybe his employer is being honest about the situation, and this is what's needed to compete with cheap foreign labor.
As a white collar worker, my first boss told me to come in 6 days/week but said up front I would get no overtime because I was "salaried." I accepted the job because I liked the work and needed the money, but I'd never do that again... unless I got paid a lot of money.
The workers are screwed, anyway... Not a matter of being a "good" or "evil" boss. They are screwed. Period.
No part of my comment called anyone evil or passed judgement. Just another report from the front lines. Make of it what you will.
Free overtime, I think?
The workers are screwed...
Amerika is screwed, make no mistake about it.
Morons to the left of me, morons to the right of me, morons in front of me.
Think I need one o'those old blunderbusses.
Amerika is screwed, make no mistake about it.
Morons to the left of me, morons to the right of me, morons in front of me.
Think I need one o'those old blunderbusses.
I think I saw the same cat twice...
Is this the only glitch in the matrix you've noticed???
MP
morons standing in my shoes , somebody stole my shoes honest .
i left them just over their by mistake ,, i did not realize the area was consigned for free shoe giveway.. this is the first time i have visited this good will place ,
and it was not until after ,, a clerk told me to keep my shoes on lol
seventree
Let's hope it will involve kidnap and spectacular bloody revenge.
Sounds exciting but won't pay the bills, so capitulation is more likely. This sort of thing is happening all over. With enough wage deflation we will eventually be able to compete with third world labor productivity. Workers will put in 12 hour days to feed their family a bowl of rice. Upside: full employment at last.
Forcing overtime work without compensation is, of course, illegal in this country (although in Asia it's the norm, and often cited as a reason for premature death). Unfortunately, may companies are now proceeding illegally in many ways against their employees. My son, 27 and an experienced design engineer, was first forced to live without benefits, and as of three months ago informed that he would be paid under the table entirely. Eventually the Feds will catch up with his employer, but the latter will be either out of business, or the terminal equivalent. In the meantime, my son will forfeit any possibility of unemployment benefits...He's currently looking for a Fed job...God help us all...
Actually I don't think that forcing overtime is illegal if you are a salaried worker. But the paying under the table is whole different ball of wax. But your son works in tech. There are jobs out there. I got cold called by three different recruiters last month. I would definitely suggest he start looking.
And yes working in tech means you sometimes work longer hours especially at a start up (which is why they tend to hire younger workers). I am currently at a start up and sometimes I put in insane hours (and I'm old!). And sometimes I look my sister who went to work for the government straight out of university and I'm a little jealous - her benefits are incredible! But, at the end of the day, she loathes her job and I love mine :)
Dont want to break your spell but could it be that your sister's job is fine and therefore it is easy for your sister to complain about it and that your job is not that fine, making it much less easy for you to complain about it?
Compare: your sister has incredible benefits, you have not. If she keeps telling that her job is fine with that, would she not alienate you? Seems to me just a love strategy. After all, you only have your job when she has her job and her benefits. Your sister might love her job but prefers to lie about it not to alienate it. Not sure she would swap her position with yours. She might just pretend.
Happens quite frequently, depending on how the situation people are allows them to travest the reality.
Usually, people in a very good situation can easily complain about how shitty their situation is, because that is just words, they live a so better reality.
People having to endure a very hard situation cannot afford to complain how shitty their situation is (especially when they cannot escape it) because this would finish to kill them. Just mental protection mechanics.
"Eventually the Feds will catch up with his employer, but the latter will be either out of business"
Who knows, maybe the feds will go out of business first. There are already wide swaths of federal law they choose not to enforce anyway. Maybe a little budget cutting apocalypse a few years from now, or a straight consumption based tax system, will cut them seriously down to size.
The trend around here is that people are working 2x for .5x money compared to three years ago. They are small business owners, on commission, etc.
People are also drinking mostly 2x these days.
...exicans also after hours run the many independent taco shops ,, where three for a buck tacos are coming back to life .
working off the books also save the laborer his share of fica, and other overhead ,
he has just found a way to get resourced over sea pay,, here in america ,, and take home more than his american peers,
is not america great ,, allows for contract labor .
and the local business can compete with walmart
interesting.
i believe it is intentional and malicious. why?
because we saw that the US used its propaganda machine against Toyota. We also saw that Wall Street is very complicit in the blow up of Europe debt, having hidden the debt with new "financial instruments".
Basically the US is going rogue and is attacking its allies economically to salvage the situation at home.
I was totally surprised by the govt attack on Toyota; thought it would be Ford.
That is a consumption game. Some people love to propagate you can better your situation in an overconsumption situation by going after the small fish.
You call, all those people who are keen on pointing on the 1 billion people who are starving around the world as being the cause of what they call overpopulation.
Unfortunately for leaders, they can not fool themselves into those kind of thinking. They need results if they want to stay in power.
For them, it is clear that pushing other big consumers on the road sides is what will better the fate of their consumers at home.
Pushing Europeans, pushing Japanese out of the consumption game will release so much more consumption space than going after people who are already no longer part of the consumption game.
I vote incompetent and or delusional. Thinking that Obama has a plan and is being a brinksman has turned out to be wrong time after timer after time. Basically the record indicates he's a chump. Punked by the banks, then the medical establishment now the oil companies and so on.
On the healthcare bill he was punked by Congress. He didn't write it. The Congress members didn't even read it, nevermind write it. The entire thing was done in backrooms by wonks, staffers, academics, and consultants. "Obama" care my ass. He merely signed the thing and waved pom-poms. Which is fitting for a former legistlator with no legislation to his name.
"1) the president's advisors are all truly incompetent and have no idea what the market perceives as good or bad news, or 2) this was a calculated move to send markets lower, which in turn would hit the euro."
Respectfully, I disagree with both of these possibilities, I think it's much simpler than that. The administration knows that the unsophisticated masses will focus on the headline number, so that's what they refer to. Also, it's their job to spin most if not all economic data as positive. Every administration does it. They get nothing, politically speaking, from doing otherwise. Politicians in power are convinced that people want them to be positive, optimistic, upbeat.
But the headline number was "stock market drops 3%".
I have to agree with this logic. They know that whatever number they put out is bogus but in this case it happened to be the first substantially positive number in quite some time. Hope, green shoots, and such. He knew what the number was ahead of time, of course he did.
chunkylover42
"The administration knows that the unsophisticated masses will focus on the headline number, so that's what they refer to."
Except that that is yesterdays playbook. Everyone is now informed at some level. Kids and Grandkids are passing along the truth more rapidly than it can be manipulated away.
Despite this being the information age US government acts like it is still the time of Yellow Journalism.
The US government is in a debt trap. There is no chance that revenues will increase to enable the ratio of debt to GDP to decline. Therefore, more monetization is inevitable.
Not to mention, Government wages are a tax on real wages.
with 1 million annnounced layoffs between now and 7/15, what else could go wrong?
Welcome to the long, hot summer of discontent. It being an election year it's gonna be volatile. Moods are getting cranky: Joe Average is waking up to the notion of a new reality: we won't get back to pre-crash levels and that world is over. Incomes, as we all know, have stagnated for 30 years thanks in large part to supply-side/trickle down economics which favored weakening wage growth. It worked but now the piper must be paid. Employment is continuing a long term contraction that began arguably in 1973, but more recently has become clear since the expansion of 2002-7 which did not replace jobs lost during the prior recession (1st time ever!). Retirement assets are deflating as well. Housing is deflating. And if this weren't enough, purchasing power is also deflating since cost of living inputs are inflating. We have Fed/Treasury policy to thank since reflation-sensitive areas of the economy did indeed reflate but left personal assets behind.
So we have a double-whammy economy. That will be a vice-grip on US consumers, who are not coming back. Once personal savings, obtainable credit and government benefits run out we'll get a big second leg down.
"That will be a vice-grip on US consumers, who are not coming back. Once personal savings, obtainable credit and government benefits run out we'll get a big second leg down."
But...I...need...just...one...more...iphone...
"second leg down"
Aren't we really still in the first?
"Joe Average is waking up to the notion of a new reality"
Fail
Joe Average is waking up to nothing. Joe/Jill Average have their eyeballs glued to the television, sucking up American Idol and Dancing with the Stars.
Joe/Jill Average has not one single clue as to what is going on in America today.
Would you like to purchace a clue for $5 apiece for each of them?
Would you?
BTW: Obama will reassure and stay the course all the way to outright revolution, because he's stuck in his own rhetoric and policy dogma. In addition Big Money won't let him deviate from the course either.
Caviar Emptor
The gameplan has always been Obama is a bone to Democrats after decades of Reagan/Bush/Clinton/Bush. His job was to allow things to go to shit paving the way for the next guy. That is the one who starts the crackdown. Who taxes or confiscates your Gold. Who kicks off the American Union. Who wages war on gun owners as domestic terrorists.
Inauguration day 2013 starts the process.
From my own personal observations, that seems to have been the job of just about EVERY president over the last several decades! Moving the goalposts ever further toward total state control. The Hegelian thesis => antithesis => synthesis, always in favor of more power to the state and more taken from the individual.
Calculated? Does it have to be a financial calculation as opposed to a political one? Obama needs a gimme, in a very real and bad way, and this is as good as it gets. Unless you have some other statistic that shows any improvement, economic or otherwise, you care to share with the rest of the class?
As far as the good witch/bad witch issue, I think it's a case of speaking from your book (god that phrase got some legs lately). US needs to sell debt. China doesn't want it and would rather not have to put up too much of an open market fight keeping the CNY down and admit the dirty little secret everyone knows: their entire economic policy is controlled by goal-seek on a pirated copy of Excel. Europe is trying not to prolapse, and doesn't need people using EUR to wipe their asses, not when intervention efficacy is competing with OTC cold medicines in terms of duration.
So the US will issue debt, Europe will buy it, and China will trade their dollar reserves for euro, turning right back around and using those euro to buy European debt since the last thing it needs right now is an appreciation in the CNY against it's two largest trading partners. And those dollars sitting in European banks? I'm sure we can find a good, risk-free, use to put them to. If you wanted to argue something about the jobs report, it could be that Obama was displaying some professional courtesy to whichever Communist party official scheduled to take a bullet on any sign of bad news....yeah, I didn't think so either.
Dunno, guess we'll see. The quality of my content goes down asymptotically towards negative infinity the closer it gets to quitting time Friday. I expect to be eviscerated shortly.
China doen't have enough reserves or capacity to put a major dint on the EURUSD.
Does it need to? Don't know about that...
Regarding the census worker driving a benz, here's the opposite end of the spectrum. Talking to a client of mine about this video:
http://globaleconomicanalysis.blogspot.com/2010/06/video-exposes-systemi...
And he said the census worker in his neighborhood was riding a bike and was wondering if she was getting mileage for it.
Look, the Fed KNOWS what they are doing. They will remove liquidity and crash the entire system while the Rothschilds, Warburgs, Schroders, Shipley, Morgans, etc buy for pennies on the (insert whatever future currency they scam the world to use).
They HAVE DONE THIS BEFORE and there is no reason for them to not do it again. So the public gets hosed, huge depression, sheeple commit suicide, etc, the members who OWN THE FED get to own many assets for virtually free.
I predict a riot.
There's every reason to believe that sheeple will patiently sit while being fleeced and a vulture fund or two will take the unmerry-go-round through another cycle.
Look on the bright side: the cheaper oil implies that the fiscal feasability of using actual helicopters dropping actual FRNs (oxymoron?) remains amongst our weapons.
And on whose political watch do you expect that TPTB will accomplish this? I rather doubt it will be during the term of a Democrat--assuming political parties remain as they are, that is, which is by no means a given. Don't forget that the last time the rug was pulled out, it was under a Republican chair, albeit a Progressive one. In any event, I suspect that the financial world is far too vast now for any one entity, even the FED, or, for you conspiracy theorists out there, the Bilderberg group, to effect anything quite so devastating. They won't need to, anyway. The Fibonacci waves have the market's ass firmly in their grasp.
Man, I get soooo frustrated. What part of 'Obama is a moron, and hires the same' don't you get?
And to you morons that want to call me a Neocon, name one Lib that knows shit about shinola!
Hear me, Rocky?
Bill Clinton made the most prosperous economy in the last forty years.
What did Bush do? Look retarded while everything went to shit?
"made"? Huh?
Yup. Worked 200 million jobs simultaneously without so much as a blow job break for 8 years. Single handedly made us all prosperous while we just goofed off and enjoyed life.
Bill Clinton made the most prosperous economy in the last forty years.
appeared that way .. raided social security , and was lucky to be at the turn of the cycle made possible by 50 years of American labor ,
in just a 10 year time frame clinton was either a lucky politicain or an out right fraud ,
course bravo the large zit ,, has been brain washed into that conclusion.
Anything is possible if you don’t know what you are talking about.
clinton and the 17 year old zit head ,, we are in charge here.
Trash the euro and long term t's get to roll, roll roll the debt cheaply as we please. Merrily merrily Washington is full of sleaze.
The least ugly chick in the bar at closing effect.
I think there is a third possibility; They didn't know! More than likely one of the Obama's economics team member whisered good number into Obama on assumption that things are looking up. Who ever that person is (I hope it was either Geithner, Summers, or Romer) will be gone by November if things don't pick up.
I watched Romer this morning spinning the piss-poor jobs numbers with a perma-smile stapled to her mouth. She makes me sick.
2) this was a calculated move to send markets lower
If you had to roll +$150 billion a week, you would spin this way too. LMAO!
In 2007, the median family income was $50,233. In 2009, the average salary of new jobs in the BHO regime was some $74k. Thus the entire income of 1 1/2 families had to be consumed in order to hire a single bureaucrat. On balance, employees in the private sector must be create wealth for themselves and for their employer. On balance, bureaucrats destroy wealth.
The only reason this befuddles people is that they confuse money with wealth. Such people tend to think the federal government can stimulate the economy by creating money out of thin air. Indeed, one radio talk show host today quoted a high-ranking public educator in Chicago as saying that the money from public education comes from "grants" and not from taxes.
Creation of wealth is important. Incomes are the amount of nominal dollars that those incomes represent. When 95% of the nation's new jobs are in the public sector, we are headed towards a reduction in wealth, no matter how much hype is devoted to the convince us to the contrary.
That had to be the epitomy of desperation pre-spin. Figure you taint alot of thinking positively and then the headline number comes out and people just don't think, b/c many are inclined to believe Soetero. The game plan had to be: no matter what "smile & lie".
Interesting that this past month Soetero was vacationing (again), prognosticating on the NBA playoffs and shilling Chitown to King Lebron - all smiles all the time. The royals in D.C. definitely are on a "Let them eat cake" track. They really don't care and/or don't get it either.
Maybe this doesn't get solved at the ballot box - is Palin vs Spetero a real choice?
I have always found it funny that the federal reserve always thinks the road to our economic recovery means we get paid less.
the average american
Onpat said; "China's dirty little secret that everyone knows, their entire economic policy is controlled by goal-seek on a pirated copy of Excel."
now that was funny.
Income would better be described as wages in this context.
But, more importantly to use the concept of real wages. We have hidden wage effects due to monetary inflation and the overall costs in Federal borrowing. So the dynamics on wages are much more complex than what business is willing to pay. The system is closed, and eventually all costs will be demonstrated in real wages.
Mark Beck