Bureau of Labor Statistics
Over the past several years, the two-day Jackson Hole symposium had garnered a particular prominence among economists and market watchers as this is where various key inflection points by the Fed were hinted, leaked or announced, including QE2, QE3 and the taper. This year, however, the gathering of central bankers in Teton County, will be less exciting due to the absense of the most important central banker in the world: Janet Yellen, which means the highlighter will be Vice-Chairman Stanley Fischer when he speaks tomorrow at 10:25pm which will be a key event given the recent market turmoil.
It is not enough to issue proclamations such as “it is time to get tough” or “It is time to make America great again”. These are the buzz words of a man that is reaching out to tap the rich vein of popular appeal. Perhaps that is what all politicians strive to do, especially when the field of candidates is rather crowded. However, what is clear is that a well-crafted economic strategy is not present, nor are staffers that would have the temerity to disagree with Mr T.
If GDP growth only averages 2.0% in the Second Half (which I think is likely), then 2015 growth will only be about 1.7% annually. Given that the Fed didn't raise rates in 2012, 2013, and 2014, when growth was well north of 2%, why would they do so now? Yet Wall Street and the media stubbornly cling to the notion that 3% growth and rate hikes are just around the corner. Old notions die hard, and this one has taken on a life of its own.
And it's far from over.
It wasn’t until the Americans were free to issue unlimited amounts of ‘dollars’ that these claims lost their soundness in a rambunctious belief in the never-ending global supremacy of US manufacturing. Now the damage is done. The gross misallocations that have plagued the world economy for well over four decades cannot be corrected without a cataclysmic event that will dramatically change living standards as the US realign their manufacturing and service sectors. But it cannot continue indefinitely either. Something will have to give.
Wondering why the drop-out rate from college is so high? One reason could be that a stunning 65% of students avoided buying textbooks due to the cost. As NBCNews reports, textbook prices have risen over three times the rate of inflation from January 1977 to June 2015, a 1,041 percent increase - dwarfing the government's official CPI data. Just as government-subsidized healthcare has 'enabled' dramatic rises in the costs of drugs so government-subsidized education has sparked hyperinflation-esque pricing in college textbooks
How hard do you work compared to the rest of the world?
With Puerto Rico missing a payment on a bond overnight "due to non-appropriation of funds" but denying that this constitutes anything close to a default, the territory may be about to retake the limelight as Greece is now "fixed." As Peter Schiff explains, this is far from over... As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency. But the damage done to the Puerto Rican economy by the United States has been far more debilitating than whatever damage the European Union has inflicted on Greece. In fact, the lessons we should be learning in Puerto Rico, most notably how socialistic labor and tax policies can devastate an economy, should serve as a wake up call to those advocating prescribing the same for the mainland.
For the FOMC to reach its mandate of full employment they boost stock prices which then creates employment in bubble jobs. When people feel rich, they spend more money on the low quality bubble jobs, and hence employment reacts accordingly. This is obviously entirely unsustainable as spending paid for by feelings manipulated by the FOMC accounts to nothing more than pure capital consumption, and the money flow will disappear as soon as the FOMC tighten the screw and the good feeling disappears along with the stock market gains.
In an odd escalation over the Grexit fiasco, where Greece is now expected to provide yet another detailed reform proposal today by midnight at the very latest, it was the one man whose decision will make or break the Eurozone when (if) he decides to impose even more ELA collateral haircuts (or yank ELA entirely) forcing Greece to Grexit by imposing its own currency (since there is no legal mechanism to kick a nation out of the new Berlin Wall) that made some surprisingly candid comments on the fate of the Greek negotiations. According to Reuters, ECB president Mario Draghi voiced "unprecedented doubts about the chances of rescuing Greece from bankruptcy as Greek Prime Minister Alexis Tsipras was due to put forward last-ditch reform proposals on Thursday."
Every quarter ConvergEx's Nick Colas reviews a raft of unusual and less examined datasets with an eye to refining and adding perspective to the more traditional macroeconomic analyses. This quarter’s assessment of everything from large pickup truck and firearms sales to Google search autofills for “I want to buy/sell” shows a U.S. economy that is reasonably strong but growing only very slowly. The chief areas of concern: Food Stamp participation is still very high at 45.6 million Americans (14% of the total population) and indicators like used car prices and large pickup sales are flat.
"Racial and ethnic minorities now surpass non-Hispanic whites as the largest group of American children under 5 years old, the Census Bureau said Thursday. The demographic rise of minorities comes at a time when heightened racial tensions make headlines from St. Louis to Charleston, South Carolina, and as minorities lag in education, earnings and labor market outcomes."
The idea of an imminent US recession may seem moot as all the self-proclaimed experts and talking heads still acts as we are well into a recovery and patiently waiting for the forthcoming escape velocity which will take care of all ills plaguing today’s over-indebted society. Never do they stop to think about why things looks as dismal as they do. The sheer scale of the backwardness shown in such gross economic illiteracy suggest to us there is ulterior motives behind so-called Keynesian economic theories. Comparing GDP with cumulative goods sold and inventory accumulation since 2000 should tell you everything you need to know. The US economy is now on the verge of a new recession.
Officially, the unemployment rate in the U.S. is 5.6%, meaning 5.6% of the work force is temporarily out of a job and actively seeking another one. But these do not feel like good times for most households, despite the low unemployment rate. By our reckoning, roughly 60% of the civilian work force is fully employed and 40% are marginally employed or unemployed.
Deutsche Bank’s derivatives position is truly enormous. It was recently estimated to be around $54 trillion. Germany's GDP, the 4th largest in the world, was a mere $3.64 trillion in 2015. Were Deutsche Bank caught off-side in its derivatives positions there is not a government or institution on earth that could bail it out and it could lead to contagion in the German financial system and indeed in the global financial system.