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Say Goodbye To Mid-2015 Rate Hikes: Revised "Hourly Compensation" Crashes
But all the clever talking heads (the same ones that to-a-man saw rising rates this year) keep telling us that wage inflation is coming any minute, it has to right, and will create escape velocity and nirvana on American soil. Sorry, nope. Unit labor costs dropped 1.0% in Q3 against a 0.3% preliminary print and expectations of a mere 0.2% drop (the 4th missing quarter of th elast 5 and lowest growth since Q4 2013. What is more problematic is real hourly compensation was revised drastically lower - quite a plunge.
Unit Labor costs dropped for the 2nd quarter in a row...missing for the 4th quarter of the last 5...
This is how the BLS just "revised" everyone wages on paper to match what is going on in reality:
In the third quarter of 2014, nonfarm business productivity increased 2.3 percent, rather than 2.0 percent as reported November 6. The revised figure reflects an upward revision to output that was partially offset by a small upward revision to hours. Unit labor costs were revised down, and decreased 1.0 percent rather than increasing 0.3 percent, reflecting both the upward revision to productivity and a 1.0 percentage point downward revision to hourly compensation growth.
In the second quarter of 2014, nonfarm business productivity, output, and hours were unrevised. Unit labor costs fell 3.7 percent, rather than 0.5 percent as previously reported, the result of a large downward revision to hourly compensation.
Which leads us to the all important Real Hourly Compensation, most likley the only metric which Yellen looks at now considering unemployment data has become a complete farce, is was revised drastically lower as a result a negative(!) revision to Business and Durable Manufacturing hourly earnings which were down to -0.5% and -0.3%, from 0.5% and 0.7%, respectively.
... busting the myth of wage inflation induced rate hikes and "self-fulfilling escape velocity growth any second" now meme.
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Deflation for the 99%. the finest Champagne for the 1%.
The 99% need some guilotines making
Stagflation/Bi-flation.
While healthcare costs, insurance, education, and services are seeing steady inflation, the retail sector is not. I wonder if some of the lackluster sales numbers are due to the fact that people realize their few remaining dollars will be able to buy more tv's, phones, video games, etc in six months than they do now. Most people wouldn't say that there is deflation now, but a lot of them "feel" it.
Waiting for deflation? Um, no. You need money in order to buy stuff. People don't have any money. Any discretionary money they did have has been wiped out by inflation elsewhere.
Sorry retailers, the grocers, insurers, educators and taxers took all our money.
Definitely bullish for stocks. More QE, less taper. "I'm turning Japanese, I think I'm turning Japanese, I really think so..."
deadelephant,
That's a common myth among Keynesians: "If prices are falling, nobody will buy anything while they wait for products to get cheaper."
Horse hockey.
If that were true, there would have been no sales of TV's, computers, cell phones or virtually any consumer electronics over the past 30 years.
If consumers aren't spending, the far more likely cause is that their EBT cards are tapped-out due to 'necessary' expenses.
"Inflation in the things we need; deflation in the things we want."
OK, so we just need the consumer to stop this buying food and shelter, and focus on toys. Then we put more linens into circulation and obtain "natural" inflation. If we can get more users to log on, the economy will expand. Can we write a script that will randomly spawn linens to boost the economy?
Great comment (plus points for using "horse hockey"). In my view, the "falling prices equals delayed consumption" story is not just a myth...it's complete ignorance. In extreme cases like 10% yoy deflation you might make that case...but 0.5% deflation (a standard equilibrium point for some analyses) would NOT be enough for consumers to register and alter buying patterns. I think the people reciting this story actually believe it...forgetting that the story started as propaganda to rationalize inflationary monetary policy. Sigh.
I am self deflating, as I choose not to participate in any and all consumerism besides what I NEED...
Crash now, avoid the rush.
De-note (Federal Reserve type) and stack PMs. Best way to self-deflate and hasten the crash which surely must come.
How can the wage rate rise when illegal immigration, work visas and automation continue unabated? The government is making zero effort to increase the wage rate. They are doing the exact opposite at the behest of their corporate owners.
"Money for nothing and the chicks for free"... Dire Straits
https://www.youtube.com/watch?v=lAD6Obi7Cag
amen never a truer statement my pay is half what it was in 2006 my taxes never higher. I am about to head for the mountains and say fuck it. hope this country is happy destroying the. makers and growing the takers
I agree that people have less money available to spend, but also think it is true that many are waiting for lower prices. I'm a stay at home mom and I am on a message board with a few thousand other moms. We are sharks for good deals and if the price isn't low enough few will buy.
Just yesterday one mom posted and asked for a deal on a baby toy. Another mom posted that she tracked the price on that toy for 2 years on Amazon and since it never was on a deep discount she never bought it. Now her youngest is too old to use it.
The 99% need some guilotines making
The 99% just needs to convince John Boehner and Mitch McConnell to do their freaking jobs......good luck with that.
A guilotine should help with that
If only Obama would write an executive order for that.
Could we just kill all the Congress and step into a brave new world? I doubt they would do anything about it....they're not doing anything now.
The 99%?
- Getting exactly what they have been begging for.
Begging for years.
Head stuck up TV's ass.
Denial, Refusal, IGNORANCE of their IGNORANCE.
Better wake up.
The 99% Do not Read ZH, much less post on it.
You are NOT part of the 99%.
You are part of a much bigger problem for the .001% than the 99% could hope to be.
You at the least have some critical thinking skills.
Causes you to ask questions.
Maybe too many questions.
99% Only asks questions about Bieber and Kardash-assian, not Policy Issues.
I wouldn't count on the 99% doing anything remotely rational with respect to cleaning up any sort of mess.
But I guess Hope/Fantasy is free.
[EDIT]
Many of the posters on this site today (and for sure the old timers that have largely faded away from here) are the Proverbial "Bad Sons" of the Elite.
Many have the same educations, abilities, skills, etc.
They just didn't join "the club".
That is why I say You are Dangerous.
I'd say be careful what you post here, but it's waaaay too late for for most of the ZH posters... So let it rip.
ZH isn't even a blip on the radar, brother, much less the people who comment on articles posted here. TPTB are coasting. That certainly may change, but for now I just can't see it being worth the effort to care about this site or the people on it.
Blatant lawbreaking is the norm for everyone in our government, including the business interests that are colluding with it. The rule of law is dead. Act accordingly.
Are you saying the 99% should convince Boehner and McConnell to get on with guillotines making? Good luck with that.
Guillotines. Nothing else works. Change and hope for real next time. At least we get a refreshing dose of a new kind of oppression from another side. We won't be free but at least the current crop of 1% gets fucked and chopped.
Guillotines?
Hey, I'M your huckleberry.
I've been making miniature versions since I was knee high to a grasshopper...all fully functional; complete with tilt tables.
But did you know, they aren't that easy to make? The stickler is designing them in a way that guarantees a sure swift drop of the blade without a hang-up on the uprights. The best designs use rollers on the weight/blade carriage.
But hey! Maybe the cruder designs where one is never totally sure about the drop are exactly what we want for some people such as the Blankfeins of this world.....we could offer odds on the required drop attempts!!!
The U.S. is just getting started on the road that Japan has been on for three decades. Look forward to all things financial to be slowly ground to dust for the next few decades (best case), or massive upheaval that may destroy the planet.
Such happy thoughts to go with my coffee this morning.
I'm used to think that but no longer.....Japan has been in a deflationary cycle but maintained more of their wage base (by not importing labor) that allowed people to keep a somewhat normal lifestyle.
The US is hell bent on dealing with its debt/growth problems through inflation and loading more semi-productive people in the boat. This allows them to continue the debt spiral upward (which is all the masters care about)....this is quickly eroding the income base for everyone, crushing the middle class and pushing the poor to subsistence living.
We are a one trick pony economy at this point, borrowing to maintain order until the masses revolt or the the lenders balk. Both outcomes will force the GOV to tighten control with likely an authoritarian outcome ...... then chaos.
Timeline....who knows. I see s deflationary cycle coming and we likely recover one more time. Next cycle after that is likely the end game.....
Yeah because legalizing 30 million folks at the wave of your sceptre always does wonders for American income growth. Pieces of shit.
To quote Dave Chappelle, "I sip Cris, you drink piss". Courtesy I Want to Pee on You, R. Kelly Re-mix
Boy those home prices really look reasonable now, don't they?
OT: Was anyone else unable to access ZH yesterday morning (US time)? We have now heard rumors that english-language news sites, such as Drudge, were affected. But ol' one-eyed Matt had nothing to say about it. Hmmmm. Anyway, apparently certain ISPs tested out equipment to use advanced technologies to block internet access. Tyler?
There were several times yesterday as I posted a reply that I saw a message that Zerohedge was in Maintenance mode. A quick refresh and it was back to normal.
I kept getting the "bad gateway" message repeatedly. Forced refresh did not help. The issue disappeared after a couple of hours.
They are fucking around with DNS... Again.
Here is the "fast action drill" for the problem:
Open a CMD window.
Or in RUN:
Type: ipconfig /flushdns
In your browser: hold down Shift while refreshing the view.
If that doesn't work... It's the website or something less transient than a polluted DNS cache.
So Solly.
54.10 rubles to the U.S. dollar
/Popcorn
Just in time for Black (as in suicide thoughts) Friday.
This decrease in gas prices* everybody is heralding as the new tax cut (but forgetting it is offset by the increase in health care premiums and taxes related thereto) will probably be spent by most people on one extra toy for the kids under the tree.
One fucking toy.
BFD after paring everything else back.
*Saudi says you guys (USA) cut production first and we'll follow ... Ah, either cut voluntarily or we'll just bankrupt your oil infrastructure.... You youngin's don't have the pleasure of having lived through this exact shit in the '70's.
Believe me... the Law of Unintended Consequences is gonna have a fucking ball!
How do you say "Howdy Saudi"?
Bow down when you meet them again and beg.
Beg
On your knees BEG
Energy Crisis of '73 & '78. It was big fun! Everyone late for work at least twice a week.
Lines out of site to get $3.00 worth, odd even plate days. Drivers following empty tanker trucks to see where it might be going. If you got behind a full one, maybe you were only an hour or two late for work.
People have been under water for a number of years now. Lower gas prices means 3 meals a day for people instead of two.
Back in those not-so-good ol' days, when gasoline, home heating oil and fuel for electrical power plants were difficult to obtain up north, there were many cars in my birthplace Texas sporting bumper stickers which read: Let the Yankees freeze, in the dark!
Yet TX has not yet seceded?
Mystifying...........
The former governor, Rick Perry (Bush Lite), wants to run for POTUS. Doubt anything will happen until he loses.
He stands a good chance in the primaries (laugh track deafening)
I was only 10 but I remember my dad had to spend most of the week at my grandmother's house because there was no gas to make the commute. She lived in the city and we had relocated to a very rural area.
"Black Friday"
Are we being.....
Saudimized?
humans become unemployable for good because of obsolescence
Reaching 'escape velocity' one of these decades!
The only way real wages can grow is if factor costs stop being disorted. Labor is not the scarce resource, even as it is a perishable resource and when utilized properly, the most valuable. Financialization/currency manipulation is encouraging malinvestment in consumption in the US and production in China. It is distributional constraints and imbalance at all levels (muni, city, state , national and global) that is causing our pain. There is 1 and only 1 semi stable path out of this mess. Liquidate float scams and buy gold.
What no wage inflation?
It's OK, Christmas spending is going to be record!!!!
No Demand
No Demand
No Demand
No Demand
Can't be fixed by the FED
Don't worry Janet is in the Kwik e mart now buying all the stock with newly printed cash
But taxes paid in to US gov't continue at RECORD LEVELS-WTF?
Well, if you believe what gubmint claims.
Maybe capital gains taxes due to asset (stocks, bonds, homes in certain areas) inflation.
http://research.stlouisfed.org/fred2/series/FGRECPT
In America, the private sector labor is going temporary on a permanent basis.
It is not all that easy to get and keep a government job either. But once beyond the probation period and with enough seniority, benefits and pay rise well above their functional equivalents in the private sector. You actually have a future.
The lesson to be learned: Get a government job. Don't let the PC BS get to you. Keep a "smiley face" on your face. "Volunteer" to do work for the Democratic Party. And vote "Liberal" in every election.
SSA has laid off 11,000
Make it hard to collect.................
Work for the government and do volunteer work for the democratic party and make over $150,000/year.
Like being a communist party member in the old Soviet Union, you get all the perks.
Just clap with all the party members when the sign lights up for applause sign comes on from a democratic speaker.
Welcome comrades to the American communist party!
Yep, it's just that easy. Really and truly, it is.
Political parties have ruined this country. Sure, Big Money hasn't helped, but Big Money couldn't have been successful if there weren't those who didn't mind doing the dirty work for Big Money.
America: Land of the fleeced, home of the enslaved.
you sound like the guy spamming every thread with stories from his sister who makes $75.78 an hour in web sales ....
only that you're not lying ... unfortunately.
Hey... I resemble that remark.
Reason for improved auto sales (besides 7 year sub prime loans): You can live in your car but you can't drive your home.
The ONLY way to save America is to establish American-centric economic policies.
Very simply, everything consumed and used inside the jurisdiction of the United States Government should be produced and provided by people living within that same jurisdiction to the maximum extent possible. There should be a heavy tariff tax paid by anyone who imports goods and services instead of using a domestic source. The tariff rate should be uniform, universal and large enogh to make it economically infeasible to use an imported good or foreign source for anything other than an emergency short-term basis.
If no one can use import substitution as a competitive advantage, then everyone can compete for profit and growth by drawing upon American resources and labor. To the extent that foreign-based entities comply with this, their direct investment inside the United States should be welcome and their businesses treated equally with American-based entities.
Now that's a true Soviet Amerikkka. GM cars and Budweiser for everybody!
No thanks.
All that would do is create a huge pool of money for the thieves at the IRS to loot.
The idea is nobel and I believe the USA could sustain itself once the infrastructure is rebuilt.
The world needs to come to the realization that 4% growth YOY is not sustainable nor is it needed. If a company makes 1 billion this year they dont need to make 1.4 B next year. As long as new money is not being printed and there is no worry about deflated purchasing power.
Back to my main point. Lets abolish the IRS and all the gvt programs and start fresh..
I wonder if Grover Norrqust planned on people wanting to throw the baby out with the very bathwater in which he so desperately wished to drown the government.
Unintended intended consequences.
You mean like South Africa used to be?
Definite proof that the BLS now works for the algo masters:
unit labor costs last month was "revised" to -3.7% from 0.3%.
"Sorry, looks like our estimate last month was a little off...just 4% off."
they will do anything to protect the large bank players in the futures market. look no further than the algos they tied to the 30 yr bond futures - everyday just prior to stock market open they jack yields up on no volume.
what is the hourly wage at the FED endowed crooked banks?
The real problem is not what the hourly wage is; wage earners get paid shit. It is what the C-level officers and senior VPs take down, plus shareholders. Though the shareholders are getting screwed by the officers by way of dillution for stock options.
And, of course, we must consider that they are the chief intermediating force in global business! Produce nothing - "earn" huge salaries and bonuses.
Craig
The US Federal Reserve wrote Japan's finance plan.
So the US has been Japanized.
There has ususally been this kind of ability to increase 'productivity'. Unions have controlled how much each guy could do through 'time-work' studies. As a kid I was doing one really fast and the union boss came over and showed me the proper work rate. One only maximizes the rate of work when self employed.
I have told my staff they have to get cetain tasks done or the business fails. With good people there is rarely need to say more.
I knew the US was in trouble when just a few years back I read a report that said for the first time in US history, there was a decrease in US worker productivity. That should have rang alarm bells in every hall of every public building and sent a clear message to Congress to STOP the increase in spending (at least until productivity started to increase again). Did they? No. Did the sheeple understand what this meant? No. What did the sheeple do at election time? Followed TV instructions faithfully.
If wages are stagnating or falling, especially for workers in the lower-end of the education/skills/income range vs Silicon Valley software engineers, then isn't it labor market suicide to import the poverty of Latin America ?
Unless there is a more important political motive to importing the poverty of Latin America, eg increasing the supply of Democrat (socialist) party voters high enough to ensure the election of socialist politicians to enough offices to ensure the transformation to a socialist coercive collectivist state, eg entitlements, earnings confiscation & redistribution, obamacare on steroids ?
Much better to create our own poverty than import it.
Dead on with one exception - the top tech companies in Silicon with its high cost of living are importing their software engineers from India and China to displace American engineers and their salaries.
As for the socialist agenda and its malinvestments, beginning nurses in San Jose have a starting salary of $97,905 with a median of $113,891 and massive benefits, i.e., unionized.
http://www1.salary.com/CA/San-Jose/Nurse-Practitioner-salary.html
A software engineer’s starting salary is $57,734 with a median of $72,378 – most with no retirement benefits, i.e., non union.
http://www1.salary.com/CA/San-Jose/Software-Engineer-I-salary.html
The median salary for an electrical engineer was $75,647 in October of 2014 (most with meager benefits) in San Jose, California -- the wealthiest and one of the most expensive areas to live in the United States. The average salary for a nurse in San Jose in 2012 was $125,450, with union-negotiated benefits.
One of the characteristics about the FedRes and the Third-World-leadership in the BLS is that you cannot depend upon anything they say to be the truth.
FYI: All of these Flash Players and other Plug-In's is causing major problems! All these darn videos! Is anyone else having problems?
Anybody that has lived in a third world country for a few months, undertands that there is no wage inflation when the other guy is willing to work for less.
Hint: There are potentially millions of other guys out there when most of the social wellfare ends, and it will soon.
By the way a Chalan is the lowest paid Mexican day laborer.
All I know is that in the IT field it's been a long, slow collapse into H-1B level wages including for any Americans stupid enough to stay in the field, and I fear it has taken another slump down just in the last twelve months.
This is how it works, and probably in other segments as well, you decapitate the field, stop paying anyone much more than the mean (you still pay many less than the mean). So the curve shifts to the left, but the mean doesn't move much, the median doesn't move much, and the mode moves not at all.
Got to make way for all the new amnesty'd immigrant college students thanks to Obumble's executive order - some of the worst pay categories of all, btw, as a "first experience" hire they're lucky to get minimum wage in many cases.
Lots of comments on downward spiral, and I have not really seen any comments about a very important factor in that. Today, in order to receive unemployment compensation benefits (a fraction of what you earn, but a help when your temporary job winds down), you MUST accept any job offer at 90% below your last wage for the first 8 weeks; then you MUST accept 75%.
Naturally, employers know this, and offer jobs at 25% of last year's prevailing wage.
This is the temporary job market. Is there any wonder that wages are falling rapidly? Does anyone really believe the statistics that are put out by our Corporate Masters?
I do see an industry with real growth potential in the guillotine manufacturing sector, however. Later, there will be a servicing sector, and a used/reconditioned guillotine market. Get ready for an IPO in a neighborhood near you.
Craig