201602.05
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Empty Consumers

If the Chinese were intent on financial reform, and that meant trying perhaps the impossible task of a managed bubble deformation, the genesis of the idea was forged in the United States. China’s vast industrial machine was made to service US consumers and financed with the full throat of eurodollar expansion, leaving so many goods…

201602.05
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Full Wages

Despite the disappointing headline Establishment Survey estimate, those inclined to believe the payroll report as an overall economic narrative had two fallback issues. U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but surging wages and an unemployment rate at an eight-year low suggested the…

201602.05
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Full Employment

The headline Establishment Survey number disappointed at just 151k in January. The figure does not represent the actual amount of jobs gained, of course, since employment in January is typically about 3 million less than December. What that estimate represents is a combination of imputations about seasonality (comparing the actual change in the data set…

201602.04
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Robust Job Growth Doesn’t Make Sense And The Numbers Show Why

With the BLS’s release of Q4 productivity figures, we get to check the BLS’s estimates just in time for tomorrow’s increasingly irrelevant payroll report. That much has become thoroughly apparent especially since the middle of last year as the Establishment Survey and unemployment rate only diverge with the overall breadth of economic indications. With GDP…

201602.04
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Let’s Get This Over With: Factory Orders More Toward Finality

Factory orders declined for the fourteenth consecutive month. At -4.3%, the year-over-year drop wasn’t huge but we are now into comparing consecutive yearly contractions. In other words, factory orders in December 2015 were 4.3% less than December 2014 which were 2.4% less than December 2013. It isn’t so much the magnitude as the time now…

201602.03
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If Services Stumble Too There Truly Is Nothing Left

So much for the services savior? The worries about manufacturing weakness spreading are spreading. It’s maddening only because it was entirely predictable, maybe even inevitable. If consumers aren’t buying goods, and they aren’t, it is not because they are otherwise healthy (in financial terms) and have only just recently decided they have in the aggregate…

201602.02
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No Confidence Vote – Raging RHINO

FOMC Voting Member Esther George issued a vote of confidence for the economy, despite financial turmoil returning across asset markets again today. With front month WTI back under $30, her idea of a strong economy and anchored inflation expectations is still highly imperiled. She remains completely dogged, however, undeterred for further “normalization” of monetary policy…

201602.02
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Personal Savings Up Meaning No Energy ‘Tax Cut’ Reaches Consumers

If China and US manufacturing are suffering from what looks like the contours of a slowly progressing recession, we don’t have to go very far to find the genesis. The common denominator is and has been US consumers. That much is evident in very clear fashion through retail sales during the Christmas season that were…

201602.02
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PMI Convergence

The Chinese Manufacturing PMI spent most of the past four and a half years straddling just the good side of 50. In fact, it hasn’t been above 52 since early 2012 – a quite remarkable feat of low variation. This fruitlessness is somewhat emblematic of China’s dilemma; no matter what they do the industrial and…

201602.01
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It Starts: Junk Bonds ‘Contained’

To an economist, the economy can bear no recession. In times of heavy central bank activity, an economy can never be in recession. Those appear to be the only dynamic factors that drive economic interpretation in the mainstream. And they become circular in the trap of just these kinds of circumstances – the economy looks…