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A few comments saying we never really recovered, or, we snapped back and now we’re slowing down back to average growth levels. I recommend taking a look at thi

by zaroth 7y ago

A few comments saying we never really recovered, or, we snapped back and now we’re slowing down back to average growth levels. I recommend taking a look at this jobs chart: https://fred.stlouisfed.org/series/USPRIV https://fred.stlouisfed.org/series/USPRIV Then set the time range to be 1997 to present. What’s remarkable is that the slope of the curve is essentially bimodal. Either the economy is hiring at 200k/month, or it is firing at 200k/month. The 2008 recession was remarkably bad. We set back jobs growth more than a decade, which had never happened before. Since then we’ve had the longest stretch of time where the economy is in “hiring mode” in history. But there was also no “snap back”, the curve has been going up, but it’s still shifted 10 years to the left. It’s not clear this stretch of up time has ended yet, but the market is flashing signals that it is more likely to end in the next 6 months than it was a year ago. With inflation so low, this to me implies there is still slack capacity and we have room to keep the “hiring” mode turned on for a while longer, but the Fed would have to lower rates for that to happen. Former Fed President Dudley’s comments in his op-ed last week were a shockingly bad look for the Fed. [1] Advocating for intentionally tanking the economy to make the current President look bad undermines the entire Fed governance model. [1] - https://www.cnbc.com/2019/08/28/the-feds-efforts-to-stay-out-of-politics-just-got-a-lot-tougher.html https://www.cnbc.com/2019/08/28/the-feds-efforts-to-stay-out...

seanccox 7y ago
Do you know whether the graph accounts for the recently reported error in the jobs figures? According to the Department of Labor, 500,000 fewer jobs were added in 2018-early 2019. [1] - https://www.nytimes.com/2019/08/21/business/economy/jobs-growth-revision.html https://www.nytimes.com/2019/08/21/business/economy/jobs-gro...
hylaride 7y ago
Most responses I've read to that op-ed were extremely negative. To blame the fed for not constantly cutting rates in response to the random and sudden actions of a mercurial (to put it nicely) president is not a bad look for the fed. It's the president who's going to be responsible for tanking the economy.
Fjolsvith 7y ago
> Former Fed President Dudley’s comments in his op-ed last week were a shockingly bad look for the Fed. [1] Advocating for intentionally tanking the economy to make the current President look bad undermines the entire Fed governance model. Maybe the Fed should be audited to see what other shenanigans they've done in the past that wasn't true to their directives.
- tzs 7y ago
  The Fed is audited multiple times a year by multiple parties, including outside auditors.
  - Fjolsvith 7y ago
    Oh. Where can we look that data up at?
    - tzs 7y ago
      This page describes the various audits that are done [1]. You'd probably have to check with the particular agencies or groups that do or arrange for the audits to find out where the results are available. [1] https://www.federalreserve.gov/faqs/about_12784.htm https://www.federalreserve.gov/faqs/about_12784.htm
roenxi 7y ago
You've picked one statistic; that is cheating. If nothing else, you need to account for population change. But more importantly, the people who care about unemployment at any given time are the marginal people being sacked or hired. For a one-stat picture I'd guess that real income quintiles across the entire population would be the best for a general economic health check. The data you picked leaves open the question of "are those jobs overpaid software engineers or fruit pickers?" > With inflation so low The price of gold currently implies inflation of ~8% p.a. since 2005 (14,000/kg to 38,500/kg over 13 years) vs CPI inflation in the range of 2% p.a. and I promise you that in real terms gold isn't any more useful today than it was then. Inflation isn't low, consumer price inflation is low. Inflation is contained in the asset markets and at a guess consumer inflation can't rise because it is linked to wages rather than asset prices.
- Redoubts 7y ago
  > The price of gold currently implies inflation of ~8% p.a. since 2005 Looking at the chart. have we been experiencing deflation since 2011?
  - zaroth 7y ago
    Gold tells you the strength of the dollar, not the rate of inflation. Two separate things.
  - roenxi 7y ago
    No. And I don't think that inflation ever reached ~30% which is how the gold price performed 2006-2011. It isn't a perfect proxy. I'm happy to say it isn't a proxy at all. But I don't believe the long-term real price of gold is rising and it certainly does not offer a financial yield in real terms. Explaining today's prices vs the ~$500 base after the 1980s bubble is much easier if we assume that inflation is about equal to the amount of money in the system (aka the M2) instead of the CPI. I'd bet (as in, I'm basing my financial planning decisions) that the next time gold spikes up in price it will imply inflation from 2011 has been higher than 2% too. My money is on the price of gold tracking closer to the M2 monetary supply than CPI inflation over the long term.
gdubs 7y ago
At the same time, hasn’t the number of people who’ve left the job market entirely decreased something like 3% since the financial crisis? Combine that with fairly stagnant wage growth, and the linked chart doesn’t really look impressive.
- zaroth 7y ago
  Hard to have wage growth if you have an excess supply of workers. So either you need job growth to outpace workforce growth, or you need to eliminate workers (e.g. less immigration, lower retirement age, shorter work week / lower overtime thresholds). The job growth is impressive - at least, it’s the best job growth we’ve ever had in one run. It would be nice if it could keep running for another 24 months at least.

by zaroth 7y ago

seanccox 7y ago

Do you know whether the graph accounts for the recently reported error in the jobs figures? According to the Department of Labor, 500,000 fewer jobs were added in 2018-early 2019. [1] - https://www.nytimes.com/2019/08/21/business/economy/jobs-growth-revision.html https://www.nytimes.com/2019/08/21/business/economy/jobs-gro...

hylaride 7y ago

Most responses I've read to that op-ed were extremely negative. To blame the fed for not constantly cutting rates in response to the random and sudden actions of a mercurial (to put it nicely) president is not a bad look for the fed. It's the president who's going to be responsible for tanking the economy.

Fjolsvith 7y ago

> Former Fed President Dudley’s comments in his op-ed last week were a shockingly bad look for the Fed. [1] Advocating for intentionally tanking the economy to make the current President look bad undermines the entire Fed governance model. Maybe the Fed should be audited to see what other shenanigans they've done in the past that wasn't true to their directives.

tzs 7y ago
The Fed is audited multiple times a year by multiple parties, including outside auditors.
- Fjolsvith 7y ago
  Oh. Where can we look that data up at?
  - tzs 7y ago
    This page describes the various audits that are done [1]. You'd probably have to check with the particular agencies or groups that do or arrange for the audits to find out where the results are available. [1] https://www.federalreserve.gov/faqs/about_12784.htm https://www.federalreserve.gov/faqs/about_12784.htm

roenxi 7y ago

You've picked one statistic; that is cheating. If nothing else, you need to account for population change. But more importantly, the people who care about unemployment at any given time are the marginal people being sacked or hired. For a one-stat picture I'd guess that real income quintiles across the entire population would be the best for a general economic health check. The data you picked leaves open the question of "are those jobs overpaid software engineers or fruit pickers?" > With inflation so low The price of gold currently implies inflation of ~8% p.a. since 2005 (14,000/kg to 38,500/kg over 13 years) vs CPI inflation in the range of 2% p.a. and I promise you that in real terms gold isn't any more useful today than it was then. Inflation isn't low, consumer price inflation is low. Inflation is contained in the asset markets and at a guess consumer inflation can't rise because it is linked to wages rather than asset prices.

Redoubts 7y ago
> The price of gold currently implies inflation of ~8% p.a. since 2005 Looking at the chart. have we been experiencing deflation since 2011?
- zaroth 7y ago
  Gold tells you the strength of the dollar, not the rate of inflation. Two separate things.
- roenxi 7y ago
  No. And I don't think that inflation ever reached ~30% which is how the gold price performed 2006-2011. It isn't a perfect proxy. I'm happy to say it isn't a proxy at all. But I don't believe the long-term real price of gold is rising and it certainly does not offer a financial yield in real terms. Explaining today's prices vs the ~$500 base after the 1980s bubble is much easier if we assume that inflation is about equal to the amount of money in the system (aka the M2) instead of the CPI. I'd bet (as in, I'm basing my financial planning decisions) that the next time gold spikes up in price it will imply inflation from 2011 has been higher than 2% too. My money is on the price of gold tracking closer to the M2 monetary supply than CPI inflation over the long term.

gdubs 7y ago

At the same time, hasn’t the number of people who’ve left the job market entirely decreased something like 3% since the financial crisis? Combine that with fairly stagnant wage growth, and the linked chart doesn’t really look impressive.

zaroth 7y ago
Hard to have wage growth if you have an excess supply of workers. So either you need job growth to outpace workforce growth, or you need to eliminate workers (e.g. less immigration, lower retirement age, shorter work week / lower overtime thresholds). The job growth is impressive - at least, it’s the best job growth we’ve ever had in one run. It would be nice if it could keep running for another 24 months at least.