Another terrific set of charts from the fine econ wonks at the St Louis Fed:
Source:
The Seasonal Cycle and the Business Cycle
St Louis Fed
July 2006
http://research.stlouisfed.org/publications/net/20060701/net_20060720.pdf
Some Interesting Employment Charts
August 10, 2006 5:56pm by Barry Ritholtz
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Made it to Vail!
Awesome charts. That St. Louis Fed is doing a great job at digging under the headline numbers. The full report looks well worth some additional time with many more excellent graphics to review.
Lame charts. That St. Louis Fed is doing a lousy job at digging under the headline numbers. The full report looks like a waste of time with many more boring graphics to review.
Is it possible that compensation could increase enough to support the ongoing consumer shopping spree?
So why is there a negative correlation between compensation and profits? I ignorantly thought they would go together.
Interesting charts, well-constructed but don’t really get at a critical question of l.t. labor force participation which recent BLS data show to have decline from about 66.7% in Q399 to about 65.7% in Q106 but encouragingly picked back up in Q206 to 66.2%. Since the labor force in Q1 was estimated at 149.6 million that means 51.3 million had opted out of the labor force. Since the labor force miracuously grew to 151 million in Q2 that still left 51 million vacationers. It’s also possible that those differences as well as the correlation between extremely low unemployment rates and little or no increase in real weekly earnings (which has been essentially negative for several years) lies in folks opting out of the ‘labor force’. Now those would have been interesting analysis to see because it’s employment + earnings that drive consumption…and if everything’s going down well then ?
papa esther
Realize that the 3 sources of income are Shares of the national income. Rising wages tend to reduce profits.
Notice that in the previous 2 cycles, corp. profits peaked well before the recessions. Implying that we may have a little time left before our recession hits. Having said that, I predict it hits Jan’07.
I imagine (but don’t know) that self employed entrepeneurs may not be reflected in the second chart.
Interesting charts, but more color is clearly needed.
The first chart (sadly for labor) shows little wage cost pressure…secure margins?
Ken Fisher bullish view from here:
http://www.forbes.com/columnists/business/free_forbes/2006/0814/112.html
According to CXOAG, his track record of “calls” is very good (69%).
http://www.cxoadvisory.com/gurus/Fisher/
I like to look at ALL sides. I am definitely not a permaBear.
If everybody is “wealthy”, then there is no relative advantage being wealthy.
By maintaining or creating more concentration of wealth into the hands of the few ,,, those few can remain “wealthy”
How else can one explain the euphoria by the fed when productivity is high for
corporate america..
and the paranoia on any signs of wage pressure of the employees ??
Mark, I’ve made very good money on some of Ken Fisher’s buy recommendations. His view of the market makes me feel good about the money I don’t have in cash.
I imagine (but don’t know) that self employed entrepeneurs may not be reflected in the second chart.
most likely not, but they may (i don’t know for sure either) be reflected in “proprietor’s income” on the top chart. some would have us believe that we are moving to a self-employed, entrepreneurial economy/culture, but if i’m reading that chart correctly, as a percentage of nat’l income, it’s barely above flatlining. granted, the economy has grown and this number hasn’t fallen, but if we were in this new-era-anyone-can-do-it economy, it’d at least done better than a 1% increase in 25 years.
that shows an unprecedentedly (at least over the period shown) steep drop in compensation over the last six months (or so) of 2005. if accurate, it’s pretty damning for personal spending. or should be, once refi’s become less of an option.
Ken Fisher is not a man to be trusted. When I read his commentary a year or so ago that Americans need more debt, I was flabbergasted. It was the most ridiculous thing I had ever read.
His commentary on CXO was generally wrong regardless of his basic style. From predicting an ugly recession in 2001 to predicting 2000 would be flat to predicting early 2002 would start another bull run to predicting 2005 would be a massive move up and on and on and on. Finally, when he finally realized 2005 was not going to be a good year he said it was for concern that was misplaced as there was nothing to worry about that he saw.
His Forbes commentary about this not being the beginning of a bear market because of the type of declines we had is simply ludicrious pontification. It might not be the beginning of another bull market but fir the first time since preOctober of 2002 my long term model is on a sell. It doesn’t include any opinion, it doesn’t try to guess and it isn’t based on the Fed. It’s purely analytical. Now, who knows, maybe it is a false signal but there aren’t too many of them. What’s Ken Fisher’s model? Guessing. I find solace in analytical facts not anyone’s opinion. Or, as I like to say, math never lies but people do.