Saturday, November 21, 2015

Weekly Indicators for November 16 - 20 at

 - by New Deal democrat

My Weekly Indicators post is up at .

The recent intensification in commodity delcines, the dollar surge, and globally depressed commerce is continuing.

Thursday, November 19, 2015

Comparing total real labor compensation growth across economicexpansiions

 - by New Deal democrat

With few exceptions, people don't get a job for social reasons.  They go to work each day in order to earn money to purchase necessities, discretionary goods, and to save for future needs.  In short, they work because of cold, hard cash. 

That's why I think the defining element of a labor market recovery after a recession is not the number of jobs created, but rather the amount of cold, hard cash it is delivering to workers.  That is measured by real aggregate wages.  This number is the product of average hourly earnings for nonsupervisory workers, times average hours worked, times the number of jobs, and then divided by the consumer price index
As of the last employment report, we are now exactly 6 years past the trough in real aggregate wages from the Great Recession.  So how does the current expansion stack up?  Here are the graphs of all economic expansions going back to 1964 (the inception of the series) with the result indexed to 100 at the bottom.  First up is the big picture from 1964-present:

Here is our current expansion:

The current expansion trails three others.  The best is 1964-70:

The next best is the 1990s tech boom:

And the 3rd is the Reagan era of the 1980s:

But the current expansion also is better than 3 others.

Here is the early 1970s:

Here is the late 1970s:

These two delivered more wage growth initially, but it didn't last because the economy fell back into recession quickly.  

But the worst by any measure is the George W. Bush expansion of a decade ago:

This delivered weaker wage growth, over a short period, and fell back into the worst recession in 75 years.

So here is the handy comparison chart of real aggregate wage growth during all of the expansions of the last 50 years:

Trough Peak #months Real wage
growth %
  Wage growth
at 6 years  
1/64*  8/6967* 30.2 
11/705/7430   18.5   12.4%***
4/753/79 47 20.8 
7/801/81 62.4 
11/8210/8983 21.6    20.1% 
2/9211/00  10533.8   23.3%
4/03 9/07 53 10.5 
10/097/15**   69** 17.8** 
*start of series

**to date

***Measured through the next recession, as recovery was short-lived

Bottom line: the current expansion isn't great, but it hasn't been poor either.  If it lasts another year or so, it may overtake the 1980s to land in third place.

Wednesday, November 18, 2015

Psssst! Single family housing permits at nearly 8 year high

 - by New Deal democrat

Don't tell anybody!  I have a new post up at, showing how single family vs. multi-unit construction have gone in separate directions, due to the continuing distortions of the NYC program that ended in June.

Tuesday, November 17, 2015

Industrial production: oil patch down, manufacturing at new high

- by New Deal democrat

You will probably read some commentary from the usual suspects about how yet another negative industrial production number means that We Are DOOMED!

But it looks rather different when we take out the Oil Patch.  Below is a graph of overall industrial production (blue), manufacturing production (red), and mining production (green), all normed to 100 as of last December:

Yes, industrial production as a whole is showing a shallow recession.  But, despite the big hit to exports due to the strong US$, manufacturing production made a new all-time high in October.  The Oil Patch continues to hurt in a big way, and this is what is bringing down the overall number.

In short, the broader US economy continues to move forward.

UPDATE:  Below is a graph of manufacturing employment (red) vs. mining employment (green), both normed to 0 as of last December as well:

Although it has taken a small hit in the last few months, manufacturing employment is still up since last December.  Mining, on the other hand, is sucking wind.  The net decline has been about -100,000 jobs, or about -10.000 a month.  This has not been nearly enough to overcome the continued growth in services employment.

The US is primarily a service economy, and the hit to the Oil Patch is just not enough to take it down.

Monday, November 16, 2015

ECRI's "Deceptive" wage growth is actually pretty common

 - by New Deal democrat

I have a new post up at .

ECRI has some new commentary claiming that wages are only growing because aggregate hours are declining, to which I say, "Huh?!?"  The historical record says this isn't uncommon at all.