- by New Deal democrat
With no news today, let’s take a look at why two releases tomorrow are especially important.
Let me begin with employment, which is “dead in the water.” I’ve written before about how manufacturing and construction employment, and now the entire leading sector of goods-producing employment, is down. But today let me point out how narrow the poor situation in services as well. [NOTE: all FRED graphs in today’s post are normed to 100 as of April of this year].
Below is the graph of total employment (blue), total employment excluding health care (red), and services sector employment excluding health care (gold):
Not only is total employment down by more than -100,000 since April excluding healthcare, but even in the services sector (which is everything except goods production), employment in every other job except health care is up by a grand total of 2,000. Total employment in *all* sectors is up only 107,000 - and it’s all healthcare.
Domestic goods production looks shaky as well. Below is total industrial production (blue), manufacturing production (red), mining (gold), and utilities (right scale, narrow, orange):
Since March nearly all forms of production are either virtually flat or down. Only utilities (probably due in great part to AI data mining operations) are significantly higher. Tomorrow we will find out if this continues or not.
If employment is flat, and if production is also close to flat, what has really been keeping the economy growing has been consumer spending.
One measure I keep track of weekly is Redbook’s consumer spending report, which is nominal and is only reported YoY:
In the past few weeks there have been strong grains of 6.5% YoY or more.
But more importantly, below are real personal spending on services (blue) which almost always grow even during many recessions, real personal spending on goods (gold) which tend to turn down shortly before recessions, and real retail sales (red) which also turn down prior to recessions, and while similar to goods spending are more sensitive to the downside:
Real retail sales are down from their tariff front-running March peak. Tomorrow they will be reported for August. Keeping in mind that consumer inflation was 0.4% last month, unless there has been strong nominal growth, real sales are likely to be negative.
