Saturday, February 13, 2021

Weekly Indicators for February 8 - 12 at Seeking Alpha


 - by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

We are beginning to see some changes in the short leading timeframe. Most notably, this week, for the first time since last February, temporary staffing is higher YoY. That means that employers are hiring more staff in anticipation of better economic conditions in the months ahead, but aren’t certain enough to make a firm commitment yet.

As usual, clicking over and reading will bring you up to the virtual moment, and help me out with a little pocket change.

Friday, February 12, 2021

Welcome to the vaccination Hunger Games

  - by New Deal democrat

That, dear reader, is a slight variation on what my sibling unit said to me when I related the saga of my attempts to schedule a COVID-19 vaccination.

As I have mentioned from time to time, I am an Old Fossil. And, well, the shortage in supply of the COVID vaccines has set off a fierce (if anything involving Old Fossils can qualify as “fierce”) competition for very limited slots.

What your helpful neighborhood MegaPharmacy has chosen to do is to open up their website for vaccination appointments pretty much in the middle of the night. If you haven’t made your appointment for a date in the next week by the time of your first morning coffee, you are shut out.

So yesterday I intrepidly opened the vaccination portal immediately after getting up in the morning, only to find that the three nearest sites to me were already booked up. So I tried to book at the fourth, about 45 minutes away, and lo and behold, there were slots available today!

After navigating through the sign-up process, which took about 10 minutes, I was greeted with a confirmation screen - which revealed that I had misspelled the name of the city I wanted, and had been redirected to a town over 4 hours away. I furiously tried to backtrack and get to a closer site, only to find that in the 15 minutes I had been online, they had been all booked up.

Which meant I could either accept the appointment about 200 miles away, or wait until next week and try again.

Guess what I am doing, dear reader, as you read this little story? That’s right, I am driving through yet another snowstorm in the East, and if I don’t get into an accident or some other calamity, by tonight I will be back home, but I will have claimed victory in Round 1 of the Boomer Vaccination Hunger Games!

Wish me luck.

Thursday, February 11, 2021

Initial and continued jobless claims: signs that the worst of the pandemic related layoffs may be behind us


 - by New Deal democrat

Some - very relative - good news in unemployment claims this week. It looks like the recent increase in new claims has peaked, while continued claims continue to decline. With new daily infections, still horrible at 100,000/day, only 40% of their 250,000/day peak, and vaccinations slowly increasing near 1.5 million/day, we may have seen the worst.

To today’s data: on a unadjusted basis, new jobless claims declined by 36,354 to 813,145. Seasonally adjusted claims declined by 19,000 to 793,000 (meaning last week’s original number was revised higher by nearly 40,000!). The 4 week moving average also declined by 33,500 to 823,000. 

Here is the close up since the end of July (these numbers were in the range of 5 to 7 million at their worst in early April): 

Both adjusted and unadjusted claims remain above their worst levels at the depths of the Great Recession.

Because of the huge swings caused by the scale of the pandemic - typically claims only vary by 20,000 or less from week to week, but since the start of the pandemic, swings of 50,000 or 100,000 per week have happened as often as not, I have been posting the YoY% change in the numbers as well, since they will be much less affected by scale. As a result, there is less noise in the numbers, and the trend can be seen more clearly:

The recent elevation in new claims compared with their November lows is clear, as is the plateauing of new claims in the past few weeks. But the evidence is also consistent with this week being noise in a rising trend, so several more weeks of data will be necessary to confirm any change.

Meanwhile continuing claims, which historically lag initial claims typically by a few weeks to several months, made new pandemic lows yet again this week. Seasonally adjusted continuing claims declined by 145,000 to 4,545,000, while the unadjusted number declined by 167,609 to 5,025,135:

Although I had suspected that we would see an upward reversal, obviously that hasn’t happened. Continued claims remain at a level last seen in autumn 2009, only about 6 months after their worst levels of the Great Recession.

I am hopeful that the disciplined approach to the pandemic by the Biden Administration, together with the onset of better weather in spring (fewer indoor activities), and more vaccinations, will mean that we either have, or are about to have, put the worst of the job losses behind us. 

Wednesday, February 10, 2021

January inflation still tame; real wages still above previous 1973 peak


 - by New Deal democrat

Seasonally adjusted consumer prices rose 0.3% in January. As a result, over the past several months there has been a slight uptick in YoY inflation to 1.3% from 1.1% in October. 

Aside from the pandemic, for the past 40 years, recessions had happened when CPI less energy costs (red) had risen to close to or over 3%/year. As of this month that number is only 1.8%, showing no real price pressure at all: 

Because pandemic affects are probably influencing seasonality, below I show both the  m/m adjusted and non-seasonally adjusted change in CPI:

While inflation is running higher than in 2019, in the longer term scheme of things there is no cause for concern.

Now let’s take a look at how inflation has affected real wages. Because wages are “stickier” than prices, typically as recessions beat down prices (or at least price increases), in real terms wages rise, either during or just after a recession. That has been the case for the coronavirus recession as well. It is the “real” buying power of wages among those still securely employed during a recession that is one of the engines that usually restarts growth. 

While real wages declined -0.1% in January, since October real wages have risen close to 1%, undoubtedly as a result of the skew in layoffs, which have disproportionately affected those in the low-wage food, beverage, and entertainment industries:

Nevertheless, real hourly wages for non-supervisory workers have continued to exceed their previous 1973 peak.

Once the pandemic is brought under control, I am anticipating at least a short burst of increased inflation, as freedom beckons rather suddenly for 300 million people.

Tuesday, February 9, 2021

December JOLTS report shows renewed stalled jobs market due to out of control pandemic


 - by New Deal democrat

This morning’s JOLTS report for December confirmed a jobs market recovery that has  paused due to the increasing effects of the out of control pandemic. Most importantly, hires declined sharply - down by over 5% in a single month!

While the JOLTS data is a deep dive into the dynamics of the labor market, since it only dates from 2001, there are only 2 previous recoveries with which to compare the present. Nevertheless it is worthwhile to make the comparison.

In the two past recoveries: 
  • first, layoffs declined
  • second, hiring rose
  • third, job openings rose and voluntary quits increased, close to simultaneously

Let’s examine each of those in turn. In each case.

What appears below is that, although there has been some variation, the year 2020 through December has recapitulated the pattern from the last two early recoveries: the first two data series to turn - layoffs and hires - have indeed turned, while the last two - job openings and voluntary quits - have appeared to bottom but have had a much less dramatic rise. With increased pandemic restrictions and consumer caution, several renewed negative readings in November, but not enough to significantly change the trend.

This first graph compares layoffs and discharges (blue) with the 4 week average of initial jobless claims (red) prior to this recession, for reasons of scale since March and April would be “off the charts”:

You can see that, by the end of the recessions, layoffs were already declining, and continued to decline steeply over the next 3-8 months before reaching a “normal” expansion level. The turning point coincides exactly with the much less volatile, but more slowly declining, level of initial jobless claims.

The same had been the case this year up through October. Layoffs and discharges already declined to their “normal” level in May, while initial jobless claims peaked one to two months later, and continued to decline (slowly) into autumn. Then, in November, layoffs and discharges increased and remained elevated in December. Initial claims followed suit with a one month delay: 

Next, here is the entire historical relationship between hires (red) and job openings (blue) through 2020:

In the past two recoveries, actual hires started to increase one to two months before job openings.

Both made troughs in April, but hires initially rebounded more sharply ever since May compared with job openings. Since July openings have stagnated, while hires actually declined significantly in December to their worst level since the April lockdowns:

Next, here are quits (green) vs. job openings (blue): 

In the past two recoveries, openings rose first, followed by quits, suggesting it is openings that leads to the increase in voluntary quits. That has been the case in 2020 as well.

Because of the enormous moves during this pandemic year, seasonal adjustments might not be leaving us with a true picture, so here are job openings (blue), hires (red), and voluntary quits (green), measured YoY instead, for the entirety of the series up through the present:

We can see that hires rebounded first following the 2001 and 2008-09 recessions. Quits and openings moved generally in tandem with a slight lag. The same pattern generally appeared in 2020, with quits perhaps slightly lagging.

Finally, I have broken out layoffs and discharges separately below, because the their level in April and May of this year would obliterate all other variations. The first graph covers their entire history through 2019, and the second 2020 beginning in June:

This metric returned to normal almost immediately after both of the past two recessions, and did so again by June of last year, and has stayed in that normal range ever since, although layoffs and discharges have clearly increased since September.

To sum up, the December JOLTS report once again shows:

1.  A pattern generally consistent with the past 2 recoveries, with layoffs having returned to normal levels, then hiring having increased, and finally quits and openings increasing as well;

2. The late autumn and early winter surge in the out of control pandemic has shown up in  increasing layoffs and separations, and a downturn in hiring.

With new infections having sharply declined in the past 4 weeks, and 40+ million doses of vaccine administered, I am expecting a positive reversal, but not until at minimum the JOLTS report covering this month,  which will be released in April.

Monday, February 8, 2021

The short term 2021 economic forecast + brief coronavirus update


 - by New Deal democrat

At the beginning of each year, I have usually posted both short and long term forecasts. Because of the impact of the pandemic, I refrained from doing so. But with light at the end of the tunnel courtesy of the vaccines, it makes sense to do updates now.

So . . . my K.I.S.S. short term forecast is up at Seeking Alpha. As usual, clicking on over to the link will give you some useful economic information about the likely trajectory of the economy through midyear, and also reward me a little bit for the effort I put in.

Meanwhile, some significant news on the pandemic front.

While we wait to see if the Super Bowl was another super spreader event, the one week average of cases through yesterday was at the lowest point in 3 months:

If the downward trajectory continues, we’ll be at our spring and summer averages within 3 weeks.

And vaccinations continue to improve, with the weekly rate at over 1.4 million daily:

total vaccinations have reached over 40 million:

That is still less than 10% of what we need to bring the pandemic truly under control.