I read WolfStreet.com daily. The author delves into these topics and provides plain-language analysis. If you're interested in economics and markets in the US, you'll likely enjoy his content.
I find r/askeconomics to be a pretty good place for economic discussion since they only allow comments after the moderators who are economists review. Ask there. A lot of it is just the economists calling posters dumb basically but the good questions get interesting discussion.
I don't believe that's true. Deficits relative to change in GDP were small from 2014-2018, and I believe if you do the math you'll find GDP ex deficit spending will still be positive for those years
> For example, I see a lot of growth in government jobs.
Where do you see this? You'll forgive me, but statements like that have the smell of a conspiracy theory ("Biden is hiring people for fake jobs to goose the numbers", something like that).
In fact this is measured and has been for a long time. Here's the FRED chart. Always go to FRED, always. Almost everything else has spin to it: https://fred.stlouisfed.org/series/USGOVT
And it's basically on trend. There was a big downward crash in the pandemic, which has been corrected for a while. Certainly there's no data to suggest a "lot of growth in government jobs", they're growing just like the economy is.
They're just listing numbers from the report, though. It's boring "here's the breakdown" journalism. It's clearly not saying these are growing faster. Those are just the biggest categories. I repeat, if you want data, look at data. FRED is free and great.
IMO, the Biden administration is going to go down as one of the greatest in modern American history.
It's one thing to do well in easy conditions. But the true measure is how you handle challenging conditions, and few terms have been more challenging than the last 4 years.
Feels like the effects of the IRA and Chips act will pump up construction jobs as factories get built in the short term.
But whether all that activity generates products and supply chains that are globally competitive is still a big question. I don't think the US is anywhere close to being out of the woods.
The Biden administration is behind a few big bills:
1. The Infrastructure Investment Bill
2. The Inflation Reduction Act
3. The CHIPs Act
The name of 2 is a bit of a misnomer (extremely common in US politics to give bills misleading names to make then more popular).
Between them, he significantly increased government investment in domestic infrastructure, green energy, and the semiconductor industry.
Short term, that has probably been a big part of the magic formula that has kept unemployment low while interest rates have been high in order to combat inflation.
It's easy to forget that, in the US last spring (1) there was widespread fear of a sharp recession, and (2) Signature and Silicon Valley Bank failed within 48 hours of each other. Many smart people who lived through the 2008 crisis were saying, "Here we go again." Yet here we are. Whatever strategy Janet Yellen and Jerome Powell did execute seems to be working.
It's nearly miraculous really. Every market maker was calling for a hard recession. SVB looked like the beginnings of a bank run. Instead we are at damn near full employment, gas is cheap, the supply chain is normalizing and stock keep ticking up.
I think back then assumption everyone made was low interest rates were the prime cause of inflation. Increasing rates to control inflation caused the bank failures.
What they have realized and said since, is the high prices were not just interest rate related, but due to supply chain shocks that happened due to covid+ukraine russia+china drama etc.
Once supply chains settled down as they do after the initial chaos when war starts prices started dropping. I am not an economist so take everything above with a pinch of salt.
Wow I was under the impression it began in 2020 while Trump was still president. I could’ve sworn much was made about his policies about it and I thought I remembered that he actually contracted it while in office. Must’ve been dreaming. Thanks for the clarification.
OP clearly was using four years to describe Biden’s term to support the idea that he will go down as the greatest President in history. But even if you want to just look at the full covid period it doesn’t belong in the same sentence as the rest of those events. The past decade has been likely the most calm period in American history. But let’s pretend it was the darkest period of the past 400 years lol
> civil war, Great Depression, Cuban missile crisis, world war 2
Modern American history means last ~50 years. So that rules these out. Biden is great, but he's not going to ever come close to displacing Lincoln at the top of the heap.
COVID alone would have been one of the greatest crises of the last 50 years, but Biden's administration also had several others to deal with on top of COVID. (remember that 2022 was COVID's worst year).
The only comparable challenges in the last ~50 years would have been the Great Inflation and GFC. Carter did a smash up job appointing Volcker to fix the Great Inflation, but the fact the crisis festered for 15 years prior is a particularly bad smell.
The GFC is a great comparison. A stronger quicker response would have ameliorated it greatly. The last 4 years was handled well because Biden was part of the GFC response and learned from their mistakes.
Can someone explain to the clueless among us (me) how you can increase jobs, but not decrease unemployment?
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December’s jobs report showed employers added 216,000 jobs for the month while the unemployment rate held at 3.7%. That compared with respective estimates of 170,000 and 3.8%.
In addition to population increasing, the number of people in the job pool can increase in other ways. Unemployment generally looks at the number of people looking for a job, which can change based on people deciding they want a job / don't want a job in a given month.
Denominator changed - more people in the workforce through participation, immigration or not being dead.
As for analyst expectation, they are often mathematically inconsistent - quarterly revenue estimates can mismatch the 1y number etc.
The expectations are a simple average, and not necessarily everyone contributes to both estimates. Analyst A might stick in a +1 mil monthly number, Analyst B sticks in a -2% unemployment rate. (+ there are many analysts that like to stick in stupid numbers so they can claim to be a genius on cnbc if there is an outlier result)
only people who are actively looking for jobs are considered unemployed, so the "jobless working age population" is a larger group than people considered unemployed. so, you can have a person who is unemployed get a job and another person who is jobless but wasn't considered unemployed because they weren't actively looking then become unemployed because they began to actively look for a job.
The official unemployment rate is calculated by the Bureau of Labor Statistics by surveying a representative sample of US households, not a literal count of people "on the job hunt": https://www.bls.gov/cps/cps_htgm.htm
So while you should expect the numbers to broadly track together, there can and will be some variance month-over-month in the impact and durability of new jobs' contribution to the overall level of employment.
Young people join the workforce every month, and also some who have been sidelined for one reason or another can re-join. Who counts as unemployed is a bit more detailed than just people who aren't working.
What's the most American thing ever? I don't believe the financial markets are really an American thing but a global one. At any rate the markets did not react negatively to the news.
In addition to what others have said I’d say that your claim that unemployment did not decrease is not necessarily correct. They’re only reporting on the tenth of a percent, the rate could’ve gone from 3.78% to 3.71% for all we know based off this. With a labor force of 170 million one hundredth of a percent is still 17,000 people.
All the pundits who have been predicting large rate cuts this year just baffle me. The jobs situation is very strong, wages are still rising, and consumer spending is still going up [1] despite predictions that everyone was going to run out of money in Q4. On top of that, housing is still sky-high and the commercial real estate market hasn't collapsed yet. I must be missing something.
If you want housing prices to come down due to raising rates instead of home building, we wouldn't just need the rates themselves to be up. If rates are high, most people don't want to sell their house either, as moves to a bigger house become prohibitive when you go from a smaller house at 2.5% to a bigger one at 7%. What we have now is relatively few home sales, which aren't enough to stay on the market for long, as there are barely enough to meet the demand of people who don't care much about mortgage interest rates.
The typical force for prices to go down in a situation like this involves too many houses for sale. And given that most new construction froze, as the interest rates also hurt builders, we'd need an increase of supply from people being forced to sell, at a time few want to. That means large job losses and being unable to afford the mortgage they already have. A job market so bad, we'd most likely been in a pretty big recession. Given that the fed wants to avoid this, it's very unlikely that we'll see home prices fall at all unless they mess up. This isn't that weird in other parts of the world: There's been soft landings in other countries, just never in the US.
The whole idea of rate cuts isn't just a matter of pundits. Jerome Powell suggested up to three rate cuts in 2024, and him speaking is not punditry: Depending of who you are learning macro from, it is forward guidance, a form of monetary policy.
Covid, the lockdowns, and the post-lockdown period have been large natural experiments, testing whether different macroeconomics theories hold water. We had a by-the-book supply shock, followed by different levels of fiscal and monetary stimulus throughout the world. Economists will argue about this for decades.
I think home construction will be the thing to do the job, it just takes time. For years, my area (The Triangle area of NC) has had a huge amount of home construction that has kept home prices rising at only a very reasonable 3-4% per year over the past few decades, despite large job growth and lots of tech employment. No reason to get into a bidding war over an existing house if you can go a mile down the street and have your pick of 7 different new home communities.
Suddenly when construction ground to a halt in early 2020, prices started spiking by 30%+ per year (extremely low interest rates obviously was a factor as well). Construction seems to be back in full swing over the past year, so basically anyone who wants a new house can buy one if they're willing to wait 6 months or so. New construction prices have leveled off and the junkiest tract houses are closing at $100K or more below their prices a year ago (still $200K more than they would have sold for in 2019 though).
That area in NC is basically the best in the country in terms of housing starts. Most other large metros are far behind where they need to be, and the higher rates has absolutely hurt them as the NIMBY policies make construction/development take longer which means more loans.
The argument for a rate cut is that the effective rate (real rate adjusted for inflation) will increase as inflation subsides and headline rate is held. So the same rate that was pumping the brakes at 7% inflation would be slamming them at 2% inflation.
I am old enough (i.e. > 2 years) to remember when politicians were complaining that rates were too low and pledged to increase them to make things great again, in stark contrast to now where they are all but promising to slash rates to make things great again.
Lest we forget that actually they have nothing at all to do with the government on your tv screens every day; and in all likelihood cutting rates is a sign of bad things in the economy and hiking rates is a sign the economy running a bit too hot.
Last I heard they were maybe going to cut towards end of 2024, so it could still happen. I am reading optimism for the US economy's 'soft landing'. Fingers crossed
Rate cuts will still likely happen, just look at what's going on with the bond market; we're already in conditions similar to the 2010's. The US Gov can't afford it's current debt load at the current rates.
We're probably never going back to ~0% interest rates again but current inflation numbers show that the inflation we felt in 2021 and 2022 were transitory because of supply-chain shocks and corporate greed. Now we'll have to deal with the boomers retiring and moving into consumption-only mode instead of consuming AND producing, the former of which is inflationary.
Besides, corporate and white collar donations are Biden's bread and butter, and they're pricing in cuts of 75-150 bps over the next year.
TL;DR - Don't discount that we're on the up from a low in a slow-rolling business cycle.
And then there’s the fact that the employment gains for October and November were both revised downward in the latest report. "The change in total nonfarm payroll employment for October was revised down by 45,000, from +150,000 to +105,000, and the change for November was revised down by 26,000, from +199,000 to +173,000. With these revisions, employment in October and November combined is 71,000 lower than previously reported."
Zero Hedge https://www.zerohedge.com/markets/inside-catastrophic-jobs-r... points out that this trend is deeply concerning because the job gains for 10 of the last 11 months of 2023 have all been revised downward. “Why? So that the White House can take credit for a strong number (one which also sparks algorithmic buying in the market) only to quietly revise it lower one and two months later when nobody is looking."
But here’s where things look really bad. https://www.bls.gov/news.release/empsit.t09.htm According to the BLS, the number of full-time workers went from 134,727,000 in November to 133,196,000 in December. That’s a whopping 1.531 million decline.
There’s another dirty secret lingering in the data.
Next we turn to the numbers behind the headline job prints which were rather terrible: the monthly nonfarm payrolls (from the Establishment Survey) may have been weak at 216K but the far more accurate Household Survey showed that the number of Employed workers actually collapsed by an unprecedented 683K, the biggest drop since the US economy was shutdown by covid!
"In short: December was a catastrophic month for the jobs market, which is why we expect the usual theater: non-stop spin and lies from the Biden admin, and not a single relevant question from the liberal media whose job is not to educate or inform, but to carry water, spread lies and enable propaganda,” observes Zero Hedge.
The report showed that inflationary pressures, despite receding elsewhere, are still prevalent in the labor market. Average hourly earnings rose 0.4% on the month and were up 4.1% from a year ago, both higher than the respective estimates for 0.3% and 3.9%. The average workweek edged lower to 34.3 hours.
https://www.bls.gov/news.release/empsit.nr0.htm explains that "Government employment increased by 52,000 in December. Employment continued to trend up in local government (+37,000) and federal government (+7,000). Government added an average of 56,000 jobs per month in 2023, more than double the average monthly gain of 23,000 in 2022. "
So, the government sector did see above average growth, and it was mainly through local governments.
Tracking employment related to subsidies would require a lot of assumptions and analysis. I don't think it's done as a part of any regular reporting.
The majority of those government hires were locals, so you get part of your preference.
To get the rest, you'd need to come up with an alternative for people who don't have others who personally care for them, or know them, or are invested in their lives.
It wasn't done privately before: many people in need without others who personally cared for them, or knew them, or were invested in their lives, just slunk off and died.
That's why the government programs exist: the "private" idea turned out to be a failure, and new ideas were needed to solve the problem.
That's why, if you want to get rid of government assistance to these people, you'd need to first come up with a workable alternative.
'Just slink off and die' isn't really a workable alternative.
Of course it was, and still is. It’s done less privately now because the funds that would be given to private resources are confiscated before they can be given. An excellent example: Catholic charities.
> That's why the government programs exist
One of the stated goals, but also a reduction of the influence of religious institutions is another.
> Just slink off and die' isn't really a workable alternative.
This is fallacious; look at the the homeless in SanFran. That’s what our current government programs amount to.
> Of course it was, and still is. It’s done less privately now because the funds that would be given to private resources are confiscated before they can be given. An excellent example: Catholic charities
Of course it wasn't, and still isn't. An excellent example: Catholic charities don't help everyone in need, or there would be nobody in need.
> One of the stated goals, but also a reduction of the influence of religious institutions is another.
What religious institutions do is up to them, but they were failing to achieve the goal before, and they're failing now, so clearly we need public help as well.
> look at the the homeless in SanFran. That’s what our current government programs amount to.
Where are the Catholic charities solving the problem, then? That's what private assistance amounts to, as well. We can either find a way to increase private assistance, or increase public assistance, until the goal of a true social safety net is achieved.
In any case, I'm still not hearing an alternative, and notwithstanding your claim that the following is somehow "fallacious", 'just slink off and die' still isn't really a workable alternative. So propose something better.
Neither do state sponsored programs, we’re talking about trade offs here, and I’m saying that Id rather the money not be taken by force and incompetently redistributed just so we can wind up with more of the terrible system we have now.
> Where are the Catholic charities solving the problem, then?
You mean the ones that aren’t receiving funding because the people are being taxed to hell?
I think we’re going in circles and have different ideological starting points. I’ll leave the last word to you.
Looks like rates will stay high for the time being, if you're at a cash starved startup, it may be a good time to look around as that's not gonna fix itself any time soon.
On the bright side, if you don't have a house yet, this may mean that rates stay high long enough to have some impact on median home prices. The Q4 2023 home sale numbers will be interesting in that regard.
OTOH, if you're buying a house or bought one recently, I admire your optimism, might I also interest you in a bridge?
The problem with homes is supply. Eventually rates will push some prices down, but without more supply there isn't going to be some big reset (~35% of houses are bought with cash). A soft landing in this case could mean flat (+/- 5%) home prices for a couple years.
Those same higher rates also starve out new supply because it drives up cost of capital for builders.
I think if people follow the old house buying rule of planning to stay at least 2 years they'll probably be ok.
Housing starts are still pretty high right now (relative to post 08), though they could definitely be much higher.
Rates don't seem to be impacting builders all that much, rather they were just making outsized profits in the lower interest rate years. IIRC labor supply was a bigger issue for them.
The issue is that if you have 100 people and 100 houses, the price of any house is just whatever the construction and land costs. If you have 101 people and 100 houses, suddenly not even the sky is the limit. It's not that the 100 houses suddenly became better, they just became an existential land grab resulting in astronomical prices dictated by the absolute maximum the median person can convince a bank to lend them. If getting the money becomes more difficult, the prices will follow.
> OTOH, if you're buying a house or bought one recently, I admire your optimism, might I also interest you in a bridge?
Is this a reference to the "date the rate, marry the house" play (which is supposed to be relatively short term, on the order of 1-2 year timescales)? (I.e., the strategy of buying something you can't really afford now in the hopes of refinancing soon at an anticipated lower rate.)
Or is this a reference to longer-term demographic issues -- the "boomergeddon" thesis, that as that generation dies off there will be excess housing capacity?
The former, just about everyone is buying with an ARM and expects rates to fall this year, but with that not likely to happen they're mostly just setting more money on fire than they would be renting at the moment.
Boomergeddon is a fun thought experiment for y/z but the US has made it far too difficult to build affordable housing at a rate matching the population growth of the country. The more likely effect IMO is y/z will just never see the levels of net worth growth the boomers did.
-That includes another 11k of returning Hollywood strikers.
-There has been a string of downward revisions for 2023, including more for October and November in this report, 71k altogether.
If you subtract all that, only 134k were added versus the November report