Ever since the mere hint of a possible recession last decade, I have kept Bill McBride’s Calculated Risk blog as one of my go-to blogs. In recent years, I have continued to make return visits as he’s generally good at offering a sober look at the economic data, including jobs reports. The latest job report has come in and as McBride notes, it is another solid report.
Just a few clips from what McBride summarizes:
The headline jobs number was decent. Job growth was somewhat below the consensus forecast (161,000 vs forecast of 170,000), however job growth for August and September were revised up – and the unemployment rate ticked down to 4.9%.
Job growth has averaged 181,000 per month this year.
In October, the year-over-year change was 2.36 million jobs – a solid gain.
In terms of wage growth, which for a long time had been weak to non-existent, here is the latest:
The graph shows the nominal year-over-year change in “Average Hourly Earnings” for all private employees. Nominal wage growth was at 2.8% YoY in October. This series is noisy, however overall wage growth is trending up – especially over the last year and a half.
Note: CPI has been running around 2%, so there has been real wage growth.
Other tidbits include the employment-population ratio of 25-54 year-olds, which increased in October, government employment (which is still pretty stagnant), long-term unemployment (which is trending downward but still elevated), and labor underutilization (U-6), which is also trending downward.
Overall, trends are going in the right direction. What this will mean for the election is hard to say, given all the noise in the mass media, blogs, and social media. Historically, an economic upswing tends to favor Presidential candidates representing the incumbent party. That should bode well for Clinton. The argument that the economy is a disaster is hard to make when hiring is on a consistent upswing, and wages are now on a consistent upswing. That won’t stop Trump and his surrogates from making that false argument, but it carries no substance.
My guess is that the recovery is solid enough that barring some catastrophe (for example a Trump victory plunging various markets), the Fed will begin to once more slowly lift interest rates. That’s merely conjecture on my part. As some others on this blog might say, we shall see.
For those so inclined.
Middle class incomes are also finally
increasing
Still not enough to overcome the ‘lost years’ from the recession, but progress is progress.
4.9 is a great number, and if it lowers more, wages should increase more. Businesses have been able to take advantage of workers far too long.
Going by historic economic numbers alone no republican should ever win. Unfortunately we don’t live in that world.
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We would have reached this point probably a bit sooner if the GOP had not been so hell-bent on blocking any stimulus. Leaving the Fed to be the supplier of stimulus of last resort was a recipe for a prolonged and needlessly weak recovery. Otherwise, the last year has generally looked good. Probably won’t have to worry about recession next year, but recoveries cannot last forever. Could be in for a bumpy ride between now and 2020.
Now if this were only a normal election year. Sadly, everything about this one has been far from normal. I have a couple teens in the house who watched part of the debates, have dealt with adults who steal or vandalize each others’ yard signs and property, who make physical threats of violence and so on, and they are thoroughly disgusted. They’re ready to write the grown ups off as not worthy role models. I can’t blame them.
I also worry about 2018-2020. The ‘powers that be’ are used to not increasing pay. To them, it’s better to have high unemployment than to pay more. I hate to sound tin foil hatish (we have enough of them around here), but when corporate powers put stock options over country….
Out here it’s quiet. The only signs are for local races (Issa and his opponent and city stuff). My non profit stuff is hobby oriented and non political.
None of that means my circle isn’t a nervous wreck. My wife and her sister are stressed as heck.
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This election has generally been a high stress one for many. When my news feeds include articles on how to reduce election-induced anxiety, something has clearly gone off the rails.
One of interesting things to watch by the time the next recession – regardless its severity – is how the Fed reacts. Last recession, the Fed could simply reduce the Prime Rate to near zero and semi-stimulate the economy. As low as rates are and given that I seriously doubt the Fed will be able to raise rates much between now and the next recession, they won’t have that particular action available. I suppose they could always experiment with negative interest rates. That will be, um, interesting. With a GOP Congress (even if only partial under the best case scenario) it is practically a guarantee that no stimulus will be forthcoming from the Legislative Branch. Interesting times.
I was at a game group last night and while it’s overwhelmingly liberal, I heard people at the other table complaining about what a “bad candidate” Hillary is. I just held my peace because I needed the break, but it pretty much ruined the break for me after that.
I don’t like ceding the ground to liberals who criticize Hillary or her campaign in unwarranted, destructive ways.
Sticking to her candidacy, the issue some of your game group was talking about, I think it’s preposterous to claim that:
is a “bad candidate”.
People can claim all they like that Trump is a bad candidate who should have been routed. But the America of 2016 is not the America of 1980. We have the tremendous polarization of the electorate, the celebrity- and scandal-driven media, and the tearing down of campaign finance laws by the pro-corporate majority on the Supreme Court. These have conspired to make it easier for Trump to avoid a landslide loss.
And then the FBI, in a completely unprecedented set of actions, moved publicly in the last weeks of the election to attempt to influence the outcome, and it appears that they have influenced the public which has been polled.
I’ll concede that the extremity of many of these circumstances has surprised me. We’ll just have to win anyway, and win as strongly as possible. And we’ll have achieved the repudiation of this white supremacist, extremely mendacious campaign the Republicans have run this cycle.
When I hear from liberals disappointed by Hillary, I point out to them that she has moved her positions substantially left in the course of the campaign, and that this gives us a great opportunity. The claim that “she’s lying and she’ll break her campaign promises” is the absolute worst way to react to her improved behavior. We need to empower good behavior, not undermine it.
If, after taking over the Presidency, Hillary is attacked and unsupported by significant portions of the left and the right, she will be unable to pass the best parts of her agenda. And if an unwarranted impeachment attempt comes, Congress will waste enormous amounts of time with investigations driven by information and rhetoric from the most fetid depths of the right-wing sewer.
This information and rhetoric may be credulously supported and disseminated by an unfortunate number of people who claim to be progressives. By their behavior, many of these last people would rather be right about Hillary than become successful in helping achieve the most progressive Federal agenda possible.
Hillary has committed to putting non-bankers on the regional Federal Reserve Boards and that will reduce the Fed’s bias towards controlling inflation at the cost of increasing unemployment. In addition, even the existing Fed Boards are somewhat dovish after almost a decade of financial trouble. So while the Fed may have a policy tighter than it should be, I don’t think they’re going to make a mess of things.
Non-trivial wage growth started coming back two years ago, so it’s not like this is the first good report we’ve seen. Fairly unsurprisingly, it started when unemployment finally got below a recessionary range. The official definition of “recession” is very clunky because it only includes the section where the economy is actively shrinking. To normal people, “recession” also includes the part of the recovery needed to compensate for the decline in the first part of the recession (the entire official part). For employment, the recession ended in 2015, not 2010.