Disposable Personal Income vs. CPI

The following scatter chart compares annual disposable personal income per capita growth (bottom scale) to the annual increase in the consumer price index (left scale).


Click to enlarge.

From 1960 to 2013:

1. 2009 was the worst year for disposable personal income growth per capita. It was also the record low year for consumer price inflation.

2. 2013 was the second worst year for disposable personal income growth per capita. Once again, inflation came in below expectations.

The following chart shows recent annual disposable personal income per capita growth. I'm using the monthly data instead of the annual averages this time to more adequately show all the gory details.


Click to enlarge.

January 10, 2014
Fed's Bullard: Inflation to pick up in 2014

WASHINGTON (MarketWatch)-- St. Louis Fed President James Bullard said Friday he expects inflation to pick up this year, despite having been surprised by lower prices last year.

1. Good luck on that inflation theory!
2. Brace for more surprises!

jjchandler.com: Tombstone Generator

Click to enlarge.

This is not investment advice, but damn.

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts deflation employment inflation japan sarcasm stock market treasuries

JOLTS of Déjà Vu

The following chart shows the semiannual average of the number of job openings divided by the number of hires (as seen in the Job Openings and Labor Turnover Survey).


Click to enlarge.

Note that this ratio appears to be a leading indicator for the last two recessions (too bad there isn't more data to backtest it further).

When the view out the front window (job openings) looks worse than the view out the rear window (hires), then there may be reason for concern (again).

The next chart shows the annual percentage change in the semiannual data.


Click to enlarge.

Let me guess. We can blame the "recent" decline on two years of bad weather?

The financial experts are bracing for this economy to accelerate in 2014. I have but one question. Which direction? Sigh.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts employment sarcasm

The Sarcasm Report v.185

Click to enlarge.

The blue line shows the annual average of the St. Louis Fed Financial Stress Index and the Kansas City Financial Stress Index.

The red line shows the negative of the annual average of the real S&P 500 Index (December 2013 dollars).

1. The key to maintaining the stock market's currently lofty level is to keep the financial stress at a near record low. That's right. Keep it there permanently. Just say no to stress.

2. The key to maintaining the financial stress at a near record low is to keep the stock market at its currently lofty level. That's right. Keep it there permanently. Just say no to stress.

What could possibly go wrong with this circular reasoning strategy? As seen in the chart, there hasn't been this little financial stress in the system since the top of the housing bubble in the mid 2000s! Oh, what a carefree time that was!

I am very optimistic about our long-term future!! ZIRP! Employment growth! Real GDP growth! Real median household income growth! Uncharted territory growth! You name it! It's going to be an adventure.

February 11, 2014
ASX bets on derivatives clearing

"We don't even celebrate trillions any more," the Englishman recently elevated to the top job of global clearing house LCH Clearnet, told The Australian on a recent visit to Sydney.

It's not quite so flippant a comment as it might seem. The arcane world of over-the-counter derivatives such as interest rate swaps that Davie inhabits turns over $600 trillion of notional value a year, so a trillion is not far off being a rounding error.

This concludes the sarcasm report.

Source Data:
St. Louis Fed: Custom Chart

charts debt employment fed chairman housing sarcasm sarcasm report stock market treasuries

A Great Disturbance in the Civilian Labor Force

Click to enlarge.

The blue line (left scale) shows the civilian labor force participation rate of those aged 25 to 54. It peaked in the late 1990s and it has been pretty much going down ever since.

The red line (left scale) shows the civilian labor force participation rate of those aged 55 and over. It bottomed in the early 1990s and it has been generally going up ever since (recent flattening notwithstanding).

The green line (right scale) shows the civilian labor force participation rate of those aged 25 to 54 divided by the civilian labor force participation rate of those aged 55 and over.

In a truly healthy economy, should those aged 25 to 54 really be dropping out of the labor force at faster pace than those aged 55 and over (as seen in that green line since the early 1990s)?



Wikipedia: Giant Sucking Sound

The "giant sucking sound" was United States Presidential candidate Ross Perot's colorful phrase for what he believed would be the negative effects of the North American Free Trade Agreement (NAFTA), which he opposed.

In space no one can hear you scream suck.

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm trade deficit videos

If Credit Is the Lifeblood of Our Economy...

...then we are officially @#$%ed.



Credit growth (in red) is slowing.
Savings growth (in blue) is slowing.

Without either of those two, I guess we'll just have to rely on wage growth. Good luck on that one. Sigh.

This is not investment advice.

See Also:
Low CD Rates: Lending Drought and Savings Monsoon

Source Data:
St. Louis Fed: Custom Chart

charts debt employment sarcasm

Restaurant Employment Prosperity (Musical Tribute)

The following chart shows annual food services and drinking places employment growth.


Click to enlarge.

3.7% annual growth! Very impressive. Each time we get a recession (the deeper the recession the better), we get more growth. More recessions for the win! Genius!

We just need to stay in that strong, resilient, predictable, and consistent trend channel long-term, preferably near the top. The long-term trend is so obvious that I don't even feel the need to add a trend line. Did I mention how stable and sustainable the channel is? Just look at it! A few more years of this and it will be almost impossible to leave the channel no matter what happens. Who doesn't love certainty?

The annual data in the first chart doesn't include 2014 yet, but I can give you a glimpse of how the year is starting off using monthly data.


Click to enlarge.

There are a whopping 10.5 million people employed in this rapidly growing industry. Growth appears to have peaked back in July. As of January, the growth is still above 3% though and there's nothing but biscuits and gravy on the horizon! Can't you see it? And with average hourly earnings of production and nonsupervisory workers in this industry coming in at $10.96 (December 2013), what's not to like?

In honor of the charts, I suggest we all try to work Chipotle into our conversations (more than we already do). Start the day off right. When we wake up each morning we should exclaim, "What a great day to Chipotle!" Or alternatively, "The future's so bright I gotta Chipotle!"

January 30, 2014
Traffic jump boosts Chipotle restaurant sales, stock soars

(Reuters) - Chipotle Mexican Grill Inc (CMG.N) said on Thursday an increase in customer visits contributed to bigger-than-expected growth in quarterly sales at established restaurants, and its shares rose nearly 13 percent in extended trading.

People braved the extreme weather to eat burritos? It's a frickin' polar vortex miracle!



See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts employment musical tribute restaurant sarcasm stock market videos

Interesting Divergence Between ADP and Establishment Survey

The following chart compares ADP's version of employment (in blue) with the government's establishment survey version (in red, minus government jobs).


Click to enlarge.

There is a clear divergence lately. Let's take a closer look.


Click to enlarge.

I haven't been following this divergence long enough to form a theory on why it is there, and without that it is difficult to offer useful commentary. Won't stop me from trying though! Here are two potential reasons off the top of my head.

1. The divergence is always there but it gets revised away over time (the older data is corrected). If that's the case, no big deal.

2. The divergence is valid and the establishment survey is coming down to close the gap. There was a weak establishment report in December and, as seen in the chart, that certainly closed the gap to some degree.

In any event, I would suggest that there is headline risk for tomorrow's employment report. If the gap closes more, then the report will disappoint.

Here's the most optimistic thing I've said on this blog in a long time. If the report is much weaker than expected (big if) and if everyone points out how exceedingly weak the report therefore is, then I would say that they may be overreacting. It might just be a correction to close a divergence and little more. It's not like the ADP report itself looks all that awful (not great either for that matter).

That said, no single straw on a camel's back thinks it is responsible for the collapse. Things could get ugly. Real ugly. Perhaps all it takes is an illusionary straw to break the camel's illusionary prosperity? Who can say for sure?

This is definitely not investment advice, nor is it a prediction of any sort. I can say that I have never been more interested in a government payroll report though. Never.

Source Data:
St. Louis Fed: Custom Chart

charts employment

Ugly Chart of the Day

The following chart shows the quarterly average of civilian employment divided by those not in the labor force.


Click to enlarge.

Maybe it is different this time.

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm

ISM: New Orders Are "Strong" and "Resilient"

The following chart shows the average of the ISM manufacturing new orders index and the ISM non-manufacturing new orders index.


Click to enlarge.

How long do you suppose businesses will continue to hire if that recent trend continues?

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm

Civilian Employment - Quarterly Change

The following chart shows the quarterly change in the quarterly average of civilian employment.


Click to enlarge.

The blue parabolic trend line uses all of the data points.
The red parabolic trend line uses select low data points in red.

I say we just blame the trends on cold weather and problems in emerging markets. What's the worst that could happen?

Risk on, baby! Risk on!

This is not investment advice.

See Also:
Trend Line Disclaimer
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm stock market

Personal Income Growth (Musical Tribute)

Click to enlarge.

It is not adjusted for inflation, population growth, or income inequality.



See Also:
Real Annual Disposable Personal Income per Capita Growth
Employment Hump Déjà Vu (Musical Tribute)

Source Data:
St. Louis Fed: Personal Income Growth

charts employment inflation linear trend failure musical tribute sarcasm videos

My Take on Construction Spending (Musical Tribute)

The following chart shows the natural log of the combined total of religious construction spending, sewage and waste disposal construction spending, and amusement and recreation construction spending all divided by disposable personal income. I am once again using a natural log so that exponential growth (or in this case decay) can be seen as a straight line.


Click to enlarge.

Why religious, sewage and waste disposal, and amusement and recreation construction spending you might ask?

1. We have lost faith.
2. The @#$% is hitting the fan again.
3. We are not amused.



"Bond" is certainly having a good year so far (the last few weeks in particular). Shocking.

The 20-year TIPS is back under 1%. Let's just blame the next 20 years on a few months of cold weather and call it good.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

charts employment inflation musical tribute sarcasm treasuries videos

When Will the Next Auto Industry Bailout Occur?

The following chart shows the natural log of annual light auto sales divided by civilian employment. I'm using a natural log so that constant exponential growth (or in this case decay) can be seen as a straight line.


Click to enlarge.

Behold the two trend channel failures. The first was a massive failure to the downside and the next was a massive failure to the upside. Slow and steady recovery my @$$.

And on that note, I'll leave the exact date of the next auto industry bailout as an exercise for the reader. Sigh.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

charts employment linear trend failure sarcasm vehicles volatility

The Future of American Baby Manufacturing (Musical Tribute)

Click to enlarge.

Wikipedia: Optimism

Optimism is a mental attitude or world view that interprets situations and events as being best (optimized), meaning that in some way for factors that may not be fully comprehended, the present moment is in an optimum state. The concept is typically extended to include the attitude of hope for future conditions unfolding as optimal as well.

Hey! Look! A parabola! Woo-hoo!



See Also:
St. Louis Fed: Japan's Working Age Population
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart

charts employment housing japan musical tribute sarcasm videos

The "Driver" of American "Prosperity"

The following chart shows personal income divided by personal consumption expenditures.


Click to enlarge.

No matter how important you think income is, consumption is always more important!

Show of hands: Who thinks this can end well?

January 31, 2014
Consumers spent more than expected last month despite flat incomes

WASHINGTON -- Consumers opened their wallets more than expected last month even though their incomes failed to grow, another indication the economy picked up steam heading into the new year, the Commerce Department said Friday.

Steam power for the win apparently.

Source Data:
St. Louis Fed: Custom Chart

charts employment oil sarcasm vehicles

Trends with Benefits

The following chart shows the annual growth in private industry worker benefits. I'm using semiannual data to smooth out the data a bit.


Click to enlarge.

Friends with Benefits (2011) - Quotes

Jamie: Why do I get the feeling this is the first real commitment you've ever made?

Dylan: It's not. T-Mobile. Two years. And f@#$ do I regret that one!

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm stock market

Parabolic Trend Failure of the Day: Retail Hourly Earnings

The following chart shows the average hourly earnings for retail employees (not adjusted for inflation). I'm using quarterly averages to smooth out the data.


Click to enlarge.

The parabolic trend line in red uses the data points in red. As a side note, I first tried to use an exponential trend line but it turns out that the data was not growing exponentially (not even remotely). Parabolic is so much more fun anyway though! Very sustainable over the long-term (until it isn't)!

Retail employees just lost what little pricing power they had left. Have no fear if you are one of the 15 million retail employees though. We've been told repeatedly that our economy is strong and resilient!

That said, we've also been told that online retailers wouldn't hurt the brick and mortars all that much and that the 10-year treasury yield would be well north of 3% by now (thanks to our strong and resilient economy of course). We're told a lot of things. If we're told enough things, some of it is bound to be true!

Rather than listen to the financial "experts" on CNBC, let's summarize what the chart's trying to say in one rhetorical question or less.

Can you say retail employment glut? :(

This is not employment advice. Sigh.

Source Data:
St. Louis Fed: Custom Chart

charts employment parabolic trend failure

Financial Activities Employment (Musical Tribute)

The following chart shows the annual change in financial activities employees. I'm using semiannual data to smooth out the data.


Click to enlarge.

That's 7.9 million jobs at stake.



Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm

What to Expect From Janet Yellen's Fed (Musical Tribute)

Q&A: What to Expect From Janet Yellen's Fed

Beyond that, I wouldn't be surprised if the Fed under Yellen lowers the unemployment-rate threshold that could trigger an increase in interest rates. A number of years ago, the Fed introduced this idea of a 6.5% unemployment threshold for considering rate hikes. But that threshold is almost certainly out of date. That's because the unemployment rate continues to drop for the wrong reasons: We keep getting a decline in the number of people looking for work. The Fed wants strong job growth, not people abandoning the labor force. And so it has to decide whether to throw it away or go to lower the level. Our feeling is the Fed will lower it to 6% or perhaps 5.5%.

And how long would we expect that unemployment rate to stay at 5.5%?

The following chart shows the 30 year moving average of the unemployment rate.


Click to enlarge.

Note that 5.5% seems like a pipe dream over the long-term (unless we can somehow magically undo the permanent damage done in the 1970s).



Yellen love you long time.

(Shame on me for going there, lol. Sigh.)

Source Data:
St. Louis Fed: Unemployment Rate

charts employment fed chairman musical tribute oil sarcasm videos

Our Manufacturing Employment Boom Bubble

The following chart shows the annual change in manufacturing employees. I'm using semiannual data to filter out some of the noise.


Click to enlarge.

How can people be optimistic about the future of long-term employment when looking at that chart? Is it because they are looking at the following chart instead (and cherry picking just the good stuff)?



Cherry Picked Goodness

1. The growth rate is still positive! Hurray!
2. It's different this time! Woohoo!
3. Thanks to the Fed, recessions are now impossible!
4. We've lost more than 5 million manufacturing jobs since 2000. 12 million to go.

Can't you see that we're being Khan'd?

He is intelligent, but not experienced. His pattern indicates two-dimensional thinking. - Spock, The Wrath of Khan (1982)

One-dimensional thinking: The growth rate is still positive.
Two-dimensional thinking: The growth rate is positive but slowing.
Three-dimensional thinking: Somethin's poppin' and it ain't popcorn.

This is not investment advice. As always, just opinions.

Source Data:
St. Louis Fed: Manufacturing Employment Growth
St. Louis Fed: All Employees: Manufacturing

automation charts employment fed chairman sarcasm