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

Low CD Rates: Lending Drought and Savings Monsoon

Click to enlarge.

The data in red (left scale) shows bank credit of all commercial banks divided by total savings deposits at all depository institutions. Think of it as a lending to savings ratio proxy.

The data in black (right scale) shows the 5-year CD rate (national rate of banks).

The data in blue (right scale) shows the 5-year treasury yield.

I would argue that the red data is a primary driver of interest rates (perhaps not the only one). All things being equal, as people deposit more money in banks relative to what banks are lending, interest rates go down. Put another way, banks have no incentive to offer great interest rates on savings when there is so much money being deposited.

Note that the 5-year treasury (in blue) has recently tried to diverge from this pattern. This is not its first attempt. Its last attempt (back in 2011) failed miserably. For what it is worth, I'm not a believer that it will succeed this time either. Rising interest rate environment? I don't think so. Could be wrong of course. Time will tell.

And lastly, note the extreme lack of a recovery in the lending to savings ratio (in red). It's just been down, down, down.

Here is a closer look at that lending to savings ratio over the past year (using weekly data instead of smoothed semiannual data).



Once again, it's just down, down, down. The lending drought and savings monsoon continues. Those patiently waiting for higher CD rates and higher 5-year treasury yields may be very disappointed. But what's new? They've generally been disappointed for 30+ years.

This is not investment advice.

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

charts debt treasuries

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

Our Economic Plague Ship (Musical Tribute)

Long-time reader mab offers the following comment in this post:

I'm watching CNBC. What's the deal? The "experts" keep blaming our economic ills on the cruise ship Queen Elizabeth!

In my opinion, this really deserves its own Christmas ship musical tribute!



Sing along! You know the tune!

Out in the Harbor

Out in the harbor, cruise ship ills
In through the dust mask, doctor bills
Down with economies, it destroys
Spreading little bugs, with sick bellboys

Oh, no, no! Who could've known?
Oh, no, no! Who wouldn't groan?
Out in the harbor, sick, sick, sick
In through the dust mask, it's ick, ick, ick

First came the sickness of little Bill
Oh dear God ships make him ill
Gave him a virus to choke and wheeze
One that fevered him to high degrees

Oh, no, no! Who could've known?
Oh, no, no! Who wouldn't groan?
Out in the harbor, sick, sick, sick
In through the dust mask, it's ick, ick, ick

Next came the sickness of little Mitt
Have we ever seen so much vomit?
Here was some fluid for what he lacked
Also a drug some say acts like crack

Oh, no, no! Who could've known?
Oh, no, no! Who wouldn't groan?
Out in the harbor, sick, sick, sick
In through the dust mask, it's ick, ick, ick

No day is complete without at least a little gallows humor. Sigh.

musical tribute sarcasm videos

The Fed's 10-1 Leverage Has Paid Off! (Musical Tribute)

The following chart compares the trillions of dollars the monetary base has grown (in blue) to the trillions of dollars household net worth has grown (in red) since the first quarter of 2009.


Click to enlarge.

Each dollar the Fed spends gets us back ten! Why on earth is the Fed tapering the sure thing? We need even moar leverage! Not less!

Crazy Theory

Let's cash out $10.8 trillion of household net worth (just half of the gain), hand it to the Fed, and let them reinvest it for us! We'll get $108 trillion back! We can then use that money to pay off all our debts and still have plenty left over! Perhaps even enough for every man, woman, and child to retire!

Why hasn't anyone else thought of this? Genius!

December 17-18, 2013
Minutes of the Federal Open Market Committee

Participants were most concerned about the marginal cost of additional asset purchases arising from risks to financial stability, pointing out that a highly accommodative stance of monetary policy could provide an incentive for excessive risk-taking in the financial sector.

Oops. Please disregard my crazy theory above. It would seem that I was offering the very thing the Fed is most worried about. You have to admit that it seemed like a darned good theory on paper though. I just hadn't factored in any unintended consequences. In my defense, it's really easy to do once I went down the "excessive risk-taking" path (gambling $10.8 trillion on a "sure thing" would definitely qualify).

Marrakesh Night Market

The magic lies scattered
On rugs on the ground
Faith is conjured by the night market's sound

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart

charts debt fed chairman housing musical tribute sarcasm stock market treasuries videos

Cass Freight Shipping Index

The Cass Freight Index

Data within the Index includes all domestic freight modes and is derived from $23 billion in freight transactions processed by Cass annually on behalf of its client base of hundreds of large shippers. These companies represent a broad sampling of industries including consumer packaged goods, food, automotive, chemical, OEM, retail and heavy equipment. Annual freight volume per organization ranges from $1 million to over $1 billion. The diversity of shippers and aggregate volume provide a statistically valid representation of North American shipping activity.

The following chart shows the annual average of the index (to remove seasonal variations).


Click to enlarge.

Looks like we've got zero chance of making it back to 2006 levels. Oh, well.

The following chart shows the year over year percentage change.


Click to enlarge.

Look at that strong and robust recovery! Ignore the part where the growth is stagnant or negative (the last 2 years or so).

The future's so bright, I gotta swear, "Hades!"

Oops. Somebody moved the "s" and added a comma. D'oh!

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

charts sarcasm