The Economy, In Charts

[tabs]

With a falling USD any company that exports is going to do OK...

[jyl]

In case anyone was wondering, doing the regression of GDP growth on top marginal tax rate gives a coefficient of 0.00046 and adjusted R-square of 0.029. If you know some stats, you know what that means.

[Rich76_911s]

Originally Posted by jyl

In case anyone was wondering, doing the regression of GDP growth on top marginal tax rate gives a coefficient of 0.00046 and adjusted R-square of 0.029. If you know some stats, you know what that means.

-Absolutely No Relationship

An interesting couple of interactive charts:
Bloomberg.com: TV and Radio

[jyl]

Top chart is month-over-month change in employment, 3 month moving average, from the payroll survey report. Bottom chart is the same data, from the household survey report. Workers hired for the 2010 census are excluded. Sorry for the different time scales.

At turning points in the economy, both positive and negative, these reportstend to diverge, with the payroll report lagging the household report. This is due to the methodology used.

[jyl]

I'm going to post more charts on employment. Focusing on the earliest indicators, not the headline "unemployment rate" which is slow to turn (because the denominator surges as the discouraged jobless resume actively searching).

This is YOY increase in temporary employment, comparing this recession/recovery (red line) to prior (other colors). Temp employment is one of the most sensitive measures of the job market, since employers are quick to shed temps when business turns down, and resort to hiring temps before the bigger step of hiring permanents when business turns up.



This is initial jobless claims (blue is weekly data, gray is 4 week moving average). The rate of job loss peaked in spring 2009 and has declined significantly since. There was a blip up in February that may have been weather-related. Initial claims won't ever go to zero, since people lose their jobs even in a "good" economy (see the 2004-2007 period). The black line is the temp employment YOY data again.



This is the net YOY change in jobs from the household survey and the establishment (aka payroll) survey. The former is based on a sample of households, and includes consultants, self-employed, and start-up businesses. The latter is based on a sample of businesses, and misses consultants, self-employed, start-ups; it uses a birth-death adjustment to compensate but that tends to lag inflections (too positive when employment turns down, too negative when employment turns up). These charts do include temporary census workers; 50K were hired in March, less than the 100K most expected.

[tabs]

Yes and your point is...that the economy is turning upwards...the only question is..is this a recovery from the near death experience or is it the end of the recession that started in 07?

Another question was this a cyclical end of recession ro did the govt helping hand bring about this recovery?

[jyl]

Originally Posted by tabs

Yes and your point is...that the economy is turning upwards...the only question is..is this a recovery from the near death experience or is it the end of the recession that started in 07?

How would you define the difference in the choices you're offering?

Another question was this a cyclical end of recession ro did the govt helping hand bring about this recovery?

Similarly - how would you define the difference in these choices? Since at least the 1930s, the government has always used its monetary and fiscal tools to help end recessions, with varying success.

[Porsche-O-Phile]

It would be very difficult to correlate past downturns (especially the Great Depression) with the current one quantitatively because unemployment numbers were calculated much differently then. People cite 25% unemployment during the G.D. but (as we all know) the numbers today are HUGELY manipulated ("seasonal variation", no accounting for underemployed/part-time, no counting individuals with exhausted benefits/long-term UE, no accounting for discouraged workers, etc.) So long story short there's no easy apples-to-apples comparison.

While one can EMPIRICALLY say this downturn is less severe than the Great Depression, there has undoubtedly been a very calculated effort on the parts of government officials to manipulate unemployment numbers in order to make sure they don't look anything even close to the kinds of numbers one might associate with "Great Depression" or any kind of "depression" for that matter. REAL unemployment is much higher than reported. That's for damn sure - and also consider that as recently as 2002 the definitions were "tweaked" in order to similarly put positive spin on the post-9/11 recession under GWB's administration.

Also, while some things are improving, a lot of things are slow to recover and may very well not recover before the next torpedo hits the hull, so to speak. I'm optimistic long-term but I think we've also not seen the worst of this yet... A double-dip is NO WAY out of the question in the short-to-intermediate term. Things like a looming tidal wave of residential foreclosures (on top of the millions of foreclosed properties already being deliberately held off the market by banks to keep prices artificially inflated today), widespread defaults in the commercial real estate sector, associated bank failures, insolvency of government institutions (local and state) as a very real possibility, exhaustion of the "stimulus" money next year, prospects of Chinese refusal to continue to buy U.S. Treasuries, potential insolvency/collapse of Greece's currency, etc. are still very real and very much out there as possibilities. Yes, long-term optimism and innovation will always prevail, but I'm very pessimistic about this "recovery" either being real or sticking for very long.

So in a nutshell - it's going to get worse before it gets better. But it will eventually get better. We've got a lot of toxins to purge out of our economic system first though...

[jyl]

What would cause you to cease waiting for the double-dip? What data points are you looking for ?

[Porsche-O-Phile]

Anything showing evidence of a sustainable economy, not just a temporary (and possibly statistically manipulated) trend.

We're still spending way more than we can support with our production and throwing every trick in the book at it to smoke screen it and contort that reality.

Hate to be a downer, but I just think there are way too many unresolved issues out there right now to be jumping for joy just yet. Eventually, yes. Not yet. There's a lot we need to fix.

Also, every investor/venture capitalist/whatever is KILLING THEMSELVES looking for the next bull market right now, so what's it going to be? Nothing has emerged yet. Alternative energy? Doubtful. Green construction? Another dud. Healthcare? Not with millions of money-losers now thrown into the market forcefully. Technology? Maybe to a point (i.e. iPad, 4G later this year, etc.) but to support a full-blown economic turnaround on techno-fads largely imported? Don't think so...

Maybe it's not "what's the next big thing" but "getting away from wanting the next big thing" that will really be the next big thing - but I believe that was already covered on another thread.

The stats are interesting and I love the charts, but I also know all-too-well in my line of work that pretty representations of B.S. are still B.S.

[jyl]

Can you be more specific?

There are so many conflicting data points, divergent interpretations, compexities, and emotions involved in assessing the economy that it is almost always possible to find support for one's own point of view. Which means that it is too easy to cling to a view, hanging on the inevitable bits of supportive data, long after we should have changed our view. We call that "thesis creep". That's how people get slaughtered staying bullish for too long in a bear market, and bearish for too long in a bull market.

I try (don't always succeed) to force some discipline on myself by clearly defining, ahead of time, what data points will compel me to change my view. Then, if I see those data points, it is harder for me to continue justifying my prior view.

The test given in your post, "Anything showing evidence of a sustainable economy, not just a temporary (and possibly statistically manipulated) trend" would be too vague for me. I'd force myself to make an specific list of data points. That's just my approach.

[jyl]

10-year treasury yield since 1800.

[jyl]

Felt like reviving this old thread.

This map shows how different parts of the country are doing, on a measure that is a combination of employment gains and housing market gains (the two tend to go together).

[Jim Richards]

Your graphic seems to indicate improved conditions in most major markets. What's your overall view of the economy, John?

[jyl]

Second gear.

[jyl]

The graphic doesn't show that, though. It just shows relative quartiles. Point is the geographic variation. See what parts of the country are doing better than others. Also, if you know where the big cities are, see how the urban vs exurban/rural is doing.

[Jim Richards]

That's how I was interpreting it, John.

[RWebb]

thx for reviving this old thread

you need a GIS for those spatial data...

[Rich76_911s]

Saw this one today. Thought it was interesting enough to put up for comment. Source was Marketwatch

[SeanPizzle]

Looks like a big bubble to burst in the equities market.