The Song Remains The Same
PGL at Angry Bear posts on Less Than Expected Employment Growth.
Menzie Chinn at Econbrowser weighs in on a Contrarian View to seemingly slow "job growth" during this so called "recovery".
Mike Shedlock aka Mish, weighs in on how $75 oil with a job market based 60% on the housing market is not a good thing in Dwindling Speculators, Dwindling Jobs.
Barry Ritholtz at The Big Picture picks at the Q405 & Q106 GDP, Non Farms Payroll data, speculating, as I do, that two more FED raises are coming.
Brad Setzer has an excellent analysis of how rising interest rates and the US Treasury Debt reset is going to make some "dark matter" disappear.
And, last but not least, Dr. David Altig at Macroblog weighs in with a left, right combination on a Good Productivity Report that Pleased No One and that "wage increases in excess of productivity growth are not a good sign".
Here is why the lack of employment growth and productivity report does not please me, and how I attempt to connect the dots between all these viewpoints....
On Feb 2nd, I weighed in on Q405 productivity "hitting a wall" or efficiency peak and wages being on the rise (see full post on supplied URL).
After Q405 productivity @ -0.6% vs Q3 +4.1%, which was the 1st decline since the 2001 recession....
From the Washington Post: "But in the first quarter, the value of pay and benefits for workers rose at a 3.6 percent inflation-adjusted annual pace, as their productivity rose only 3.2 percent."
Thus, Q106 wage increases outstripped productivity thus snapping FIVE consecutive years of productivity outstripping wages.
This may confirm my position that "Any nominal or marginal increase in costs will be priced into the cost of goods accordingly and further inflation will ensue throughout the supply chain." Thus leading to further rate increases by the FED.
Heres what we will have to live with in the near to medium term:
1. Wages will continue to rise slowly. The only way that "wage inflation" can be partially mitigated is through further outsourcing to labor at the margin.
Those further layoffs due to outsourcing and an economic (housing market) slowdown will exacerbate the problem.
2. Wage increases will continue to outstrip productivity efficiency. Due to temporary technological limitations (or Malthusian Hesitation), efficiency is currently maxed out at 81 workers to do the work of 100 in Q4 of 2000.
In fact, "we are at the inflection point where laziness, bad planning, skills deficiencies and time constraint inefficiencies which were at an all time low, will inevitably start to rise, further adding to the costs."
2. Energy stagflation will rise exponentially. $70 - $100 oil will continue to generate energy, transportation and manufacturing cost pass through inflation in an exponential manner throughout the supply chain.
3. Real jobs growth will remain stagnant. "Jobs growth" as we have demonstrated previously will continue to be negligible.
4. Any wage increases will be eaten by inflation. Wages are being outstripped by rampant 11.5% real inflation.
Does any of this sound familiar?? The more things change, the more they stay the same...
Neo cons and the industrial military complex are waging an oil war for what remains of the seven sisters and their financial interests, AGAIN...
Iran with its Ayatollah is a problem, AGAIN... This time they will take us ALL hostage when they have a nuke...
Crude oil, energy, gasoline and commodities prices are at inflation adjusted all time highs, AGAIN...
Energy pass through inflation is raging, AGAIN... A major asset bubble has occured and is about to deflate, AGAIN...
And the bottom line is we are dealing with genuine STAGflation, AGAIN... which along with the other seemingly ever RECURRING crises, is not going away anytime soon.
As a result of all the above, we are still chanting one of our favourite mantras from these pages: Rates will continue to rise, far beyond what anyone expects. Read (even the central banks and speculators) and the consequences will not be pretty.
As Dr. Marc Faber aptly notes, history keeps repeating itself, "the Central Banks will support asset prices and see to it that they keep on going up. So they will inflate more and more and eventually you will come to an economic collapse."
The ubiquitous "happy daze" crowd or "they" always say, "but, this time is different". This may be true in the sense that the central banks may not be able to "support asset prices" or "control" the markets reactions.
In this leveraged, risk complacent, over speculative world, the bankers really dont know how market undercurrents will react to debt stress, yield curve inversions or what the effects of global rebalacing flows such as "dark matter" or a derivatives meltdown might cause.
The central banks are attempting to navigate previously uncharted economic and finanical market waters, that have unpredictable undercurrents with a single paddle (interest rates) and antiquated econometric implements.
And so, the band played on, and the song remains the same.... time to get the "Led" out and perhaps watch the Zeppelin go down in flames.
Menzie Chinn at Econbrowser weighs in on a Contrarian View to seemingly slow "job growth" during this so called "recovery".
Mike Shedlock aka Mish, weighs in on how $75 oil with a job market based 60% on the housing market is not a good thing in Dwindling Speculators, Dwindling Jobs.
Barry Ritholtz at The Big Picture picks at the Q405 & Q106 GDP, Non Farms Payroll data, speculating, as I do, that two more FED raises are coming.
Brad Setzer has an excellent analysis of how rising interest rates and the US Treasury Debt reset is going to make some "dark matter" disappear.
And, last but not least, Dr. David Altig at Macroblog weighs in with a left, right combination on a Good Productivity Report that Pleased No One and that "wage increases in excess of productivity growth are not a good sign".
Here is why the lack of employment growth and productivity report does not please me, and how I attempt to connect the dots between all these viewpoints....
On Feb 2nd, I weighed in on Q405 productivity "hitting a wall" or efficiency peak and wages being on the rise (see full post on supplied URL).
After Q405 productivity @ -0.6% vs Q3 +4.1%, which was the 1st decline since the 2001 recession....
From the Washington Post: "But in the first quarter, the value of pay and benefits for workers rose at a 3.6 percent inflation-adjusted annual pace, as their productivity rose only 3.2 percent."
Thus, Q106 wage increases outstripped productivity thus snapping FIVE consecutive years of productivity outstripping wages.
This may confirm my position that "Any nominal or marginal increase in costs will be priced into the cost of goods accordingly and further inflation will ensue throughout the supply chain." Thus leading to further rate increases by the FED.
Heres what we will have to live with in the near to medium term:
1. Wages will continue to rise slowly. The only way that "wage inflation" can be partially mitigated is through further outsourcing to labor at the margin.
Those further layoffs due to outsourcing and an economic (housing market) slowdown will exacerbate the problem.
2. Wage increases will continue to outstrip productivity efficiency. Due to temporary technological limitations (or Malthusian Hesitation), efficiency is currently maxed out at 81 workers to do the work of 100 in Q4 of 2000.
In fact, "we are at the inflection point where laziness, bad planning, skills deficiencies and time constraint inefficiencies which were at an all time low, will inevitably start to rise, further adding to the costs."
2. Energy stagflation will rise exponentially. $70 - $100 oil will continue to generate energy, transportation and manufacturing cost pass through inflation in an exponential manner throughout the supply chain.
3. Real jobs growth will remain stagnant. "Jobs growth" as we have demonstrated previously will continue to be negligible.
4. Any wage increases will be eaten by inflation. Wages are being outstripped by rampant 11.5% real inflation.
Does any of this sound familiar?? The more things change, the more they stay the same...
Neo cons and the industrial military complex are waging an oil war for what remains of the seven sisters and their financial interests, AGAIN...
Iran with its Ayatollah is a problem, AGAIN... This time they will take us ALL hostage when they have a nuke...
Crude oil, energy, gasoline and commodities prices are at inflation adjusted all time highs, AGAIN...
Energy pass through inflation is raging, AGAIN... A major asset bubble has occured and is about to deflate, AGAIN...
And the bottom line is we are dealing with genuine STAGflation, AGAIN... which along with the other seemingly ever RECURRING crises, is not going away anytime soon.
As a result of all the above, we are still chanting one of our favourite mantras from these pages: Rates will continue to rise, far beyond what anyone expects. Read (even the central banks and speculators) and the consequences will not be pretty.
As Dr. Marc Faber aptly notes, history keeps repeating itself, "the Central Banks will support asset prices and see to it that they keep on going up. So they will inflate more and more and eventually you will come to an economic collapse."
The ubiquitous "happy daze" crowd or "they" always say, "but, this time is different". This may be true in the sense that the central banks may not be able to "support asset prices" or "control" the markets reactions.
In this leveraged, risk complacent, over speculative world, the bankers really dont know how market undercurrents will react to debt stress, yield curve inversions or what the effects of global rebalacing flows such as "dark matter" or a derivatives meltdown might cause.
The central banks are attempting to navigate previously uncharted economic and finanical market waters, that have unpredictable undercurrents with a single paddle (interest rates) and antiquated econometric implements.
And so, the band played on, and the song remains the same.... time to get the "Led" out and perhaps watch the Zeppelin go down in flames.
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