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US labour market recovery stalling

Last Friday (September 3, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – August 2021 – which reported a total payroll employment rise of only 235,000 jobs in August and a 0.2 points decline in the official unemployment rate to 5.2 per cent. The results suggest that the labour market recovery has slowed quite significantly. The US labour market is still 5,333 thousand jobs short from where it was at the end of February 2020, which helps to explain why there are no fundamental wage pressures emerging.

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US labour market continues to recover – but a long way to go yet

Last Friday (August 6, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – July 2021 – which reported a total payroll employment rise of 943,000 and a 0.5 points decline in the official unemployment rate to 5.4 per cent. The results are strong even though the US labour market is still 5,702 thousand jobs short from where it was at the end of February 2020, which helps to explain why there are no fundamental wage pressures emerging.

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Investors lose out following the advice of New Keynesian (mainstream) macroeconomics

I have been doing a lot of talks over the last few years discussing Modern Monetary Theory (MMT) with financial professionals. I stress that I am not acting as a consultant, to allow this community to make more money. I often joke I hope they all go broke. My motivation is education and one hopes that these communities will spread our ideas through their own influential networks. The aim is to put pressure on the public policy makers to restore full employment and reorient the public imagination away from the gloom that the neoliberal years has imposed on our policy aspirations. One of the things I confront these audiences with is the reality that an adherence to the precepts of mainstream macroeconomics and the predictions that flow from them have undermined their own objectives (which, shh, is to make money). I can easily point to many ways in which the mainstream of my profession have vicariously made predictions that could never be accurate, yet have been relied on by investors as if they were derived from valid knowledge. I have no sympathy for those who have made massive losses in this way, but when the consequences spread into the real economy and start costing jobs and work-related incomes, then the concerns rise. In the last few weeks, we have seen a classic example of this phenomenon and the message is – won’t they ever learn!

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Still a lot of slack remaining in the US labour market

The US Bureau of Labor Statistics published the latest JOLTs data yesterday (July 7, 2021) – Job Openings and Labor Turnover Summary – May 2021 – which provides some interesting insights into labour market dynamics that run against the mainstream narrative. It allows me to calculate broader measures of labour demand and supply to achieve a more accurate indication of how tight or otherwise the US labour market is. Currently there is still considerable slack in the US labour market, some of it, outside the official labour force, and some of it in underemployment, as well as the official unemployment number. My estimates of the gap between labour supply (employment plus unemployment plus part-time for economic reasons plus not in the labour force but want to work) and labour demand (employment plus job openings) comes to 12,465 thousand or 7.75 per cent of the labour force. In February 2020, this gap stood at 8,076 thousand or 4.9 per cent of the labour force. So there has been improvement but there is still a lot of slack in the US labour market.

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US labour market recovery leaves considerable slack and rising long-term unemployment

Last Friday (July 2, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – June 2021 – which showed that the recovery since the catastrophic labour market collapse in March and April 2020, continues with payroll employment rising by 850,000 in June 2021. The unemployment rate rose by 0.1 points to 5.9. However, the broader labour wastage captured by the BLS U6 measure fell by 0.4 points to 9.8 per cent. The US labour market is still 6,76 thousand jobs short from where it was at the end of February 2020, which helps to explain why there are no fundamental wage pressures emerging. The other notable point is that long-term unemployment now dominates among the duration categories published by the BLS.

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Rising prices equal an inflation outbreak (apparently) but then the prices start falling again

In my daily data life, I check out movements in commodity prices just to see what is going on. As I wrote recently in my UK Guardian article (June 7, 2021) – Price rises should be short-lived – so let’s not resurrect inflation as a bogeyman – the inflation hysteria has really set in. I provided more detail in this blog post – Price rises should be short-lived – so let’s not resurrect inflation as a bogeyman (June 9, 2021). Yes, I stole the title of my article for the blog post if you are confused. The inflation hysteria really reflects the fact that mainstream economists are ‘lost at sea’ at present given the dissonance between the real world data and the errant predictions from their economic framework. They cannot really understand what is happening so when they see a graph rising it must be inflation and that soothes them because rising deficits and central bank bond purchases have to be inflationary according to their perverted theoretical logic. The financial market press then just repeats the nonsense with very little scrutiny. But given many graphs are falling again, this Pavlovian-type response behaviour must be really doing their heads in. I have no sympathy.

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US labour market recovery continues but still 7,629 thousand jobs short from February 2020

Last Friday (June 4, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – May 2021 – which showed that the recovery since the catastrophic labour market collapse in March and April 2020, continues after a moderate month in April 2021. Payroll employment rose by 559,000 in May 2021 after rising by only 266 thousand last month. The slight rise in unemployment last month gave way to a fall in the unemployment rate by 0.3 percentage points to 5.8 per cent. edged up slightly to 6.1 per cent. The broader labour wastage captured by the BLS U6 measure fell by 0.2 points to 10.2 per cent. The US labour market is still 7,629 thousand jobs short from where it was at the end of February 2020.

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US labour market goes backwards with mixed signals – but significant slack remains

Last Friday (May 7, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – April 2021 – which showed that the recovery since the catastrophic labour market collapse in March and April 2020, has substantially slowed after signs in March that the revovery was accelerating. The change in payroll employment fell from 770 thousand in March 2021 to a miserly 266 thousand and unemployment edged up slightly to 6.1 per cent. The broader labour wastage captured by the BLS U6 measure fell by 0.4 points to 10.7 per cent. The US labour market is still 8,215 thousand jobs short from where it was at the end of February 2020 and the unemployment to job openings ratio also suggests significant slack remains.

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US and UK fiscal stimulus supporting growth while the delays in the Eurozone lead to a double-dip recession

Last week (April 29, 2021), the US Bureau of Economic Analysis published the latest national accounts data – Gross Domestic Product, First Quarter 2021 (Advance Estimate) – which showed that the US economy grew by 1. The following day (April 30, 2021), saw Eurostat announce that the Eurozone contracted by 0.6 per cent in the first-quarter 2021, which means it is now enduring a double-dip recession. The European Union, now without Britain as a member, contracted by 0.4 per cent. In contrast, with Britain now out of that mess and determining its own future, we saw the British economy return a positive GDP growth rate in February as exports rose and government stimulus sustained domestic activity. Why should we be surprised about this. In this post, I examine the US situation in more detail and reflect on some interesting trends in the UK. The Eurozone situation is too depressing to write about on a sunny day!

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Dr Die Schwarze Null still not thinking beyond more austerity

Project-Syndicate recently published the latest Op Ed (April 16, 2021) from former German finance minister and current President of the German Bundestag, Wolfgang Schäuble – Are We Risking a Debt Pandemic?. He is the person who personified the so-called ‘die schwarze null’ (Black Zero) while finance Minister. His conduct as finance minister was an instrumental element in extending the GFC across the Eurozone. He is still influential in European politics and his latest Op Ed makes it clear that the austerity mindset is still alive and well despite the current relaxation of the Stability and Growth Pact rules during the pandemic. The problem is that if Europe reverts back to that mindset, the essential changes to the monetary union that are necessary to make it viable will never be discussed. It will be just more of the same. And that same is pretty ordinary for the common folk across the EMU.

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