The pandemic has caused fundamental shifts in worker behaviour

Jeff Beck has died! A masterful musician. Very sad. We move on. I read an interesting research paper recently – “The Great Retirement Boom”: The Pandemic-Era Surge in Retirements and Implications for Future Labor Force Participation – published in the US Federal Reserve Bank’s Finance and Economics Discussion Series (released November 2022), which illustrates how the pandemic is altering the behaviour of the US labour market. The lessons from the US are relevant everywhere as governments progressively ignore the reality that a dangerous virus is still in our midst and still causing havoc (deaths, long-term disability and more). For those who are continuing to claim the pandemic is some sort of conspiracy to control us or that Covid is less dangerous than influenza or that mask wearing is redundant and all the rest of the nonsense that seems to perpetrated by some on the Left who think they are for ‘freedom’ and those on the Right who just care about profits, this sort of research should presents a serious wake up call.

Read more

US labour market continues to grow as more working age people find jobs

Well, happy 2023 to all my readers. We are back for another year – the 19th in this blog’s existence. All the observers have been waiting for a sign that the US interest rate hikes are slowing the US economy down, which is the mainstream logic that has been used to justify the regressive policy shift. The data, so far, suggests that the inflationary pressures are subsiding as a consequence of the factors other than the interest rate changes which seem to have done little other than redistribute income to the rich away from the poor. The latest labour market data release from the Bureau of Labor Statistics supports that view. Last Friday (January 6, 2022), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – December 2022 – which revealed on-going employment growth, rising participation and falling unemployment. These are good signs for American workers. Further, as inflation is subsiding the modest nominal wages growth is now providing real wages growth – another virtuous sign. The latest data is certainly not consistent with the Federal Reserve type narratives. But who should be surprised by that.

Read more

US inflation has peaked and monetary policy had nothing much to do with it

It’s Wednesday, and I have two things to write about briefly before exposing readers to some more music. First, the evidential base for my ‘this inflationary period is transitory’ narrative gains more weight. The latest CPI data from the US Bureau of Labor Statistics shows that inflation has peaked in the US and falling rapidly in the goods sector, which started this episode off. The second topic relates to measuring progress in the development and spread of new ideas. It is often difficult to know how far a new framework has penetrated the broader debate. But sometimes things happen that remind me of how far we have to go in changing the framing and language surrounding fiscal capacity and the related topics, that Modern Monetary Theory (MMT) has brought to the fore. We finish with some calming guitar playing.

Read more

US labour market is a sort of holding pattern – declining but slowly

Last Friday (December 2, 2022), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – November 2022 – which suggested that the US labour market showed signs of slowing further, with payroll employment growing by just 263,000 net jobs. The labour force measure showed employment and labour force growth turning negative as the participation edged down. The result was that the official unemployment rate remained largely unchanged – with both the demand and supply side falling in proportion. The quit rate is stable which suggests that the US labour market is in a sort of holding pattern – slowing weakening but not consistent with the Federal Reserve type narratives. There are also no fundamental wage pressures emerging at present to drive any further inflation spikes. Wages growth appears to be reactive to inflation rather than propelling it. Wages growth appears to be reactive to inflation rather than propelling it. The claim that wage pressures are now pushing inflation is untenable given the data.

Read more

US labour market – shows further signs of slowing

Last Friday (November 4, 2022), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – November 2022 – which suggested that the US labour market showed signs of slowing further, with payroll employment growing by just 261,000 net jobs. The labour force measure showed employment and labour force growth turning negative as the participation edged down. The result was that the official unemployment rate rose by 0.1 points to 3.7 per cent. There are also no fundamental wage pressures emerging at present to drive any further inflation spikes. Wages growth appears to be reactive to inflation rather than propelling it. Wages growth appears to be reactive to inflation rather than propelling it. The claim that wage pressures are now pushing inflation is untenable given the data.

Read more

US labour market – weaker but employment growth remains positive

Last Friday (October 7, 2022), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – September 2022 – which reported a total payroll employment rise of only 263,000 jobs (further slowdown) and a drop (0.2 points) in the official unemployment rate to 3.5 per cent. Total labour force survey employment rose by just 204 thousand net (0.13 per cent), while the labour force declined by 57 thousand net (0.03 per cent) as a result of the decline in the participation rate of 0.1 points to 62.3 per cent. 4. As a result (in accounting terms), total measured unemployment fell by 261 thousand to 5,753 thousand which is why the unemployment rate fell by 0.2 points. However, while the unemployment rate fell, the combination of weakening employment growth and falling participation is a sign of a faltering labour market. There are also no fundamental wage pressures emerging at present to drive any further inflation spikes. Wages growth appears to be reactive to inflation rather than propelling it. The claim that wage pressures are now pushing inflation is untenable given the data.

Read more

Two diametrically-opposed approaches to dealing with inflation – stupidity versus the Japanese way

Well things are going to get messier with the decision yesterday by the OPEC+ cartel to significantly reduce the oil supply and push up prices. On the one hand, when OPEC was first formed and pushed prices up, while there was significant disruption to oil-dependent nations, the substitution that followed (home oil heating abandoned, larger cars replaced by smaller cars, etc) was ultimately beneficial. So given that we need less cars on roads and less kms travelled by cars, one might consider the move to be fine. But given the way the central banks and treasury departments around the world are behaving at present, the short term impacts of the OPEC+ decision will be very damaging. How citizens endure whatever extra inflationary pressures that might emerge will depend on the fiscal and monetary policy responses. We have two diametrically opposed models: the one that most nations are following (hikes and austerity) versus the Japanese approach. I explain the difference below and predict that the latter will deliver much better outcomes for the people.

Read more

US labour market showing further signs of slowdown

Last Friday (September 3, 2022), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – September 2022 – which reported a total payroll employment rise of only 315,000 jobs (a major slowdown) and an official unemployment rate rose 0.2 points to 3.7 per cent. The participation rate also rose (somewhat reversing last month’s decline) and the broad labour underutilisation rate (U6) rose by 0.3 points, largely due to the rise in unemployment. The other interesting aspect of this data is that real wages continued to decline in all industry sectors – they have systematically fallen each month since March 2022. I note some commentators are trying to claim that wage pressures are now pushing inflation. That conclusion is untenable given the data. The US labour market is still producing employment but it is hardly booming. Further, most of the net jobs created since the pandemic have gone to workers in occupatinos that pay above-median earnings.

Read more

Elites using monetary policy to deal with paranoid fears that power might shift towards workers

What a world we live in where we are snowed with propaganda from the elites about how the only way forward is that we accept “pain” or “sacrifice” to prevent some inflationary catastrophe from accelerating out of control and that if workers dare seek some cost-of-living redress as corporations go for broke in their margin push, then the pain the policy makers will inflict will be greater. The annual gathering of the elites at Jackson Hole in Wyoming over the last days has been one of those ‘can you believe this lot’ moments. First, we had the US Federal Reserve boss almost joyfully telling Americans that he will inflict pain on them because “these are the unfortunate costs of reducing inflation”. At the same event, the ECB Board member Isabel Schnabel told the gathering that the central banks had to inflict higher unemployment rates to control inflation to stop wages getting driven by inflationary expectations. And then we look at wages growth in Europe and see that real wages are in free fall (dropping 5.9 per cent in the June-quarter 2022).

Read more

Where are all the economists? Its lucky they have gone AWOL

It’s Wednesday and so I write less on the blog to allow me to write more elsewhere. And, we get a chance to savour some music – today some of the best vibraphone playing that was recorded. Simon Jenkins wrote a column in the UK Guardian on Monday (August 8, 2022) – Who knows if Truss or Sunak is right on the cost of living crisis – where are all the economists? – which runs the line that my profession has gone to ground as the two Tory leadership hopefuls come out with diametrically opposed views as to how to fix the ‘cost of living crisis’ in the UK. Well, he could have answered his own question. Who would want the opinion of the ‘economists’ by which I mean the mainstream macroeconomists given they have an appalling record of prediction anyway. The majority are supporting the Bank of England’s kamikaze interest rate increases because they think monetary policy is an effective solution to inflationary pressures and they agree that unemployment should be a policy tool rather than a policy target. He might also have noted in his article that who gets a platform in the public debate about economic matters is heavily biased against those who might offer an alternative view. Try getting an Op Ed in the UK Guardian, for example, if you are non mainstream and not part of the ‘progressive, pro-Europe’ network in London. And on those cost of living pressures, no mainstream economist that the UK Guardian is likely to publish would propose nationalising energy supply, public transport, water supply and telecommunications anyway. Which is the best long-term solution to protect workers and low-income consumers. Further, the latest data from the US indicated that inflation has peaked and inflationary expectations are falling sharply. Did anyone mention the word ‘transitory’ around here?

Read more
Back To Top