US labour market continues to improve but ‘middle class’ jobs disappearing

Last week’s (February 1, 2019) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – January 2019 – showed that total non-farm payroll employment rose by 304,000 and the unemployment rate rose by 0.1 points to 4 per cent on the back of a 0.1 points rise in the participation rate. The labour force survey estimates were significantly impacted by changes in population benchmarks (an annual occurrence). However, all indications are that the labour market continues to improve. We will see in the next few months whether the strong January payroll employment growth was a one-off blip or a sustained trend. While the US labour market is looking fairly robust there is still a substantial jobs deficit remaining which tells us that it remains some distance from full employment. And, my latest analysis on which occupations are enjoying the employment growth shows that there has been a distinct hollowing out of median pay jobs (the so-called ‘middle class’ jobs), which helps to explain the sharp increases in income inequality.
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    Posted in Labour Force, US economy | 3 Comments

    Nations heading south as austerity continues

    On the back of a decelerating inflation rate, Italy in recession, Germany not far behind, terrible PMI in Europe, Eurostat released the latest retail sales data yesterday (February 5, 2019) – Volume of retail trade down by 1.6% in euro area. Not good news. Remember all those Europhile Left reformers telling us that now was the time to reform the EU while the ‘sun was shining’. Well, its black clouds again and they didn’t get to first base in the reform basis. Lots of hot air – none of it got near disturbing the neoliberal austerity bias. But this austerity bias is not just a feature of the currency union. Yesterday, the Australian Bureau of Statistics released two data sets – Retail Trade and Balance of International Trade – and they both tell the same story. The interesting thing was that the trade data recorded a “record trade surplus” and I heard commentators actually claiming this was a great result. Wrong. Exports declined, but more slowly than imports. And imports declined because consumer spending and business investment was weak. Not a great result at all. At some point, the austerity bias around the world has to stop. But nations are heading south again in the meanwhile. With all that gloom, the best thing to do is enjoy my regular Wednesday music spot (if you like). And if you don’t like it, then maybe, appreciate the artistry of the musicians.
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      Posted in Economics, Eurozone, Music | 15 Comments

      MMT is sending us crazy – the end is near … hold on, not quite near

      The – Final Report – from Australia’s Royal Commission into to Misconduct in the Banking, Superannuation and Financial Services Industry was released to the public yesterday. The Commission was conducted under highly restricted terms of reference and barely scratched the surface of what goes on in this sector because the conservative federal government that was finally forced into establishing it didn’t want their mates to be exposed. Even so, the Report reveals massive fraud, deception and all manner of cheating behaviour from the major players in the financial sector. But its recommendations are pathetic. It is highly likely that no-one will go to jail for their criminal misconduct and no board member will lose anything as a result of their incompetence. Yet, if an indigenous Australia commits a minor infraction they go straight to jail to not pass go! It is also clear than commentators who appear in influential media publications and predict the worse then steer their readers to financial services they offer themselves should be held to account for the veracity of their claims. If a commentator is making money from their predictions then they should be subject to professional negligence claims if these predictions are systematically incorrect. That shift in law would prevent outlandish and wrongful commentary entering the public domain and influencing the way unsuspecting and/or unknowing customers invest their savings.
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        Posted in Central banking, Economics, Fiscal Statements | 32 Comments

        Monetary policy has failed – we must reprioritise fiscal policy

        Remember back in early 2009, when the then head of the European Central Bank Jean-Claude Trichet (boasted that the “euro … is a success … it helps to secure prosperity in participating states”. He was still making these claims in October 2018. At an event in honour of he and former German finance minister Theodor Waigel, organised by the Banque de France, Trichet said that “the euro is a historic success … in terms of credibility, resilience, adaptability, popular support and real growth during its first 20 years is impressive”. He particularly singled out the “delivery of price stability”. Well the latest data confirms beyond doubt that the ECB has failed to deliver on its price stability charter. Further, the descent back into recession in Italy and probably Germany in the December-quarter 2018 tells us that this reliance on monetary policy to stimulate growth while maintaining ridiculous levels of fiscal rectitude has undermined growth and unnecessarily condemned millions to unemployment and rising poverty.
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          Posted in Central banking, Eurozone, Fiscal Statements, Inflation | 6 Comments

          The Weekend Quiz – February 2-3, 2019 – answers and discussion

          Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
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            Posted in Saturday quiz | 10 Comments

            The Weekend Quiz – February 2-3, 2019

            Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.
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              Posted in Saturday quiz | 2 Comments

              The conflicting concepts of cosmopolitan within Europe – Part 2

              In the blog post earlier this week – The conflicting concepts of cosmopolitan within Europe – Part 1 (January 29, 2019) – I juxtaposed two concepts of ‘cosmopolitanism’ which appeared to be part of the early moves to achieve European integration. On the one hand, there was a Kantian-style desire to create, through cooperation between previously warring states, a peaceful and prosperous future for a ‘one’ Europe. This construct would be welcoming to outsiders, progressive, and celebrate ethnic and cultural diversity. It was a rights-based conception of citizenship and democracy, which closely aligned with the growing popularity of the social democratic polity. On the other hand, the early moves to overcome the resistance to creating a supranational entity that would increasingly compromise national sovereignty – the so-called “functionalist” approach of Jean Monnet and Robert Schuman, created a pragmatic, free market-based cosmopolitanism, which set the Member States against each other as competitors. As I demonstrated, over time, the economic cosmopolitanism channeled the burgeoning neoliberalism of the 1980s and compromised the rights-based, political cosmopolitanism, to the end that we now talk about democratic deficits as the European Commission and its unelected allies such as the IMF trample over the rights of citizens across the geographic spread of Europe. Europhile progressives hanker for the first conception of European cosmopolitanism and proffer various reform proposals, which they claim will tame the economic dimensions and restore the ‘European Project’ as a progressive force in the world. In this second part of the series I will argue that from the outset the cosmopolitanism embedded in the ‘Project’ was deeply flawed and it is no surprise that democracy is now compromised in the European Union. I argue that reform is not possible such is the extent of the failures.
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                Posted in Britain, Cosmopolitanism, Eurozone, Reclaim the State, Reclaiming community | 15 Comments

                Australian government satisfied with failure

                Only a short blog post today as it is Wednesday and I reserve most of the day for other writing (book manuscripts etc). What follows is some analysis I provide to several Australian journalists to help them get the arguments right when it comes to the political spin that the politicians try to pump out. Australia’s Prime Minister has been making a big deal that “Over the last five years we’ve delivered more than a million jobs” and yesterday, as we lead into the election cycle (due in May) he said that the Federal government aimed “to see 1.25 million jobs created over the next five years”. Should we cheer or cry? Many economists who have offered commentary over the last 24 hours seem to think we should be happy with that goal. Me, I think it is about half as many new (net) jobs that are required given the state of the labour market and signals a failed policy strategy. Here is why I think that.
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                  Posted in Labour Force, Politics | 2 Comments

                  The conflicting concepts of cosmopolitan within Europe – Part 1

                  In the past week, the UK Guardian readers were confronted with the on-going scandal of wealthy British politicians and ‘peers’ receiving massive European Union subsidies under the Common Agricultural Policy (CAP). The article (January 27, 2019) – Peers and MPs receiving millions in EU farm subsidies – recounted the familiar tale –
                  “Dozens of MPs and peers, including some with vast inherited wealth, own or manage farms that collectively have received millions of pounds in European Union subsidies”. The story is not new and this scandal is just a reflection of the way in which the development of the European Union has contradicted the idealism that the Europhile Left associate with ‘Europe’. As an aside, it would be telling, one imagines to map the EU payments (and well-paid job holdings) with Brexit support – one would conjecture a strong negative correlation. This is a two-or-three part mini-series on the evolution of concepts of ‘cosmopolitanism’ in the European context. It is part of work I am doing for the next book Thomas Fazi and I hope to publish by the end of the year. In this blog post, I introduce the conflict that is inherent in the European Union, and the way the Europhile Left has been seduced by a concept of cosmopolitanism that bears not relevance in the reality of modern Europe.
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                    Posted in Britain, Cosmopolitanism, Eurozone, Reclaim the State, Reclaiming community | 8 Comments

                    British labour market – rise in self-employment driving growth

                    The British Office of National Statistics (ONS) published its latest labour market data last week (January 22, 2019) – UK labour market: January 2019. Employment continues to increase, unemployment is steady and inactivity is falling (participation is rising). Real wages are also finally starting to rise (average weekly earnings rose by 3.3 per cent over the last 12 months) after a decade of flat wages growth. The ONS say that the 4 per cent unemployment rate “has not been lower since December 1974 to February 1975”. But the labour market of 2019 is very different to that of late 1974. While the growth in real wages is a positive development, the large negative is that employment for employees fall in the three months to November 2018 and all the employment growth was taken by self-employed. The other disturbing statistic is that if we considered the involuntary part-time workers to be equivalent to the unemployed, then the adjusted unemployment rate would be around 6.6 per cent, a far cry from full employment.
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                      Posted in Britain, Labour Force, UK Economy | 15 Comments