Mish's Global Economic Trend Analysis |
- No Money to Pay 70,000 Employees In Castilla-La Mancha Region of Spain: Situation a "Total Failure"
- Boehner Accepts Obama's Invite to Play 18 Holes of Golf to Discuss Debt Ceiling
- BLS Jobs Report: +54,000, Unemployment +9.1%; Awful at First Glance, Merely Bad Beneath the Surface
- Why I Continue to Like Gold
- Case-Shiller Nominal and Real Housing Declines Since Peak; Home Prices Best in 25 Years, Better Prices Still Coming
No Money to Pay 70,000 Employees In Castilla-La Mancha Region of Spain: Situation a "Total Failure" Posted: 03 Jun 2011 09:40 PM PDT My friend Bran who lives in Spain passed along this bit of news regarding Spain. After the power change in the Castilla-la Mancha community, the new People's Party governorship effectively declares it bankrupt, with 2 billion EU unpaid service bills and 7 billion EU in debt.No Money for Payrolls Courtesy of Google Translate, please consider The PP says there is no money to pay payrolls in Castilla-La Mancha The PP will have to find ways to pay from next month's payroll of 70,000 employees of the Junta de Comunidades de Castilla-La Mancha, because the situation is "total failure", with a debt to suppliers of 2,000 million euros , has secured the regional secretary of the PP, Vicente Tirado.Those who can read Spanish may wish to consider El PP asegura que no hay dinero para pagar nóminas en Castilla-La Mancha The following map and facts courtesy of Wikipedia will help put the region and population in proper perspective. Castilla la Mancha Area-wise that is about 15.7% of Spain, population-wise, only 4.3% of Spain. From Wikipedia It is mostly in this region where the story of the famous Spanish novel Don Quixote by Miguel de Cervantes is situated - due to which La Mancha is internationally well-known. Although La Mancha is a windswept, battered plateau, it remains a symbol of the Spanish culture with its vineyards, sunflowers, mushrooms, oliveyards, windmills, Manchego cheese, and Don Quixote.Castilla-la Mancha is one of the more sparsely populated regions. However, where there is smoke, there is going to be fire, and much of Spain is smoking in protests, high unemployment, property bubbles, union inefficiencies, and other related problems. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Boehner Accepts Obama's Invite to Play 18 Holes of Golf to Discuss Debt Ceiling Posted: 03 Jun 2011 03:52 PM PDT On the lighter side of the news, Obama Invites for Golf Summit Amid Debate Over U.S.'s Debt Ceiling President Barack Obama has invited U.S. House Speaker John Boehner for a round of golf June 18 as the administration and congressional Republicans wrangle over federal spending and the national debt.Does anyone think this will resolve anything? Speaking of golf, I hope to get some in myself this weekend. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
BLS Jobs Report: +54,000, Unemployment +9.1%; Awful at First Glance, Merely Bad Beneath the Surface Posted: 03 Jun 2011 09:16 AM PDT Thoughts on the Jobs Report Thoughts on the Jobs Report Last month I commented that on the surface the job reports was the "best back-to-back reports we have seen for years", not as measured by a typical recovery but as measured by this so-called recovery. Beneath the surface things were awful. This month things are awful at first glance and simply bad beneath the surface. The number of employed rose by 105,000 which is an anemic number, but for the first time in a long time those in the labor force rose by a considerable amount: 272,000. That suggests, momentarily that people think there may be jobs and are looking for them. That is a good thing, except for the fact they are not finding jobs. The number of unemployed rose by 167,000 and the unemployment rate ticked up by .1% to 9.1%. Economists projected a drop to 8.9%, I called for a rise to 9.2%. For the last two months I commented "It is very questionable if this pace of jobs keeps up." Clearly it didn't and this certainly cannot all be blamed on a Tsunami in Japan. The entire global economy is slowing rapidly. Mish on Yahoo Finance Daily Ticker on Slowing Global Economy; U.S. Manufacturing ISM Plunge; Order Backlog and New Orders Barely Above Contraction China's Manufacturing Slowest in 9 Months, New Orders Suggest Manufacturing May Have Already Peaked; Australia Biggest GDP Drop in 20 Years Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data. Digging deeper into the Household Survey, we see some more interesting data. In the last year, the civilian population rose by 1,814,000. Yet the labor force dropped by 544,000. Those not in the labor force rose by 2,358,000. In January alone, a whopping 319,000 people dropped out of the workforce. In February another 87,000 people dropped out of the labor force. In March 11,000 people dropped out of the labor force. In April, 131,000 dropped out of the labor force. At long last, the labor force expanded. This month it rose by 272,000. The 5-month total for 2011 is +276,000. Many of those millions who dropped out of the workforce would start looking if they thought jobs were available. Indeed, in a 2-year old recovery, the labor force should be rising sharply as those who stopped looking for jobs, once again started looking. Instead, an additional 276,000 people dropped out of the labor force in the first four months of the year. Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%. I do not know if this is a one-month anomaly with the labor force rising. However, if it continues (and that would be a good thing), it will be very difficult for the unemployment rate to drop. April 2011 Jobs Report Please consider the Bureau of Labor Statistics (BLS) May 2011 Employment Report. Nonfarm payroll employment changed little (+54,000) in May, and the unemployment rate was essentially unchanged at 9.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains continued in professional and business services, health care, and mining. Employment levels in other major private-sector industries were little changed, and local government employment continued to decline. Unemployment Rate - Seasonally Adjusted Nonfarm Employment - Payroll Survey - Annual Look - Seasonally Adjusted Notice that employment is lower than it was 10 years ago. Nonfarm Employment - Payroll Survey - Monthly Look - Seasonally Adjusted click on chart for sharper image Ignoring the effects of the census, in the last 8 months of a recovery 2 years old, the economy is averaging 150,000 jobs a month. That is enough to hold the unemployment rate flat but is very poor as recoveries go. Nonfarm Employment - Payroll Survey Details - Seasonally Adjusted Total nonfarm employment has increased by 1.8 million, or 1.4 percent, since its trough in February of 2010. Between January 2008 and February 2010, the U.S. economy had lost 8.8 million jobs. Statistically, 127,000 jobs a month is enough to keep the unemployment rate flat. Average Weekly Hours Index of Aggregate Weekly Hours Average weekly hours for both all employees and production employees remained unchanged in May. The index of aggregate weekly hours for all employees in the private sector increased by 0.1 percent. Since a low point in October 2009, the index has increased by 3.6 percent. Average Hourly Earnings vs. CPI "Success" of QE2
Not only are wages rising slower than the CPI, there is also a concern as to how those wage gains are distributed. BLS Birth-Death Model Black Box The big news in the BLS Birth/Death Model is the BLS has moved to quarterly rather than annual adjustments. Effective with the release of January 2011 data on February 4, 2011, the establishment survey will begin estimating net business birth/death adjustment factors on a quarterly basis, replacing the current practice of estimating the factors annually. This will allow the establishment survey to incorporate information from the Quarterly Census of Employment and Wages into the birth/death adjustment factors as soon as it becomes available and thereby improve the factors. For more details please see Introduction of Quarterly Birth/Death Model Updates in the Establishment Survey In recent years Birth/Death methodology has been so screwed up and there have been so many revisions that it has been painful to watch. Quarterly rather than annual adjustments can only help the process. The Birth-Death numbers are not seasonally adjusted while the reported headline number is. In the black box the BLS combines the two coming out with a total. The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance. Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way. Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions. Birth Death Model May 2011 BLS Back in Outer-Space Do NOT subtract 206,000 from the headline number. That is statistically invalid. That said, the BLS is back in outer-space. It is clear the economy is slowing and the BLS has not picked it up. Household Data click on chart for sharper image In the last year, the civilian population rose by 1,814,000. Yet the labor force dropped by 544,000. Those not in the labor force rose by 2,358,000. Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%. Table A-8 Part Time Status click on chart for sharper image There are now 8,500,000 workers whose hours may rise before those companies start hiring more workers. The is little change in these numbers for a year. Table A-15 Table A-15 is where one can find a better approximation of what the unemployment rate really is. click on chart for sharper image Distorted Statistics Given the total distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is hard to discuss the numbers. The official unemployment rate is 9.1%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6. While the "official" unemployment rate is an unacceptable 9.0%, U-6 is much higher at 15.8%. Things are much worse than the reported numbers would have you believe, and for the second consecutive month the beneath the surface numbers were bad-to-awful. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 03 Jun 2011 07:26 AM PDT In the last of three videos recorded Tuesday on the Yahoo Finance Daily Ticker I explain why I continue to like gold. Please consider Why Michael "Mish" Shedlock Is Still Betting on Deflation…and Gold In case you missed the other Daily Ticker videos, please see Mish on Yahoo Finance Daily Ticker on Slowing Global Economy; U.S. Manufacturing ISM Plunge; Order Backlog and New Orders Barely Above Contraction Debt Ceiling Discussion on Daily Ticker with Mish, Aaron Task, Henry Blodget: Will the Bond Market Eventually Force Congressional Hands? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 03 Jun 2011 01:16 AM PDT Here are some charts showing nominal and real (CPI inflation-adjusted) housing declines in 20 Case-Shiller metro areas. Charts are grouped by 10 least expensive and 10 most expensive areas. Additional tables show housing declines from the peak. An explanation follows the charts. Charts and tables are courtesy of "TC". Case-Shiller Nominal Price History 10 Least Expensive Metro Areas click on any chart or table for a sharper image Case-Shiller Nominal Price History 10 Most Expensive Metro Areas Case-Shiller Nominal Price Declines Since Peak Case-Shiller "Real" Price History 10 Least Expensive Metro Areas Case-Shiller "Real" Price History 10 Most Expensive Metro Areas Case-Shiller "Real" Price Declines Since Peak TC writes ... Mish, I've attached several Case-Shiller graphs based upon most recent Case-Shiller data.Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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