Mish's Global Economic Trend Analysis |
- China Manufacturing PMI Hits 15-Month Low: Is This a Big Deal?
- What Happens When Public Unions Control Everything for Decades? (Hint: Look at Chicago and the State of Illinois)
- Gearing Up for More War in Ukraine?
- Weekly Unemployment Claims Lowest in 41 Years
- What's the Rise in People Without Fulltime Employment Since 2009? What "Should" It Be?
China Manufacturing PMI Hits 15-Month Low: Is This a Big Deal? Posted: 23 Jul 2015 11:09 PM PDT I have been bearish on China manufacturing and growth in general for years. It is no surprise to me that news is generally negative. For example, on news today that China's PMI "unexpectedly" declined Yahoo!Finance reported China Factories Falter, Commodities Take the Hit. Activity in China's factory sector seemingly contracted at the fastest pace in 15 months in July, a preliminary private survey showed on Friday in a blow undercutting recent signs of stabilization in the struggling economy.China Rehash In a complete rehash of the above, but under a different title Yahoo!Finance reported one hour later Asian Shares Tumble as Weak China PMI Revives Demand Concerns. There's actually less information in the second article than the first. PMI Report Let's go straight to the Markit Report for the results of the latest Flash China General Manufacturing PMI™. Key Points:
PMI, Production, New Orders The above chart shows Chinese manufacturing has been languishing for years. I do not believe, and have not believed Chinese GDP reports for at least as long. Mainstream media appears to be catching on. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
Posted: 23 Jul 2015 05:14 PM PDT I will be on CNBC again Friday, with Rick Santelli. This will be my third appearance, all discussing the sorry state of affairs in Chicago. Spotlight will likely be on my post a week ago: Emanuel Fiddles While Chicago Burns; Public Schools Over the Edge; 9% Cloud Tax on Data Streaming; Emanuel Eyes Property Tax Hikes. It is very difficult to say what really needs to be said in a 3-5 minute time horizon, typically 4 minutes, so expect an animated summary. Pension Economics Michael Bargo, writer for the American Thinker, provides more commentary for the mix. Here is a lengthy snip from Bargo's recent, well-written article Public Pensions Prove Zero Sum Economics. One of the major appeals in Democrat presidential campaigns is to explain to voters that they need Democrats in office to take money away from the rich. And since the rich own big corporations, they will pay workers as little as possible. This idea is what Barack Obama had in mind in 2008 when he said he will redistribute money to the working class and poor.Who Really Runs Illinois? Little or no legislation passes through the Illinois legislature without the approval of Michael Madigan. Wikipedia notes Madigan has been a House member since 1971, and Speaker in all but two years since 1983. Chicago Magazine named Madigan the fourth-most-powerful Chicagoan in 2012 and second in 2013 and 2014, calling him "the Velvet Hammer—a.k.a. the Real Governor of Illinois."Taxes Not the Answer The results of Madigan's tenure as the long-serving "real governor" of Illinois are as follows:
Tax hikes are clearly not the answer. Illinois has a spending problem, not a revenue problem. Unfortunately for Illinoisans, other than kowtowing to public union demands, raising taxes is about the only thing Madigan knows how to do. The results of Madigan's tenure speak for themselves. Isn't it time to try a new tack? Here's Where to Start
That's a big list of things that needs to be done, and Madigan is on the other side of every one of them. As I said at the top, Emanuel Fiddles While Chicago Burns. And at the state level, Madigan Fiddles While Illinois Burns. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
Gearing Up for More War in Ukraine? Posted: 23 Jul 2015 03:31 PM PDT In spite of near continuous ceasefire breakages on both sides in Ukraine, media has turned its attention elsewhere, especially to Greece and China. Today I have some Ukraine anecdotes from reader Steven, who lives in Prague. He has family ties to Ukraine. Steven writes .... Hi Mish,Here is a snip translated from Ukrainian on new rounds of forced recruitment. I don't have a link to the original article. In the Reni, Odessa region of Ukraine, recruiter Igor Skrypnyck ordered men to show up for military service. The order applies to men aged 20 to 60 years who have not yet received a summons. The military commissar also prohibits men from changing their place of residence without notifying the military. Odessa lawyer Oleg Obukhov says the order is legal and not contrary to the Law of Ukraine on mobilization preparation and mobilization. More War? This latest expansion in forced recruitment all the way up to age 60 suggests one of two things.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
Weekly Unemployment Claims Lowest in 41 Years Posted: 23 Jul 2015 10:16 AM PDT Weekly initial unemployment claims fell to the Lowest level Since 1973, perhaps distorted by auto retooling summer shutdowns, or lack thereof. The number of Americans filing new applications for unemployment benefits last week dropped to its lowest level in more than 41-1/2 years, suggesting the labor market maintained a sturdy pace of job growth in July.That last line is interesting. A rise of less than a tenth of a percent after five straight months of negative readings hardly seems worth crowing about. Econoday on Weekly Claims Bloomberg Econoday had this to say on today's Weekly Claims Report. Auto retooling, and related temporary layoffs, is always a major wildcard for jobless claims in July and are likely at play in a startling 26,000 fall in initial claims in the July 18 week to a 42-year low of 255,000. A look at the 4-week average, which helps smooth out volatility, is less startling, down 4,000 to a 278,500 level that is little changed from the month-ago comparison.Jobless Claims Economists are now upbeat about the July Jobs report due out on August 7. We will find out soon enough. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
What's the Rise in People Without Fulltime Employment Since 2009? What "Should" It Be? Posted: 23 Jul 2015 12:04 AM PDT Reader Roger asked me "What is the total number of people without full time work, compared to Jan 2009?" That's actually an easy number to calculate. The problem is the number is totally misleading. First let's answer the question straight up. Those Not Working Full Time The above very scary-looking chart shows the civilian noninstititional population minus those usually working full time. Noninstitutional means those over the age of 16, not in prisons, mental institutions, etc. The current noninstitutional population is 129.61 million. At the beginning of 2009 it was 118.92 million and at the start of the recession in November of 2007 it was 111.06 million. Since the beginning of the recession, the rise in the number of people not working fulltime is 18.55 million. Calculation Discussion The first problem with the above chart is that it fails to account for demographics. There is a huge rise in population as well as huge rise in boomer retirement. Moreover, over time, there has been a legitimate rise in the number of people going to college after high school graduation. Brief Word on the Unemployment Rate As pertains to the much ballyhooed declining unemployment rate, there is also a non-insignificant number of people in college who really would rather be working. Add to that, millions of people who would rather be working, but are not counted as unemployed because they stopped looking for a job. That is why many, myself included, believe the unemployment rate is a joke. Proper Comparison To properly address Roger's question, one needs to factor in
The problem in producing the proper calculation is insufficient data. The St. Louis Fed repository (named Fred), that I used to easily create the above chart, does not have the data. Not even the BLS has the data we need to properly answer the question. Information on the critical age group 55 to 64 is scant or missing. However, we can look at age group 16-54 or 25-54 for meaningful comparisons. I selected the latter because it filters out the rising trend of people going to college. Using BLS data, I produced the following charts. Not Working Full Time - Age Group 25-54 click on chart for sharper image A big hat tip goes to Calculated Risk for an example of how to add recession bars. These are the first charts in which I incorporated the idea. Note the rise over time in this series. Also not the spikes during recessions. The intra-year patterns are because I used non-seasonally adjusted data (that's all that is available). In regards to non-seasonally-adjusted data: Every year, there are more people working in November and December than January and February. Some hate seasonal adjustments but in general I have no problems with the concept. The charts would be smoother with seasonally-adjusted data, but it's not available. Regardless, the overall trends are easy to spot. In November of 2007, at the start of the recession, there were 36.65 million people in age group 25-54 who were not working full time. There are now 40.12 Million, a rise of 3.47 million. However, that too, is a misleading number. It does not properly factor in population shifts. The following chart addressed the above problem by looking at rise and declines on a percentage basis. Percentage of People Aged 25-54 Not Working Full Time click on chart for sharper image Key Dates and Percentages
The all-time low in this series is 26.88% in April of 2000. That coincides with peak entry of women in the work force coupled with the top of the internet boom. The pre-recession levels in 2007 and 1990 were around 28.5%. If one uses 28.5% as a measure of normalcy, then in percentage terms we are still about 3.58 percentage points too low in fulltime employment. If one uses the record low 26.88% as a target, then we are about 5.2 percentage points lower in fulltime employment than we should be. How Much Lower is Fulltime Employment Than It Should Be? With the above percentages, we can do the math.
In the age 25-54 demographic, this recovery lags somewhere between 4.5 and 6.5 million fulltime jobs. Note that is just age group 25-54. I am confident age groups 55-62 and 55-64 lag in fulltime employment as well, but I do not have the data to prove it. We can make similar comparisons about those not working at all (i.e. "real" unemployment) and I will tackle that a bit later. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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