Mish's Global Economic Trend Analysis |
- Government Cyber Attacks Shut Down WikiLeaks Domain Name; Information Wars; Twitter to the Rescue
- Explaining last Month's Jobs Upside Surprise and this Month's Downside Surprise
- "Economics 101" Video Exposes Keynesian Consumer Spending Fallacy
- After All the Hype, Jobs Up an Anemic 39,000; Unemployment Rises to 9.8%; Quicksand of Stimulus
| Government Cyber Attacks Shut Down WikiLeaks Domain Name; Information Wars; Twitter to the Rescue Posted: 03 Dec 2010 02:23 PM PST WikiLeaks has moved its site twice already and now its domain name has been shut down because of massive cyber attacks. In my opinion these coordinated attacks come from government agencies around the world who do not want to be embarrassed by WikiLeaks data. If it's not government agencies, then who is it? Moreover, and by extension, governments (or whoever is doing this) could shut down any site via these same kind of massive coordinated cyber attacks. If I am correct, data gathered about the success or failure of these suppression efforts will feed into every military contingency plan in the world. The first casualty of war is the truth, and what better way to shut off the truth than killing internet sites not to one's liking. With that backdrop, please consider Cyber attack forces Wikileaks to change web address Whistle-blowing website Wikileaks has been forced to change its web address after the company providing its domain name cut off service.Does anyone seriously think this is not a case of too, little, to late? Moreover, the more governments try to prevent access, the more curious people will become about what is out there. Thus government suppression of data and the news stir that causes, may very well cause interest in WikiLeaks to soar. I suspect the vast majority of the world's population had no interest in WikiLeaks before, but they might now. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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| Explaining last Month's Jobs Upside Surprise and this Month's Downside Surprise Posted: 03 Dec 2010 12:18 PM PST One reason economists are frequently surprise is they have a tendency to extrapolate every economic uptick perpetually into the future yet they seldom do the same for negative news. I have no idea why this is so, but history certainly suggests that it is so. Last month, economists were giddy over retail hiring but I commented several times that I did not think it was sustainable. Today Calculated Risk has a very nice chart that shows that to be the case.  It's easier to see what is happening if you unstack the chart. I did not go back to the actual data but I did move the bars around. Holiday Season Hiring Unstacked  Looked this way, last months seasonal hiring was not that great. I discussed this on November 15, in In Search of 1.1 Million Jobs Claimed by Obama; Where the Hell are They? 151,000 Jobs In October? Really?In the Nick of Time Ignoring 2008, November seasonal hiring was the was the worst going back to 1993 or so. October beats 2002 but only because retailers started seasonal promotions earlier. Hooray. Inexplicably, the BLS dropped the bar for October seasonal adjustments. This month we see the opposite effect, just in the nick-of-time I might add, to allow this lame-duck Congress time to reconsider extending unemployment benefits. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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| "Economics 101" Video Exposes Keynesian Consumer Spending Fallacy Posted: 03 Dec 2010 10:34 AM PST A Center for Freedom and Prosperity Foundation "Economics 101" Video Exposes Keynesian Consumer Spending Fallacy. "Keynesian stimulus schemes failed under Bush and now they are failing under Obama" said CF&P Foundation President Andrew Quinlan. "This new video hopefully will prevent similar mistakes in the future by helping people understand the importance of growth rather than redistribution." Other Econ 101 Videos
Inquiring minds will want to check out some of those videos. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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| After All the Hype, Jobs Up an Anemic 39,000; Unemployment Rises to 9.8%; Quicksand of Stimulus Posted: 03 Dec 2010 06:56 AM PST Today the BLS reports that jobs gained a mere 39,000 and the unemployment rate shot up to 9.8%, the highest rate since April. Private payrolls gained a mere 50,000 compared to expectations of +160,000. Both jobs and the unemployment rate were worse than every single economist estimate which has me noting once again that economists as a group are sure one optimistic lot. Check out these Grim Job Details courtesy of Bloomberg.
Two days ago in Challenger Reports Planned Layoffs Highest in 8 Months; ADP Reports Strongest Job Gains in 3 Years; Impact of State Budget Deficits on Jobs I took "the under", guessing the jobs report would disappoint, but admittedly I did so without much conviction. I don't know what Friday's job number will show, (I am actually slightly inclined to take the under), but regardless of how strong the number is, it would be a serious mistake to extrapolate job growth we see now throughout 2011.If you missed it, please click on the above link for a detailed list of "headwinds". Over the past half-year I have held to my position that the highs in unemployment rate are not yet in, and I certainly see no reason to back down from that cal today. We are a mere .3% from matching the high. BLS November Report Please consider the Bureau of Labor Statistics (BLS) November 2010 Employment Report. Bear in mind, were it not for millions of people allegedly dropping out of the labor force over the last year, the unemployment rate would be over 11% right now. Nonfarm Payroll Employment - Seasonally Adjusted
Note the effect of temporary census hiring earlier this year. For all the hype about the improving economy, there has only been one decent jobs report all year. It was last month, and no doubt influenced by heavier than normal retail seasonal (temporary) hiring. Establishment Data
Index of Aggregate Weekly Hours Production and non-supervisory work hours fell by .1 to 33.5 hours. Average hourly earnings were flat at $19.19. BLS Birth-Death Model Black Box For those unfamiliar with the birth/death model, monthly jobs adjustments are made by the BLS based on economic assumptions about the birth and death of businesses (not individuals). Birth Death Model Revisions 2009  click on chart for sharper image Birth Death Model Revisions 2010  click on chart for sharper image I am actually shocked to see birth-death adjustments not only back in the solar system, but also back on planet earth. I cannot recall the last negative number in any month but January or July. Birth/Death Model Methodology The big news in the BLS Birth/Death Model is the BLS is going to move 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. It is possible that the BLS model is now back in sync with the real world. Moreover, quarterly rather than annual adjustments can only help the process. Please note that one cannot subtract or add birth death revisions to the reported totals and get a meaningful answer. One set of numbers is seasonally adjusted the other is not. In the black box the BLS combines the two coming out with a total. The Birth Death numbers influence the overall totals but the math is not as simple as it appears and the effect is nowhere near as big as it might logically appear at first glance. 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. Household Data
Table A-8 Part Time Status  click on chart for sharper image There are now 8,972,000 workers whose hours may rise before those companies start hiring more workers, about where we were a year ago. The number is down from last month but massively higher than the reported 8,300,000 reported in January. 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 Grim Statistics The official unemployment rate is 9.8%. 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. It reflects how unemployment feels to the average Joe on the street. While the "official" unemployment rate has held steady, at an unacceptable 9.8%, U-6 is much higher at 17.0% Recap and Reflections 41.9% of unemployed have been out of work for 27 weeks or longer, 59% have been out of work 15 weeks or longer. The stock market is higher, but things are not improving, at least in the real economy. The stock market is up, because profits are up. Profits are up because of unsustainable stimulus spending, and because corporations are not hiring. Moreover, China and India are overheating, and Europe is in shambles. Looking ahead, there is no driver for jobs. States are in forced cutback mode on account of shrinking revenues and unfunded pension obligations. Shrinking government jobs and benefits at the state and local level is a much needed adjustment. However, those state and local government cutbacks will weigh on employment and consumer spending for quite some time. Keep in mind that huge cuts in public sector jobs and benefits at the city, county, and state level are on the way. These are badly needed adjustments. However, economists will not see it that way, nor will the politicians. Last month I said "Retail hiring is not sustainable. Nor is the rise in manufacturing. We might see a few more months of this (or not), but this is highly unlikely to be the start of something big or sustainable. I still expect to see the unemployment rate back up above 10% in this cycle. While today's report may not be as good as it gets, it certainly is close to as good as it gets on a sustainable basis." The "or not" has arrived already. Perhaps we see good December and January numbers, but apparel sales are not going to drive the economy as noted in yesterday's post SpendingPulse: Retail Sales Led by Apparel, Consumer Electronics and Appliances Down Quicksand of Stimulus Courtesy of the Greenspan and Bernanke Fed, we threw the biggest housing party in history. This is the payback. No one in mainstream media will say it but I will: There is much more pain to come, and highly likely in the stock market as well. Solid recoveries are not built on the quicksand of stimulus. Sticking with a message I said on August 18, 2009 "Expect to see the unemployment rate structurally high for a decade." Addendum: Please click on this link for further Explanation of last Month's Jobs Upside Surprise and this Month's Downside Surprise Also consider 6 Million Benefit-Paying Jobs Vanish in One Year! Things are much worse than this administration would have you believe. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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