Category Archives: Uncategorized

Average Hourly Earnings Trends

I have written many blog posts concerning the worrisome trends in income and earnings.

Along these lines, one of the measures showing disconcerting trends is that of hourly earnings.

While the concept of hourly earnings can be defined and measured in a variety of ways, below are a few charts that I believe broadly illustrate problematic trends.

The first chart depicts Average Hourly Earnings Of All Employees: Total Private (FRED series CES0500000003)(current value = $26.84):

(click on chart to enlarge image)(chart last updated 5-4-18)

CES0500000003

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of All Employees:  Total Private [CES0500000003] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed May 4, 2018:

http://research.stlouisfed.org/fred2/series/CES0500000003

This next chart depicts this same measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 5-4-18)

CES0500000003 Percent Change From Year Ago

There are slightly different measures available from a longer-term perspective. Pictured below is another measure, the Average Hourly Earnings of Production and Nonsupervisory Employees – Total Private (FRED series AHETPI)(current value = $22.51):

(click on chart to enlarge image)(chart last updated 5-4-18)

AHETPI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of Production and Nonsupervisory Employees:  Total Private [AHETPI] ; U.S. Department of Labor: Bureau of Labor Statistics;  accessed May 4, 2018:

http://research.stlouisfed.org/fred2/series/AHETPI

Pictured below is this AHETPI measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 5-4-18)

AHETPI Percent Change From Year Ago

I will continue to actively monitor these trends, especially given the post-2009 dynamics.

_________

I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2642.31 this post is written

Median Household Income Chart

I have written many blog posts concerning the worrisome trends in income and earnings.

On the Doug Short site, in the May 2, 2018 post titled “Real Median Household Income…” displays the median household income chart below.  It is based upon data from Sentier Research, and it shows both nominal and real median household incomes since 2000, as depicted.  As one can see, post-recession real median household income (seen in the blue line since 2009) remains worrisome.

(click on chart to enlarge image)

Median Household Income

As mentioned in the aforementioned post, regarding the change in real median household incomes:

As the excellent data from Sentier Research makes clear, the mainstream U.S. household was struggling before the Great Recession. At this point, real household incomes are about where they were during the Great Recession.

Among other items seen in his post is a chart depicting each of the two (nominal and real household incomes) data series’ percent change over time since 2000.

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2635.67 as this post is written

Velocity Of Money – Charts Updated Through April 27, 2018

Here are three charts from the St. Louis Fed depicting the velocity of money in terms of the MZM, M1 and M2 money supply measures.

All charts reflect quarterly data through the 1st quarter of 2018, and were last updated as of April 27, 2018.  As one can see, two of the three measures are very near an all-time low for the periods depicted:

Velocity of MZM Money Stock, current value = 1.305:

MZM Money Velocity

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 30, 2018:

http://research.stlouisfed.org/fred2/series/MZMV

Velocity of M1 Money Stock, current value = 5.484:

M1 Money Velocity

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 30, 2018:

http://research.stlouisfed.org/fred2/series/M1V

Velocity of M2 Money Stock, current value = 1.439:

M2 Money Velocity

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 30, 2018:

http://research.stlouisfed.org/fred2/series/M2V

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2669.91 as this post is written

Consumer Confidence Surveys – As Of April 27, 2018

Doug Short’s site had a post of April 27, 2018 (“Michigan Consumer Sentiment:  April Final Improves“) that displays the latest Conference Board Consumer Confidence and Thomson/Reuters University of Michigan Consumer Sentiment Index charts.  They are presented below:

(click on charts to enlarge images)

Conference Board Consumer Confidence

University of Michigan Consumer Sentiment

There are a few aspects of the above charts that I find highly noteworthy.  Of course, until the sudden upswing in 2014, the continued subdued absolute levels of these two surveys was disconcerting.

Also, I find the “behavior” of these readings to be quite disparate as compared to the other post-recession periods, as shown in the charts between the gray shaded areas (the gray areas denote recessions as defined by the NBER.)

While I don’t believe that confidence surveys should be overemphasized, I find these readings to be very problematical, especially in light of a variety of other highly disconcerting measures highlighted throughout this site.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2669.91 as this post is written

Employment Cost Index (ECI) – First Quarter 2018

While the concept of Americans’ incomes can be defined in a number of ways, many prominent measures continue to show disconcerting trends.

One prominent measure is the Employment Cost Index (ECI).

Here is a description from the BLS document titled “The Employment Cost Index:  what is it?“:

The Employment Cost Index (ECI) is a quarterly measure of the change in the price of labor, defined as compensation per employee hour worked. Closely watched by many economists, the ECI is an indicator of cost pressures within companies that could lead to price inflation for finished goods and services. The index measures changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits. As a fixed-weight, or Laspeyres, index, the ECI controls for changes occurring over time in the industrial-occupational composition of employment.

On April 27, 2018, the ECI for the first quarter was released.  Here are two excerpts from the BLS release titled “Employment Cost Index – March 2018“:

Compensation costs for civilian workers increased 0.8 percent, seasonally adjusted, for the 3-month period ending in March 2018, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.9 percent, and benefits (which make up the remaining 30 percent of compensation) increased 0.7 percent. (See tables A, 1, 2, and 3.)

also:

Compensation costs for civilian workers increased 2.7 percent for the 12-month period ending in March 2018 compared with a compensation costs increase of 2.4 percent in March 2017. Wages and salaries increased 2.7 percent for the 12-month period ending in March 2018 and increased 2.5 percent for the 12-month period ending in March 2017. Benefit costs increased 2.6 percent for the 12-month period ending in March 2018. In March 2017, the increase was 2.2 percent. (See tables A, 4, 8, and 12.)

Below are three charts, updated on April 27, 2018 that depict various aspects of the ECI, which is seasonally adjusted (SA):

The first depicts the ECI, with a value of 132.5:

Employment Cost Index ECI

source: US. Bureau of Labor Statistics, Employment Cost Index: Total compensation: All Civilian[ECIALLCIV], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed April  27, 2018:

https://research.stlouisfed.org/fred2/series/ECIALLCIV/

The second chart depicts the ECI on a “Percent Change from Year Ago” basis, with a value of 2.7%:

Employment Cost Index Percent Change From Year Ago

The third chart depicts the ECI on a “Percent Change” (from last quarter) basis, with a value of .837%:

ECIALLCIV Percent Change

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2666.06 as this post is written

Real GDP Chart Since 1947 With Trendline – 1st Quarter 2018

For reference purposes, below is a chart from Doug Short’s “Q1 GDP Advance Estimate: Real GDP at 2.3%” post of April 27, 2018, depicting Real GDP, with a trendline, as depicted.  This chart reflects the Gross Domestic Product Q1 2018 Advance Estimate (pdf) of April 27, 2018:

Real GDP chart with trendline

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2670.90 as this post is written

Durable Goods New Orders – Long-Term Charts Through March 2018

Many people place emphasis on Durable Goods New Orders as a prominent economic indicator and/or leading economic indicator.

For reference, below are two charts depicting this measure.

First, from the St. Louis Fed site (FRED), a chart through March 2018, updated on April 26, 2018. This value is $254,947 ($ Millions):

(click on charts to enlarge images)

Durable Goods New Orders

Second, here is the chart depicting this measure on a “Percentage Change from a Year Ago” basis:

Durable Goods New Orders Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Manufacturers’ New Orders:  Durable Goods [DGORDER]; U.S. Department of Commerce: Census Bureau; accessed April 26, 2018;

http://research.stlouisfed.org/fred2/series/DGORDER

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2670.03 as this post is written

Money Supply Charts Through March 2018

For reference purposes, below are two sets of charts depicting growth in the money supply.

The first shows the MZM (Money Zero Maturity), defined in FRED as the following:

M2 less small-denomination time deposits plus institutional money funds.
Money Zero Maturity is calculated by the Federal Reserve Bank of St. Louis.

Here is the “MZM Money Stock” (seasonally adjusted) chart, updated on April 20, 2018 depicting data through March 2018, with a value of $15,345.2 Billion:

MZM Money Supply

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 4.1%:

MZM Money Supply Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 24, 2018:

https://research.stlouisfed.org/fred2/series/MZMSL

The second set shows M2, defined in FRED as the following:

M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs). Seasonally adjusted M2 is computed by summing savings deposits, small-denomination time deposits, and retail MMMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

Here is the “M2 Money Stock” (seasonally adjusted) chart, updated on April 19, 2018, depicting data through March 2018, with a value of $13,926.4 Billion:

M2 Money Supply

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 4.0%:

M2 Money Supply Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed April 24, 2018:

https://research.stlouisfed.org/fred2/series/M2SL

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2670.29 as this post is written

Charts Indicating Economic Weakness – April 2018

U.S. Economic Indicators

Throughout this site there are many discussions of economic indicators.  At this time, the readings of various indicators are especially notable.  This post is the latest in a series of posts indicating U.S. economic weakness or a notably low growth rate.

While many U.S. economic indicators – including GDP – are indicating economic growth, others depict (or imply) various degrees of weak growth or economic contraction.  As seen in the April 2018 Wall Street Journal Economic Forecast Survey the consensus among various economists is for 2.8% GDP growth in 2018.  However,  there are other broad-based economic indicators that seem to imply a weaker growth rate.  There has been a significant lowering of estimates for 1st Quarter GDP growth as seen in the Federal Reserve Bank of Atlanta’s GDP Now (April 16, 2018 estimate of 1.9%) releases.

As well, it should be remembered that GDP figures can be (substantially) revised.

Charts Indicating U.S. Economic Weakness

Below are a small sampling of charts that depict weak growth or contraction, and a brief comment for each:

Rail Freight Carloads

“Rail Freight Carloads” continues to show a downward progression.  Shown below is a chart with data through January (last value of 1,104,080, updated March 21, 2018):

Rail Freight Carloads chart

source:  U.S. Bureau of Transportation Statistics, Rail Freight Carloads [RAILFRTCARLOADSD11], retrieved from FRED, Federal Reserve Bank of St. Louis;  accessed April 11, 2017:

https://fred.stlouisfed.org/series/RAILFRTCARLOADSD11

Here is the same measure on a “Percent Change From Year Ago” basis, with value -2.8%:

Rail Freight Carloads Percent Change From Year Ago

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Auto Sales

Auto sales have experienced significant growth over the post-2009 period. The current reading (through February, updated on March 29) is 16.962 million vehicles:

Light vehicle sales

source:  U.S. Bureau of Economic Analysis, Light Weight Vehicle Sales: Autos and Light Trucks [ALTSALES], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed April 11, 2018:

https://fred.stlouisfed.org/series/ALTSALES

Here is the same measure on a “Percent Change From Year Ago” basis, with value -2.1%:

ALTSALES Percent Change From Year Ago

I believe that many factors indicate that auto sales have peaked.  While this peaking will have vast economic implications, there are many other factors concerning auto sales that are worrisome.  While an exhaustive discussion of the topic would be exceedingly lengthy, various notable factors include the degree to which (ultra-) cheap financing and relaxed financing terms are aiding sales, as well as various aspects of pricing and discounting.

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Total Federal Receipts

“Total Federal Receipts” growth continues to be intermittent in nature since 2015.  As well, the level of growth does not seem congruent to the (recent) levels of economic growth as seen in aggregate measures such as Real GDP.

“Total Federal Receipts” through March had a last value of $210,832 Million.  Shown below is  displayed on a “Percent Change From Year Ago” basis with value -2.7%, last updated April 12, 2018:

Total Federal Receipts Percent Change From Year Ago

source:  U.S. Department of the Treasury. Fiscal Service, Total Federal Receipts [MTSR133FMS], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed April 12, 2018:

https://fred.stlouisfed.org/series/MTSR133FMS

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Commercial And Industrial Loans, All Commercial Banks

“Commercial And Industrial Loans, All Commercial Banks”  through March had a last value of $2138.4559 Billion.  The growth in such loans continues to decline.  Shown below is the measure displayed on a “Percent Change From Year Ago” basis with value 2.6%, last updated April 13, 2018:

Commercial and Industrial Loans, All Commercial Banks Percent Change From Year Ago

source:  Board of Governors of the Federal Reserve System (US), Commercial and Industrial Loans, All Commercial Banks [BUSLOANS], retrieved from FRED, Federal Reserve Bank of St. Louis April 16, 2018:

https://fred.stlouisfed.org/series/BUSLOANS

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Inflation Trends

Although there has been widespread recent concern about impending inflation, as well as indications of higher inflation in some price measures, I continue to believe that deflation (as defined by when the CPI goes below zero) will occur.

Current inflation levels and the possibility of deflation is a vastly complex topic, and as such isn’t suitably discussed in a brief manner.  I have discussed the issue of deflation extensively as it will have critical and wide-ranging economic implications.  As I have stated in past commentaries, my analyses indicate that surveys or “market-based” measures concerning deflation will not provide adequate “advance warning” of this deflation.

For reference, here is the “Core PCE” measure as of the March 29, 2018 update, showing data through February, with a current reading on a “Percent Change From Year Ago” basis of 1.6%:

Personal Consumption Expenditures Excluding Food and Energy (Chain-Type Price Index) YoY

source:  U.S. Bureau of Economic Analysis, Personal Consumption Expenditures Excluding Food and Energy (Chain-Type Price Index) [PCEPILFE], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed April 12, 2018:

https://fred.stlouisfed.org/series/PCEPILFE

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Other Indicators

As mentioned previously, many other indicators discussed on this site indicate economic weakness or economic contraction, if not outright (gravely) problematical economic conditions.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2677.84 as this post is written

Disturbing Charts (Update 30)

I find the following charts to be disturbing.   These charts would be disturbing at any point in the economic cycle; that they (on average) depict such a tenuous situation now – 106 months after the official (as per the September 20, 2010 NBER BCDC announcement) June 2009 end of the recession – is especially notable.

These charts raise a lot of questions.  As well, they highlight the “atypical” nature of our economic situation from a long-term historical perspective.

All of these charts are from the Federal Reserve, and represent the most recently updated data.

(click on charts to enlarge images)

Housing starts (last updated March 16, 2018):

Housing Starts

US. Bureau of the Census, Housing Starts: Total: New Privately Owned Housing Units Started [HOUST], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/HOUST/, April 13, 2018.

The Federal Deficit (last updated March 27, 2018):

U.S. Federal Deficit

US. Office of Management and Budget, Federal Surplus or Deficit [-] [FYFSD], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/FYFSD/, April 13, 2018.

Federal Net Outlays (last updated March 27, 2018):

Federal Net Outlays

US. Office of Management and Budget, Federal Net Outlays [FYONET], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/FYONET/, April 13, 2018.

State & Local Personal Income Tax Receipts (% Change from Year Ago)(last updated March 28, 2018):

ASLPITAX

US. Bureau of Economic Analysis, State and local government current tax receipts: Personal current taxes: Income taxes [ASLPITAX], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/ASLPITAX/, April 13, 2018.

Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated April 6, 2018):

Total Loans And Leases

Board of Governors of the Federal Reserve System (US), Loans and Leases in Bank Credit, All Commercial Banks [TOTLL], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/TOTLL/, April 13, 2018.

Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated April 6, 2018):

Total Bank Credit Percent Change From Year Ago

Board of Governors of the Federal Reserve System (US), Bank Credit of All Commercial Banks [TOTBKCR], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/TOTBKCR/, April 13, 2018.

M1 Money Multiplier (last updated April 5, 2018):

M1 Money Multiplier

Federal Reserve Bank of St. Louis, M1 Money Multiplier [MULT], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/MULT/, April 13, 2018.

Median Duration of Unemployment (last updated April 6, 2018):

Median Duration of Unemployment

US. Bureau of Labor Statistics, Median Duration of Unemployment [UEMPMED], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/UEMPMED/, April 13, 2018.

Labor Force Participation Rate (last updated April 6, 2018):

Labor Force Participation Rate

US. Bureau of Labor Statistics, Civilian Labor Force Participation Rate [CIVPART], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/CIVPART/, April 13, 2018.

The Chicago Fed National Activity Index (CFNAI) 3-month moving average (CFNAI-MA3)(last updated March 26, 2018):

CFNAIMA3

Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/CFNAIMA3/, April 13, 2018.

I will continue to update these charts on an intermittent basis as they deserve close monitoring…

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2656.30 as this post is written