Disclaimer

Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. I do make mistakes, but I try hard to do my analysis thoroughly, and to make sure my data are correct. Remember: the unexpected sometimes happens. The expected does too, but all too often it takes longer than you thought it would.

The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Thursday, July 12, 2012

US Labour Mkt Data for June

Employment growth lower, the unemployment rate not falling.  On the face of it, further evidence that the economy is slowing, or that it's going through a payback period for faster growth earlier this year.  But one piece of evidence suggests otherwise:  overtime hours are rising.  This indicator is well correlated with the cycle.  It suggests that rather than take on new employees, firms are asking existing employees to work longer hours.  This is clearly not sustainable for long.

But it also suggests a degree of caution amongst employers, which does run the risk that it's self-fulfilling.  Why the caution?  The dreary European debacle has to be affecting sentiment.  But more likely is the prospect of the fiscal cliff in January.  The automatic tax increases and spending cuts which are forecast (depending on the forecaster) to reduce GDP by 3 to 5% must be affecting confidence.  This isn't irrational -- Japan tightened fiscal policy early in its now 20 year stagnation and caused the economy to plunge back into recession, and in 1937 in the midst of recovery from the Great Depression, a newly elected Republican Congress forced a balanced budget on the US causing a deep recession.

Time for the politicians to stop acting like three-year olds.

[As ever, click on charts to enlarge]
Change over 6 months, inverted




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