Thursday, January 07, 2010
1) Weekly claims. The prior week was revised up to 433,000, and although this week's number was up slightly, it may actually be down slightly. The overall trend is still not that hot. It does look great if you look at last year's numbers. For the week ending January 2nd, 2009's actual claims were 731,958, and 2010's actual claims are 645,571. That's a big improvement. The four week moving average (seasonally adjusted) finally made it to the 450,000 level. YoY seasonally adjusted initial claims dropped from 488,000 to 434,000. Again, it's a nice trend.
2) ADP employment report. This report only covers private non-ag workers, so it is similar to the numbers I was quoting before. The December net was -84,000 jobs, which is the best reading since March 2008! Most notable is that small and mid range businesses are now leaking jobs at a lower rate than large businesses, which have stepped up their cuts. Looking further, the difference is in services, not manufacturing. Because far more employment is in services, this overweighs the reverse trend in goods-producing. Small (1-49) and medium (50-499) service businesses added 11,000 and 10,000 workers respectively, whereas large service businesses cut 9,000. This squares perfectly with the info I've been getting, which has overall described the beginning of a long-term large business rationalization trend.
3) The Monster employment index dropped a bit from 119 to 115.
4) December tax receipts still lagged YoY - WIET is still in the mid negative 7% range. Corporate tax receipts are lagging, although the gap is still narrowing. I really don't want to discuss FUT. It stinks.
5) We got a Chicago PMI number that looked great. It showed employment expanding for the first time in over a year. But the same day Kingsland released its adjustment, which pushed employment back down to the improving-but-still-contracting range. The adjustment was early - it normally comes in January - and it was pretty hefty. Thus I am looking with great skepticism at ISM numbers. The heftiness of the Kingsland adjustment is really a measure of how deep this recession was - it skewed the mix.
My bottom line is that recovery really comes down to small businesses now. Thus Congress should be very careful about what it is doing with health care. Any private job growth in most of 2010 will be in small businesses, and if you raise their costs per employee you'll choke it off in a heartbeat. Caution would be warranted. If you've got the time you might want to poke around NFIB's website and see what they have to say about the matter. Or you could just wander over and ask the Coyote.
The good part is that small businesses spend. They plough a lot of what they make back into employees and productivity stuff. The bad part is that they are very sensitive to bureaucratic/regulatory impacts. They do not have the cushion that large businesses have to deal with this stuff. I don't think this Congress has a clue.
I do have one amusing side commentary. Few people realize that small business employer mandates will directly raise primary physician costs. Why? Well, fees for primary care have been pushed down so much - and fees for individual/small business insurance coverage have been raised so much - that it is now something of a rarity for the primary care physician's employees to have medical insurance. Yes, that's right. Some doctors don't even have it....
Congress is making a terrible mistake in trying to throttle down debate and do a closed-door reconciliation and passage of the health care bill. The thing's been written by the same process that brought us the costly and ineffective stimulus bill, but this thing is designed NOT to be modified. The decisions are shifted to all these new committees and bureaucracies, and in many cases it would take a 2/3rds vote to override the decision. So the idea that it can be passed and modified later is a complete lie. Your Congress Critter probably doesn't know this, because your Congress Critter has no idea what's in the legislation. The Congress of Plausible Deniability sets sail on the Titanic....
Lord forgive them, for they know not what they do.
My best guess is that no one can stop the current process by which the USofA is shoehorning itself into a second recession. This one will be courtesy DC. Two things - the carbon endangerment finding and the health care no-reform bill - virtually ensure that the normal recovery process will be choked off because it throws costs at a sector that can't absorb costs.
Health insurance costs are shooting up. And nothing will stop it. Over the period 2006-2011 many small businesses will have seen their costs more than double.
"The heftiness of the Kingsland adjustment is really a measure of how deep this recession was - it skewed the mix."
That's what strikes me about this recession, moreso than others I've been through. This is happening because significant chunks of the economy are surplus and obsolete--the capacity is no longer required.
The government statistics that were set up to measure this capacity, and its utilization, are worse than useless.
Oh, and I fear this statement: "Lord forgive them, for they know not what they do."
interest rates will have to rise, along with taxes. That
will then start the second leg down. No way out of this box unless they can raise money from outside the US
at no interest I look for tariffs.
Anon - hey, the feds don't have money to bail out the states. And the feds are already raising taxes without addressing the retirement crunch, so I don't know what their plan for that is. Oh, retire on a federal pension. Heehee.
Mark - yep.
Chicago PMI revised from 60.0 to 58.7, employment revised from 51.2 to 47.6.
"With the economy in a tender position, we felt obligated to get the data out sooner," says Jack Bishop of Kingsbury International, which compiles the survey for ISM-Chicago. The re-estimation keeps the trough of the recent recession at March 2009, when the barometer fell to 32.7 versus the 31.4 reported earlier.
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