Friday, February 11, 2011
Harry, Meet Sally
Well, this is not the best diner experience I have ever had, but in January, Medicare wages DID rise YoY
January 2010: Wage Tax: 15,452 Self Emp: 2,288 Total HI: 17,740 January 2011: Wage Tax: 15,533 Self Emp: 2,233 Total HI: 17,766That is not much of a net increase, but at least it IS an increase. We broke the negative trend that started last fall.
One odd thing about this is that the trend in self-employment versus wages and salaries reversed. Self had still been eking out gains even though wages and salaries were going significantly negative YoY.
I think that the self-employment shift has something to do with price increases. There does seem to be a correlation between profit trends in NFIB's small business survey and self-employment taxes. It may be that bad weather is having more of an effect on small-business type profits, such as construction.
January's NFIB survey had some interesting data. Optimism was up. See the bottom table on page 7 of the link, and notice that the dip last summer accurately predicted the trend for Medicare wages in the fall. We also finally broke recession trend for the 80s, although we are still far below the recession levels of the early 90s and early 2000s:
I thought this was significant when I saw it the other day.
Employment trends are still very bad - well below the 80s recession low, but well off the floor for this recession. See page 11. Sales changes are well off their floor for this recession, but just sneaking back to their normal recession pits. Earnings trends (page 8) are still well below their normal recession lows, but have now moved decisively above their 80s recession trend.
I wonder what the current inflation trend is going to do to this? I want to say that there is enough underlying strength here to carry it for another six months, but I'm not sure.
One of reasons I have trouble using the word "recession" to describe the downturn is that it is not, structurally speaking, a recession.
Structurally, it is a depression.
A recession occurs largely due to the inventory effect - inventories build up, activity drops, inventories clear, there is a rebound. That is why acute recessions often rebound acutely.
But this isn't determined by the inventory cycle.
Another thing - if you go to this charting utility with four series from H.8, and look at the curves for loans and leases and large time deposits, you see that they are quite correlated.
That's because large time deposits are a very stable base from which to lend, I think. And large time deposits are dropping. So are loans and leases.
I don't think that can easily be unwound.
And that which cannot easily be unwound is almost the definition of a depression. So I don't know.
This is unlike anything since the GD. It's a little like the restructuring after WWII, but not totally. My guess is that we emerge from this to something like the later 50s. Except we don't have the structural factors favoring growth that we did then.
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