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September 2013

Enjoy the party, but beware of the hangover

Despite what was widely viewed as a weak employment report in early September, the U.S. economy appears to be on solid footing. Both ISM manufacturing and nonmanufacturing indexes for August were strong, with the nonmanufacturing index setting a record high. Initial unemployment claims have been in a steady and steep downtrend since 2010. Job openings in the private sector are higher than at any time since 2008, and employers complain …Read More

The Fed Has Lost Its Cred

After nearly eight years of trying to make the Federal Reserve more transparent, in one stroke Chairman Ben Bernanke has undone much of that effort. In May, he telegraphed the “taper” of the Fed’s “Large Scale Asset Purchase” program (known as LSAP to Fed economists and quantitative easing, or QE, to Wall Street) based on a strengthening economy and labor market. The market reacted by pushing 10-year Treasury yields to …Read More

Enjoy the party, but beware of the hangover

Despite what was widely viewed as a weak employment report in early September, the U.S. economy appears to be on solid footing. Both ISM manufacturing and nonmanufacturing indexes for August were strong, with the nonmanufacturing index setting a record high. Initial unemployment claims have been in a steady and steep downtrend since 2010. Job openings in the private sector are higher than at any time since 2008, and employers complain …Read More

Real Employment Numbers Portend Inflation

One of the most lamented statistics coming out of the employment data is that the shrinking labor force participation rate, not increased hiring, is causing the fall in the unemployment rate. Does this foreshadow a weakening economy? When raw data are manipulated, massaged and sent through computer systems that smooth, enhance and add and subtract from that data, their monthly movements are unlikely to be meaningful. Massaged Data As John …Read More

Hidden Inflation Slows Growth, Holds Down Wages

On Thursday, August 29th, fast-food chain workers conducted strikes in nearly 60 cities asking that chains like McDonalds (MCD), Burger King (BKW), Wendy’s (WEN) and Yum Brands (YUM) (which holds KFC and Taco Bell) boost their minimum hourly pay to $15/hour. Meanwhile, the saga between Walmart (WMT) and the D.C. City Council continues with Mayor Gray having 10 days from August 30th to sign or veto legislation which requires Walmart …Read More