The Fed is looking for jobs reports to justify tapering its asset purchases, and this was one. But the labor market is still messed up.
By Wolf Richter for WOLF STREET.
While companies are desperately searching for labor and are offering hiring bonuses and higher wages, amid a record number of unfilled job openings, still 6.1 million fewer people were working in July than before the pandemic, and 13 million people were still claiming state or federal unemployment benefits. But this weird phenomenon is showing signs of loosening up.
Employers of all types – companies, governments, and nonprofits – reported that they added 943,000 workers to their payrolls in July, and 2.5 million over the past three months, bringing their payrolls to 146.8 million workers, according to the Bureau of Labor Statistics today. But total payrolls were still down by 5.7 million from February 2020 (green line).
Households reported that the number of people working, including the self-employed, jumped by 1.04 million in July, and was up by 1.5 million over the past three months, to 152.6 million workers. But this was still down by 6.1 million from February 2020 (red line).
The fact that households reported a gain over the past three months of 1.5 million workers, while establishments reported a gain of 2.5 million workers may indicate that some self-employed people, who are counted in the household surveys but not in the establishment surveys, have switched to regular employment with companies – which would make sense, and has been seen anecdotally, given how aggressively companies are now hiring.
If the Fed is looking for jobs reports that will give it economic cover to begin tapering its asset purchases later this year – as many Fed governors have been saying recently – this was one.
People only slowly trickling back into the labor force.
The labor force – people who had a job during the survey period or who were actively looking for a job in the prior four weeks – inched up by 261,000 people in July, and by 359,000 people over the past three months, to 161.3 million. It remains down by 3.2 million people from December 2019. The labor force has recovered barely over halfway from its plunge in April 2020:
People who might in the future want to work but weren’t actively looking for a job during the weeks prior to the survey – whether they were busy with other projects, or had to take care of their kids or an elderly parent, or whatever – aren’t considered to be in the labor force.
People who “retired” during the pandemic as part of the sudden retirement boom – including those chasing quality of life with their stock market or crypto gains – may not be permanently retired, and may return to the labor force when things change for them, such as a big downturn in the stock market or cryptos, a phenomenon that occurred after the dotcom bust when lots of former stock-market millionaires started looking for jobs again. Once they’re actively looking for a job, or got a job, they’re back in the labor force.
Employment in manufacturing rose by 27,000 workers in July, and by 102,000 over the past three months, to 12.4 million jobs, amid a red-hot boom in manufacturing and endless complaints about difficulties in hiring qualified people. Manufacturing payrolls were still down by 433,000 people, or by 3.4%, compared to February 2020:
But with automation, manufacturing production, despite 3.4% fewer jobs, has recovered compared to February 2020. This has been the pattern during every downturn: Manufacturers cut costs and raise productivity by investing in automation.
Even as employment in the manufacturing sector went into a multi-decade decline, production continued to rise until the Great Recession, at which point manufacturers massively offshored production. Much of the auto components manufacturing walked off to China at the time, and production, adjusted for inflation, never recovered to the 2007 peak:
Employment in the leisure and hospitality industry jumped by 380,000 jobs in July and by 1.09 million over the past three months, as restaurants, bars, hotels, and casinos are furiously trying to hire workers. Employment was still down by 1.74 million people from the peak in February 2020, but up massively from the lockdown lows in April last year:
Employment in Construction rose by 11,000 workers in July, after two months of declines, for a net decline over those three months of 18,000 workers, to 7.4 million workers:
Employment in federal, state, and local governments rose by 240,000 workers in July, and by 468,000 workers over the past three months, after massive job losses during the pandemic.
At the federal level, military personnel and the good folks at the major intelligence agencies are not included. But USPS employees are included. At the state and local levels, it includes workers in education, many of whom are now getting back to work. The number of government workers plunged during the pandemic, in part related to jobs in education. In July, government payrolls were still down by 782,000 workers from February 2020:
In mid-June, some states began withdrawing from the federal unemployment benefits, which include the extra $300 a week. Two big states, Texas and Florida, withdrew at the end of June. Other states followed in July. By now, over half the states have withdrawn from the federal unemployment benefits.
In these states, the unemployed residents, if eligible, still receive the meager state unemployment benefits, but no longer receive the federal top-off benefits. The federal benefits are scheduled to expire for all states on September 6. Every employer is looking forward to this day.
Part of the “labor shortage” came from the fact that many people had to take care of kids when schools were closed or had to take care of elderly relatives, and couldn’t work.
In addition, employers had to compete with this combination of state and federal unemployment benefits that ended up paying a large number of lower-wage people more than they’d made while working, and provided other benefits.
This effectively put a floor under the wage scale in some industries, and employers had to adjust to it by raising wages, improving benefits, offering bonuses, and the like – or make do with fewer employees, or both.
This weird phenomenon of “labor shortages” in an economy that is not at all short on people who could and would possibly work under different conditions is now gradually easing. And in states that withdrew from the unemployment benefits, continued claims for unemployment insurance fell significantly since early July, compared to states that maintained the federal benefits. Read… Yes, More People Went Back to Work in States that Ended the $300/Week in Federal Unemployment Benefits
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I ain’t gonna taper yet, bubba! No way! Gotta see full employment! Hahahahahahaha!!!! My goal is to get people back to work!!!!! Hahahahhhahhah!!!!!!!!!!
I gotta admit…
Usually not a fan of the gimmick accounts but this post had me laughing. Its exactly what they do – repeat a lie long enough and loud enough and people start to believe that the Fed is actually trying to help the average worker.
thought I heard they said it would take 2-3 years before employment shortages got back to normal
I’ll have you know that — far from a gimmick — I, Jay Powell, am the Chair of the Board of Governors of the Federal Reserve of the United States of America!!! We at the Fed are committed to full employment and will use all tools necessary to reduce inequalities and bring progresses and prosperities to the United States of America!!!! We will stop at nothing to save this great country from the ravages of climate change and the brutal gut-wrenching effect of poverties and racisms!!!!! We are on the side of good!!! We have been waiting a long time for good to arrive! And finally we are here!!! Behold!! Hahahahahahahahahahaha!!!!!!!!
It is outrageous that a comment from Jay Powell, the Chair of the Board of Governors of the Federal Reserve of the United States of America, is awaiting moderation!!!!! I won’t have it!!!!! I demand that my comment is immediately published!!! Wolf Richter, you can expect a thorough audit by the Internal Revenue Service of the United States of America!!! This is an outrage!!!!!! I am good! And I am here to do good!!!!!
Careful, don’t break character.
I see people putting insane bids out on certain work who obviously don’t want the work. Home improvement, renos etc. Either they have enough work already or think people will say yes to anything.
I’m getting raked over coals by contractor next week
they want 1/2 up front
I am not sure what the norm is, but giving money to someone before you receive the good or service is risky. Maybe you can pay for materials once they are delivered and pay labor as project goes along. If you give him 50% Monday and he goes bankrupt Tuesday, you have problems.
Usually the person paying is the one that determines the rules, not the person providing the service.
Are there the workers .. that work in the empty tall towers gathering dust .. that stand around .. Trump Tower .. the workers that never have been yet ??
Are job adds tax deductible in the USA ??
Or ..
Are they looking to create more fictitious workers ??
Why ??
It is the opposite in Australia .. AIA the insurance company my daughter worked at last week is is strife & it is suspected that many others are also.
The whole of Australia is in lockdown now.
Investment is walking out on Australia.
Who can blame them .. hey.
Going back to working with the general public in Florida, Louisiana, or other southern covid hot spots would be a horrible experience.
I’ve done a lot of miserable mind-numbing jobs but never had to risk my health and potentially be hospitalized just to make a measily living.
If everyone would vax up, we’d see GDP grow even more.
“If everyone would vax up, we’d see GDP grow even more.”
if we divested ourselves from ch ina and their vir us es we’d see gdp grow even more. fixed it for ‘ya.
You know, the last great worldwide pandemic originated right here in the good ole USA (Haskell County, Kansas). Wonder if the Chinese and the rest of the Asia Pacific countries were bemoaning the USA at the time? I am guessing not.
I’m more afraid of super spreader VAXxED folks
they are ones causing problem
I for one want them to be held LIAbLE if they infect me
Get vaccinated and you won’t have to worry about it. Stop being a victim.
recently…over 70% of new covid cases in Massachusetts were Vax’d…..beyond spooky
Quit complaining…get vaccinated and live your life. Try to make a contribution here instead of bitching about your fears.
Give me a break. There’s virtually no risk if you’re vaccinated, even if you are in a “hot spot.”
At most, you’re likely to get a cold. Stop with the fear porn.
Exactly. I actually relish the idea of getting thew variant, so my immune system can kick it’s ass, and all of it’s variant cousins.
Yep. They’re now saying that 99.2% of hospitalizations occur among the unvaccinated, and that the likelihood of death for someone who IS vaccinated is 1/100,000.
I’m not going to spend too much time worrying with those odds.
RightNYer, I’m seeing otherwise. You got a link to some data specific to Delta and the last couple months? b/c the effectiveness of the vaccine isn’t fixed, nor are the variants it has to protect against. And that case study from Massachusetts which the CDC released gives one pause about the real protection provided (or not) currently by the vax.
My sister-in-law got COVID fully vaccinated maybe vaccinine is a hoax
What were here symptoms?
Ron,
Maybe YOU are a hoax?
Ron,
Being vaccinated won’t stop you catching covid, or even pasing it on, but it does make it less likely that you’ll get it, have less severe symptoms if you do get it, and also be less likely to pass it on to anyone else.
97% of people in the US who are hospitalized with COVID have not been vaccinated, if you have been vaccinated and under the age 60 with no risk factors, there isn’t much risk.
That 97% you allege are what age and have what health status?
If you are healthy at any age, there isn’t much risk of getting hospitalized for Covid, especially if you’ve been exposed to it and have T-cell memory and immunity.
Get injected and there’s a 100% guarantee that spike proteins will be generated in your body.
Obese people with comorbidities should definitely get the vaccine, wear masks and not fly.
The next time someone asks me if I have been vaccinated, I will ask them if they’ve ever had herpes or gonorrhea. It’s none of their business.
Herpes is permanent.. just fyi.. as is the coronavirus. They are similar in that they both become one with your central nervous system and flare up unexpectedly for the rest of your life.. hence the covid survivors with long-haul symptoms
the Vaccinated are the ones spreading the virus. Even the CDC is admitting that now.
I got it, it’s been 2 weeks and the only possible transmission source is from the vaccinated.
Rumble — Vaccines CANNOT prevent COVID transmission anymore – CDC’s Dr. Rochelle Walensky admits.
This is from CNN so you know it’s a “trusted source” /sarc.
interesting,
The vaccines were never designed to protect the unvaccinated — though they do lower the transmission rate. The vaccines were designed to protect the people that got vaccinated, and that’s working, given how few vaccinated people end up in the hospital.
Now the people that refuse to get vaccinated are complaining that those who are vaccinated aren’t protecting them?? I mean, come on.
Out West–stay out West.
My particular strong interest in the job market is in technology, since I was trained to work in that field.
Manufacturing remains the biggest sector of the U.S. economy, although Wolf doesn’t mention this. Employment has nudged up by about 100,000 workers over the last 3 months, and this on top of a base of about 12 million jobs. Although manufacturing has shed about 5 million jobs in the past generation of people, it finally seems to have stabilized around the 12 million figure producing very often high-end, super-high-tech products.
Yes, there has been outsourcing but — surprisingly — much of the job shrinkage has occurred because of superior automation. The industrial engineers — the men who build the facilities — have outdone themselves. The result is factory lines that are smoother, more robust, and faster than ever.
The net result is that U.S. manufacturing is a close second behind China, and is actually equal to Germany, Japan and South Korea put together. Some people are surprised to find that Japan is only a fraction of U.S. output, but it’s true. (Japan itself has outsourced to China, with mixed results in quality control.)
Industrial engineering is the single most important job in the world, after being President of the United States, in my opinion. The riches of the world flow from factories. Handcrafted goods are mere quirky curiosities. With electricity supercharging the factory line, and with workers positioned at strategic points, the flow of goods is impressive to see. Probably the most impressive technological thing I’ve ever seen has not been Oculus but the manufacturing of cigarettes. All those smokes shooting into packages is an amazing sight.
I’m glad manufacturing still has a strong, and stable, future in America and equally glad it’s not all done in the weapons field.
you are funny
thinking mils will actually gain skills to ‘w o r k’
they’ll fiddle with their iphones from china
Catxman,
“Manufacturing remains the biggest sector of the U.S. economy, although Wolf doesn’t mention this.”
I put two charts on manufacturing into the article:
1. manufacturing employment and
2. manufacturing production.
Payrolls in manufacturing = 12.4 million workers. This amounts to only 8.4% of total payrolls.
Manufacturing is not the biggest sector by employment. Here are some of the sectors that have more employees:
Leisure and Hospitality (see chart in article)
Governments (see chart in article)
Retail (15.3 million)
Professional & business services (20.1 million)
One might quibble with the BLS’ definition of manufacturing. Agriculture is also production, for instance.
Alternatively, “sector” is also a flexible term.
One might also look at the economic value of the output rather than the number of workers employed. Manufacturing as defined by St. Louis Fed in a 2017 report is still 12% of US GDP. That’s pretty large.
One could state that “government” is larger as a share of GDP, but then one would have to convince others that “government” is actually part of the gross domestic “product”, rather than being an overhead expense of generally dubious value… Also if one strips out transfer payments (which are definitely not production of any kind) government is far smaller.
see http://www.stlouisfed.org/on-the-economy/2017/april/us-manufacturing-really-declining
> Also if one strips out transfer payments (which are definitely not production of any kind) government is far smaller.
Yeah… id also argue reallocating of others resources thru governance is not production, and can be done in cheaper ways without the overhead of traditional governance, esp in a decentralized and “trustless” manor (not requiring one trust a government of easily compromised and corruptible elected officials and the people they appoint, but say, a set of smart contracts that reduce the human element).
Though that would require some that prefer to hold increasing less valuable stateside dollars wrt consumer goods and services to open up their mind to how decentralized unit of account and exchange of value could improve things beyond:
“OMG SOMEONE CREATED A PONZI, ITS ALL TRASH, LET ME STILL HODL FEDERAL RESERVE TOILET PAPER UBER ALLES”
Good comment cat:
Only possibility of dis agreement is between definition of ”Industrial” and ”Process” engineering..
Truly and more than likely even more important in the overall scheme of the progress of our species than any, possibly all POTUS…
Please keep commenting on here, as this is the only website I trust even a little bit,,, actually, between Wolf’s great reporting and analyses, a big ”bit.”
VVN, I’m a graduate Industrial Engineer. Part of that field of study is factory layout for efficiency. Also things like site selection alternatives for new facilities.
Process engineers I know and have worked with are typically employed in the petrochemical industries and work on “inside the pipe” material flow and pressure/temp stuff which is more aimed at chemical reactions, etc, etc.
I’m sure the above is a small subset of both fields and they are distinctly different.
True that AA,,, while us, in, mostly, the blue collar work force who have been ”cleaning up and following through” on all the Ivory Tower thinking, policies and practices ”fomented” on to the world of work, especially the world of working in the mines and factories processing ALL the products of the harvest of the natural resources, are now or have been ”retiring” to whatever is left from the ”ivory tower” thinking of the last decade/century…
Not to denigrate you personally, because I see on here you are at least trying to tell the truth as you perceive it, as opposed to the constant truth management now prevalent almost every other news source other than Wolf’s…
You haven’t watched the production of ammunition, which does far less damage to human bodies and society in the aggregate than do cigarettes.
I’m in manufacturing. You are misguided.
China can build the entire project and ship the end product to the USA for less….sometimes, about 1/2 for what it would cost us JUST TO BUY THE STEEL. And all this while my shop rate hasn’t changed since 1997, it’s as if every year it’s get CHEAPER for China to build tooling.
The only logical conclusion? Massive government subsidies.
If China gets into a business, you don’t want to be in it or at least that is the way it was 10 years ago. They were about state objectives, not return on investment.
Catx
“Industrial engineering is the single most important job in the world”,
Agree they’re good, but not most important, they need buildings and roads and water etc. for their factory.
Civil engineers build the infrastucture that is actually the physical World that everybody lives in. There is no bigger satisfaction in life than knowing that you built a bridge or a road or a tower that will be there for centuries.
We can agree I hope, engineers of all sorts designed, built and ran everything of importance in the world.
Not biased in any way!
Employment decisions do not occur in a vacuum. I think many people realized the rat race of working extremely hard so your employer can get rich with no reciprocal loyalty/job security, only to pay a lot of taxes, and then buy a bunch of crap you don’t need, does not really make sense.
My wife just went back to work full time for the first time in 13 years, since my oldest son was still a young baby. When we adopted him, she took 12 weeks of unpaid leave, then went back to work until she hit the six months necessary to get her employer adoption assistance payment,
I hit age 55 this year which and was severanced out – part of the normal course of being aged out of work in Corporate America. I found a new position but took a 20% pay cut for now because employers know how the game is played.
So that and paying for parochial high school (wokeism and CRT tends to disappear when parents pay the tuition directly) is the only reason she went back to work.
You need money to avoid the clutches of Woke Corporate America and CRT, but there is no satisfaction itself working in either of those systems.
Just read the anonymous comments in your Employee Engagement Surveys – the cubicle serfs are not happy.
surely you have pension coming
or are you also 1st in line were pensions only go to executives
I find self employment much better
take day here and there when I want and still work about 1/2 time for same pay
of course it would be nice to have affordable health insurance
just few more years before we get that might medicare stuff
CRT is called unconscious bias training UBT where I work.
I complained about work in private sector when I was in it. Looking back I always have 100% and probably was always paid a market rate.
Economics says you should invest in your specialization and pay everyone to do everything else to have highest material standard of living. It can rob the soul.
Being totally self sufficient is impossible, but you can be a bush crafting person and live on very little. Happiness is finding the place on the spectrum that feels right to you.
I’m a preacher so i tend to meet folks down on their luck; I’m seeing a lot of folks who got laid off recently post lock down who then decide that what they have in pensions and such is OK to live off of for now.
I don’t think its quite true; a lot of the “I did 30 years at my job” folks when cut loose now are looking at a totally different job ecosystem and freezing up.
They’ve never even glanced at Indeed! I did 8 years tech and contracts 2010-18 so i try to help; they don’t wanna move on.
I think there’s quite a bit of “unemployment by despair” out there in the demographic.
I also have always felt with millenials and even Xrs getting shuffled so much HR’s requirements are getting more Unicorn-y by the day. I know in my secular jobs the average ages keep creeping up so ANYONE young like me 35 just can’t land the job (with experience) if HR is managing it because we’ve simply been alive less.
Have to end run HR and network it. Folks who were spared that rat race are really at a disadvantage and companies are so used to having silly hiring ideas they can’t find the folks right in front of them.
When the middle managers drop the company is then left with no one to work around the stupid and they can’t find anyone. Be amazed how many companies want 10 years experience on 2 year old programs.
Ready to order my new Ford Maverick, hybrid, msrp sub 20K, plus destination charges 1500, made in Hermosillo, Mexico. In the old days you could buy a car right off the assembly line in Detroit and drive it home.
Are dealers willing to order the base model? At MSRP? What is the wait time?
buying new if for those with to much money
This is brilliant marketing. The base model has no option for cruise control. Those who buy the XL now will be back in a year for an upgrade. The wait time is three months, they aren’t asking for a deposit. The ecoboost engine costs more, is not a hybrid, and gets half the mileage, but you need that to get the towing package. Made in Mexico, and not sure how they got away with that? Next year maybe in the states? For every base model they sell now they are selling two vehicles, and low mileage trade ins will probably jump off the lots. Good time to be a Ford dealer.
I’m checking those out myself to replace my 2006 Expedition. Will probably have to wait until next year, though with all of the chip shortage issues.
Nice vehicle except that 20k basic Maverick ruck has not cruise control option.
Never thought I would see the day when steel wheels becomes all the rage again. Also kind of odd how Ford reused the Maverick name. All I can think of in my mind is that 2 door coupe from the 1970’s. Regardless, a 40MPG pickup truck for about $20K should be a pleasant consumer experience, but not investors holding energy stocks.
My experience is you normally are better of purchasing a relatively high end used car than a cheap new car. Maybe cheap new cars have changed and I know used car prices are high.
My experience is that cars at the very low end have paint and trim standards that don’t hold up for the long term.
U talking back in the 1930s era, and maybe up to the very early 1950s only AB,,, and from what I heard from neighbor who went to Day Twa to do that regularly with his fil as a driver, in the later part of that, it was restricted to ”dealers” who paid cash on the barrel only…
Not really a bad idea in general IMHO, if all of WE the PEONS could do that,,,
Tesla might be trying that pretty soon if I understand their focus on maximum profit for Tesla, etc., etc…
Other than that, please keep in mind the ultimate solution: Folks just go to their local general manufacturing facility and make a vehicle that will last as long as they live,,, and then re-use every component to make another vehicle similarly long lasting for their grand or great grand child.
”NO matter what the oligarchy does between times.”
Joe Biden & the Democrats have an enormous incentive to create stagflation – they need high inflation to inflate away their debt-fueled binge spending, and they need the high unemployment to give central bankers cover to keep the printing presses rolling.
But no more. With today’s jobs report, I’m not sure what further excuses the FOMC has to delay normalization without sounding like enormous hypocrites (as if they weren’t so already.) Tapering needs to start this year.
“But no more. With today’s jobs report, I’m not sure what further excuses the FOMC has to delay normalization without sounding like enormous hypocrites”
The Fed will just conjure up yet another critical ‘mandate’ as to why they are going to leave everything going at ludicrous speed. But that will only happen after months of ‘We are watching it closely’, ‘We stand prepared to do whatever is necessary’, etc (e.g. jawboning). Meanwhile, the non-voting Fed members will drone on about how QE needs to be stopped or reduced and how interest rates will need to rise imminently. They do this to provide cover for the voting Fed members who have no intention whatsoever of doing either. End result, nothing changes.
Rest assured that we at the Federal Reserve are carefully monitoring the situation!!! We have our tools — a wrench, a pick axe, and a money printer! And as long as there is at least one more person who is looking at want ads or even thinking about potentially getting a job so he can qualify for unemployment and quit, we will continue to print money to help the situation! BBBBRRRRRRRRRRR!!!!!! Hahahahahahahahahahaha!!!!!!!
If $2/loaf of bread is inflated up to $18/loaf the are we winning when the price comes down to $9/loaf. It is half of what it was at the 2020’s peak. But still 4.5x the normal cost. That is what I see with all of these rocket ship increases
Glad you mentioned the bread ND,,,
Reminded me of the 24 Inch sandwich bread at the only ”super” market I worked at in Naples, FL in 1961: TEN CENTS per LOAF!!!
Go ahead and try to find anything anywhere near that, EH??
^please delete this comment, was a reply above.
Yesterday I came across the third closed down national chain fast food restaurant ( with drive thru). First it was a Mcdonalds, then a Burgerville ( that one is pnw only) and then yesterday a Taco Bell. Not shuttered for renovation or urban renewel. Each had signs on the door and drive thru board that said, ” closed due to labor shortage.”
Why would you work at a place that..
#1. Never gives you enough hours for health insurance.
#2. Changes your schedule at a drop if the hat.
#3. Treats you as a thief at every opportunity.
#4. Doesn’t pay you enough, and has food stamp literature in the break room.
Good luck to them
Because you need the money?Because you are a teenager and need spending money?
Because you are beginning your work career and need to prove you can be responsible so you can move up the labor market?
Because you screwed your life up and now you want to provide for your child?
Because you are not physically able to do factory or construction work?
Kurtismayfield:
“Why would you work at a place that..”
Because accepting the reasons you stated makes u “management material”.
Look at the bright side…it might help reduce the nation’s median body weight.
My local bank, on the King’s Road in Chelsea, has been shut for a week due to COVID induced staff shortage….a busy neighbourhood restaurant that used to be open late now only serves breakfast and lunch….I could go on …
That’s happens where I live in Canada because people will only drive so far from towns far away to work for peanuts. Where I live they can’t hire because of the cost of living. Residential rents means anyone making under around 25 dollars an hour can’t afford to rent and eat at the same time. So many of the fast food shops just close.
I’ve heard horror stories about fast food lately.
I’ll just put it this way:
Is the person at the drive-thru window smiling at you because he/she is making a good living or because there is a booger in your croissant?
Who do you want to handle your food? I was in the office of a Mcdonalds’ about fifteen years ago at tax time. The w2 forms for past year employees were stacked to the ceiling, just for that one location. They get anybody and everybody, in and out, to flip those burgers as cheap as they can.
Just don’t think about it.
I worked with many successful people who worked at McDonalds as a first or second job.
I always tell young people when they start at the bottom to use it as an opportunity to see how the business works.
Someone really smart probably can learn more working in fast food for a year, than a year of college. Producing goods and services, in this case, fast food dining has a lot in common with producing and providing services in a lot of industries.
Burgerville is not closed due to labor shortage and there are no signs indicating that on the building.
Employment in Manufacturing: A friend of mine owns a rather large steel and aluminum mfg’ing plant in southern CA and has seen prices increase 200% for raw materials, which are of course passed on to the end customer. Worse yet, delivery of aluminum from their supplier of 30 years is 7 to 8 months out, while steel is 4 -5 months out. If they can’t get the raw materials for the stacked up demand, workers will be laid off.
Part of that 200% increases are the tariffs on Canadian steel and aluminum products.
Part of high construction costs are tariffs on Canadian softwood lumber.
It’s hard for a country to walk on both sides of the line, with lower prices and protectionist policies. These costs are just passed on to the consumer, and we know how well they are doing. (sarcasm) Our production wages are usually much higher here, but US customers are buying with our dollar at $.80. Tariffs make it about par, but they are sometimes adjusted.
Regardless, economy is booming here and there is little virus infection with a high vaccination rate, 70% full and 82% 1st dose. Our local forestry company just posted very large profits and the big local mine is in full operation. I think every Canadian tourist is on Vancouver Island and on the 9th the border opens to vaccinated US travelers. Hotels and campgrounds are full up so I don’t know where they will stay. It looks like a vaccine passport system will be implemented soon. Quebec is already doing it.
Drove by one of our local mills last week and for the first time in over 8 – 10 years there was new lumber piled up to be shipped out. Far north Cal, in the PNW really.
Wow, 200% on raw materials, that probably explains why the roof rack option for my Subaru doubled in price since I last looked 3 years ago. I imagine increased shipping container costs from China probably plays into that price increase as well.
It’s tough to invest because shock to economy was so big and Fed and government response continues to be so big. If Congress stops over spending the Fed could be right that inflation is going to pass through the system and longer term we are going to have a more indebted and slower growth economy than before Covid.
One thing is true is that stock market is currently a casino. Stocks that have more predictable income streams like utilities and no growth dividend payers might pay you 3% – 4% and have a PE of 20 plus. The speculative stuff that can’t be valued on fundamentals seem to be in a complete mania.
I’m wondering if they’re still counting the Corona dead.
I think much of the additions to payrolls over the last 3 months has everything to do with the reduced impact, nationally, of Federal cream-on-the-top unemployment goodies and still does not show a surging American economy that is so laden with newly printed debt that it can barely get off the mat from 2020’s collapse. The recent GDP miss confirms this aspect of Employment Changes vs. Economic Growth Changes.
Granted, the Help Wanted or Open Jobs numbers are significant, but it is more a function of a distorted labor market, thank you Uncle Fed and Uncle Sam, that was making more to stay home and play RobinHood in the securities markets than punching the clock at an honest job. The octopus tentacles of the Government have once again created a mess that will be very hard to clean up this time. There was a pick-up from Lock-down America, Phase One, and the threat of Lock-down America, Phase Two, with Covid mutating like a politician up for re-election couldn’t come at a worse time for the soon to fizzle L-shaped recovery, missing the top of the letter.
The effects from the push to get back to work with no more goodies from the Uncles will be a diminishing phenomenon as we head into Fall. Basically, an employment spurt until the very ravaging effects of Foregone Forbearance has its own economy killing effects. Biden might think he can use the CDC backdoor to extend and pretend an illegal, unlawful, and UN-Constitutional government instigated breach of mortgage and rental agreements, but the clock is ticking for the Supreme Court and States’ supreme courts to pound the gavel on the bench to finally put end such foolishness. Landlords, who can be Moms and Pops, not mega-corporations, and Mortgage Lenders have no rights in 2021 America???
So the Dollar cause a bid today, so what! The fundamentals for the Greenback make a Beanie Baby a better looking medium of exchange. Or a tulip bulb. One report a sustainable trend does not make.
Why work when you get free FedBucks, can’t be evicted, and stocks only go up?
Don’t forget you don’t have to pay student loans either.
“Why work when you get free FedBucks”
Of course these rumors aren’t true, but it has been said that some of those getting free fed bucks, are also working under the table. With the combination of Fed bucks, State bucks, and under the table work bucks, these subs could be making more money than they have ever made before. They may also be spending that money, joining in on the giant buying spree and the feeding an ever growing trade imbalance.
From the local newspaper:
“Closing the Largest Generic Drug Plant in the US Is a Sick Joke”
July 23,2021
Cue: Joe Manchin’s daughter is that company’s CEO.
And she is gently descending from the skies on Golden Parachute…
Just some extra fund$ to hold her over until she is off the unemployment rolls……about $31 Mil I hear…….but she IS a CEO!
But Joe Manchin has such a nice smarmy haircut to go with his folksy delivery…him so worried about inflation and working people and all.
They plan to move production from WV to India.Who can afford $15 per hour wages nowadays ?
WV is pretty sad place,anyway.Still remember one road sign there “What is cooking in your neighborhood ? If it is meth call 1-800-….”
But the mountains are beautiful.
15 $ to indian rupees is something like 15*70 which is likes 1000 rupees an hour. So, the employee in India will take home around 8000 rupees home everyday. Unless, of course his jobs are shipped to Vietnam where the money is cheaper…
=the employee in India will take home around 8000 rupees home everyday=
???
I looked up wages & salaries at Sun Pharma,the largest Indian generic drug maker,at Glassdoor.
Lets quote a guy right in the middle: “research scientist”
and disregard outliers like lowly assembly worker and plant manager.
510,000 Indian Rupee=$6,845.87 US
PER YEAR !!!
The manipulation of international exchange rates by the US financial elite, such as the Fed positioning itself as the “world’s lender of last resort” and the government creating the petrodollar, have slowly but surely made any STEM career in the US a very risky proposition. When you can hire Indian research scientists for $7000 a year, and the US has now established that “working from home” is a new norm, then any STEM worker who is not required to be physically present at the worksite is going to be replaced. The military contractors might end up as the only large employers of US citizen STEM workers quite soon.
The real kick in the ass will happen in five to ten years, after the dollar collapses down to a more sane level. There just won’t be anybody left in the STEM professions because all of those jobs were outsourced overseas, and no US citizen students wanted to get degrees for professions that no longer employed US citizens. Once your seed corn has been eaten, you can’t plant a new crop.
1) Workers : Households v Establishment : 19 dots ago, workers nirvana, “Trump Peak”.
2) Dot 19/18 : a dived from cliff. Dot 18/17 workers hunt, but Mnuchin escaped.
3) The speed : after 17 dots workers are still below < dot 18 (the second from the top).
4) June 2021 is a dead cat bounce. It might last another month or two. Workers are sick & tired of the gov, after resting too much.
5) Worker #9 was five month ago.
6) Warning : TY (US10Y Futures, price) might inflate to a new all time high.
7) Mfg : the 2020 low is a failed spring. It failed to make a new all time high.
8) Wolf : clean/clear charts.
9) Thanks, Wolf.
Thanks Wolf! Awesome article. I do wonder if lockdowns are possibly implemented to mitigate the economy from tanking to much.
Gabby Cat,
No, on three levels:
1. No, the economy isn’t tanking.
2. No no one is talking about lockdowns.
3. Lockdowns in the past weren’t implemented to “mitigate the economy from tanking” but to slow the flow of dead bodies from ICUs to morgues, if you haven’t figured this out yet after 17 months of not trying.
People who aren’t vaccinated might face some problems, but vaccinations are free and available everywhere, and most people above 12 can get them, so it’s up to them to decide and deal with the consequences. The rest of the people aren’t going to worry about that. And masks are not preventing anyone from spending money.
We are seeing news articles in Ohio that lockdowns are being implemented again. The organization my husband works for implemented mask mandates for everyone. The organization I work for is back to the work from home 100% due to the Delta variant. I find it interesting that the mandates are in effect starting 8/10. I find all of the lockdown news pushes the FED Reserve news out of the feed. One has to go looking for FED news to find it. That is why I check Wolf Street daily. All the other MSM/alternative news is fear mongering. You are not and it is appreciated. My Dad taught me to follow the $ to see what the true intentions of the American Government. I hear the FED is grumbling and thinking of tapering and now we have possible Delta lockdowns (at least in Ohio). Can we assume the same measures to be implemented financially by the government as before? If so, I argue that lockdowns maybe a way for the government to control the Fed to an extent. Possibly at the Central Banks instruction. Is this possible?
Mask suggestions/requirements when indoors is NOT a lockdown. This comparison is just nuts.
And extending working from home is what lots of people want anyway. This is a new trend, and lots of people love it. A majority of people would take a pay cut to be able to work from home. That’s not a lockdown either when a company decides to continue or restart working from home.
Here is something from your state, Aug 5 — and there is nothing about a lockdwons, but lots about getting vaccinated and wearing masks, and if you refuse to get vaccinated, to social distance:
“The delta variant is extremely contagious and our cases are increasing,” said Columbus Health Commissioner Dr. Mysheika Roberts. “The best way to protect yourself and your loved ones from hospitalization and death from COVID-19 is to get vaccinated. And wearing a mask is another layer of prevention that will help protect yourself and others.”
“We know that masking works to slow the spread of COVID-19,” said Franklin County Health Commissioner Joe Mazzola. “By masking up again we can break this substantial transmission rate, save lives and help our schools and businesses continue to stay open.“
“Individual New Albany businesses may choose to have their patrons wear masks. However, any mask requirement will be at the sole discretion of the business ownership and will not be mandated by the City of New Albany.
“State Health Director Stephanie McCloud said that anyone who is not fully vaccinated should continue to wear a mask, socially distance, avoid large gatherings, and whenever possible, be outside for activities and gatherings. Only by vaccination and following the basic precautions can we continue to lower the number of COVID-19 cases and save lives.”
Messi is unemployed. Canada soccer team won the gold. .
Interesting comments on all these recent Wolfstreet threads! While I agree in principle that we are accurately portraying the ongoing train wreck called the American Economy, most people here are missing a key element. Namely, that we are in still in the EARLY stages of the new Roaring 20’s (same as the 1920’s, after the 1918 pandemic). Remember: Bull markets end in euphoria. We haven’t begun that stage yet! Like the commenters here, most everyone I know is still pessimistic. The predicted collapse is nowhere near (and the real estate bubble is nowhere near the top either). We will have several years to go of partying like it’s 1927 again!!!
@Tony: suggest shifting your paradigm from Roaring 20’s to the Go-Go Years (1960s). Lots of economic headaches, credit acceleration and government overspending resulted in stagflationary recessions in 1969, 1972, 1976, 1980, 1982…
2020s Update: “borrow-and-spend” government is now “print-and-spend” thanks to MMT delusional thinking.
Certainly possible. And like the 70’s oil embargo, the mid-East is due for a major confrontation , particularly Iran vs. Saudi/Israel, probably initiated from Lebanon…
If most people you know are still pessimistic, you clearly don’t run in the same circles as I do.
Most people I know think the economy is “booming” and that we are almost “fully recovered.”
Well, this is from CNBC, a source that’s friendly to the Democrats:
“U.S. deficit will total $3 trillion in fiscal 2021, budget panel says” is the headline, a ‘key point’ is “As a result of multiple stimulus measures aimed at combating the pandemic’s economic impact, Congress will run a budgetary shortfall this year equivalent to 13.4% of GDP.” I’d add a URL here but I’ve learned that Wolf doesn’t like them, so type the headline into your favorite search engine instead.
It would be a huge surprise if we didn’t have a mini-boom when the federal government alone is spending such huge sums. Add in state and local governments and the huge amount of financial manipulation from the Fed, and the US is virtually certain to have one hell of a sugar high for the next year or so.
The hangover will be even more epic than the party, however.
Economics isn’t just some loop that faithfully repeats. If it were, we need only identify a prior time as being like today, and we could predict the future.
One needs to be careful comparing now (or near future) to ’29 crash. To put it simply there was a ’29 crash primarily because it was preceded by a huge bubble.
Even I talk in terms of a bubble today. Frankly, I’m scared. But today’s bubble is smaller in magnitude than the 1920s version. In fact our current crash may have occurred from approximately 2000 to 2008. Since then, on a trending basis, we’ve essentially moved back to the peak before the crash. But this is 20 years later and on a longer term basis the S&P naturally goes up. So part of re-achieving peak level is due to natural bias to the upside.
I’m still scared.
Everything I see shows that this bubble is slightly bigger than 1929. In other words we are at the 100 percentile. Fed is trying to stiff arm it off by printing $120 billion per month.
My hospital mandated the injections and lost 20% of its personel.
There’s only so much you can ask of people.
Yes, asking healthcare workers to get vaccinated is like asking them to cut off both their legs. But don’t worry. In this economy, those folks can easily find another job somewhere in some anti-vaxxer enclave, no problem. People have the right to choose. And Covid is now a preventable disease for those who choose to make it that.
BS Wolf. Have friends in the same tight spot. They have already had covid. NONE of these vaccines will
Provide them with what their immunity system is currently able to.
But they can/will reduce or do damage.
These people need to be able to say no and keep their jobs.
It really doesn’t matter what you think because many companies are making vaccinations now a requirement for employment and for coming to work because they want to protect their own people. Antivaxxers can choose between getting vaccinated and working somewhere else. It’s up to them.
Trump got covid and then when the vaccines became available he go vaccinated. The rich and powerful try to protect their own lives, that’s just logical.
I know this has been mentioned but to reiterate the fact that all this stimulus and unemployment cash raising wages has a large ancillary affect of sending more jobs overseas,
Here in Costa Rica we have over the years large investments in customer service, back officefunctions, design and manufacturing. amazon, microsoft Intel all here as well as many smaller outfits.
Particularly medical devices. Anyway just reading locally where private investment is up again even with the pandemic.
Slowly but surely all these giveaways make decisions easy to move overseas. Its too bad.
We dont have all the stimulus here so unemployment is high and many good workers are ready to work for a lot less.
“If the Fed is looking for jobs reports that will give it economic cover to begin tapering its asset purchases later this year – as many Fed governors have been saying recently – this was one.”
I think Powell is looking for every NOT TO TAPER.
He said he is keeping rates low, zero, 5% below inflation, to promote their first mandate of “maximum employment”. (curious they ignore the 2nd and 3rd mandates)
Then Powell outlined why, with record job openings, employment is still an issue…
Generous federal payouts
COVID fears
Child Care issue
Looking for better jobs
NONE of which are affected by keeping rates at these levels.
IF he wished, he could taper and point to the record openings. He does not, and that speaks volumes to me. He is delaying as much as possible. He has a 5% inflation rate and all the excuse he needs to taper,raise rates, and change policy…..he chooses not to.
“Intentional delay is often deceit”….Dietrich Bonhoeffer
This will all become blatantly obvious when the Fed eventually “limps in” with hair splitting meaningless rate hikes. 1/4pt rise in response to a 5% inflation?
Perhaps a solution to the vaccination problem should include not admitting unvaccinated people to the hospital if they become sick with covid. If their personal choice is not to have the vaccine, perhaps that choice should include not having community supported treatment if they contract serious covid disease.
Sure, as long as you don’t admit people that smoke, take drugs, have dangerous sex, drink alcohol, ride motorcycles etc.
Perhaps the unvaccinated should be stripped of the responsibility to pay federal, state and local taxes, since they are excluded from public services
By extension we should not provide hospitalization for people that:
Smoke.
Drink.
Participate in activities with elevated risk.
Furthermore, perhaps we shouldn’t provide police / judicial services to able body persons who do not learn self defense techniques and carry a gun.
Can we add people who refuse vaccines?
In Canada, we hear the same “we can’t get workers!” nonsense pedalled by industrialists and media. However, we also have a backdoor Temporary Foreign Worker Program which enables rich, crybaby leaders to import young people from Mexico, Poland, and the Phillipines etc to staff the building sites, McDonald’s restaurants, and nanny jobs, without any work safety concerns. Young Canadians are consistently diddled out of a possible work experience and career in these service industries.
Isnt it convenient that instead of raising pay, big business can lobby government to change supply and demand when its not in their favor?
Simple fix….STOP PAYNG PEOPLE TO STAY HOME!!!!!
No such thing as a shortage, only supply and demand of labor do not meet at current prices.
Economy desperately needs Wage Inflation after DECADES of wage suppression from offhoring, guest workers etc.
Time to reward hard work again!
Wolf – for those low wage workers that received both State and Federal benefits that were paying more than they would typically make per week:
1) Will they have to pay income tax on that (state and fed)?
2) how much more did they make – $10K or more?
3) do these people realize they have to pay taxes on these amounts next April?
4) will they be tax slaves when they do their taxes and realize they own ALOT of money to Uncle Sam?
I am just worried that these folks won’t have the money to pay if they were bumped up to another tax bracket with a giant tax bill next year.
pieter,
Normally, unemployment benefits are taxable, but most people who receive the state benefits (which are low) are not in a high-income category, and so pay little or no income taxes when they get laid off and get UI. The extra federal benefits (currently $300 a week) changed that. I seem to remember that there were provisions in one of the Pandemic Acts that alleviated the taxation of unemployment benefits, not sure. Maybe someone here can chime in to confirm. You can also probably google it.
Remember that the standard deduction = $12,550 and twice that for a couple, and more if there are kids. And there are other deductions and credits they can take. That is why most lower-income households pay no income taxes (though they pay all sorts of other taxes). Anything that is taxable income above that, is taxed at 10% initially. So if a couple with $30,000 in gross income ends up with a taxable income of $2,000, they’d pay $200 in income tax for the year.
A study last year determined that about 65% of the people on Pandemic UI made more than they’d made in their prior jobs. Some made twice as much. The study probably doesn’t apply now since the scenario has changed.
It depends on the state too. Someone on state UI gets whatever that state pays plus an additional $1,200 a month in federal top-off benefits. In California, where the maximum UI per week = $450, the monthly maximum, including the federal top-off benefits, would come to about $3,000. And it comes with basic free healthcare benefits and some other benefits. If you have stopped paying rent due to the eviction moratorium, it’s a sweet deal.