Post by unlawflcombatnt on Jun 2, 2006 13:39:01 GMT -6
The last 2 days' economic calendar have provided strong and consistent evidence that the economy is slowing markedly. As usual, the government overestimated almost every category prior to the release of the actual numbers. The preliminary estimate for Construction Spending had been for an increase of 0.6%. Instead, Construction Spending declined 0.1%. Furthermore, there were downward revisions to the previous month's numbers as well. Private Construction for March was revised downward from an increase of 1.1% to only 0.9%. February's Private Construction was revised downward from an increase of 1.2% to only 0.7%.
Residential Construction declined 1.1% for April (or a change of -1.1%) This is not surprising considering the rapidly declining sales rates of new homes over the last several months. March's original Residential Construction figure was revised downward from an increase of 1.6% down to only a 1.0% increase. February's Residential Construction number was also downwardly revised from the original 1.3% increase to only a 0.6% increase.
Below is a chart showing both the revisions to Construction Spending (revisions that took place in less than 24 hours) as well as the revisions to the NonFarm Payroll Employment numbers.
Friday's Payroll Employment Report was also much worse than expected. As can be seen from the chart above, NonFarm payrolls increased only 75K, not 170K has had been predicted the previous evening. (In this case, the revisions took place in less than 12 hours prior to the release of the "actual" numbers.) Again, previous months' numbers were also revised downward. April's Nonfarm Payroll Employment increase was revised from the original 138K down to 126K. March's overestimate of 200K was revised downward to 175 K. Over the last 3 months, this puts the monthly average employment increase at 125,000. The general consensus is that we need to created 150,000 jobs per month to keep pace with labor force growth.So the current numbers indicate that 75,000 jobs less have been created than necessary to keep up with labor force growth. Below is a bar graph from Briefing.com showing the declining employment growth.
Given that the growth of labor "supply" has been greater than the growth in labor "demand," it might be expected that the "price" of labor (or wages) would decline. In fact, that's exactly what has happened. Real wages (inflation-adjusted wages) declined 0.2% from February through April. May's nominal hourly wage increase of only 0.1% probably represents a net decline in "real" wages as the increase in inflation will probably be much larger.
Factory Orders also declined 1.8% (or for a change of -1.8%.)
In summary, the last 2 days' economic reports provide considerable evidence that our economy is on the decline, despite what some of the supply-side maniacs, like Larry "I-lost-my-straitjacket" Kudlow might proclaim. Construction spending is declining. Residential Construction, which has provided over 40% of the new jobs created under the Bush dictatorship, is also declining. Employment growth is not keeping up with labor force growth, causing downward pressure on wages. The decline in real wages is putting downward pressure on consumer spending and production demand, putting still further downward pressure on demand for workers to provide production. To put it differently, as aggregate worker/consumer income stagnates, so does the production demand provided by consumer spending. And so does the demand for workers to provide that production.
The decline in factory orders was completely predictable, due to the decline in real consumer income to purchase factory goods. Does this sound like an economy that is "strong, and getting stronger," as Der Fuehrer so bone-headedly claims?
Residential Construction declined 1.1% for April (or a change of -1.1%) This is not surprising considering the rapidly declining sales rates of new homes over the last several months. March's original Residential Construction figure was revised downward from an increase of 1.6% down to only a 1.0% increase. February's Residential Construction number was also downwardly revised from the original 1.3% increase to only a 0.6% increase.
Below is a chart showing both the revisions to Construction Spending (revisions that took place in less than 24 hours) as well as the revisions to the NonFarm Payroll Employment numbers.
Friday's Payroll Employment Report was also much worse than expected. As can be seen from the chart above, NonFarm payrolls increased only 75K, not 170K has had been predicted the previous evening. (In this case, the revisions took place in less than 12 hours prior to the release of the "actual" numbers.) Again, previous months' numbers were also revised downward. April's Nonfarm Payroll Employment increase was revised from the original 138K down to 126K. March's overestimate of 200K was revised downward to 175 K. Over the last 3 months, this puts the monthly average employment increase at 125,000. The general consensus is that we need to created 150,000 jobs per month to keep pace with labor force growth.So the current numbers indicate that 75,000 jobs less have been created than necessary to keep up with labor force growth. Below is a bar graph from Briefing.com showing the declining employment growth.
Given that the growth of labor "supply" has been greater than the growth in labor "demand," it might be expected that the "price" of labor (or wages) would decline. In fact, that's exactly what has happened. Real wages (inflation-adjusted wages) declined 0.2% from February through April. May's nominal hourly wage increase of only 0.1% probably represents a net decline in "real" wages as the increase in inflation will probably be much larger.
Factory Orders also declined 1.8% (or for a change of -1.8%.)
In summary, the last 2 days' economic reports provide considerable evidence that our economy is on the decline, despite what some of the supply-side maniacs, like Larry "I-lost-my-straitjacket" Kudlow might proclaim. Construction spending is declining. Residential Construction, which has provided over 40% of the new jobs created under the Bush dictatorship, is also declining. Employment growth is not keeping up with labor force growth, causing downward pressure on wages. The decline in real wages is putting downward pressure on consumer spending and production demand, putting still further downward pressure on demand for workers to provide production. To put it differently, as aggregate worker/consumer income stagnates, so does the production demand provided by consumer spending. And so does the demand for workers to provide that production.
The decline in factory orders was completely predictable, due to the decline in real consumer income to purchase factory goods. Does this sound like an economy that is "strong, and getting stronger," as Der Fuehrer so bone-headedly claims?