Thursday, September 5, 2013

Today's Links

1---US manufacturing renaissance? Announced layoffs jumped to 50,462 in August, Testosterone Pit
..., the highest level since February, up 33.8% from July, and up 57% from August last year, sez the Challenger report. After a strong spring followed by three months in a row of layoff announcements that exceeded those for the same months last year, they have now reached 347,095 year to date, essentially flat with last year. Hardest hit was manufacturing, where a huge 22,162 layoffs were announced in August – compared to 26,103 in all of 2012! The record? January 2009, when 32,083 layoffs were announced. August manufacturing layoffs were the highest for any industry category in 2013. Something is brewing in manufacturing, and it isn’t good.

(and this)  Japan – inflation without compensation: Prices have been going up in Japan. Latest detail: retail gasoline price, at ¥160.7 per liter on average nationwide, has hit the highest level in 58 months, sez the Agency for Natural Resources and Energy. But... with declining demand for gasoline after the Bon summer holiday in mid-August, prices normally drift lower in the fall. Not this year. The impact of having to buy imported products with a devalued yen is worming its way bit by bit into everyday prices. It’s tough for consumers: this and a myriad of other price increases come as nominal wages continue to decline though summer bonuses had been a tad higher, and they made July the second month in a row when total compensation, including bonuses, was actually higher, after some steep wage decreases earlier in the year. But even that glorious July increase in total compensation of 0.4% year over year, ephemeral is it may turn out to be, is below the rate of inflation which in July was 0.7%, and rising rapidly. So, in its methodical manner, Abenomics is forcing Japanese workers – not the elite that is pocketing the Bank of Japan’s flood of money – to tighten their belts.

2---Watered-Down Mortgage Rules Probably Won't Prevent Another Crisis, motley fool

Last week, a conglomeration of federal agencies unveiled the newest set of proposals regulating the mortgage industry. A newer, shinier version of those put forth in 2011, the rules are meant to rein in risky lending by, among other things, requiring banks to hold on their books 5% of the mortgages they securitize and sell.

This sounds like a dandy idea -- and it is. The problem is, these rules were a lot stricter two years ago. Since that time, the regulations have been weakened and likely won't cut the mustard when it comes down to protecting the economy from another mortgage meltdown.

3--August Sees Decline in Consumer Sentiment , DS News

4---Retirement American Armageddon Style, economic populist

We have a new dimension in the great race to income inequality in the United States, retirement funds.  The Economic Policy Institute has a new graph-o-rama analyzing retirement today.  The thing that's bothersomeis we am fairly certain most people have no retirement at all beyond social security.  Suspect EPI's estimates on retirement funds are conservative and the approaching maelstrom for the last of the baby boomers and younger is whipping up into a frenzy over the horizon.
Retirement insecurity has worsened for most Americans as retirement wealth has become more unequal. For many groups, the typical household has no savings in retirement accounts and balances are low even when focusing only on households with savings. Retirement savings are characterized by large differences between mean and median values because mean savings are skewed by large balances at the top.

5---Strongest Initial Claims Data Since Before Crash Gives Fed Excuse To Taper, Wall Street Examiner

Taper Time!

6--Home values rise, but millions still drown in debt, CNBC

7---Wage led growth, stumbling and mumbling

You can see that, for most of the last 50 years we have indeed had wage-led growth; the coefficient has been negative. In most five-year periods, lower profit shares did lead to better growth and higher profit shares to lower ones. And this has been true in recent years - including before the crisis - which vindicates Stewart Lansley:
In both the UK and the US, booming profits have been associated with falling investment. This is because the sustained squeeze on wages has created a number of highly damaging economic distortions. It has sucked out demand, encouraged debt-fuelled consumption and raised economic risk.
However, wage-led growth is not assured
 
The results of Japan's Provisional Report of Monthly Labour Survey for July 2013 are now available. The Wall Street Journal calls the wage data "not all that gloomy," citing the fact that nominal earnings are up 0.4%. According to the article,
"That’s good news for Prime Minister Shinzo Abe as he has made wage growth a key measure of success for Abenomics, which seeks to lift Japan out of 15 years of deflation. While the aggressive monetary easing and government spending measures have pushed up production as well as prices, Mr. Abe has acknowledged that without substantial wage growth, there can be no sustainable economic expansion
 
The total real wage is down 0.4% from the same month a year ago. On a seasonally-adjusted basis, the number of regular employees has neither increased nor decreased. If any readers are adept at interpreting this survey data, please chime in with any insights I have missed.

I believe my earlier post--"What Does Abenomics Feel Like?"-- is still quite relevant.
 
9---What Does Abenomics Feel Like? , carola Binder
 
When asked, in the abstract, about the "growth potential" of the Japanese economy, responses are less pessimistic than in previous quarters.  But when asked about their own household's experience, the situation still looks pretty bleak. In one question, respondents are asked, "What do you think of your household circumstances compared with one year ago?" Only 4.9% say they are better off, while 39.2% say they are worse off, and the rest say it is difficult to tell. While not great, these numbers are a minor improvement over a year prior, when only 3.6% said they were better off and 47% said they were worse off. Of the households who reported worse circumstances, 73% said a reason was that their income decreased and 42% said a reason was that their income was not likely to increase in the future (they could choose multiple options).

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