Mish's Global Economic Trend Analysis

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• Mish on Capital Account: Jobs, Real Wages, Income Distribution, Fiscal Stimulus
• Law of the Funnel
• Spain Still Has 60,000 More Public Employees Than in 2007
• Global Manufacturing Contracts 5th Consecutive Month

Mish on Capital Account: Jobs, Real Wages, Income Distribution, Fiscal Stimulus Posted: 03 Nov 2012 03:13 PM PDT On Friday, I once again had the pleasure of being on Capital Account, live television with Lauren Lyster. I believe you can pick up the show on Comcast but it is not available on ATT U-verse, at least in my area. We discussed the latest jobs report, real wages, Keynesian stimulus, income distribution, taxes, and other topics. I come in at about the 3:00 mark, but the first few minutes of Lauren are entertaining as usual. Link if video does not play: What Happens When Jobs Rise But Leave Wages And Living Standards Behind? Here are a couple of charts from my Friday Jobs report (see Nonfarm Payrolls +171,000, Unemployment Rate 7.9%; Good All Around Numbers), that we discussed in the video. Index of Aggregate Weekly Hours The index of aggregate hours paints a good picture of the stall in the recovery. Employment is up, but hours are not up proportionally. This reflects the trend to part-time workers and the reduction of hours in part-time workers. Average Hourly Earnings vs. CPI Average hourly earnings has been falling for years and lagging CPI inflation since September 2009. Simply put real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly. Income and Wealth Distribution We also discussed income and wealth distribution and what causes the inequity. In case you missed it, please check out my detailed description in What's "Really" Behind Gross Inequalities In Income Distribution? I had a fun time on Capital Account as usual, and will be back on the first Friday of every month to discuss jobs. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Law of the Funnel Posted: 03 Nov 2012 01:01 PM PDT I received an interesting email from Hugo Salinas Price in response to Reflections on "Moral Choice" and the Definition of "Temporary" Hugo writes ... Hi Mish! Thanks again, for the mention! It's odd that only those who are to pay, have to make a "moral choice". In Mexico, we call this "La Ley del Embudo" ("The Law of the Funnel"): at the wide top end the 99% contribute, at the bottom narrow outlet the 1% collect. I think many good teachers would make the right moral choices, but as the California law now stands, they are actually prevented from making any choice, since their money is taken from them and they have no say in how it is to be used. Used to be that great teachers - I had one, God bless him - taught because they loved to teach children, and lived very modestly indeed. Best wishes Hugo Law of the funnel certainly describes the economic results we see. Here are links to Hugo's two most recent articles. Reflections on the effects of War as compared to the effects of Fiat Money The house has burnt down The first link above is on fiat money vs. gold, and the second is about the crisis in Europe. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Spain Still Has 60,000 More Public Employees Than in 2007 Posted: 03 Nov 2012 09:46 AM PDT Spain is finally shedding some public workers, but the total is still substantially above the number employed at the peak of Spain's property bubble. Via Google translate from Libre Mercado please consider Spain Has 60,000 More Public Employees Than in 2007 The Labour Force Survey (LFS) for the third quarter confirmed the trend that has been recorded in recent months in terms of job losses in the public sector. Specifically, the number of employed fell by 96,000 from the second quarter, reaching a total of 17.32 million, the lowest level since 2003. However, what is important is that nearly half of job destruction is concentrated in the public sector: 49,400 jobs, of which 19,600 were permanent and 29,800 temporary workers. Also focused on trimming the regional administration, with a reduction of 44,300 workers in the third quarter The number of public employees in September stood at a total of 2.99 million, thus lowering the threshold of 3 million for the first time since the third quarter of 2008. Nevertheless, the Spanish public sector still has to this day with more than 59,800 employees at the beginning of the crisis, as in the third quarter of 2007 they numbered 2,931,900 workers. The reason is the substantial increase in contracts that government made during the crisis. Thus, despite the financial meltdown, the subsequent recession and the increasing deficit, politicians, far from adopting the necessary austerity, fired their workforces over the past few years. While in late 2007 Spain had about 2.9 million public employees, in the third quarter of 2011 the volume amounted to 3.22 million, a record of history. That is, public sector workers increased by 350,000 in crisis: some 45,000 in central government, another 45,000 in the Local and nearly 250,000 in the CCAA. These excesses corrected only started late last year. Since the third quarter of 2011 to third in 2012, the public sector has slimmed its workforce by nearly 230,000 people, but remains above the figure recorded at the beginning of the crisis in the bubble peak. And indeed, this setting has accelerated in recent months: the Spanish economy has destroyed 836,000 jobs in the last year, of which almost a third are concentrated in the public sector, but in the last three months, half the work proceeds and destruction of government. Spain needs to shed a lot more public workers instead of hiking taxes. The latter strategy backfired already. For details, please see Retail Sales in Spain Plunge 10.9%, Largest Drop on Record; All Pain, No Gain. Should Spain further reduce public workers, here is the critical question: will those workers revolt? The popularity of prime minister Mariano Rajoy is low and sinking fast, and a number of regions in the country are threatening secession, so his hands are more than full already. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Global Manufacturing Contracts 5th Consecutive Month Posted: 03 Nov 2012 01:02 AM PDT Markit reports Global manufacturing contracts for fifth consecutive month The downturn in the global manufacturing sector moderated in October. The JPMorgan Global Manufacturing PMI™ – a composite index produced by JPMorgan and Markit in association with ISM and IFPSM – rose for the second month running to reach 49.2, its highest reading during the current five-month period of contraction. The sector continued to report declining volumes of production and new orders, although rates of contraction were slower than in the previous month. Signs of excess capacity were present in the global manufacturing sector during October. This was highlighted by a further marked reduction in backlogs of work, which fell for the seventeenth successive month and at the joint-fastest rate during that period. Global PMI Manufacturing is leading this global decline. Retail and services will follow. I have very little to add here other than a note that this certainly was not unexpected in this corner. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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