The Little Voice


I couldn’t resist throwing at least a little cold water on the good jobs report. My fundamental position is that time will tell and one good jobs report doth not a trend make. While I rejoice in the good jobs report I think we need to consider it more closely.

I’ve already mentioned my first cavil: we’ll need to see jobs reports like last month’s for a good two years before we reach the previous jobs peak. How likely is that to happen?

According to the NBER, the official scorekeepers on recessions, roughly 84 months have elapsed since the last peak in the economy. In the post-war period only three business cycles have seen expansions longer than that: the expansion that began in 1961, the expansion that began in 1982 (the Reagan boom), and the expansion that began in 1991 (the dot-com boom). Does this feel like any of those periods to you? Me, neither.

Average post-war duration from trough to peak has been 54 months.

Also, consider the graph at the top of this post. It depicts oil prices from 2000 to the present. The current spot price is below $71 per barrel. There is a non-conformist theory of the Great Recession that says that buying houses you couldn’t afford, credit default swaps, and so on were all sideshows and the real cause of the Great Recession was a rapid increase in the price of oil. The Saudis won’t keep the taps open forever. Even if they wanted to they can’t.

There is a folk tale, made popular in the movie Patton, that in an official Roman victory celebration, something only granted by the Senate to the greatest victor or vir triumphalis, the victor paraded through Rome in a chariot but stationed behind the vir was a public slave who whispered in his ear, “You are not a god.” That’s the little voice I’m referring to in the title of this post.

Or, as Han Solo put it, “Great kid. Don’t get cocky.”

12 comments… add one
  • Guarneri Link

    I’m not familiar with the oil theory of the collapse, but have a much more straightforward view of the jobs report.

    1. Yes, we need more evidence. Some of the precursor indicators are going limp, especially that teller of truth: inventory accumulation.

    2. Job quality matters, something it was disappointed to see Doug at OTB gloss over. Question: two guys come up to you and report they have each found bags of money, 5000 pieces of paper, bills, in each bag. One says all 5000 are one dollar bills. The other says his are all hundreds. Which bag would you prefer to have?

    They don’t get that over there. Lots of part time and clerk type jobs in that report. Don’t aggregate incomes to be reported as robust.

  • Holiday retail sales are troubling, too. A phlegmatic holiday season would really shoot holes in the “gaining steam” narrative.

  • steve Link

    We haven’t had quality job production in ages, hence the inequality issue. We haven’t had rapid growth w/o a bubble (Clinton) or massive public debt (Reagan) in ages. I am not expecting it now either.


  • ... Link

    Doesn’t even matter if it is a trend. Millions of us had the guts ripped out of our working careers for years at a time, and we will never recover. I’m going to die poorer than my mother did by a long shot, despite everything I learned along the way.

    But, the Dems and the Reps choose to bail out bankers and illegal immigrants, and told the rest of us to fuck off. So who cares about another chance for Barry (currently in his own private hospital for a sore throat, the poor baby) to congratulate himself about what an awesome job he did ?

  • Guarneri Link
  • ... Link

    That’s like the lament, “If we just had the right anti-gun laws….”

  • ... Link

    But I’m sure TOP MEN are on the problem as we speak.

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