The weekly leading indicator sets remain in uptrends but have been a little more volatile
because of comparatively wide swings in initial unemployment insurance claims. Low
jobs growth in Dec. might reflect severe weather, but I note that jobless claims did move
up over the Sep. - Dec. period of 2013. The monthly leading indicator was nicked in Dec.
reflecting weak new orders for commercial services but overall new order performance has
been running at nicely elevated levels since mid - 2013.
The weekly coincident economic indicator is also showing ok yr/yr progress after a slow
period over mid - year.
This remains a droopy area with slow wage growth and civilian employment growth of
only 1% yr/yr. The stronger indicator performance for sales and production along with
rising capacity utilization have yet to translate into faster jobs or wage growth when
measured on a 12 month basis. The lack of output / income balance remains a disturbing
factor in the outlook.
Using conservative assumptions regarding employment growth, it appears that total
civilian employment is running about 12 million below the level suggested by the long
term trend. That is a 7.5% shortfall and translates into a huge loss of taxable income.
Despite higher operating rates, employment growth and an upturn in private sector credit
demand, there is still ample slack in the US economic system even after four years of
recovery. This translates into substantial room to grow and the economy would perform
much better with a stronger job market and a far better balance in compensation levels.
It is hard to envision an economy with a falling real wage for the rank and file humming
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!