Good for stocks and bonds,

Not so good for people, apart from the lower gasoline prices.

Karim writes:

June Employment Data (U.S. and Canada)

  • Headline payroll growth of 80k in line with other Q2 employment readings and a clear loss of momentum in job gains from Q1.
  • The report was a positive from a personal income standpoint, however, as the components of the income equation, Hourly Earnings (+0.3%) and Aggregate Hours (0.4%) were both strong.
  • The hours data in particular suggests demand was running at reasonable levels but forward uncertainty may have restrained hiring.
  • Weather related sectors did bounce back: Net change in construction of +33k in particular. There may have been some seasonal issues in education as that sector had a net change of -55k.
  • Other key metrics were generally stable: The unemployment rate was unchanged at 8.2%, the labor force participation rate was unchanged, the median duration of unemployment fell from 20.1 weeks to 19.8 weeks, and the Diffusion Index dropped from 59.8 to 57.9
  • This is the last payroll number before the next Fed meeting. In what should be a close call, Twist 2 will likely be maintained.


  • Very modest growth in employment in June (7.3k). Equivalent to about 75k in the U.S., population-adjusted.
  • Y/Y growth in Canadian employment is exactly 1%. Combined with modest productivity growth, current GDP trends appear similar to the U.S., about 1.5-2.0%.

13 Responses

  1. Warren – did you see the FT piece “Regulator looked at lifting liquidity rules”?

    The article says the new UK regulator (the “Financial Policy Committee”) is considering reducing banks’ requirement for holding liquid assets in order to spur lending; but at the same time, it wants banks to build up a larger capital buffer.


      1. @WARREN MOSLER,

        You’re hitting the bulls eye Warren.

        Whole industries, large bureaucracies, national administrations and even electorates may easily become clueless about context, and hence incompetent.
        No one with any influence understands anything?

        What good is processing power if situational awareness fails to meet the requirements of a string of situations? “Hey buddy, can you spare a paradigm?”

        Engineers call it “loss of control”; biologists call it mal-adaptive; criminologists call it innocent fraud; politicians call it success … etc, etc,

        Meanwhile, Joe/Jane Sixpack wake up in the gutter one too many times, slowly realize that their mirrors show no clothes, and that the inmates are running the asylum.

        So. What’s the solution? Automated 2x4s to get the attention of large mule teams? Bankers Anonymous? a 12-step recovery program? (but first, they have to WANT to be helped;)

        Cut ’em off cold turkey?
        The methacondone program didn’t work 🙂

  2. Many in the one percent must be ecstatic to learn that inflation for 2012 is expected to come in below the Fed’s 2% target.

    They own Congress and it’s an election year, so I don’t expect much stimulus over the next six months. Why would they want to mess with inflation below 2%? They’re loving the current state of the economy!

      1. @Tyler Healey,

        Haven’t had a chance to read the article yet, but do you realize that at 2% inflation, the dollar loses 17% of it’s value in just 10 years. Some people, I for one, have a problem with that. How useful would a 12 inch ruler be if it lost an eighth of an inch per year or more?

      2. maybe we shouldn’t allow bushels per acre to grow- how useful would a 12 inch ruler be that gets longer each year?

        you’re mixing your metaphors.

        the dollar is a tool to provision govt, not a unit of measure

      3. @Tyler Healey,

        Ed, first 2% a year is a fiftieth per year not an eighth. Secondly who without interest for ten years. Savings are put out at compound interest and yields, benchmarked to the interest rate set by the Fed, are priced to offset expected inflation. Moreover, expected inflation is compensated for in virtually all economic activity. It’s not like inflation is a “silent killer” of wealth, comparable to undiagnosed hypertension as a silent killer of humans, for example.

        Anyway, the “inflation rate” is not an observable. Is is an index that depends on selectivity, so it is controversial. This makes the claim of economics to be an empirical science controversial, since the real is a function of the nominal and the deflator is largely subjective. MMT economists prefer to look at unemployment, which is more observable even though an aggregate.

  3. Warren: “Not so good for people, apart from the lower gasoline prices.”

    And those lower prices may be signaling weakening demand due to contraction?

    1. US demand for gasoline is down 4% year over year

      but net global demand for crude remains at the highs with saudis selling 10 million bpd at their posted prices.

      and they just widened the spreads they post vs other grades, which could mean they are now in price hike mode.

  4. Actually might have been the worst case scenario for stocks…. weak enough to show a deteriorating economy but not bad enough to result in a QE3 for the sugar junkie market. Stocks sure didn’t like it today.

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