Morning Report: Job openings at a record 9/9/15

Stocks are higher this morning on overseas strength in equity markets led by Japan. Bonds and MBS are down.

Mortgage Applications fell 6.2% last week, with purchases falling 0.9% and refis falling 9.9%.

Job openings hit a record in July, with the JOLTS job openings hitting 5.7 million. Compare that number with the number of unemployed at 8 million. The quits rate (which is a measure of economic strength) has been unchanged for the past year however at between 2.7 million and 2.8 million. It seems surprising to see a labor force participation rate at 38 year lows, job openings at highs, an unemployment rate at boom time levels, and almost  no real wage growth. It speaks to a mismatch between what business wants and who is available.

Chart: JOLTS job openings:

Citi is forecasting a better than 50% chance of a global recession in the next couple of years. This will be led by emerging markets and China. While that doesn’t necessarily mean the US will head into a recession, it does mean that there will be little to no upward pressure on interest rates. The biggest risk to the US is a sharp increase in the US dollar, which will hurt exporters. The policy response to a recession will be limited – monetary policy is already at pretty much full stimulus. Much more worrisome however, is the fact that protectionist policies are gaining in popularity.

Homebuilder Hovnanian reported earnings this morning. Deliveries fell 3.8% compared with last year. Gross margins were down as well. Contracts did expand however, to almost 20%. It seems like the builders in general had a bit of a lull in deliveries over the summer, but almost all reported bit increases in contracts and backlog. We are entering the slow season for the builders, which lasts about as long as football season. While I sometimes feel like Linus in the pumpkin patch, 2016 could be a big year for the builders. Would be nice to get housing starts back around historical levels of 1.5 million or so.

Larry Summers is out with another editorial which lays out the case for keeping rates at zero. His argument is that credit spreads have widened (which means the interest rate companies have to pay to borrow) has increased over the past month and that in of itself constitutes a tightening. David Stockman (Reagan’s budget director) was on Bloomberg Radio this morning excoriating the “clowns at the Fed” for not having raised rates already. His point is that the unemployment rate is in the middle of the range of what the Fed considers full employment. In fact, the 5.1% unemployment rate is in the bottom quintile of unemployment rates over the past 40 years.

46 Responses

  1. Having just gone through Labor Day, there were plenty of think pieces about the effects of raising the minimum wage. One newsletter sees it as a business booster.

    http://www.centralfloridafuture.com/story/opinion/2015/09/04/higher-minimum-wage-lead-robust-economy/71706756/

    A restauranteur in the Miami Herald takes the other tack:

    http://www.miamiherald.com/opinion/op-ed/article34269492.html

    Would restaurants not be rolling out kiosk ordering systems if the minimum wage were lower?

    Like

    • Thinking that forcing someone to pay more for something than it is actually worth could possibly lead to economic growth is like thinking that putting a tooth under your pillow at night can turn it into a silver dollar.

      Like

  2. If raising the minimum wage is so great for the economy, who do all of its proponents propose to phase it in over a period of years? Wouldn’t you want to increase it right away? The fact that the proponents of a min wage hike want to phase it in shows that they don’t really believe the positive business effects argument either.

    While the shift to technology is probably going to happen anyway, increasing the minimum wage above market simply makes the transition more attractive and accelerates the move.

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  3. Yello, what’s the maximum minimum wage you’d be comfortable with, and why?

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    • Twenty bucks an hour with mandatory sick leave accruing on a percentage of worked hours and 80% of individual health care coverage. That IMHO is a livable wage. Exceptions for training (not to exceed six months) and minors.

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      • yello:

        Twenty bucks an hour with mandatory sick leave accruing on a percentage of worked hours and 80% of individual health care coverage. That IMHO is a livable wage…

        With variable costs of living depending on where one lives, it makes no sense whatsoever to talk about a single “livable wage”, even if the concept itself made any sense in the first place. A “livable wage” in Augusta, GA is not the same as it is in New York City.

        And, of course, $10/hour is certain more livable than $0/hour, which is what many workers will end up with as a result of any minimum wage that is higher than the market itself would bear without one.

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  4. Brent: Thomas Edsall nicely telegraphs the left’s ultimate response to the failure of previous integration/desegregation initiatives: prevention of new houses being built to block white flight.

    ““Our highly dispersed and profoundly unequal distribution of housing is not inevitable,” Jargowsky of the Century Foundation writes. He argues that there are two major changes “that need to occur,” both “simple to state, but hard to bring about.”

    “First, the federal and state governments must begin to control suburban development,” Jargowsky argues, in order to prevent excessive construction that leads to accelerated abandonment of existing housing:

    New housing construction must be roughly in line with metropolitan population growth. Second, every city and town in a metropolitan area should be required to ensure that the new housing built reflects the income distribution of the metropolitan area as a whole.”

    http://www.nytimes.com/2015/09/09/opinion/whose-neighborhood-is-it.html?ref=opinion

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  5. There’s also the matter of the level of welfare for the people who are unemployable at $20 per hour.

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  6. The left has never gotten over Milliken… Hopefully HUD gets reined in with a new administration that does not view every single issue through the prism of race.

    This is just do-gooder social engineering that will help nobody and anger just about everyone.

    Forcibly integrating suburbs along racial / socioeconomic lines is simply not a valid role of government.

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  7. This is the time on [ATiM] when we say “Somalia!”

    Touch my monkey!

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  8. “Would restaurants not be rolling out kiosk ordering systems if the minimum wage were lower?”

    I used one at Panera somewhere in NC on 95 last week. they offered a free cookie if you used it.

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  9. Krugman on Jeb!’s tax proposal:

    I can’t help noticing that Jeb Bush has now come out with the highly original proposal that we give rich people and corporations big tax cuts. A different kind of Republican! And he’s hoping to “jump-start his campaign” by winning the endorsement of … Stephen Moore, Larry Kudlow, and Steve Forbes.
    {snip}
    Endorsements from the supply-siders may matter for big-money donations, but Jeb! already has plenty of those, and his hundred million is doing him no good at all.

    Truly, this is pathetic.

    Scratch Krugman from the short list for Bush III’s council of economic advisors.

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  10. He’s always been a Reagan man.

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  11. Someone needs to tell Dr. Cowbell and the rest of the left that we cut taxes for everyone, not just the rich.

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  12. “I can’t help noticing that Jeb Bush has now come out with the highly original proposal”

    As opposed to his highly original proposals to just increase government spending.

    There’s a reason he’s called Dr. Cowbell.

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  13. Speaking of Kruman, he’s directly taking on NoVA, or at least his Snidely Whiplash avatar:
    http://krugman.blogs.nytimes.com/2015/09/07/affinity-and-inflation/?smid=tw-nytimeskrugman&smtyp=cur

    Like

  14. they offered a free cookie if you used it.

    I would have expected you to hold out for more than just a cookie, NoVA! 🙂

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  15. Shorter Krugman. Those who disagree with current monetary policy are racist.

    He would fit right in on the PL comment boards..

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  16. I would have expected you to hold out for more than just a cookie, NoVA!

    He did for the warm feeling that he is helping destroy the service economy.

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    • yello:

      He did for the warm feeling that he is helping destroy the service economy.

      That would be the minimum wage doing that.

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  17. That was a good story today about your signed red line NoVA.

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    • Mark:

      Since you are unwilling to address the hypothetical, can you explain to me why the imprisonment of Kim Davis was not a violation of her Title VII rights?

      Like

  18. thx, JNC

    Like

  19. Charles Pierce on Trump’s latest:

    “Donald Trump’s campaign for president is a deeply cynical, deeply dangerous exercise in democratic lassitude. It is a campaign for people who don’t give a damn. It is a campaign for a country that has abandoned citizenship for spectacle, and a campaign for citizens who’d rather be spectators. It is a campaign of brainless loogies hawked at whoever happens to be in range. The Libidinous Visitor isn’t asking the American people for anything except to give him a job and let him do all the work.”

    http://www.esquire.com/news-politics/politics/news/a37789/trump-cruz-iran-deal-rally/

    That seems to be an ideal fit for the current American electorate.

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  20. She’s an elected Democrat.

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  21. was not a violation of her Title VII rights

    (f) The term “employee” means an individual employed by an employer, except that the term “employee” shall not include any person elected to public office in any State or political subdivision of any State by the qualified voters thereof, or any person chosen by such officer to be on such officer’s personal staff, or an appointee on the policy making level or an immediate adviser with respect to the exercise of the constitutional or legal powers of the office. The exemption set forth in the preceding sentence shall not include employees subject to the civil service laws of a State government, governmental agency or political subdivision. With respect to employment in a foreign country, such term includes an individual who is a citizen of the United States.

    Like

  22. She’s an elected Democrat.

    Once Huck showed up, it doesn’t matter any more. That said, there are liberals who are worried about the optics of throwing middle aged Christian women in the slammer as well.

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  23. Like

  24. In the span of just a few years, it went from “we just want respect” to ” you will be incarcerated for not accommodating” us.

    and you wonder why i draw a line on gun rights and don’t give a fucking inch. not one.

    Like

  25. That’s why if Virginians were smart, we’d rig the american legion bridge to blow up and keep your guys on your side of the river.

    Like

    • That’s why if Virginians were smart, we’d rig the american legion bridge to blow up and keep your guys on your side of the river.

      With all this talk about harassing Supreme Court justices and blowing bridges, aren’t you guys worried about ending up on a watch list?

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      • yello:

        With all this talk about harassing Supreme Court justices and blowing bridges, aren’t you guys worried about ending up on a watch list?

        Have you reported us yet?

        Like

  26. I just assume i already am b/c I comment at Reason from time to time. I’m sure you saw what happened there.

    Like

  27. Perzaktly. There’s a quote on a Daily Beast article which calls Reason “a site with excellent content but cursed with a group of commenters who think such trash talk is amusing.”

    That covers an awful lot of the internet.

    Like

  28. Have you reported us yet?

    In any investigation I will serve as a character witness that it is inconceivable that you would actually carry out such a plan. Besides, what happens on ATiM, stays on ATiM.

    Like

  29. Those commenters are some of the best on the internet.

    Like

  30. I’m an excellent scrounger, in the camps, come see me for booze, cigarettes and condoms.

    Or, we follow Solzhenitsyn:

    “And how we burned in the camps later, thinking: What would things have been like if every Security operative, when he went out at night to make an arrest, had been uncertain whether he would return alive and had to say good-bye to his family? Or if, during periods of mass arrests, as for example in Leningrad, when they arrested a quarter of the entire city, people had not simply sat there in their lairs, paling with terror at every bang of the downstairs door and at every step on the staircase, but had understood they had nothing left to lose and had boldly set up in the downstairs hall an ambush of half a dozen people with axes, hammers, pokers, or whatever else was at hand?… The Organs would very quickly have suffered a shortage of officers and transport and, notwithstanding all of Stalin’s thirst, the cursed machine would have ground to a halt! If…if…We didn’t love freedom enough. And even more – we had no awareness of the real situation…. We purely and simply deserved everything that happened afterward.”

    Randy Weaver’s wife didn’t fare so well though.

    Like

  31. why i love reason comments. being send to the camps is a running joke.
    there was a comment

    “The anarchists are comparing the libertarians to the guards!”

    i laughed for a week.

    Like

  32. Besides, what happens on ATiM, stays on ATiM.

    Unless we get together for dinner. Then we try not to bore the spousal units too much.

    Like

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