Morning Report: Gen X hit hardest by Great Recession 7/5/18

Vital Statistics:

Last Change
S&P futures 2733 19.7
Eurostoxx index 382.97 2.89
Oil (WTI) 74.32 0.2
10 Year Government Bond Yield 2.85%
30 Year fixed rate mortgage 4.54%

Stocks are higher this morning on rumors that the Trump Administration is dialing back its plans for tariffs on European autos. Bonds and MBS are flat.

The minutes from the June FOMC meeting are coming out at 2:00 pm today. Be careful locking around then since they could be market-moving.

The service economy continues to plow ahead, according to the ISM Non-Manufacturing Survey. Higher input prices, tariffs, and labor shortages are the biggest worries. Trucking shortgages are increasing prices, and that has the potential to push up inflation since it touches just about every business, at least indirectly.

The economy added 177,000 jobs last month according to the ADP Survey. This was a touch below street estimates. Note that ADP numbers have generally been higher than the government’s for the past several months. The Street is looking for 191,000 jobs in tomorrow’s payroll report. While the payroll number will be important, for the bond market, it will all come down to the average hourly earnings number.

Initial Jobless Claims ticked up to 231,000 last week. Separately, outplacement firm Challenger, Gray and Christmas noted there were 37,000 announced job cuts in May.

Tariffs on about $34 billion worth of Chinese exports are set to go into effect tomorrow. Beijing has announced it will retaliate with more tariffs the “instant it goes into effect.” Trade fears have been weighing on the stock market, and we are seeing some effects in commodity prices. Today’s minutes will probably discuss the issue at length. On one hand, this trade war is pushing up commodity prices, which is inflationary and should encourage the Fed to lean hawkish, at least at the margin. On the other hand, trade wars are an economic drag, which should encourage more dovishness. The Fed generally considers commodity inflation to be transitory, so on net trade wars should encourage dovishness, at least at the margin.

Oil prices have been a problem for while now, as WTI crude now trades close to $75 a barrel. Oil prices have been rising due to Venezuela issues and pressure on Europe to not buy Iranian oil. Trump tweeted that OPEC should increase production, which caused Saudi Arabia to announce it would increase output and Iran to announce that his pressure on them have added about $10 to the price of oil in the first place.  At the end of the day however these issues affect North Sea Brent prices, which really only matter to East Coast refineries. The rest of the country uses US domestic oil. Higher gas prices do make consumers surly and the Administration wants to see them down ahead of midterms this fall.

Here are the hottest real estate markets in June, according to Note it isn’t the names you would think.

Interesting chart in today’s Journal about which breaks down the labor force participation rate by age cohort. The press keeps harping on the job market for entry level workers (essentially the Millennial Generation) however if you look at the labor force participation rate for that cohort, it is lower than the year 2000, but not by much. Nor is the problem the 55+ cohort (baby boomers). They are close to all-time highs. It is Gen X that is the issue – their cohort peaked around 83% in 2000 and now is closer to 80%. It is this generation that was hit hardest by the Great Recession (nailed right during the peak earnings years) and has yet to recover.

labor force participation rate by age cohort

17 Responses


    This strikes me as a credible analysis. Those of you who feel constrained to defend DJT may do so now.

    Scott and Joe, doesn’t clicking on “Reader” and scrolling to “search” work for y’all?


    • Mark:

      Scott and Joe, doesn’t clicking on “Reader” and scrolling to “search” work for y’all?

      I believe that the search function there 1) only searches for posts, not comments, and 2) searches literally every post in the entire WordPress universe, not just the ATiM site.


    • I feel no duty to defend DJT, only that, at present, I don’t have any sympathy with the “he doesn’t listen to the Washington experts” line. Or that his ignorance is such a bad thing.

      Stuff from “sources” I take with a grain of salt. Might be true, might not be. I dunno. What someone says Trump is doing is not as important as what he ultimately does. We definitely don’t need to be invading countries left and right, but until we’re actually about to invade Venezuela, I’m not going to worry.

      Stuff like this: “Just last week, Trump tweeted: “Russia continues to say they had nothing to do with Meddling in our Election!” As if that means it’s true.”

      … just seems naive. On the part of the press. Trump is spinning. Framing the narrative. He isn’t even asserting it’s true, or suggesting he says it’s true. It’s intentionally ambiguous. He’s not saying it, Russians are. Maybe you can read it that he’s astonished they are still denying it. Maybe he’s implying it is true. That’s narrative framing, not an assertion.

      Although again I’m highly suspicious of anybody in DCs ability to be objective or to understand well-enough how computers work–or have sufficient and reliable sources within the Russian government–to reach the sort of conclusions they have. I’m listening to a podcast (“Revisionist History by Malcolm Gladwell”) about cases where lots of cases of science fraud were prosecuted, or persecuted, and how they were all bs and mostly a form of mass-delusion. I still suspect most of this Russian stuff is mass-delusion and confirmation bias.

      “The panel stressed that intelligence analysts were under ‘no politically motivated pressure to reach any conclusions

      The louder he protested his honor, the faster we counted our spoons. And, again, you could have zero political pressure and still fall victim to confirmation bias, share-delusion, over-estimating your knowledge (lots of data on how people do this, constantly) and just a general dislike of Trump (perfectly understandable) might bias them independent of any political pressure.

      and that their conclusions had been prescient as well as accurate, noting that ‘the Committee’s investigation has exposed a far more extensive Russian effort to manipulate social media outlets to sow discord and to interfere in the 2016 election and American society’ than the officials who drafted the assessment realized at the time they were writing it.

      I’m very suspicious about people dazzled by their own supposed prescience, based on “evidence” they have collected in order to better judge their own prescience. Also, use of words like “the Kremlin” and even the assertion that Putin personally organized a plot to buy ads on Facebook . . . it’s stretched credulity, to me. But we’ll see if they ever actually present real evidence rather than conclusions. So far, what little evidence I’ve heard mentioned has not sounded like evidence to me, at all.

      Also, North Korea did not fracking’ hack Sony.

      That being said, some of it seems fair to me, others not particularly insightful. I think Trump thrives on uncertainty in a way that is not typical in US politics and isn’t at all popular within the bureaucracy. I don’t think Trump really values historical alliances. If he’s serious about the tariffs I think he’s definitely not thinking through the consequences. Other bits look like just nonsense and falling prey to propaganda, like: “a notice posted by the Chinese Embassy in Washington last week, urging tourists to ‘avoid going out alone at night’ in the United States, where cases of ‘shootings, robberies, and theft are frequent”.

      They’re kind of struggling to be critical and diminishing while not falling back on the worst of the tropes (he’s Hitler!).


      • Well written.

        I’m especially fascinated by the belief that American foreign policy experts are, well, experts.


        • What does “expert” mean? It means generally you know a lot about the topic, or can successfully assert that you do. Does it mean you’re good at predicting outcomes? Probably not. Does it mean you are as familiar with the country as you think? Probably not. Does it mean you’re free of partisan political bias and utterly objective about your topic? Almost certainly not.

          Expertise has varying degrees of values, and the broader the category is (and other countries make for broad categories), the less important your “expertise” actually is in terms of predicting outcomes, or making your solution superior to some other, less-informed solution.

          Specific expertise tends to have value: car expertise means that you can fix a car, perhaps design a car. Foreign policy expertise tends to be a lot more amorphous and harder-to-measure. I tend to believe that the most common expertise in the Washington bureaucracy is “how to be a successful bureaucrat”.

          And also there’s the question of emotional investment in any topic. Expertise in car repair or performing certain medical procedures tends to be technical, procedural, and specific, and without a lot of emotional freight that might distort decision making or interpretation. Expertise in economics or foreign policy or race relations would tend to be way more amorphous and non-specific and freighted with heavily distorting emotional baggage . . . making the idea of “expertise” in those categories very, very different from, say, expertise in tax law.


  2. I wonder if I can use the Trump excuse to get away with sitting on my butt, drinking beer and eating chicken wings…


    • That’s a parody, right?


      • She writes for Guardian Australia too… I don’t think I have ever cared about who wins in some other country..


        • America is exceptional, and a beacon in the world. We are perhaps the only country where most of the rest of the world is heavily invested in the outcome of our elections. I’d like to see another Thatcher win in England, but whether or not I go to the gym or do anything else (except, perhaps, travel to England) doesn’t depend on what happens there politically.

          I kind of payed attention to Brexit because the US media did, and was hoping they did it. Now I hope they stick to it. But if they don’t, I’m going to shrug and go on with my day.


    • I didn’t want Trump to win – he’d grabbed women by the pussy and mocked a reporter’s disability. He’d promised to build a wall and called Mexicans “rapists”.

      Promising to build a wall is bad? What’s wrong with walls?

      I don’t really think he mocked a reporters disability (which would be awful, because reporters would never *mock* him for anything like his skin or his hair or his weight) but he definitely didn’t call Mexicans rapists, unless the reporter is asserting that all Mexicans are illegal immigrants. And even then I recall a “some” qualifier.

      I mean, presumably, the stuff he actually said and did was or should be bad enough. I really don’t think misrepresenting helps their case (although I understand why if she primarily digests liberal US news sources, she’d just assume these are sourced and vetted things that actually happened, and not shit made up by pundits and the media). There are lots of actual, legitimate things to target Trump on that require no hyperbole.

      Enough is never enough with those folks. Which I always think about when they talk about a little intrusive legislation or a teeny-tiny tax hike on just very, very rich people. Uh-huh.


  3. “”

    “Finally, we’d still likely be a monarchy, under the rule of Elizabeth II, and constitutional monarchy is the best system of government known to man. ”


    • Eh, not without some good points. “Slavery would’ve been abolished earlier” . . . almost certainly true, though how and with what compromises is another question. To some extent, slavery was abolished by technology, and so some other arrangement that kept somebody picking cotton and harvest sugar cane at low cost likely would have occurred while Britain could take the moral high ground.

      “American Indians would’ve faced rampant persecution but not the outright ethnic cleansing”

      There is no reason to think this is true, or to assume an England that was able to hold on to the US would have been a kinder, gentler England at the time. Or that many of the folks who had power in the US would not have had power and executed similar plans with similar thinking in the British colonies.

      “For one thing, the South, like all other British dependencies, lacked representation in Parliament.”

      I see why they think a British-controlled US would be so sexy now!

      And this: presidential “democracies” make it hard for progressive fascists to rule by fiat!

      “n the US, activists wanting to put a price on carbon emissions spent years trying to put together a coalition to make it happen, mobilizing sympathetic businesses and philanthropists and attempting to make bipartisan coalition — and they still failed to pass cap and trade, after millions of dollars and man hours. In the UK, the Conservative government decided it wanted a carbon tax. So there was a carbon tax. Just like that. “

      That we don’t have groups of our betters arbitrarily able to play god in the economy is seen as a negative out come of the American revolution. Christ on a cracker.

      “The US is saddled with a Senate that gives Wyoming the same power as California”

      Another huge, huge positive the Juiceboxer sees as a negative. Thank the lord they didn’t prevail in 1776!

      Of course, for them, the best form of government is a progressive fascist dictatorship run by a “benevolent” progressive dictator.


      • As usual Kev, your replies are very well thought out and patient. You pointed out the weaknesses in the WaPo critique of DJT’s FP well.

        I think the lauding of the Parliamentary system in the UK is over the top, as well. These guys are too young to recall the 50s, when the UK rocked left and right so hard that every couple of years railroads and mines were nationalized only to be de-nationalized in the next cycle. GB lagged well behind Germany on coming back from WW2 partly because it had a Parliament with no middle ground and no useful alliances. And why they think a monarchy is anything to be lauded is beyond my ken. Class humor remains a British staple thanks to its perpetuation of a titled aristocracy. Oh, well.

        I do value expertise and experience in FP, myself. Negotiating with someone whose history and values are unknown to you is a fool’s errand, if he has studied you and you have not studied him. From experience, I know that Japanese businesses negotiate with no sense of urgency, for example. Puts an American who thinks time is of the essence at a distinct disadvantage. So I can imagine at least a dozen different ways an unstudied diplomacy would fail.


    • I recently listened to a podcast by Malcolm Gladwell (who is, of course, all in on global warming) where he’s discussing how wrong the public and the media and the scientific community was in identifying so-called “science fraud” in the 90s and early 2000s. He compares this to other cases of mass hysteria or mass delusion in making the case that humans are not good at seeing what is actually going on, and can even become sick because other people are saying they are sick: meaning we are engineered to respond more to social evidence and pressure than the actual objective state of our own bodies.

      One could take the podcast as perhaps leading (there’s another installment, so we’ll see) to a “and that’s why there are climate deniers: mass hysteria!”) but I find it very easy to listen to it and see it as an analog for a lot of current conviction in the climate change arena. It was, after all, fellow scientists and the governing bodies or grant-givers like NIH, etc., behind most of the absurd and delusional persecution of science fraud back in the late 80s, 90s and aughts.


    • Some journals now insist that authors pre-register their research protocol and supply their raw data, which makes it harder for researchers to manipulate findings in order to reach a certain conclusion

      What possible reason is there for every journal not doing this? And why should anyone treat any journal that doesn’t as scientifically serious?


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