Morning Report: Productivity Falls

Vital Statistics:


  Last Change
S&P futures 3831 8.3
Oil (WTI) 56.07 0.34
10 year government bond yield   1.14%
30 year fixed rate mortgage   2.84%

Stocks are higher this morning on no real news. Bonds and MBS are down small.


Initial Jobless Claims fell to 779,000 last week. While the numbers are going in the right direction, we are still super-elevated, and above the days of the Great Recession.


Announced job cuts rose to 79,552 in January, according to outplacement firm Challenger, Gray and Christmas. “While cuts were higher than average last month, we are seeing a leveling off of announcements, which may bode well for recovery in the coming months. Companies may be reassessing their staffing levels and waiting on the impact of the relief bill before making any additional workforce decisions,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.


Productivity fell 4.8% in the fourth quarter as output increased 5.3% and hours worked increased 10.7%. Unit labor costs increased 6.8% driven by a 1.7% increase in compensation and the 4.8% decline in productivity. Unit Labor Costs have been rising steadily for the past year, although I wonder if COVID is introducing some statistical noise here. Note that manufacturing productivity is up, so this is a service sector phenomenon.


Janet Yellen has summoned regulators to discuss stock market volatility and the Gamestop phenomenon. This is similar to the pools that were operating 100 years ago, except the floor traders aren’t in on it any more (since they don’t exist). If you read Reminiscences of a Stock Operator you will read about a similar phenomenon. By the way, IMO Reminiscences is THE treatise on momentum trading (though he didn’t call it that).

I am not sure what regulators can do about this situation. Ultimately, you don’t have big, controllable institutions behind it, and the market-maker adult supervision of the markets disappeared a long time ago. NYSE floor specialists don’t control the flow any more, and NASDAQ market-makers have been eliminated as trading commissions are so low that it doesn’t make sense to take risk any more. The Gamestop situation may simply be nothing more than the unintended consequence of lowering transaction costs to the floor.


Zillow has a report out on suburban versus urban housing markets. The punch line:

  • Suburban homes sold faster than urban homes by the end of 2020, but home value growth, sales volume and Zillow web traffic in urban areas has kept pace with or exceeded levels in suburban areas.
  • Urban home value growth outperformed the suburbs in much of the Midwest, where homes are typically less expensive near city centers. In some of the most-expensive markets, including New York and San Francisco, urban housing demand softened relative to the surrounding suburbs. 
  • Urban rent growth fell behind growth in the suburbs in 2020, but Zillow expects urban rents to quickly recover as the pandemic subsides.


11 Responses

  1. Ben Shapiro on AOC controversy and a good break down on how the left has completely destroyed the idea of “fact checking”, and how nothing purporting to be a “fact check” is actually a fact check.

    I don’t get the right-wingers who hate Shapiro because his conservatism is apparently not “pure” enough.


    • The problem that people have with Ben Shapiro, Kate Pavlich and Guy Benson is that they reflexively believe every crazy leftwing story about some member of the Right or Trump until it falls apart and then act as if it had been bullshit all along. How often to somebody have to cry wolf before they realize that they’re being gaslit? Apparently for Ben and those like him, it’s always.


      • I think some of that is the narcissism of small differences. When he was talking about Marjorie Taylor Greene he had to complain about her being crazy and how she should be stripped of her committee assignments for talking about crazy conspiracy theories multiple times without any further context, even though he probably agrees with far, far more of what she says than AOC.

        There may be a financial incentive or something, or he wants very much to avoid reflexively defending potential bad actors just because they are “on his side”. Which I understand.

        And some folks like Jonah Goldberg: I expect it’s social-circles and donors that have pushed him leftwards (that said, he’s never been a fan of populism). I might start listening to his podcast again in a few months. If he’s stopped talking about Trump at that time, I might keep listening.

        Then there’s the Bill Kristols and the Jen Rubins. Their conversion to full communist (along with pretty much everyone who went into the Lincoln Project) amazes me.


        • And yet I’m guessing the MSM isn’t going to gloat about how justice is being done here. They’ll just . . . you know . . . not mention it.

          Although it was get a “fact check false” if it starts trending on Twitter.


  2. Question: Why is Trump bothering to even participate in the impeachment process?

    I don’t understand why he is even dignifying the “trial” with a defense. Surely he knows, as everyone must, that this is an entirely political process, and that neither the facts nor the law actually matters in the slightest. Whether or not he is ultimately “convicted” will have literally nothing whatsoever to do with any defense he might put forward, and the legitimacy of any “conviction”, in the unlikely event that it should happen, or any sanctions against him because of it will ultimately be determined by a future legal process. So why is he even bothering? Even as a political tactic, I think he gets more mileage out of trying to delegitimise the process by making a show out of refusing to participate than by making arguments as part of a defense within the process.

    Am I missing something?


    • Under pressure, he has just left the Screen Actors Guild. Perhaps if he had left SAG first he would have chosen more rationally. You know those actor types cannot resist a microphone.


    • I’m guessing Graham and McConnell have Trump convinced that mounting a defense is the only possibility of preventing a conviction and that’s something he’s probably afraid of. To me the smart play is to show up to the Senate trial and take the stand and start pointing out all the Impeachment Managers and Senators who’ve enriched themselves and their family in office. Then he should announce he’s forming a third party and walk off, daring the Sgt. at Arms to detain him. Alas we won’t see that as he’s obviously susceptible to steamrolling as we’ve witnessed with the ridiculous quarantine horse shit that he imposed. If they want to impeach him for that, they’d have a case as far as I’m concerned as it crushed the constituents who elected him.


  3. The left is so proud of how it manipulated the election process it can’t help but brag about it. Change the adjectives used to describe the action and alter the tone from joy to anger and this story would probably be dismissed as an absurd Trumpkin conspiracy theory forwarded “without evidence”.

    Their work touched every aspect of the election. They got states to change voting systems and laws and helped secure hundreds of millions in public and private funding. They fended off voter-suppression lawsuits, recruited armies of poll workers and got millions of people to vote by mail for the first time. They successfully pressured social media companies to take a harder line against disinformation and used data-driven strategies to fight viral smears. They executed national public-awareness campaigns that helped Americans understand how the vote count would unfold over days or weeks, preventing Trump’s conspiracy theories and false claims of victory from getting more traction.


Be kind, show respect, and all will be right with the world.

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