Morning Report: Incomes fall while employment costs rise

Vital Statistics:

  Last Change
S&P futures 4,560 -27.2
Oil (WTI) 81.66 -1.01
10 year government bond yield   1.60%
30 year fixed rate mortgage   3.30%

Stocks are lower this morning after Apple and Amazon both missed earnings expectations. Bonds and MBS are down.


Personal incomes fell 1% in September, according to the Bureau of Economic Analysis. The drop in government assistance as extended unemployment benefits expired was the big driver. Wages and salaries rose by $80 billion while unemployment benefits fell by $255 billion. Consumer spending rose by 0.6%.

The Personal Consumption Expenditures index (PCE) rose by 0.3% MOM and 4.4% YOY. Ex-food and energy, it rose 0.2% MOM and 3.6% YOY. This is higher than the Fed’s preferred level, however the central bank (and Treasury) still consider the current spate of inflation to be temporary.


The Employment Cost Index rose 3.7% YOY as companies are raising wages in order to attract employees. One thing to keep in mind is productivity and wages. We saw 3Q GDP come in at 2%, while employment costs are rising much faster. This would imply falling productivity (output increasing slower than wage growth). Increasing productivity is the key to higher living standards, and when productivity is low, you generally see inflation and stagnation. Which is kind of where we are now.

To that point, Treasury Secretary Janet Yellen is peddling the idea that the Administration’s big spending package will be anti-inflationary because it will include subsidies for healthcare and childcare.


Pending Home Sales fell 2.3% last month, according to NAR. “Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity,” said Lawrence Yun, NAR’s chief economist. “It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year.”

The hottest markets were Jacksonville, Tampa, Nashville and Denver. Pending Home sales dropped almost 19% YOY in the Northeast, while they declined mid-to-high single digits everywhere else.


Despite some of the disappointing economic data, the Fed Funds futures are increasing bets that interest rates rise next year. The December 22 Fed Funds Futures seem to be coalescing around 2-3 rate hikes next year. This is a huge jump from a month ago.

45 Responses

  1. Virginia Democrats really are getting desperate:


  2. I find this fascinating. Didn’t it dawn on the NY pension fund that announcing you are going to sell will affect the amount you get?


  3. What’s the logic of the booster shot? Is there evidence that those with the two shots, if infected with COVID, get sicker than those with the booster? We know that those with the shot are also likely to spread COVID so reducing the infectious potential can’t be it and I haven’t seen any data that shows two shot COVID infecteds get sicker over time.


  4. Taibbi on “Let’s go Brandon!”

    Is it really possible that these people don’t get they’re being trolled? Part of the joke of “Let’s Go Brandon,” of course, is that you couldn’t go five minutes during the last administration without hearing someone in pearls or a bowtie screaming “Fuck Trump!” I don’t remember Rangappa pumping out “Osama de Niro” tweets after this celebrated Tony Awards appearance:

    The bigger part of the “Let’s Go Brandon!” gag is that such outbursts during the Trump years were not only not condemned, they were celebrated, as pundits and reporters for the first time told us directly profane insults of presidents were okay. “Robert de Niro’s Comments at the Tony Awards Go Viral,” was CNN’s bemused take, in a story quoting artist Ferrari Shepard saying, “Robert de Niro is my favorite rapper.”

    He also reminds us of one I had forgotten about, Samantha Bee on TV referring to Ivanka Trump as a “feckless cunt”. These hypocrites have no shame.


  5. I guess the Washington Post now has some immersive 3 part series about Jan 6.

    It really was the left’s 9/11.


    • Well, they’re trying to make it so.


      • The economy seems to be weakening. So it is going to be the only card they have.


        • Good luck with that. Yahoos acting fools in DC over Trump is not going to move people—at least most people—as much as inflation, gas prices, supply chain breakdown, vaccine mandates, lockdowns, education—especially CRT and highly-sexualized stuff—and so on.

          Jan 6th is going to be very low on most people’s priority list by 2022, as least those that show up to vote for midterms. It’s going to be pretty far in the past by the time 2024 rolls around.

          Eh. We will see.


      • To good to check.


        • I laughed at Kendi


        • I love the use of the term “tortured logic” from someone busy torturing logic.

          But—eventually-you have to explain why people benefiting from systemic white supremacy want to be nonwhite, and either convince themselves they are nonwhite or pretend to be nonwhite.

          You need explain how this is different than light-skinned minorities passing as Caucasian in the early half of the 20th century. I once read a letter (from a briefcase my Uncle bought at an estate sale), from a black man to his family talking about his efforts to bleach his skin so he could pass as white (apparently not having much luck). He wasn’t doing that in the 1940s because he was part of the ruling class or a favored identity group …

          You don’t get people pretending to be and lying about being and wanting others to believe they are a non-white race unless that race is seen as better or more attractive. When people would rather been seen as a member of race X than race Y—race Y cannot be considered the ruling race or the desirable race.

          Kendi’s incoherence on the topic is the reason they don’t spend a lot of time discussing it.


        • I suspect something did happen or has happened. Why that would be any more of an issue than his awful policies, I don’t know.


        • I’m just surprised Kendi decided to call out Elizabeth Warren like that on Twitter.


      • Trying to make it so. Exactly. They’ve been wanting a good 9/11 perpetrated by the only real terrorist—white Christian men—forever. There hasn’t been anything perfect, so this will have to do.


    • “I guess the Washington Post now has some immersive 3 part series about Jan 6.”

      Next up, an immersive 3 part series about Tucker Carlson’s documentary on January 6th.

      Of course, HBO beat him to the punch from the other side.


  6. Like

  7. NoVA – FYI

    “Any Subscribers in Loudon County, VA?
    Matt Taibbi

    Hello all – I’m thinking of coming down to VA to cover the gubernatorial election and wondered if there are any subscribers in Loudon County. Not looking to sleep in your garages! Just wondered if anyone in the area could help me make sense of some of the recent controversies there. No worries if not, and thanks for your time in any case!”


    • “Brandon Brown, after whom the phrase is coined, is struggling for sponsorships and partners since the slogan went viral. Maybe he should’ve thought out the consequences before expressing his support for the phrase, huh.”

      The Kos Kids are so often insufferable … jerks. Mad that anybody dares use a catch phrase that dares dishonor dear leader, they’re pleased the Brandon that was there when the meme began but had no role is creating it is suffering because he didn’t disown his name or something.

      You are a masochist, McWing.


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