The “richest country in the world” is clearly falling down on the job

Outlook:

We get the ADP private sector jobs forecast, the trade balance, two services PMIs (from Markit and ISM), and a few other things, including earnings. Some are already befogged by vast borrowings by Alphabet and other big names, while also seeing foreign borrowing from the Fed falling like a rock.

We imagine the ADP jobs forecast will be the keynote, and it’s expected to be weak, only 1.2 million jobs added after 2.4 million in June and 3.1 million in April. Jobs are the leading edge of forming sentiment about the recovery or lack of recovery, so it’s worth digging down a bit. The problem is that jobs data is really messy in the US. The different data sets from different sources are just plain contradictory.

As Wolf Richter points out, the Labor Dept said last week that unemployment claims, both state and federal, show 30.2 million unemployed. But the Bureau of Labor Statistics says June unemployment was down to 17.8 million people. Then there’s the “Household Pulse Survey” which shows, among other things, that  51.2% of respondents have had a “loss of employment income” for the most recent week (July 16-21).

Just for kicks, we looked at food insufficiency, measured by “enough to eat,” “enough to eat but not the foods wanted,” “often not enough,” and “not enough.” “Often not enough and not enough” added comes to 29,284,583 persons, or 11.76% of the total. You have to question the total, though; it’s shown as 249,170,916, or more than 75% of the population. We just don’t believe that high a percentage took any survey, let alone this one, so there must be a high level of assumptions and extrapolations going on. Still, that nearly 12% of the US population do not have enough to eat is a shocker. Richest country in the world and all that.

You can also find payment status for housing, both rent and mortgage, confidence in ability to make next month’s housing payment, home education data, and a slew of other things. On “confidence in ability to make the next month’s rental payment,” 35.6% are fully confident, but an almost equal number have no or slight confidence, 32.5%. Eeek.

The point about “not enough to eat” is to view the Challenger report tomorrow and the July employment report on Friday with a jaundiced eye. It’s not just the jobs, it’s what jobs will be there next month or next quarter, and will those jobs pay enough to stay housed and fed.

This is not one of those situations where it’s appropriate to get comparable data from other countries. These same metrics from Nigeria or the Philippines would likely be far worse. Data from the UK or Germany would likely be far better. But as a measure of the success and competence of government, the “richest country in the world” is clearly falling down on the job. Meanwhile, the eurozone is recovering on the main metrics. Is anyone going hungry in Germany?

So now to the failing dollar correction. It got stopped in its tracks for reasons we can’t identify—maybe worsening yield differentials—but can re-emerge. Still, we had a similar-looking run in 2017 with hardly any corrective pullbacks. Still, caution is called for.

Tidbit: Yesterday somebody told Trump that the old fogies in Florida—many of them his base—prefer to vote by mail. So he did an about face and now promotes it—after decrying mail-in voting for weeks as leading to a rigged election and then suing Nevada for rolling out a vote-by-mail initiative. Maybe he thinks the voters won’t notice the hypocrisy. Far more worrisome is rushing the Census to completion instead of giving it the extra time needed to make up for the pandemic-induced delays. For some reason, the late responders who have to be contacted door-to-door are heavily weighted toward minorities, so they will be losing weight in Congressional re-districting. Between hogtying the Post Office and suppressing the minority vote, Trump is the one trying to rig the election. 

The New York Times features a video by academic Alan Lichtman, who studies elections and got 2016 right. He has a set of true-false questions to ask (candidate has/has not charisma; short-term/long-term growth, scandals or military failures/successes?, etc). He comes up with a win for Biden. It’s entertaining but he neglects to include the stock market, and while he includes social unrest, it’s not calibrated. It would seem that Black Lives Matter and tearing down Confederate statues is the biggest “social unrest” we have had since the 1960’s-1970’s. That comparison, if we dare to call it qualitative, apparently doesn’t count. Lichtman also scores Trump as having no military successes. We are not sure that the Trump base sees it that way. Bullying China is not “military,” but it’s war-like and even nicknamed a “cold war.” Still, the exercise is fun.

Hurricane Tidbit: Burying power lines really does work to prevent outages in a hurricane. Over 600,000 homes lost power yesterday in N. Carolina and Virginia, but our loss lasted only 10 minutes. We are glad to have moved from Connecticut, which had 680,000 outages, not having learned the lessons from years past. Note the vaster bigger size of N. Carolina + Virginia compared to tiny Connecticut. Losing power is still terrifying for reasons our ancestors would not understand—they were not addicted to electricity. And we remain bewitched by those heroic hummingbirds.

 

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