Tuesday, August 9, 2022

July Labor Market Even Hotter!

 Popular Economics Weekly

MarketWatch

I said last month June’s labor market was hot. It was even hotter in July. Every industry in the Labor Department’s unemployment report had positive job growth in July, with Education and Health alone adding 122,000 jobs. Professional/Business, Leisure and Hospitality, and Government added another 242,000 jobs.

How is this possible with all the talk of a looming recession? Maybe the minus-1.25 percent negative cumulative GDP growth in Q1 and Q2 was just a blip that may or may not have been a technical recession, and it’s already over?

Hiring was broad based as businesses created the most jobs in five months, said MarketWatch. And the number of people working finally returned to February 2020 levels — the last month before the pandemic (my emphasis). The unemployment rate, meanwhile, slipped to 3.5 percent from 3.6 percent, the government said Friday, matching the lowest level since the late 1960s.

Let us now see how much higher the Federal Reserve dares to push interest rates because of fears such robust hiring is a sign of surging growth, not the slowdown in demand it is attempting to engineer.

In fact, inflation is already declining, mainly because world oil prices have plunged, and food prices may also soften with the good news that grain shipments from the Ukraine have finally begun.

That’s in part because U.S. consumers' expectations for where inflation will be in a year and three years dropped sharply in July, a New York Federal Reserve survey showed on Monday, as reported by Reuters, indicating U.S. central bankers might be winning the fight to keep the outlook for price growth as they battle to tame high inflation—although official CPI inflation numbers out later this week will confirm or deny whether said expectations are reliable.

“Median expectations for where inflation will be in one year tumbled 0.6 percentage point to 6.2 percent and the three-year outlook fell 0.4 percentage point to 3.2 percent, the lowest levels since February of this year and April of last year, respectively,” said Reuters.

For the one-year outlook, the fall in expectations was driven by big drops in year-ahead price growth changes for gasoline and food, with the decline in anticipated gasoline price growth being the second largest in the survey's nine-year history and the decline in food price growth the largest ever.

In fact, the current hiring surge may lower inflation. The inflation surge is mainly caused by supply shortages, and more jobs means more workers producing goods and services which increases the supply of things.

MarketWatch

But MarketWatch economist Rex Nutting is warning of one obstacle to continued jobs growth, a looming shortage of working-age adults, I said last week. The baby boomer population bulge of the 1970s has reached retirement age, and the millennials cohort of the 1990s, their offspring, will be approaching retirement age as well, as is seen in his graph of population growth rates.

“But now the tide is going out. Next year, the working-age population is expected to grow by just 400,000. In 2024, it’s expected to grow by 300,000 and by just 200,000 in 2025. The pool of workers will begin to grow a bit faster later in the decade and throughout the 2030s, but current projections through 2060 don’t foresee the labor supply returning to the same growth rate we’ve gotten used to over the past 70 years.”

And that means slowing economic growth as well, unless we allow more working-age adults to immigrate and invest in more productive technologies, since more workers producing more goods and services powers economic growth.

Harlan Green © 2022

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Saturday, August 6, 2022

Cesar Chavez and The United Farmworkers Union of America

  Answering Kennedy's Call

Chapter Seven—Part I

I had heard of the United Farmworkers Union several years earlier while working as a television news cameraman for KTTV Channel 11, a Sacramento TV station.

One shoot was a weekend special report on the US Immigration Service in action to show their prowess in protecting the borders. We reported on the Immigration Service rounding up undocumented aliens in the fields—Mexican and Central American seasonal workers—while they were working.

I thought then it was an unjust system, as I filmed these so- called “illegals” being chased down and herded like cattle by “La Migra”, their term for the Immigration Service. The growers, of course, knew many of the workers did not have valid Green Card work visas and had turned a blind eye to the labor contractors that smuggled them across the border.

I learned much about California labor relations while filming for KTTV and watching how the growers operated. Farm workers had almost no protections in those days, since even those with legal work visas weren’t given adequate housing or benefits.

It was a brutal system, so when Cousin John asked if I wanted to help him out with whatever needed to be done in La Paz to support the United Farmworkers Union, I thought it a worthy cause. I had little idea of what that meant at the time even though I had worked with farmworkers in a Turkish village as a Peace Corps Volunteer for two years.

It was easy to see that the UFW needed lots of help. I met César Chávez at a low point in the UFW. La Paz had a small staff for several reasons. The United Farmworkers Union had just 6,000 members then. This was after many growers had signed Teamster ‘sweetheart’ contracts to avoid re-signing expired UFW labor contracts. Its membership was as high as 70,000 in the early 1970s.

César had purchased the former Kern County TB sanitarium in 1971 that had been abandoned when modern wonder drugs made the quarantine of TB patients no longer necessary. The UFW had outgrown its original Delano headquarters in the San Joaquin valley as union membership grew.

Re-named Nuestra Senora Reina de la Paz, or Our Lady Queen of Peace, it contained dormitories for the farmworkers, a hospital, and staff for those who worked there. The former sanitarium was leased from Edward Lewis, a Hollywood film producer who supported many social causes. He had to be the straw buyer of record of La Paz from its Kern County owners, since Kern County’s decision- makers were no friend to the UFW.

There was a lot of work to be done at La Paz to make it habitable for farmworkers and staff. Cousin John had already begun to renovate the dormitories to house farmworkers and staff, as well as modernize the hospital. The place had been abandoned for years, and since I had worked as a carpenter several summers to pay for my UC education, I was happy to assist.

I soon began spending weeks instead of weekends at La Paz, and hoped I would have the opportunity to use my film and photography skills as I did with the Environmental Protection Agency, since this was a chance to record history in the making. It seemed to be a call to work in another new frontier that President Kennedy had spoken of, advancing human rights using peaceful means to better farmworkers’ lives.

So, I became a fulltime resident of La Paz in January 1974, whereas Cousin John still lived and worked in Los Angeles.

But he could be called upon to bring up any necessary skilled labor. In fact, without the skilled union carpenters, plumbers, plasterers and electricians John was always bringing from Los Angeles, César couldn’t have completed the Agbayani Retirement Village for retired Filipino farmworkers to honor those who were some of the first to join the UFW. He wanted to honor them because they were the first to strike for better working conditions and join the UFW. He said many times

Agbayani Village was an example of benefits that would be possible for UFW members...(to be cont'd)

Harlan Green © 2022

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Wednesday, August 3, 2022

Is the Recession Already Over?

 Financial FAQs

Calculated Risk

I was a bit facetious last week when I said calling a recession at this time because we may have two consecutive quarters of negative GDP growth is almost irrelevant, because it may be over as quickly as the artificially induced two-month recession in April-May 2020, when the pandemic was building a head of steam.

But another indicator, the JOLTS report that measures the number of job openings (black line in graph) decreased to 10.7 million on the last business day of June, the U.S. Bureau of Labor Statistics reported today. The slight decline in openings was too small to be conclusive of an extended downturn

Hires and total separations were little changed at 6.4 million and 5.9 million, respectively. Within separations, quits (4.2 million) and layoffs and discharges (1.3 million) were little changed.

The number of job opening didn’t rise above the longer term normal of 6-7 million openings until January 2017, per the Calculated Risk graph. That is when economic growth began to take off, and it rose sharply to its current nosebleed range of 11 million openings after the two-month 2020 recession.

The number of hires (blue line) and Layoffs (red bar) leveled off and began to taper in January 2022 per the graph, so then began a slight downturn in job formation that could predict looming negative GDP growth.

What better proxy for the beginning of a recession than the slowing of job growth? I also mentioned last week that consumer confidence was another good proxy, which is still in decline.

We will know more this Friday with release of the government’s July unemployment report. The rate has been below 4 percent since last December.

But we have now the just released ISM non-manufacturing survey of supply managers beginning to rise again. The ISM barometer of business conditions at companies such as restaurants and hotels that employ most workers rose to a three-month high of 56.7 percent in July, suggesting the economy is beginning to expand again in the face of growing headwinds.

“According to the Services PMI®, 13 industries reported growth,” reported Anthony Nieves, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee. “The composite index indicated growth for the 26th consecutive month after a two-month contraction in April and May 2020. Growth continues — at a faster rate — for the services sector, which has expanded for all but two of the last 150 months. The slight increase in services sector growth was due to an increase in business activity and new orders.”

Orders and production rose, hiring improved and intense inflationary pressures eased somewhat last month, business executives told the Institute for Supply Management.

Even U.S. factory orders rose 2 percent in June, the government said Wednesday, in a report that offered some good news .Orders for durable goods made to last at least three years climbed a revised 2 percent in June, up from an initial 1.9 percent. Most of the increase was in autos and military planes. Orders for nondurable goods such as clothing and food products also rose 2 percent. Orders for nondefense capital goods, excluding aircraft rose a revised 0.7 percent, up from the prior reading of a 0.5 percent gain. Manufacturers are growing more slowly as the economy decelerates, but they are still growing.

This means we could already have reached a ‘trough’ in growth, or the bottom of the down cycle. And that confuses things even further! Stay tuned for Friday’s unemployment report to know more.

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Tuesday, August 2, 2022

'Armed and Ready'...for What?

Answering Kennedy’s Call

NYTimes.com

The NY Times front-page picture of a teacher “armed and ready” to wear a gun in her classroom shocked and disheartened me. I remember the fear I felt as a small child hunkering under classroom desks in civil defense drills during the cold war.

And the irony of teachers wanting to arm themselves to protect their schools shouldn’t be lost with the current celebration of the killing of Al Qaeda’s number two—Ayman al Zuwahiri. This is looking in the rear-view mirror of foreign terrorism now vanquished, when domestic terrorism holds the greatest threat to our national security.

How does that teacher think her children will feel seeing her arming herself, and other staff whose job it is to care for them?

“Today, after a seemingly endless series of mass shootings,’ said the NYTimes, “the strategy has become a leading solution promoted by Republicans and gun rights advocates, who say that allowing teachers, principals and superintendents to be ar.med gives schools a fighting chance in case of attack.”

Really? I fear children will learn that violence is the only answer to combat terrorists in schools, in a country that allows weapons of mass destruction to be owned by 18-year-olds as happened in Uvalde, Texas.

More guns have never been the solution to reducing gun violence, as Australia’s history has shown. Australian demographics are similar in many ways to America’s—similar age distribution, wealth distribution, etc.—yet Australia has only had three mass shootings since it banned military-style assault rifles.

That happened because of a 1996 massacre in Port Arthur, Tasmania. During that event, a gunman killed 35 people and wounded 28 others with a semi-automatic weapon he bought from an ad in the newspaper. Twenty of those people were killed in just a minute and 15 seconds.

Will we ever subdue gun violence in America, which means enforcing the real intent of the Second Amendment by disarming our unregulated militias?

A country such as ours that cannot protect its children from domestic violence is a country that does not care for the welfare of its future generations that once again will have its children cowering under desks because of the threat of legally acquired assault rifles, which are literally weapons of mass destruction.

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen