Don’t let the top-line number fool you. The employment report for May was discouraging. Although total nonfarm payrolls rose by 431,000 last month—the biggest monthly gain in a decade—it was heavily padded with the government’s temporary hiring of Census workers. Stripping out the government factor reveals a tepid rise in private-sector nonfarm payrolls of just 41,000, a dramatic fall from April’s 218,000 gain in private-sector jobs. In other words, job creation in real economy is struggling…again. In fact, it looks like it hit a wall in May.
Author Archives: James Picerno
POSITIVE NEWS FOR JOBS AHEAD OF FRIDAY’S EMPLOYMENT REPORT
Today brings two bits of good news on the employment front, laying the groundwork for thinking positively about tomorrow’s jobs report for May. New jobless claims fell last week, the Labor Department advised, and nonfarm payrolls rose in May, according to the ADP National Employment Report. Are these positive changes a sign of things to come in the official employment report? We’ll have an answer in less than 24 hours.
CONSUMER SPENDING SOFT IN MAY, ACCORDING TO REPORT
A private-sector report on consumer spending advises that retail spending slipped last month. “Overall the environment in May has been relatively soft,” Mike Berry, director of industry research for MasterCard Advisors SpendingPulse, tells Reuters. “It looks like the consumer is taking a pause.”
HARRY MARKOPOLOS & THE “NEW” SEC
When Bernie Madoff’s Ponzi scheme imploded in December 2008, it unleashed two major scandals. One was simply an issue of money. Lots of losses because there were lots of victims. The tens of billions of dollars that went up in smoke rocked the financial world, thanks to the sheer size of the fraud and the fact that Madoff had snookered so many people (and institutions) for so long. The other great indignity (and arguably the bigger one) is that the world’s biggest financial con survived for years under the nose of America’s top regulatory agency: the Securities and Exchange Commission.
A RATE HIKE CLOSE TO HOME
The Bank of Canada today announced that it was raising its overnight lending rate by 25 basis points to 50 basis points. The doubling of the price of money is the first hike in North American by a central bank since the Great Recession ended.
THE MAULING IN MAY
May was the worst month for the major asset classes since the dark days of February 2009. Virtually everything suffered with more than trivial losses. Treasuries were the exception, thanks to the revived rush to safety. In turn, that helped prop up broad investment-grade bond indices. Otherwise, the red ink last month is a sign that the big, easy gains in everything is over.
SATURDAY LINK LIST: 5.29.2010
Consumer spending was flat last month, even though income was up in April. A sign of things to come? A sampling of reaction from the punditocracy…
APRIL INCOME RISES WHILE CONSUMER SPENDING IS FLAT
This morning’s update on personal spending and income for April raises as many questions as it answers.
SHOULD WE WORRY ABOUT A 90% DEBT/GDP RATIO?
Paul Krugman questions the central finding in a new Reinhart-Rogoff research paper that focuses on the apparent linkage between government debt and economic growth. The study (“Growth in a Time of Debt”) has been cited in the discussions in Washington re: the budget deficit, as The Hill reported here. The central point in the paper: when debt rises to 90% of GDP, growth “deteriorates markedly,” according to Carmen Reinhart, an economist at the University of Maryland and co-author of the paper. Krugman isn’t so sure. “It’s based on a crude correlation,” he charges, “and as soon as you look at specific examples, it starts to look all wrong.”
MORE CHATTER ABOUT DEFLATION…
The pundits are buzzing about the rapid decline in the money supply of late. The latest catalyst for the chatter is a story yesterday in the Telegraph, which ran this provocative headline: “US money supply plunges at 1930s pace as Obama eyes fresh stimulus.”