Wednesday, January 17, 2018

Industrial production and retail sales both had strong 4th Quarters

 - by New Deal democrat

Whether due to a bounce from hurricane interruptions, or some other reasons, both real retail sales and industrial production have now completed very strong 4th Quarters.

Together they point to a good GDP print next week.

This post is up at

Monday, January 15, 2018

Minority unemployment: progress vs. prejudice

 - by New Deal democrat

On this Martin Luther King Day, let's take a look at minority unemployment. This got a little attention earlier this month when the December jobs report showed the smallest gap ever between the unemployment rates of blacks and whites.

So let's start by confirming the good news.  Indeed last month saw the smallest gap ever between the unemployment rates of the two groups:

The secular trend over the last 40 years has been very slow progress, as the relative low in unemployment from the early 1970s was superseded in the 1990s, which in turn was superseded by that of the 2000s, and now that too has been eclipsed.  But of course, the black unemployment rate has for that entire time been higher than that for whites.

Next, let's compare black and Latino unemployment:

Similarly, for the entire forty year period, the rate of African American unemployment has been higher than that of Latino unemployment. What is most telling is that this metric hit a low point over 20 years ago. Since 1995 the proportion of Latino unemployment has decreased compared with black unemployment. 

I believe this has had important political consequences. Like African American unemployment, the Latino unemployment rate has risen relative to white unemployment during and after recessions, and improved as expansions continues.  Unlike black unemployment, however, Latino unemployment never blew out in the late 1970s and 1980s, and more strikingly, in both of this and the last expansion has come within 1.2% of white unemployment:

On the one hand, while we don't have any historical statistics that I am aware of with earlier immigrant groups, I suspect that Latinos hare having a typical immigrant experience: the first generation establishes the beachhead, and the second and thir d generations approach the employment norms of the majority natives.

But on the other hand, I think this has played a significant role in the backlash that gave us Donald Trump.  Remember that the single issue which most changed in importance motivating voters between 2012 and 2016 was immigration:

Considering that employment in smaller metro areas and rural ares has not grown so strongly  during this expansion, and especially bearing in mind that roughly 1/4 of the Latino population (about 12 million of 48 million) are undocumented workers or illegal aliens, depending on your preference, I suspect that the ethnic backlash by Trump voters and the relatively good performance of Latino vs. white unemployment is not a coincidence.

Finally, in view of the continued difference between black and white unemployment rates, I wanted to take a look at how that breaks down by education, since the  disparity in college educations may be one reason for the difference in in the rates.

But that isn't the case.  Here are two separate graphs of unemployment, one of which also includes Latinos and Asians, and the other of which brakes down education by 5 levels:

When we consider that even with a conquerable education, the rate of  black unemployment is still above that of Latino unemployment, and  that black college graduates have an unemployment rate equivalent to that of whites who don't even have an associates degree, I am afraid that racial prejudice still plays a role in the jobs market.

Saturday, January 13, 2018

Weekly Indicators for January 8 - 12 at

 - by New Deal democrat

My Weekly Indicators post is up at

This week a lot of the data was affected by holiday seasonality, because it was for the week of New Year's Day.

Friday, January 12, 2018

Real wages in 2017

 - by New Deal democrat

Now that we have the report on consumer prices for December, let's take a look at what happened with real wages in 2017.

Consumer prices increased +0.1% in December, and wages for non-managerial workers rose 0.3%,  This for that month the average worker earned 0.2% more.

For the year, the nominal wages of non-managerial workers rose 2.4%, while prices increased 2.1%, meaning that for the entire year workers saw a whopping 0.3% increase in real pay:

Here's a close-up of the last 5 years:

But because inflation accelerated slightly in the second half of the year, and nominal pay increases slackened, real pay has actually decreased roughly -0.8% since peaking in July, and is barely up at all over the last 24 months.

Next let's take a look at the real aggregate pay that non-managerial workers earned in 2017.  I like this measure because it tells me how much the economy as a whole has delivered to the middle and working class during the economic expansion.  Here's the graph:

For the entire expansion, real aggregate pay has increased ~23%.  On a YoY basis, aggregate real payrolls increased about 2.5%, about the average for this expansion:

In other words, consumers have more money in the aggregate, but only because the number of hours and jobs in the economy has increased, and almost not at all because their individual hourly pay increased in real terms in 2017.