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...Only Thunder in the Distance

Posted by: Tom Keene on September 6, 2010

The Cauldron of the Home Front

How to capture the spirit of Labor Day?

Look back to David Kennedy’s Freedom from Fear which rewards on every page. Every time someone compares now to the Great Depression, I want to hit them over the head with Kennedy’s life-work.

Look forward to the great research that I’m privileged to have come across my desk (see below, and don’t ask me for so-and-so’s research as we religiously protect their copyright and value added).

Look now, and it is not a pretty picture. Yes, there is marginal green-shootedness but it is a struggle. The distinction between the 10% crew and the slowly to 8% “optimists” centers on a belief in investment. The have’s cash will be put to good, domestic, use. Here’s a few 35,000 feet snapshots.


60 Years of Employment from 60 million to 139 million

The above chart is semi-log, or logarithmic on the y-axis. What that means is a) slope-matters, and b) it shows equal percentage change. Notice how the recent falloff is way, way bigger than ANY OTHER back to the end of David Kennedy’s Freedom From Fear.


The Same Semi-Log Chart: 1979 - 2010

Note how much bigger the fall-off is compared to the three previous slowdowns. Also note, the thickness of the pain, indicated by the amount of space underneath the line in the red box. This is getting old.


Here’s Your Blue-Collar Pain: This is average hourly earnings less inflation as measured by the Cleveland Fed Series. It’s ugly. It looks better on the rightside of the chart (2009 and 2010) but that’s only because inflation has evaporated (or so they say). The decade average in this series is…under 1 percent. Note how it has rolled over in recent quarters.

Research (If It’s Labor Day It Must Be Belgium)

Ethan Harris and Team BoA Merrill go grim and lower their 2011 view to sub-2% GDP and above 10% unemployment. “The downward revision comes from weaker anticipated spending from both consumers and businesses.”

John Tumazos, he of the independent shop, writes of the BHP-Potash mating, “One benefit of a BHP Billiton purchase of Potash Corp would be a consolidation of two potential over-expanders to reduce potash expansion projects.”

Dennis Gartman of The Gartman Letter writes from the 12th hole of some golf course I cannot afford on lessons from Belgium, “If Belgium cannot get its French and Dutch speakers to agree upon government, how can Brussels/Strasbourg ‘get’ German speakers, and Spanish speakers, and French speakers and Dutch speakers and English speakers and Croat speakers and Polish speakers et al to do so?” He is correct. September is Watch Europe Month.

Spread the Word: Thanks Barry and Mark

Thanks to The Big Picture and Economist’s View for attaining first-mover status. Any help in driving EconoChat forward is appreciated.

Paul & Amity

Paul Krugman writes clearly. His Delusions of Recovery is beyond important. Its short, sharp and truly must-read in a Newtonian way. Even if you don’t agree with him, wrap your head around his calculus. Summary: The way to move the needle is initiative and innovation and Paul would suggest, more stimulus.

Amity Shlaes provides a primer on the path to the modern-day public union. What’s that? No Stan, not french horns. Is it thunder in the distance?


Reader Comments

Christopher Squire [UK]

September 7, 2010 5:22 PM

Careful measurement of the y-axis on a print out of a screen grab of chart 1 confirms what the eye can see on the screen: it is LINEAR not LOG.

What made you think it was a log scale??

I'm off to the pub but will return tomorrow i.e. in100 minutes from now . .

Tom Keene

September 8, 2010 6:18 AM

christopher: nice catch and fixed USEMTOT INDEX GPL Y ROLL

Milton Littman

June 10, 2011 9:17 PM

Valuable information and excellent style and design you got here! I would just like to thank you for sharing your thoughts and also time into your stuff you post!! Thumbs up

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EconoChat captures Tom Keene's thoughts on economics, finance and investment. He is editor-at-large for Bloomberg News and hosts Bloomberg Surveillance and Bloomberg on the Economy on NYC1130, Sirius 129 and XM 130 and Surveillance Midday on Bloomberg Television. His complete interviews are at Tom Keene on Demand. Look for Tom on twitter @tomkeene

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