You are no doubt aware of how sucky the job market is lately. It’s only a ripple of worse to come, looks like.
The monthly Jobs Cut report from Challenger, Gray & Christmas sounds totally dismal: Nearly 1M Cuts Due to COVID-19 This Year.
“Job cuts announced by U.S.-based employers totaled 397,016 in May, down 40.8% from April’s total of 671,129, the highest monthly total on record. Despite the drop, last month’s total is the second highest monthly total on record since global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc. began tracking job cut announcements in January 1993, according to the firm’s monthly report released Thursday.
The COVID-19 pandemic caused 209,147 cuts in May, followed by 119,018 job cuts due to market conditions, and 50,172 announced cuts due to demand downturn.”
And to put it into historical context:
Job cuts announced in 2020 are 9.8% higher than the job cuts tracked at the height of the Great Recession. In 2009, Challenger tracked 1,288,030 announced job cuts one year after tracking 1,223,993 cuts.
The problem, in a nutshell is that globally, a Great Contraction is setting in. While the layoffs and cuts are better than last month, the employment data tomorrow may be safely predicted as being well-short of re-assuring.
Shows in Trade Data, Too
Just out this morning from Census:
The gap from hell.
When we get to tomorrow’s Job Report, we ought to all be thinking about our futures: Politically-drive racial divisions, pandemic set to flare again, and markets fueled by the crooked Fed’s “made-up money” regimen.
What About Productivity?
On a percentage-wise basis, the End of the World may not be here yet, but you might be able to see it from here:
“Nonfarm business sector labor productivity decreased 0.9 percent in the first quarter of 2020, the U.S.
Bureau of Labor Statistics reported today, as output decreased 6.5 percent and hours worked decreased 5.6 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2019 to the first quarter of 2020, productivity increased 0.7 percent, reflecting no change in output and a 0.7-percent decrease in hours worked.
Unit labor costs in the nonfarm business sector increased 5.1 percent in the first quarter of 2020, as
hourly compensation increased 4.2 percent and productivity decreased 0.9 percent. Unit labor costs
increased 1.9 percent over the last four quarters. (See table 2.) BLS calculates unit labor costs as the
ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase
unit labor costs, and increases in output per hour tend to reduce them.
Productivity is a dicey one to think about. But think of it this way: If you have half the people working as at a zenith benchmark, their productivity would need to double to make up the spread. We’ll be watching this relationship in coming months to see how it rolls.
Meantime: Physics of Collapse
Our long-time (and much-appreciated) Economic Fractalist pointed something out in a post overnight in our comments section. You might consider what he offers:
“89 Year US Third Fractal Nonlinearity … With trading halts, Thursday 4 June 2020 will be the longest day (trading day … denominated in 8 …. one hour units …)“
And he suggests you read up a bit over here:
Personally, I’m not thinking it will be [today], but seems we are getting very close. Monday? Because this is always noise in fractals (which can influence timing a bit), but in more traditional analysis, we have now completed the Wave 5 must be larger than Wave 1 rules under Elliott. Oh, and the middle wave (Wave 3) can not be the smallest of all the waves. Like so:
To make it easy, look at the 3 rightmost “trading boxes.” Trouble lies “outside the box.”
I was talking with my friend Robin Landry about this and he mentioned something (which I’ll try to paraphrase right) “When you get a hard down, you get a bigger – higher – bounce, oftentimes.”
This is not unlike playing pool (or snooker): “Angle of Incidence is equal to angle of reflection.”
While it may take a bit more time for the fractals to line up, just so, we have a “Loaded Threat Board.”:
Sour Grapes Mattiss
There’s a good article in the (left-leaning) Atlantic today: “James Mattiss Denounces President Trump, Describes Him as a Threat to the Constitution.”
While we admire the general’s military service, we wonder if there’s something of a “fact-gap” he’s missed? Particularly when he’s quoted as saying:
“I have watched this week’s unfolding events, angry and appalled,” Mattiss writes. “The words ‘Equal Justice Under Law’ are carved in the pediment of the United States Supreme Court. This is precisely what protesters are rightly demanding. It is a wholesome and unifying demand—one that all of us should be able to get behind. We must not be distracted by a small number of lawbreakers.”
What surprises me is how little attention has been paid to the fact that all four police officers involved in the George Floyd killing have now been arrested. Moreover, we have been watching all the looting and question the general’s characterization of a “small number of lawbreakers.” Small compared to what? War?
Moreover, while accusing Trump of being divisive, this is PRECISELY what the democrats and left has been doing for years. In modern guerilla politics, the “Rules for Radicals” a key tactic is to “Label your opposition what you are, yourself…”
“EBM” Remains Valid
Around here, we try not to get too “wrapped around the axle” of public hysteria.
Instead, we tend to recognize that each of us – in a hundred ways a day – operates to optimize our own, personal economic conditions. Food, money, sex, power, status…all optimizations everyone runs.
EBM simply means Everything’s a Business Model and we see evidence of that (behind the smoke of looted stores) in things. Like Google Search Trends interest in the word “reparations” over the past 90-days.
The [terrible reality] is that with global growth dying and dead – we become (as a planet) much more confined.
Welcome to Thurowville
We have arrived, I think globally at the crossroads described 30-years ago in the book “The Zero Sum Society” by Lester Thurow. It’s based on the simple notion that when bounds are set – and no growth is possible – any gains (whether by companies or individual persons) will necessarily comes at someone else’s expense. From the Wiki entry on Zero Sum Games:
“In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which each participant’s gain or loss of utility is exactly balanced by the losses or gains of the utility of the other participants. If the total gains of the participants are added up and the total losses are subtracted, they will sum to zero. Thus, cutting a cake, where taking a larger piece reduces the amount of cake available for others as much as it increases the amount available for that taker, is a zero-sum game if all participants value each unit of cake equally (see marginal utility).
In contrast, non-zero-sum describes a situation in which the interacting parties’ aggregate gains and losses can be less than or more than zero. A zero-sum game is also called a strictly competitive game while non-zero-sum games can be either competitive or non-competitive. Zero-sum games are most often solved with the minimax theorem which is closely related to linear programming duality, or with Nash equilibrium.
Humans have a cognitive bias towards seeing situations as zero-sum, known as zero-sum bias.”
The Petri Model Arrives
All of which leads us to this morning’s “Financial Tee Time.”
Have we entered that period of globalism where we are coming head-on, face-to-face, with the sides of the Petri dish where we can “see the glass sides” and the only way to survive is for one species (of bacteria) to steals from another?
Racial suppression (by any side) and financial exploitation (by any side) is abhorrent to all. Or, at least should be. Yet, in behavioral economics (and zero sum gaming) it is entirely predictable.
As we – the bacterial – keep gobbling up the consumer “agar” left over from Peak Prosperity, it will become increasingly apparent that zero sum is in play.
Oh, so’s slavery. Except you don’t hear much about it. Contemporary slavery is alive even today – in Africa. Yet, because it’s a “hard mass monetization” we don’t see businesses being looted on that pretext. Too small to fix? Is any injustice, really?
I’d go on. But, it’s like “talking back the tide.”
It’s OK for former president Obama to divide his audience into general and “people of color” in his :”town hall” last night. But it’s not OK for sitting president Trump to call out looters and threaten miliary use to restore order? Which is more divisive? Rules for Radicals, friend. Who’s calling who, what?
We sit – not bewildered, but certainly disappointed. That our underlying problems (especially an economics model that “blows up” without growth) are not being addressed. While the lines harden between “us bacteria” as the walls of the Petri dish loom just ahead.
As the super-computer WOPR said in the movie WarGames:
“Greetings Professor Falken.
A Strange Game.
The Only Winning Move is Not to Play.”
In order to measure, we divide. And in so doing, sows our own bitter harvest.
Write when you get rich,