Posts Tagged ‘trading’

Are we all working less?

November 6, 2009

That’s right, work less, good catchy title for a post about the job numbers released on Friday :)

According to the calculations of our friend Jake over at EconomPic, the current average of working hours in the US is the lowest it has ever been! (well the lowest it has ever been since we’ve been keeping track anyway.)

Employment/Population Ratio * Number of Hours Worked Per Week

That’s actually kind of amazing if you think about it this means that if you take the US as a group and looked at how many hours we are working, we are working the least amount of hours then we did at any other period in tracked history. Look at Oct. 99 – we were working the most and of course we all know about the internet bubble that was happening at that time. With so much less work

Interestingly a lot of people argue with me about the rate of job loss decreasing is a result of people getting new jobs and not a result of people dropping out of the job hunt or settling for lower quality work. This certainly has some truth to it, my friend Mish has some interesting numbers that he pulled out of the BLS data on this…

Highlights

  • 190,000 jobs were lost in total vs. 263,000 jobs last month.
  • 62,000 construction jobs were lost vs. 64,000 last month.
  • 61,000 manufacturing jobs were lost vs. 51,000 last month.
  • 61,000 service providing jobs were lost vs. 147,000 last month.
  • 40,000 retail trade jobs were lost vs. 39,000 last month.
  • 18,000 professional and business services jobs were added vs. 8,000 lost last month.
  • 45,000 education and health services jobs were added vs. 3,000 added last month.
  • 37,000 leisure and hospitality jobs were lost vs. 9,000 last month.
  • 00,000 government jobs were lost vs. 53,000 last month.

A total of 129,000 goods producing jobs were lost (higher paying jobs). Retail and professional services contributed to to the plus side.

So yes – there was some job growth… we added a lot more retail jobs, professional services jobs, education jobs, and healthcare jobs… In other words – the people who lost their jobs making products are now reporting that they are in a category that does not make products and usually requires less working hours, lower pay, etc. A great example of this is a friend of mine who lost their financial industry job some time ago and began a private professional service job out of their house. They are doing good with it, they have customers and are making money – yet the overall income they are taking in is drastically less and the contribution to the economy as a result is drastically less (their consumption is down, despite having a graduate degree they are not contributing to a company that is producing or investing anything, etc). Based on the overall data, this anecdote is likely true amongst a large number of the people making a similar change.

Mish summarizes this very well with this quote (he has the data to back it up on his site)

The chart shows there are 9.28 million people are working part time but want a full time job. A year ago the number was 6.8 million.

Yes, that is a huge difference – yes that is A LOT OF PEOPLE! Given all this information it is not amazing that the government is adding extensions to the unemployment insurance program. What does that mean for you and I – five simple thoughts?

  • If your a trader, trading will be choppy intra-day so follow trends.
  • If you are unemployed – try starting your own business (now’s the time to experiment while you have free time)
  • If you are employed – you should re-evaluate where and how you are saving your money, what your plan is for staying afloat when/if you are laid off.
  • If you are an entrepreneur – get scrappy – regardless of the funding you have, being scrappy and focused is important (did you read Andy Sack’s lessons on Seattle 2.0 today?).
  • Talk to your kids about what his going on.
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The Bear Market Cometh?

October 27, 2009

Well now that we hit our magical 10k number (again) and the big market makers had a chance to take some profits, some wonder if we’re on the verge of a bear market, and others (like last time we hit 10k) think we’re on our way to 14k… Whether you are optimistic or not about the market, the next few weeks will be telling (probably a good time to take some profits if you’re in the market and wait)

We are starting to see the tails of housing not making the comeback we all were anticipating and consumer confidence eroding (now at the lowest point it’s been in 26yrs). This consumer confidence problem is a big deal, especially when combined with continued declines or stagnation in the job market. The consumer confidence is an attempt to measure what consumers think about the future outlook of their livelihoods. This means that if the general populous thinks the future is dim, they will react accordingly. In other words letting money out of their site will be a difficult thing to do.

Some argue, that keeping the money in savings is ok, considering banks have more in their coughers to lend out to big and small businesses alike. The problem with that theory (in relation to the current situation) is that consumer confidence in banks is eroding and banks are continuing to add more barriers to credit. The financial sector in general is struggling to make ends meet and the list of bank failures growing monthly. Banks need to find ways to make ends meet, the obvious source is the consumer. This is an odd problem all on it’s own though – Banks are taking more of the consumer funds to cover the taxes they borrowed in the first place – yes, we gave banks money through the government, so to pay us back, they are taking more of our money through assessing larger fees for using their services. This results in a lot of money poured down the drain on overhead (on both the government and financial organization sides), it also results in a deadweight loss as consumers choose to not partake in the new banking environment and keep their money out of the system.

So what does all this point to? Additional declines in the economy? A jobless recovery? The recession being over?

Well, I don’t think anyone can safely predict where things are going. There will always be controversy in the actions taken so far and what the correct actions should have been or are to fix the remaining problems. All I can say is that whether you’ve lost your job or 40% of your bank savings or not – Be cautious that the worst is not over and make the right decisions along the way. My favorite picture is of the 1932 timeframe of the stock market, after what looked like the worse decline ever…

 1929 Crash

There was a great recovery – see it there? Right at the end of 1929 – just before the rest of the fall halfway through 1930?

1930 Bear

Worse can happen – plan accordingly

UPDATE – A few more posts related to the topic today – Mish has a great review of David Waggoner’s technical chart of the current correction. Economicpicdata has a great graphic of current the thoughts of the public.