US Q1 2018 GDP estimated at 2.3% as personal consumption collapses; wage growth highest in a decade; personal saving rate falls

US real GDP increased at an annual rate of 2.3% in the first quarter of 2018 as per an advance estimate released by the Bureau of Economic Analysis.

US GDP Q1 2018
Source: U.S. Bureau of Economic Analysis

Continue reading “US Q1 2018 GDP estimated at 2.3% as personal consumption collapses; wage growth highest in a decade; personal saving rate falls”

This is what has happened to the unemployment rate in the US four to eight months before every recession since the 1940s and why it matters now

The US Bureau of Labor Statistics data reveals that the US unemployment rate has a hit a new multi-year low four to eight months before the start of every recession since the 1940s. In other words, the economy hits full employment four to eight months before the start of a recession.

The graph below might help visualise it better (the shaded areas indicate recessions),

US unemployment rate 1948 to 2018
US unemployment rate (shaded areas indicate recessions); Source: U.S. Bureau of Labor Statistics

Why does this matter now? Continue reading “This is what has happened to the unemployment rate in the US four to eight months before every recession since the 1940s and why it matters now”

The European banking crisis is far from over

Hidden away in the European Central Bank’s supervisory and prudential statistics are metrics for asset quality. It isn’t easy to find and if you do find them then the spreadsheets won’t open without issues. Once If you manage to get them to work you will find some quite stunning statistics.

Here are the numbers and graphs for asset quality as of September 30, 2017 (the latest set of data available), Continue reading “The European banking crisis is far from over”

Weekly overview: US employment numbers; Bond yields fall globally over the past month; Stock markets volatility

US employers added only 103,000 jobs in March as against 185,000 new jobs expected by economists surveyed by Bloomberg. Jobs have been added for 90 straight months, the longest phase on record. January’s job addition number was revised sharply downward from 239,000 to 176,000. Wage growth was 2.7% which was largely down to tax cuts driven wage rises earlier during the year rather than real wage inflation.

Any addition under 80,000 new jobs a month would cause the unemployment rate to rise. As we covered earlier, unemployment has always hit record multi year lows on an average 6 to 12 months before the start of a recession.

The graphs below might help visualise it better, Continue reading “Weekly overview: US employment numbers; Bond yields fall globally over the past month; Stock markets volatility”

The problem Asset Managers have is that they have money that must be invested

The 10 largest asset managers in the world, a list that includes BlackRock, Vanguard, State Street, Fidelity, Allianz, UBS and JP Morgan Asset Management have some $32 trillion assets under management (at the end of 2017). The entire space of asset managers have around $65 trillion of assets under management.

Fund managers have over $3 trillion of new inflows a year, primarily down to private pensions (governments keep pushing it given the looming state pension crisis). These fund managers get paid as long as they invest the money. There lies the problem – they have to invest it. It isn’t as simple as it sounds. Continue reading “The problem Asset Managers have is that they have money that must be invested”

Inefficiency keeps unemployment low and here is why it now matters

Everything by design is kind of complicated. And because it is complicated it is inefficient. But inefficiency keeps people in jobs. Let us explain.

Education is form of an inefficiency. Just 20% of people go on to a role that requires their knowledge from college or university education. But keeping more people in education keeps them out of the job market.

Government regulations change so often that it inherently creates several roles. The law is complicated and inefficient, but it keeps many people in a job and creates new jobs.

New technologies become a trend and all big organizations want to keep up with the trend. The result? More jobs for new stuff. And new stuff brings with it new experts, new certifications and new training. Continue reading “Inefficiency keeps unemployment low and here is why it now matters”