Congress went wild spending on Covid relief and related wasteful spending. Notice that the impetus for job openings (spending) occurred before “Angry Joe” Biden and Commie-la Harris were sworn in. So, the job creation claims by Biden/Harris were put into motion before they assumed office.
The lag in job openings growth after the surge in spending is clearly visible in the following chart, as is the BURNOUT in job openings growth after Covid spending burned out.
Harris is promising explosive spending if elected. And she is promising MORE regulations! And the regulatory burden will grow.
Under Biden/Harris, native born workers lost -2.7 million jobs in 2014 while foreign-born workers gained 13.4 million jobs. THAT is the great replacement of American workers.
Total jobs including government rose by a measly 12k.
The print was so low it was only above the two lowest estimates (those of Bloomberg Econ for -10K and ABN Amr0 for a 0 print). That means it was a 3 sigma miss to estimates.
And of course, as has been the case for the entire Biden admin, previous months were revised sharply lower once again: August was revised down by 81,000, from +159,000 to +78,000, and September was revised down by 31,000, from +254,000 to +223,000. With these revisions, employment in August and September combined is 112,000 lower than previously reported. This means that even after the monster September revision when 818K jobs were removed, 7 of the past 9 months were again revised lower!
This means that once the November jobs are released, we can be virtually certain that October will be revised to negative.
But wait, there’s more because while the total payroll number was just barely positive, if one excludes the 40K government jobs, private payrolls was in fact negative to the tune of -28K, down from 223K pre-revision last month, and the first negative print since December 2020. In other words, we were right… when it comes to actual, non-parasite “government” jobs.
To be sure, a big part of the drop was due to the one-time event discussed, including the Boeing strike and Hurricanes Helene and Milton. This is what the BLS said on the topic: “In October, the household survey was conducted largely according to standard procedures, and response rates were within normal ranges” however, “the initial establishment survey collection rate for October was well below average. However, collection rates were similar in storm-affected areas and unaffected areas. A larger influence on the October collection rate for establishment data was the timing and length of the collection period. This period, which can range from 10 to 16 days, lasted 10 days in October and was completed several days before the end of the month.”
More importantly, the BLS said that “it is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates because the establishment survey is not designed to isolate effects from extreme weather events. There was no discernible effect on the national unemployment rate from the household survey.”
Ironically, while the BLS was unable to “quantify the net effect” from the hurricanes, it was able to calculate that the number of people not at work due to weather surged to the third highest in recent history, up 512K!
In other words, the BLS now has an excuse to blame the plunge on, it just doesn’t know how to quantify it. Translation: if Trump is president next month, expect the downtrend to continue with little to no mention of hurricane as the BLS prepares to admit the true state of the labor market; if however Kamala wins, the November jobs will magically rebound (even as downward revisions accelerate) and all shall be back to fake normal.
Oh, and of course, today’s catastrophic jobs print gives the Fed a full carte blanche to again cut 25bps next week, even if the plunge was all hurricanes…
The rest of the jobs report was not that exciting: the unemployment rate printed at 4.1%, unchanged from last month and in line with expectations. The number of unemployed people was little changed at 7.0 million.
Among the major worker groups, the unemployment rates for adult men (3.9 percent), adult women (3.6 percent), teenagers (13.8 percent), Whites (3.8 percent), Blacks (5.7 percent), Asians (3.9 percent), and Hispanics (5.1 percent) showed little or no change over the month.
It’s worth noting that the unemployment rate actually rose almost 0.1% despite being reported as flat because in September it was 4.05% and in October it was 4.145%, and rose due to a surge in layoffs (+166K) as well as re-entrants (+108K). Additionally, as Southbay research notes, the average duration of unemployment rose from 22.6 weeks to 22.9 weeks
Wage growth came in slightly higher than expected, with average hourly earnings rising 0.4% in October, higher than the 0.3% expected, and up from the downward revised 0.3% in September (was 0.4%). On an annual basis, earnings rose 4.0%, in line with expectations, and above the downward revised 3.9% (was 4.0%).
Some more stats from the latest monthly report:
Among the unemployed, the number of permanent job losers edged up to 1.8 million in October. The number of people on temporary layoff changed little at 846,000.
The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.6 million in October. This measure is up from 1.3 million a year earlier. In October, the long-term unemployed accounted for 22.9 percent of all unemployed people.
Both the labor force participation rate, at 62.6 percent, and the employment-population ratio, at 60.0 percent, changed little in October.
The number of people employed part time for economic reasons was little changed at 4.6 million in October.
The number of people not in the labor force who currently want a job, at 5.7 million, was essentially unchanged in October. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.
Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force, at 1.6 million, was little changed in October. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, changed little at 379,000 in October.
Turning to the establishment survey, we find the following breakdown in jobs:
Health care added 52,000 jobs in October, in line with the average monthly gain of 58,000 over the prior 12 months. Over the month, employment rose in ambulatory health care services (+36,000) and nursing and residential care facilities (+9,000).
Employment in government continued its upward trend in October (+40,000), similar to the average monthly gain of 43,000 over the prior 12 months. Over the month, employment continued to trend up in state government (+18,000).
Within professional and business services, employment in temporary help services declined by 49,000 in October. Temporary help services employment has decreased by 577,000 since reaching a peak in March 2022.
Manufacturing employment decreased by 46,000 in October, reflecting a decline of 44,000 in transportation equipment manufacturing that was largely due to strike activity.
Employment in construction changed little in October (+8,000). The industry had added an average of 20,000 jobs per month over the prior 12 months. Over the month, nonresidential specialty trade contractors added 14,000 jobs.
And visually:
Three things stick out here:
First, manufacturing is a disaster, with the US losing manufacturing jobs for 3 months in a row, and 4 of the last 5. Can’t blame that on hurricanes.
Second, the number of construction jobs is becoming absolutely ridiculous, especially when contrasted with the plunge in actual housing starts, completions and last but not least, actual job openings.
Finally, delta between government jobs and private jobs was a whopping 12K, the biggest since covid. This means that more government jobs were added in October than all private jobs lost in the month! Just in case you needed to know how the Biden admin avoided a negative total headline print.
Mortgage applications were essentially flat last week as rates increased for the fourth time in five weeks, driven by bond market volatility in advance of the presidential election and the next FOMC meeting. The 30-year fixed rate, at 6.73 percent, was at its highest level since July 2024.
WASHINGTON, D.C. (October 30, 2024) — Mortgage applications decreased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 25, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 0.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 10 percent higher than the same week one year ago.
The Refinance Index decreased 6 percent from the previous week and was 84 percent higher than the same week one year ago.
S&P/Case-Shiller released the monthly Home Price Indices for August (“August” is a 3-month average of June, July and August closing prices). August closing prices include some contracts signed in April, so there is a significant lag to this data. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).
The US is the expensive tower of power … but it should be cheap. Getting rid of coal power was idiotic and The Left’s fear of nuclear power is laughable.
Europe’s fertilizer plants, steel mills, and chemical manufacturers were the first to succumb. Massive paper mills, soybean processors, and electronics factories in Asia went dark. Now soaring natural gas and electricity prices are starting to hit the US industrial complex.
On June 22, 600 workers at the second-largest aluminum mill in America, accounting for 20% of US supply, learned they were losing their jobs because the plant can’t afford an electricity tab that’s tripled in a matter of months. Century Aluminum Co. says it’ll idle the Hawesville, Kentucky, mill for as long as a year, taking out the biggest of its three US sites. A shutdown like this can take a month as workers carefully swirl the molten metal into storage so it doesn’t solidify in pipes and vessels and turn the entire facility into a useless brick. Restarting takes another six to nine months. For this reason, owners don’t halt operations unless they’ve exhausted all other options.
At least two steel mills have begun suspending some operations to cut energy costs, according to one industry executive, who asked not to be identified because the information isn’t public. In May, a group of factories across the US Midwest warned federal energy regulators that some were on the verge of closing for the summer or longer because of what they described as “unjust and unreasonable” electricity costs. They asked to be wholly absolved of some power fees—a request that, if granted, would be unprecedented.
Michael Harris, whose firm Unified Energy Services LLC buys fuel for industrial clients, says costs have risen so high that some are having to put millions of dollars of credit on the line to secure power and gas contracts. “That can be devastating for a corporation,’’ he says. “I don’t see any scenario, absent explosions at US LNG facilities’’ that trap supplies at home, in which gas prices are headed lower in the long term.
EIA Average Electricity Cost Cents
EIA cost data chart by Mish
EIA Cost Data January 2021 vs May 2022
Residential: 12.69 to 14.92
Commercial: 10.31 to 12.14
Industrial: 6.39 to 8.35
Transportation: 9.61 to 10.79
All: 10.36 to 12.09
Those prices are through May 2022. Much electrical energy comes from natural gas.
US Natural Gas Futures
US Natural Gas Futures courtesy of Trading Economics
US gas prices fluctuated wildly in June and July. I suspect the average price is 7.33 or so for both months. Things are decidedly worse in Europe.
EU Natural Gas Price
US Natural Gas Futures courtesy of Trading Economics
From 25 or even 50 to 200 is one hell of a leap. It’s somewhere between 300% and 700% depending on your starting point vs 100% or so for the US.
Let’s now check the latest PPI data for a look at where things are and more importantly headed.
PPI Electrical Power Index 2020-Present
PPI data from the BLS, chart by Mish
From pre-pandemic to January of 2021, the PPI electrical power index was flat. It has since surged on a relatively steady pace.
From May to July the index went from 231 to 238. That tacks on another three percentage points since the EIA report.
PPI Electrical Power Index 1991-Present
PPI data from the BLS, chart by Mish
Long Term Trend
The long-term trend does not exactly look pretty.
And as Bloomberg noted, Century Aluminum Co. says it’ll idle the Hawesville, Kentucky, mill for as long as a year, taking out the biggest of its three US sites.
The beer industry uses more than 41 billion aluminum cans annually, according to a Beer Institute letter to the White House dated July 1.
“These tariffs reverberate throughout the supply chain, raising production costs for aluminum end-users and ultimately impacting consumer prices,” according to the letter signed by the CEOs of Anheuser-Busch, Molson Coors, Constellation Brands Inc.’s beer division, and Heineken USA.
This letter to the president comes amid the worst inflation in more than 40 years and just months after aluminum touched a multi-decade high. Prices for the metal have since eased significantly.
Whatever victory beer makers and drinkers may have with aluminum prices may not last with US aluminum plants shutting down.
Then again, the cure for everything is likely to be a huge recession.
Zero Consumer Inflation
I am pleased to report there was no consumer inflation in July.
The CPI report resulted in a nonsensical Twitter debate on the meaning of zero. For the record, assuming you believe the numbers, there was indeed zero inflation month-over-month.
The accurate rebuttal is: One month? So what?
Moreover, zero is not as good as it looks. All of it was due to a 7.7 percent decline in the price of gasoline. And year-over-year inflation was a hot 8.5 percent.
Meanwhile, rent and food keep rising and the price of rent will be sticky. Gasoline is more dependent on recession and global supply chains.
The above reports and this one industrial costs puts a spotlight on the silliness of the Fed’s focus on consumer inflation as if that’s all that matters.
The Fed has blown three consecutive bubbles trying to produce two percent consumer inflation while openly promoting raging bubbles in assets and missing the boat entirely on industrial matters.
I just watched Dennis Quaid in “Reagan”. Excellent film. But it reminded me of how Reagan sank the Soviet Union: by outspending the Soviet Union on the arms race. It worked! The Soviet Union, hamstrung by grossly inefficent central planning, couldn’t keep up and collapsed under President George H.W.Bush.
Fast forward to today. Starting with Barack Obama and Joe Biden in 2009, following the financial crisis in 2008. The Federal government ramped up Federal spending, and Federal debt. While The Federal Reserve, the hand maiden to the Federal government, ramped up M2 Money supply.
“You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” – Rahm Emmanuel
Then came Biden/Harris who drove Federal debt and spending to absurb level (orange box). Like the financial crisis, fans of big government and big government spending will utter the word “Covid.” But that is gross misleading. Covid was the excused for wild spending and debt issurance. And MORE Fed money printing. It’s almost as if Obama/Biden/Harris were replicating Reagan’s bankrupcy strategy in reverse! That is, collapsing the US from within.
As we are all painfully aware, the US Debt now stands at $36 TRILLION with $220.3 TRILLION in unfunded liabilities. Too bad total US Assets are only $217 TRILLON.
Do I believe that Obama/Biden/Harris want a “Great Reset”? Absolutley. Just look at our fiscally unsustable open borders and our politiicians blatanly lying to us. :Like Ohio’s Senator Sherrod Brown who brags about his helping write the border bill that would reverse Trump’s deportations and fund the speeding up of immigration.
Mortgage applications decreased 6.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 18, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 6.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 3 percent higher than the same week one year ago.
The Refinance Index decreased 8 percent from the previous week and was 90 percent higher than the same week one year ago.
Implied volatility in Treasury yields has risen to the highest since December.
Confounded Interest - Anthony B. Sanders 
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