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Alberta had 10,000 fewer jobs, country’s unemployment rate inches up to 7.2%

Canada's jobless rate currently stands at 7.2 per cent after the economy lost 5,700 jobs last month.

Canada’s jobless rate currently stands at 7.2 per cent after the economy lost 5,700 jobs last month. (LM Otero/Associated Press)

That’s worse than what economists were expecting — for the economy to add about 6,000 jobs during the month.

Statistics Canada reported Friday that fewer people were working in Alberta, Manitoba as well as Newfoundland and Labrador in January. Ontario was the lone province with an employment increase.

“Perhaps the greatest thing of note is that regional weakness in the energy dependent areas is being offset by regional strength in Ontario,” Scotiabank economist Derek Holt said in a note after the numbers came out.

Alberta led the downside, with 10,000 fewer jobs.

Ontario added twice that many, with 20,000 new jobs created. In the past 12 months, Alberta has lost 35,000 jobs, while Ontario has added 100,000.

At 7.4 per cent, Alberta’s jobless rate is now at its highest level in almost 20 years, and is also now higher than the national average for the first time since 1988.

“This is a mild disappointment on Canadian job markets but nothing to get terribly excited over given the small magnitude of the decline and the mixed details,” Holt said.

CANADIAN UNEMPLOYMENT IN DECEMBER

Is Judgment Day At Hand?

November 12, 2015

Is Judgment Day At Hand?

What is Judgment Day?

It is like ancient times that the Feds, under Greenspan, somehow decided that US needed to follow a zero interest rate policy, a policy now known as the ZIRP. It was 2008 when Bernanke gave birth to the term Quantitative Easing, QE. QE was followed by Operation Twist, and its sequels – QE2 and QE3.

The new buzzword is “normalization”. Normalization is the reversal of the QE operations and the raising of interest rates to above zero. Whether we agree or disagree is irrelevant. The fact is that the BLS just declared the unemployment rate is at 5%, a level that should justify initiating the normalization process starting with the next FOMC meeting in December. In other words, judgment day is at hand.

juday Batten down the hatches, judgment day approacheth
Image credit: World Wrestling Entertainment (WWE)

The following two charts summarize the Fed’s policies nicely. The first shows the Federal Funds rate. It dropped from over 5% in 2007 to zero today. So we are making a big deal over a possible 25 basis points hike? I will leave that question for later.

Effective Federal Funds rate. It may be hiked from nothing to almost nothing soon, but what difference would it really make? – click to enlarge.

The second chart shows the Fed Balance Sheet, also starting in 2007. It went from $875 billion in 2007 to $4.5 trillion today, an increase of $3.625 trillion.

Total assets held by the Federal reserve. This unprecedented intervention has delivered “the weakest economic recovery of the entire post-WW2 era”. This result should be no surprise to anyone, except perhaps the monetary mandarins themselves – click to enlarge.

…click on the above link to read the rest of the article…

Looking at the two charts above, they beg the question: How do you normalize the extreme policies of the last 8 years? If normal means a return to a 5% federal funds rate and reducing the Fed’s balance sheet back to under $1 trillion, we have a hell of a long way to go.

We’re Flirting With Another Recession

October 20, 2015

We’re Flirting With Another Recession

Meaning, it might already be here.

Back in May, we were about to go to the printer with the June issue of Boom & Bust when I put on the brakes. My team wasn’t happy to hear it since these things take time to put together. But I didn’t have a choice. I had found compelling evidence to suggest that we were not just looking at another recession, but already possibly back in one.

So, we took a close look at how we’d been flirting with recession over the first half of the year, while economists kept spouting that we had reached escape velocity. Now, after a bit of reprieve during the summer, it looks to be happening again.

We recently got the worst nonfarm payroll jobs report in months as only 142,000 jobs were created last month, with August revised almost 40,000 jobs lower. Plus, labor force participation hit a new low at 62.4%. Overall, we’ve averaged 198,000 jobs per month in 2015, compared with 260,000 jobs in 2014.

For this reason and others, I have reason to believe we’re once again falling into a recession.

What makes the jobs report so concerning is that it’s a lagging indicator – meaning, it’s following a particular trend that’s already started. It supports the possibility that recession is already here.

But let’s also review some of the indicators I looked at back in June. The U.S. Macro Surprise Index shows when indicators beat or miss expectations. Green is when we’re dancing on rooftops because everything’s better than expected. You know what red means. And you can see that 2015 has been a total miss. It’s been negative all year, with early 2015 being the worst period since early 2009.

It might be up from earlier this year, but after the last couple months, it’s dangerously close to falling again.

…click on the above link to read the rest of the article…

Hawking: Greedy capitalists may pocket wealth as robots replace human workers

October 9, 2015

Hawking: Greedy capitalists may pocket wealth as robots replace human workers

Renowned physicist Stephen Hawking’s latest Apocalyptic prediction involves neither colonizing aliens nor malicious artificial intelligence – just plain old human greed.

The scientist was commenting on so-called technological unemployment, a trend of automatization taking over the jobs that previously required humans. According to some estimates, in a matter of decades robots may become better and cheaper than humans in most tasks and make most of the human workforce unemployable.

Hawkins believes that in such a scenario we should expect not prosperity but drastic economic inequality in the future.

“If machines produce everything we need, the outcome will depend on how things are distributed,” he said in a Reddit Ask Me Anything session Thursday.

“Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.”

Hawkins’ previous predictions of emerging threats dealt with automatic weapons controlled by artificial intelligence (AI) and the potential dangers of actively searching for alien life.

Economic inequality is a problem growing worse in developed countries. According to the OECD, the situation is worse than 30 years now, with the US and Israel performing worst.

Why This Feels Like a Depression for Most People

October 9, 2015

Why This Feels Like a Depression for Most People

“And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.” – John Steinbeck, The Grapes of Wrath

Everyone has seen the pictures of the unemployed waiting in soup lines during the Great Depression. When you try to tell a propaganda believing, willfully ignorant, mainstream media watching, math challenged consumer we are in the midst of a Greater Depression, they act as if you’ve lost your mind. They will immediately bluster about the 5.1% unemployment rate, record corporate profits, and stock market near all-time highs. The cognitive dissonance of these people is only exceeded by their inability to understand basic mathematical concepts.

The reason you don’t see huge lines of people waiting in soup lines during this Greater Depression is because the government has figured out how to disguise suffering through modern technology. During the height of the Great Depression in 1933, there were 12.8 million Americans unemployed. These were the men pictured in the soup lines. Today, there are 46 million Americans in an electronic soup kitchen line, as their food is distributed through EBT cards (with that angel of mercy JP Morgan reaping billions in profits by processing the transactions).

These 46 million people represent 14% of the U.S. population. There are 23 million households on food stamps in a nation of 123 million households. Therefore, 19% of all households in the U.S. are so poor, they require food assistance to survive. In 1933 there were approximately 126 million Americans living in 30 million households. The government didn’t keep official unemployment records until 1940, but the Department of Labor estimated 12.8 million people were unemployed during the worst year of the Great Depression or 24.9% of the labor force. By 1937 it had fallen to 14.3% or approximately 8 million people.

…click on the above link to read the rest of the article…

One True Measure of Stagnation: Not in the Labor Force

October 6, 2015

One True Measure of Stagnation: Not in the Labor Force

This is a stark depiction of underlying stagnation: paid work is not being created as population expands.

Heroic efforts are being made to cloak the stagnation of the U.S. economy. One of these is to shift the unemployed work force from the negative-sounding joblesscategory to the benign-sounding Not in the Labor Force (NILF) category.

But re-labeling stagnation does not magically transform a stagnant economy.To get a sense of long-term stagnation, let’s look at the data going back 45 years, to 1977.

NOT IN LABOR FORCE (NILF) 1976 to 2015

I’ve selected data from three representative eras:

— The 20-year period from 1977 to 1997, as this encompasses a variety of macro-economic conditions: five years of stagflation and two back-to-back recessions (1977 – 1982), strong growth from 1983 to 1990, a mild recession in 1991, and growth from 1993 to 1997.

— The period of broad-based expansion from 1982 to 2000

— The period 2000 to 2015, an era characterized by bubbles, post-bubble crises and low-growth “recovery”

In all cases, I list the Not in Labor Force (NILF) data and the population of the U.S.

1977-01-01: 61.491 million NILF population 220 million

1997-01-01 67.968 million NILF population 272 million

Population rose 52 million 23.6%

NILF rose 6.477 million 10.5%

1982-07-01 59.838 million NILF (start of boom) population 232 million

2000-07-01 68.880 million NILF (end of boom) population 282 million

Population rose 50 million 22.4%

NILF rose 9.042 million 15.1%

2000-07-01 68.880 million NILF population 282 million

2015-09-01 94.718 million NILF (“recovery”) population 322 million

Population rose 40 million 14.2%

NILF rose 25.838 million 37.5%

Notice how population growth was 23.6% 1977-1997 while growth of NILF was a mere 10.5% As the population grew, job growth kept NILF to a low rate of expansion. While the population soared by 52 million, only 6.5 million people were added to NILF.

In the golden era of 1982 – 2000, population rose 22.4% while NILF expanded by 15%. Job growth was still strong enough to limit NILF expansion. The population grew by 50 million while NILF expanded by 9 million.

…click on the above link to read the rest of the article…

Failure to Launch

October 6, 2015

Failure to Launch

The popular belief that the U.S. economy has been steadily recovering has endured months of disappointing data without losing much of its appeal. A deep bench of excuses, ranging from the weather to the Chinese economy, has been called on to justify why the economy hasn’t built up any noticeable steam, and why the Fed has failed to move rates off zero, where they have been for seven years. But the downright dismal September jobs report that was released last Friday may prove to be the flashing red beacon that even the most skilled apologists can’t explain away. The report should make it abundantly clear that we are far closer to recession than recovery. But old notions die hard and, shockingly, most economists still believe that we have hit a temporary speed bump not a brick wall. But at some point healthy hope turns into dangerous delusion. We may have just turned that corner.

The report was horrific any way you slice it. The consensus of economists had expected to see 203,000 new jobs in September, not a particularly impressive number, but at least it would have been an improvement from the 173,000 new jobs that were added in August. Not only did September miss substantially, at just 142,000 jobs, but August was revised down to 136,000 (Bureau of Labor Statistics) (there were economists who had even expected August to be revised up to as high 247,000). This means that the last three months have averaged just 167,000 jobs, a level that is not even close to where we should have been in a real recovery. But it gets worse from there.

…click on the above link to read the rest of the article…

Is the Local Economy the Solution to a Post-Capitalist World?

October 5, 2015

Is the Local Economy the Solution to a Post-Capitalist World?

In his new book, Michael Shuman debunks many of the myths around economic development.

Think local. Buy local. Support your local community. Community investment.

This all makes sense, right? Right. Then why do so many government-funded economic development programs get this wrong?

According to community economics advocate Michael Shuman, mainstream economic development today is a scam. States and local government agencies spend big money to lure corporations to their region but do little to stimulate the local economy or support local businesses. And those small businesses, not the chain stores, are often what give a neighborhood its unique identity and make it desirable to live in.

In his new book, The Local Economy Solution: How Innovative Self-Financing “Pollinator” Enterprises Can Grow Jobs and Prosperity (Chelsea Green, June 2015), Shuman debunks many of the myths around economic development—that tax breaks for wealthy corporations are beneficial for all, that only big businesses create jobs, that consumers only care about price, and that social enterprises can’t be self-financing.

Shuman, who has been a leader in the local economy movement for more than two decades, proposes low-cost pollinator businesses to stimulate the local economy through small business development. He defines a pollinator as a self-financing business with a mission of supporting other local businesses.

Pollinators lead to more dollars spent within that community, and often favor a triple bottom lineapproach that makes a connection between the three Ps: people, planet and profits.

Unlike impersonal chain stores, local pollinator businesses foster more connection between consumers and retailers, food growers and customers, and businesses and their employees, resulting in a healthier, more equitable community, which translates into safer neighborhoods that can weather economic fluctuations.

…click on the above link to read the rest of the article…

Canada’s economy: 5 reasons not to panic

August 28, 2015

Canada’s economy: 5 reasons not to panic

Cheap gas, solid hiring and a strong housing market help Canadians weather the financial storm

A recent spate of frightening economic headlines paints a dire picture of the economy, but an examination of some basic gauges of Canadians’ financial health demonstrates it’s not all doom and gloom.

News of plummeting oil prices, the struggling stock market and a loonie that recently dipped below the 75-cent US level for the first time in more than a decade have Canadians on edge and fearful for their their futures, as economists debate whether this country is in a recession.

But already, things are looking up. The North American and global stock markets surged on Thursday, oil rebounded to above $42 US a barrel and the Canadian dollar recovered to above the 75-cent line.

While the effects of the economic downtown on Canadians should not be downplayed, there are plenty of reasons not to panic — hiring remains steady, home values are up, gas prices are down, people are generally managing their debt responsibly and most Canadians have nice nest eggs of savings and investments.

1. Most people are working

Hiring has remained steady in Canada despite a shrinking economy. (CBC)

The most recent job numbers from Statistics Canada show that employment in Canada is steady and job growth is modest.

In July, the economy created 6,600 additional jobs, and the unemployment rate remained at 6.8 per cent for the sixth straight month.

“Make no mistake, this is not a strong report … but it’s also not notably weak,” BMO chief economist Douglas Porter told CBC News at the time. “While many have been quick to label this year’s economic performance a recession, the job numbers just haven’t backed that up.”

As of July, Canada had added 100,000 jobs in 2015, despite a major downturn in the oil and gas sector.

…click on the above link to read the rest of the article…

Does Capitalism Cause Poverty?

August 23, 2015

Does Capitalism Cause Poverty?

Capitalism gets blamed for many things nowadays: poverty, inequality, unemployment, even global warming. As Pope Francis said in a recent speech in Bolivia: “This system is by now intolerable: farm workers find it intolerable, laborers find it intolerable, communities find it intolerable, peoples find it intolerable. The earth itself – our sister, Mother Earth, as Saint Francis would say – also finds it intolerable.”

But are the problems that upset Francis the consequence of what he called “unbridled capitalism”? Or are they instead caused by capitalism’s surprising failure to do what was expected of it? Should an agenda to advance social justice be based on bridling capitalism or on eliminating the barriers that thwart its expansion?

The answer in Latin America, Africa, the Middle East, and Asia is obviously the latter. To see this, it is useful to recall how Karl Marx imagined the future.

For Marx, the historic role of capitalism was to reorganize production. Gone would be the family farms, artisan yards, and the “nation of shopkeepers,” as Napoleon is alleged to have scornfully referred to Britain. All these petty bourgeois activities would be plowed over by the equivalent of today’s Zara, Toyota, Airbus, or Walmart.

As a result, the means of production would no longer be owned by those doing the work, as on the family farm or in the craftsman’s workshop, but by “capital.” Workers would possess only their own labor, which they would be forced to exchange for a miserable wage. Nonetheless, they would be more fortunate than the “reserve army of the unemployed” – a pool of idle labor large enough to make others fear losing their job, but small enough not to waste the surplus value that could be extracted by making them work.

Read more at http://www.project-syndicate.org/commentary/does-capitalism-cause-poverty-by-ricardo-hausmann-2015-08#ZHmOTir0drCVm34s.99

Cincinnati’s experiment with an economy that works for everyone

August 10, 2015

With the 2016 presidential campaigns underway, economic populism has taken center stage. Bernie Sanders, calling for a $1 trillion investment in a sustainable infrastructure jobs program along with publically funded health care and college education, has forced Hillary Clinton to offer vague support for similar measures, while even some Republican candidates, like Marco Rubio, have asserted the need to stop the “fall of the [American] worker.” Not content to wait for national politicians to follow through on non-binding proposals, 1worker1vote — a joint venture launched in 2009 by the United Steelworkers, or USW, and Mondragon USA — has been pursing a grassroots agenda to move populist discontent beyond protest and toward the building of new institutions.

The 1worker1vote network has developed and is beginning to implement a “union co-op” model, which calls for a business structure that combines worker, and sometimes community, ownership with union representation. With the model, 1worker1vote hopes to demonstrate the viability of a democratic economy, both in terms of ownership and management, capable of eventually replacing the corporate-managed economy that generates astounding wealth for those at the top while leaving nearly a quarter of the country living in poverty and half the population stuck in a debt trap with zero net assets.

“Profit should be for people, not for profit’s sake, and capital, while important, is subordinate to labor,” explained Ellen Vera, a founding member of both 1worker1vote and one of its member coops, the Cincinnati Union Cooperative Initiative, or CUCI.

The claim conjures images of the clashes between labor and capital of a bygone era, and, more recently, growing grassroots protest for a democratic global economy that began in 1994 with the Zapatistas in Chiapas, Mexico and have continued during the first years of the new millennium with the global justice and Occupy movements.

A Prescription for Peace and Prosperity

August 5, 2015

A Prescription for Peace and Prosperity

The question is often asked: “What can we do?” Here is a prescription for peace and prosperity.

We will begin with prosperity, because prosperity can contribute to peace. Sometimes governments begin wars in order to distract from unpromising economic prospects, and internal political stability can also be dependent on prosperity.

The Road to Prosperity

For the United States to return to a prosperous road, the middle class must be restored and the ladders of upward mobility put back in place. The middle class served domestic political stability by being a buffer between rich and poor. Ladders of upward mobility are a relief valve that permit determined folk to rise from poverty to success. Rising incomes throughout society provide the consumer demand that drives an economy. This is the way the US economy worked in the post-WWII period.

To reestablish the middle class the offshored jobs have to be brought home, monopolies broken up, regulation restored, and the central bank put under accountable control or abolished.

Jobs offshoring enriched owners and managers of capital at the expense of the middle class. Well paid manufacturing and industrial workers lost their livelihoods as did university graduates trained for tradable professional service jobs such as software engineering and information technology. No comparable wages and salaries could be found in the economy where the remaining jobs consist of domestic service employment, such as retail clerks, hospital orderlies, waitresses and bartenders. The current income loss is compounded by the loss of medical benefits and private pensions that supplemented Social Security retirement. Thus, jobs offshoring reduced both current and future consumer income.

…click on the above link to read the rest of the article…

The Cost of Stagnation: We’re Living in Limbo

August 1, 2015

The Cost of Stagnation: We’re Living in Limbo

This erosion of opportunities to complete life’s stages and core dramas is rarely recognized, much less addressed.

The idea that human life subdivides rather naturally into stages is based on our natural progression from childhood into adulthood and eventual (if we’re lucky) old age.

Confucian thought views life as a developmental process with seven stages, each roughly corresponding to a decade: childhood, young adulthood (16-30), age of independence (30-39), age of mental independence (40-49), age of spiritual maturity (50-59), age of acceptance (60-69), and age of unification (70 – end of life).

Each stage has various tasks, goals and duties, which establish the foundation for the next stage.

Each stage is centered on a core human challenge: for the teenager, establishing an identity and life that is independent of parents; for the young adult, finding a mate and establishing a career; for the middle-aged, navigating the challenges of raising children and establishing some measure of financial security; for those in late middle-age, helping offspring reach independent adulthood and caring for aging parents; early old age, seeking fulfillment now that life’s primary duties have been accomplished and managing one’s health; and old age, the passage of accepting mortality and the loss of vitality.

The End of Secure Work and the diminishing returns of financialization are disrupting these core human challenges and frustrating those who are unable to proceed to the next stage of life:

1. Teenagers are being pressured to focus their lives on achieving a conventional financial success (see “Training for Discontent” in From Left Field) that is becoming harder to achieve.

2. Young adults without secure full-time careers cannot afford marriage or children, so they extend the self-absorption of late adolescence into middle age.

3. The middle-aged are finding financial security elusive or out of reach as they struggle to fund their young adult children, aging parents and their own retirement.

…click on the above link to read the rest of the article…

The Big Bad Bear Case

July 26, 2015

The Big Bad Bear Case

My aim with this article is to outline, with facts, large global structural issues that I believe everyone, bulls and bears alike, should be fully aware of. While some of this discussion may rattle the cage a bit you will hopefully find this article well researched and informative.

Recently I’ve outlined why we switched our trading stance from buy mode (Door Shut) to sell mode (Inversion) on stocks. This week I’ve also outlined the aggregate technical factors that have us very cautious on stocks in general (Totality) while not precluding the possibility of new highs.

This article, however, will focus on much larger structural issues that have been building for years, decades indeed. And no this article is not so much about central banks, debt issues, Greece, China, deficits, etc. While all these are important as part of the overall picture, they are mere current symptoms of a much larger issue that is at the core of all that is already in play and will only deepen in our societies in the decades to come: Institutionalized poverty with an ever widening divide between the haves and the have nots which will result in an eventual drastic revaluation of asset classes across the board.

And before you think I’m off on a hyperbolic rant let me assure you my reasoning will be very much fact based and I have reason to believe the US Fed and Janet Yellen are very much aware of it all, but have no solution to prevent it from happening. In fact it is mathematically unavoidable.

A few weeks ago in The Greek Butterfly I discussed the concept of a global math construct that needs to maintain its integrity to make global debt serviceable. To that end I concluded that they would not let Greece default.

…click on the above link to read the rest of the article…

The Media Is Wrong About The Fed

June 24, 2015

The Media Is Wrong About The Fed

Earlier this year, most of the financial stories were about how the Fed will start to raise interest rates in June. Much of this speculation was due to the lower unemployment rate, and the expectation that the U.S. economy would be in full recovery. This past Wednesday, the Fed decided not to raise interest rates, despite the fact that most media pundits were certain that it would finally have normalized its monetary policy by now.

Despite the recent inaction by the Fed, many still believe a rate hike will occur inSeptember. The problem with this assumption is that most media analysts are basing it on a headline number such as unemployment, and not the underlying details of the labor market.

Currently, the unemployment rate stands at 5.5%. Although this looks great on the surface, one of the reasons the unemployment rate is so low, is because only62% of the population is participating in the work force.

When looking at this chart, one can see a clear correlation between the decline in the unemployment rate, and the decline in the labor participation rate. The mainstream press attributes this to the retirement of baby boomers, but the statistics don’t support their thesis.

This chart clearly shows that the declining labor participation rate has come from the age groups between 16-54 years old, people that are considered to be in their prime working years. The age group of 55-75, has actually increased its labor participation rate. This is the opposite of what normally would occur.

…click on the above link to read the rest of the article…

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