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  • New Jobless Claims In And Out Of The Oil Patch [View article]
    It already is. Primarily that's happening through the downturn in the U.S. energy extraction industry's orders for equipment used in oil and gas extraction, but the effects so far are relatively small where they have been more than offset by the benefit of falling oil and fuel prices.

    A good example of this is Illinois, home to equipment maker Caterpillar, where we see employment in industries like manufacturing begin to stall out and begin dropping between October 2014 through the preliminary data for February 2015, while other industries have grown during that same time, such as leisure and hospitality:

    So maybe a good way to describe this is that growth in other states is now slower than it would otherwise be if not for the distress in the U.S. oil patch.
    Apr 17, 2015. 07:21 PM | 1 Like Like |Link to Comment
  • Corrections, Omissions And The Hidden Recession [View article]
    Both things are true. Here's how:

    1. When oil prices first started falling, there was an immediate benefit for U.S. consumers, who could now buy both the same quantity of oil-based products as they did before and additional things, such as dine-out meals. So falling oil prices prompted revenues to grow in other sectors of the U.S. economy.

    2. When oil prices first started falling, instead of cutting their production and investment right away, domestic U.S. oil producers (particularly those in the high-cost-of-production "shale play" states), continued business as usual - in effect, they did the equivalent of tapping their savings to continue operations as they waited to see if the price drop would be short or if it would deepen.

    These two factors combined to produce an outsized surge in GDP growth in 2014-Q3. But not a sustainable one in the face of oil prices that continued to fall and stay down....

    The shakeout then began after oil prices dropped below $80 per barrel in early November 2014 (remember, because of the way payroll cycles work, new jobless claims typically lags by 2-3 weeks behind the actual events that prompt changes in the employee retention decisions of businesses, which is why it job losses in the energy sector began showing up in the data after mid-November). Looking at more recent data, that shakeout has continued at least through the end of March 2015.

    This is why GDP dropped so much below the previous quarter in 2014-Q4 and threatens to be outright negative in 2015-Q1.

    So what we have is two things happening simultaneously - we have a lot of people benefitting from falling oil prices at the same time they are clearly hurting people in the energy industry.

    And if we look at the other 42 states that don't have the same high-cost oil production industries that we focused on in the eight states in this article, we can confirm that's exactly the case - new jobless claims in these states have generally fallen since oil prices began falling after June 2014, a trend that has continued at least through the end of March 2015.

    Nationally, the trend appears flat because these two trends are generally offsetting each other.

    We'll follow up with a post covering this exact dynamic on our site later this week:

    We can't say if it will appear here at Seeking Alpha - that will be up to SA's editors.
    Apr 13, 2015. 04:18 PM | 1 Like Like |Link to Comment
  • China Recession Deepens In February 2015 [View article]
    Actually, yes, negative trade growth between 2 countries does signify a recession.

    Hope this helps clear up that misperception!
    Apr 9, 2015. 03:27 PM | Likes Like |Link to Comment
  • Dividends: U.S. Economy Contracts For Fourth Month In A Row [View article]
    Gary, shbennett,

    We double checked - the WSJ did indeed record OHI's payment as a reduction in its dividend back on 6 March 2015:

    That said, Gary's comment could well explain the apparent discrepancy, since the WSJ's automated system for determining whether a firm has increased or reduced its dividend may not be capable of recognizing and accounting for that particular situation.
    Apr 2, 2015. 11:47 AM | Likes Like |Link to Comment
  • The National Dividend Vs. GDP [View article]
    Your criticism would hold up a lot better if you presented an alternative explanation that successfully describes what's evident from the analysis of the data we've presented. What we're doing is science, where we've advanced a hypothesis that potentially explains what we observe in the data. Without presenting a coherent and viable alternative, your argument is actually less than the equivalent of the kind typically put forward by science deniers.
    Mar 20, 2015. 10:56 AM | 1 Like Like |Link to Comment
  • The National Dividend Vs. GDP [View article]
    You might want to take your charge up with the Bureau of Labor Statistics and the Census Bureau. All we did was take the topline data they reported for average annual expenditures per "consumer unit" and multiply it by their reported number of consumer units. The only data mining involved is finding their Consumer Expenditure Survey in the first place.

    But watch out - unless you carefully construct a Faraday cage from aluminum foil to line your hat when you talk to them, they will be able to read your thoughts.
    Mar 20, 2015. 10:49 AM | 1 Like Like |Link to Comment
  • The National Dividend Vs. GDP [View article]
    You might find it helpful to follow the links provided in the article. Specifically, the very first one (and really, two of the first three), and also the link for "increasing financialization" later in the article.

    Hope this helps clear up any confusion!
    Mar 20, 2015. 10:44 AM | Likes Like |Link to Comment
  • Calculating The National Dividend [View article]
    We doubt that there would ever be such a thing as a perfect calculation - what is possible though now that wasn't before is that we can now reasonably approximate it, assuming that the ways that we've extended Fisher's original concept to make it a practical calculation hold.
    Mar 20, 2015. 10:34 AM | Likes Like |Link to Comment
  • The 'Hidden' U.S. Recession [View article]
    pg guy wrote:

    "While there may be a few individuals doing some specialized individual engineering, consulting, or contract work at a well pad, the vast majority are employees of firms doing excavating, drilling, cementing, hydrofracturing (aka fracking), pipelining, and other construction related tasks."

    That's a very good point - the interesting dynamic here is that a very large percentage of these firms are also staffing large portions of their workforces with independent contractors, which is one reason why the overall share of independent contractors across the entire oil, gas and mining industries is so high.

    Another good point, made elsewhere, is that a lot of the reduction in labor that has also occurred by reducing the hours that these individuals are working, where before oil prices began dropping in early July 2014, it was very common for many of these workers to put 70+ hours a week in on the job. Since then, many of those hours have gone away, leaving us with the situation where a good number of people are still employed, but aren't making anywhere near the incomes they had been. That aspect also has a contractionary effect on the economy.
    Mar 12, 2015. 01:19 PM | 2 Likes Like |Link to Comment
  • U.S. Joins China In Recession In January 2015 [View article]
    First, citing China's official trade and economic statistics is a wasteful exercise:

    "Given their historical inaccuracy, trade and economic statistics reported by China's government agencies should be taken with a strong grain of salt, as even the nation's leaders believe the data can only and should only be used to get a general sense of the overall direction of China's economy."

    Second, regarding China's export growth, that's an indication that the rest of the world is outperforming China, which you can see by comparing it to the value and volume of what China imports, which we do not need to rely upon China's official statistics to measure.

    Third: A recession does not mean 2Q of negative growth, and even if it did, China qualifies as being in recession by that standard based on a wide variety of measures.
    Mar 11, 2015. 08:26 AM | Likes Like |Link to Comment
  • Winter 2015 Snapshot Of Expected Future S&P 500 Earnings [View article]
    Since "number of shares" is in the denominator of both the dividends per share calculation and the earnings per share calculation, the same observation that applies to the effect of the change upon earnings per share will also apply to dividends per share.
    Feb 19, 2015. 05:53 PM | Likes Like |Link to Comment
  • 10 Years Of Disappearing Teen Jobs [View article]
    Tin Lizzy,

    We appreciate that you're trying to make a good faith effort to counter our analysis, so we'll take some time to fill in some of the missing pieces in the data that you're likely not familiar with.

    In looking to see whether older Americans are really displacing teens (and young adults) from the labor force, you have to pay attention to a lot of pieces, starting with the changing age demographics of the U.S. labor force over time, which is something that you need to control for in any competent analysis. You need to be able to answer questions like: "Does an increasing number of Age 55-64 individuals (aging of the Baby Boomers) explain why the relative percentage of teens and young adults (Age 16-24) has smaller share than it did X years ago?"

    [We point out Age 16-24 because this age group has represented approximately half of all minimum wage earners, which you can confirm, as we have, by consulting all of the BLS' reports on the characteristics of minimum wage workers.]

    You also need to take factors like inflation and economic growth into account, because those are both things that directly affect the number of jobs that exist.

    And then, you have to look at the entire income spectrum - you cannot just focus at the minimum wage level, although as it turns out, that threshold is very significant when you review the available data over an extended period of time.

    Here's what you'll find when you correctly combine the relevant pieces:

    1. The population of teens and young adults has been very stable for a prolonged period of time. The actual numbers of teens and young adults has not significantly changed.

    2. After adjusting for inflation, the aggregate income earned by all Age 16-24 year olds is virtually unchanged over a 20 year long period. The only exception during that period coincides with the inflation and deflation phases of the Dot-Com Bubble (1997-2003), where the Bubble provided enough extra economic growth during the period to temporarily offset the negative impact of minimum wage hikes that occurred at that time until it ended.]

    3. Going by the number of individuals with incomes, teens and young adults whose wages place them above the inflation-adjusted minimum wage level have not been displaced from the U.S. labor force. That's especially significant because if older workers were really displacing teens from the job market, we would see these numbers decline right along with the number of teens and young adults earning incomes below the inflation-adjusted level affected by minimum wage hikes, and they're not - instead they've actually increased slightly. What we do find reported in the data however is that very large numbers of teens and young adults with incomes that place them below the minimum wage income threshold are no longer there. Working teens and young adults below this level have essentially disappeared over time.

    So there you have it: over the last 20 years, the population is virtually unchanged, the inflation-adjusted aggregate amount of wages being paid to these individuals is virtually unchanged as the numbers of teens and young adults making more than the inflation-adjusted minimum wage level has very slightly increased. Meanwhile, what has changed significantly is the inflation-adjusted minimum wage threshold.

    So guess what pops out of the data when you combine all these factors? A growing number of teens and young adults with incomes disappear over time from the labor force. All are at incomes at or below the inflation-adjusted minimum wage level.

    None of this should be a surprise to anybody who has taken time to review all our analysis on the topic - we've covered each and every single one of these factors. Meanwhile, you should be aware each of the papers you've recommended reviewing have problems - especially the Card/Krueger paper, which we would describe as borderline junk science. But we'll leave that discovery to you as an exercise.
    Feb 16, 2015. 06:03 PM | Likes Like |Link to Comment
  • Crude Oil Prices In The Driver's Seat? [View article]
    Thank you for your question. The real correlation is between the S&P 500 and the index' expected future dividends per share, which makes your observation extremely easy to explain. There was very little in the way of actual future dividend erosion related to the downturn in oil prices prior to the first quarter of 2015, which is why you don't see any correlation between the downturn in oil prices and the S&P during the period preceding the last week of 2014. Simply put, all of the relevant data is in 2015.

    As for your baseless accusations of cherry picking, since we've already established that there was no relevant reason to extend any of our analysis significantly backwards into 2014, we only went one week back before the beginning of 2015 to establish a relevant baseline for comparison.

    To really appreciate the extent to which investors appearing to follow something other than their expectations of future dividends in setting stock prices is interesting, even if it only lasts for a short period of time, you would have to both follow dividend futures on a regular basis and be aware of the relationship between them and the behavior of stock prices. We appreciate that you're both unfamiliar with dividend futures and are completely unaware of their role as the primary driver of stock prices, much less any of our own previous discussions of the topic.

    Thanks also for the link to the charts showing the spurious correlation charts. We're fans of Tyler Vigen's work exploring the topic and have even contributed some of our own to the discussion:
    Feb 16, 2015. 04:54 PM | Likes Like |Link to Comment
  • 10 Years Of Disappearing Teen Jobs [View article]
    Quick clarification, needed given how SA displays replies to comments - our "Wow, mathematically illiterate too!" comment above applies to the following statement made by Ba1k3es:

    "Found a much better graph that shows what is going on much easier.

    Clearly the number of minimum wage jobs increased over the period of minimum wage rate increases. Clearly those 25+ is a much greater share."
    Feb 11, 2015. 01:36 PM | Likes Like |Link to Comment
  • A Reality Check For Greece's New Government [View article]
    There's a bigger picture to consider - Greece's income-based taxes are greater than Sweden's and Italy's (see following chart from The Economist):
    Feb 11, 2015. 10:56 AM | Likes Like |Link to Comment