Tuesday, August 4, 2015

Maybe This Is What The Fed Is Worried About???

Simple chart below showing the annual change in full time and part time jobs.  Full time employment peaks have, without fail for almost 50 years, peaked about here (between 2.5 and 4 million full time jobs added annually) and soon thereafter fallen to negative territory.

What is also clear is that both private and government credit (debt) are waning...private has been net deleveraging since '09 while government deficits have declined by fourfold and Federal Reserve direct net QE has ceased expanding it's balance sheet (yes, the Fed does continue buying, replacing the maturing debt to maintain it's $4.5 trillion balance sheet).

As the following chart shows, this is the first time (at least since WWII) that all FT jobs have not been recovered let alone FT jobs created for the growing population.

Simply put, this is as good as it gets.  As you can see below, population growth among the 0-54yr/old population is at a standstill and interest rates effectively can go no lower.  There is no driver for increased demand and consumption.

Getting back to the jobs charts above...only an economist or financial columnist or financial planner could miss the normal process of recession and slowing jobs growth or outright job reductions that is dead ahead...but this downturn has all the makings of a depression rather than recession.

And the Fed hasn't a single lever or button to push except for the button labeled ctrl-P.  But unfortunately for the Fed there isn't much deficit or outstanding treasury debt left to monetize?  Perhaps a quarter or half point rate hike quickly before returning rates to ZIRP (NIRP?) will allow the Fed to raise the "Mission Accomplished" banner one last time?!?