Retail Sales and Jobs

From Panzner Insights:

Economists rely on a variety of indicators to try and get a read on the economy. But the apparent connection between certain data points and trends and future activity isn't always obvious or straightforward.

That doesn't seem to be the case in regard to the connection between retail sales and employment. Indeed, it makes sense that concerns about the job market would be quickly felt when it comes to household spending. If workers fear they might lose their jobs, they don't wait until they get the bad news before cutting back.

More broadly, if a large enough number of workers believes the job market is deteriorating, then it's a good bet the overall trend of retail sales will signal the change before the payroll data does.

As the following chart shows, this has been the pattern previously. Under the circumstances, the latest readings on the pace of retail sales suggest it's only a matter of time before the headline employment data reveals that the jobs market is heading south.

Comments

[Hammer will fix]

Bernanke's Hammer: When You Have a Printing Press, Everything Looks Like a Monetary Transaction

This turning of things upside down is what has been called Rubinomics, the principle that by supporting the buying of certain select instruments such as SP futures ahead of a crisis, one can more efficiently avert a financial problem than by allowing the markets to reflect the fundamentals, and then to clean up the mess afterwards. It's cheaper and easier he observed.

It is the belief that rather than an instrument of price discovery within the real economy, the financial markets ARE the economy, and will lead rather than follow. And it has become a form of financial totalitarianism through the manipulation of policy and money.

It should also be noted that Robert Rubin articulated this while he was the Secretary of the Treasury, and he somehow persuaded Greenspan, then the Chairman of the Fed, to go along with it, shortly after the Maestro had made his famous 'irrational exuberance' speech. Although it should be noted that Greenspan had already found that tool, and used it. He merely took it to another level, not as a response to be used to a crisis as in the case of the Crash of 1987, but as a proactive tool of financial engineering.

And this was the genesis of the principles of Modern Monetary Theory, which in fact is a concept as old as the hills, appearing over again with different names, and the source of much recent misfortune through several Presidencies.

"Notwithstanding anything said or done by the Congress this year, operating through trained surrogates such as Geithner, Summers and others, Robert Rubin is still pulling the economic and financial strings in Washington. The fact that there is a Democrat in the White House almost does not seem to matter. President Obama arguably has a subordinate position to Rubin because of considerations of money."

Chris Whalen, The World According to Robert Rubin

And this is the problem I have with this Modern Monetary Theory that would save the system by placing the ability to simply create money in the hands of the Treasury, to be wielded such titans of sound judgement as Robert Rubin, Hank Paulson, and Tim Geithner, with oversight perhaps by those incorruptibles and paragons in the Congress.

http://jessescrossroadscafe.blogspot.com/2013/01/bernankes-hammer-when-everything-looks.html

[roger]

Money is a product of the mind, and nothing is more fickle than the human mind.

[Doable Finance]

I think most folks don't stop spending because they are afraid they would lose jobs. At least, Americans are known for spending more than they can handle their finances. Spending is the root cause of American economy's expansion over the previous so many decades.

[Held hostage]

Neil Barofsky Tells Jon Stewart How the Ego and Narcissism of Washington Preserve a Broken Status Quo

Hope you enjoy this chat. I did, despite its predictably depressing conclusion. Stewart and Barofsky do a good job of conveying how DC works and why that guaranteed “a thoroughly broken financial system” would stay intact.
Read more at http://www.nakedcapitalism.com/2013/02/neil-barofsky-tells-jon-stewart-how-the-ego-and-narcissism-of-washington-preserve-a-broken-status-quo.html#t5jBscF1rZpbDHXx.99